KARACHI (December 02 2009): The State Bank of Pakistan on Tuesday introduced financing facility for establishment of new power projects using renewable energy with capacity of up to 10 mw with the view to meeting the growing electricity demand in the country. According to a Circular (SMEFD Circular No 19) issued on Tuesday, sponsors of power projects can avail financing facility through banks/DFIs for new imported and locally manufactured plant, machinery and equipment.

Preference shall be given to projects being established in the less developed areas of the country, it said. As per eligibility criteria laid down in the Circular, financing will be available to the prospective sponsors desirous of setting up of Power Projects with a capacity of up to 10 MW, who have completed prescribed requirements of Alternative Energy Development Board (AEDB), the concerned regulatory authority and other relevant Government Department / Authority, in compliance with the prevalent Renewable Energy Policy of the Government of Pakistan.

It said the financing shall be available only for establishing new Power Plants of up to 10 MW installed capacity using alternative / renewable energy sources (wind, hydel, biogas, bio-fuels, bagasse cogeneration, solar power and geothermal as fuel). However, financing will be available for LCs established for import/purchase of new plant, machinery & equipment from December 1, 2009 to June 30, 2012 only.

Refinance may be provided up to 100 percent of financing provided by banks/DFIs to the eligible borrowers for the import/ local purchase of plant, machinery & equipment subject to adherence of other rules & regulations, the circular said. Under the Scheme, financing will be available for a maximum period of ten years including a maximum grace period of 2 years.

The grace period will be over and above the Availability Period of one year. However, maximum period of financing shall not exceed the period of ten years (including grace and availability period), from the date of first disbursement, it added. According to the Circular, the rate of service charge at which SBP will provide refinance to the Banks/DFIs shall be determined on the basis of average of weighted average yields of last two auctions of 5 and 10 years PIBs.

It said the service charges shall be announced for each fiscal year and shall remain valid for a period of one year from 1st July to 30th June.

KARACHI (December 03 2009): The government of Pakistan on Wednesday executed the GoP Guarantee, thereby accepting the Financial Close of Hub Power Company's 75 percent-owned subsidiary, Laraib Energy Limited. In an information sent to Karachi Stock Exchange (KSE), Hubco said that Laraib Energy is setting up the 84 MW first hydel IPP of Pakistan. According to the company, the construction activities will commence shortly.

ISLAMABAD (December 05 2009): Pakistan's first Asian Development Bank (ADB) backed hydro independent power producer (IPP) has achieved financial close after a series of extensions in project deadline and the rise of tariff from 4.7 cents to 8.33 cents per kwh, sources close to World Bank Consultant Riaz Ahmad Khan told Business Recorder .

"The 84 MW new bong escape hydropower project successfully gained tariff increases over the years with the support of PPIB's incumbent and former Managing Directors, Secretaries of Water and Power, and close aides to former Prime Minister Shaukat Aziz," sources said. A couple of extensions in financial close were granted on the insistance of Asian Development Bank, which approached the Secretary, Water and Power, for this purpose.

Khan is a very close relative of Water and Power Minister Pervez Ashraf and has occupied the Ministry's office with the consent of the Minister after he was refused an extension as Advisor to the Ministry.

The 84 mw new bong escape hydropower project of Hubco Laraib Energy Limited declared a financial close and the Government of Pakistan (GoP) executed the GoP guarantee which was signed at PPIB offices by Fayyaz Elahi, Managing Director, PPIB, on behalf of the GoP, while Khalid Faizi, CEO, and Hasnain Hyder, COO, signed the said guarantee on behalf of Hubco Laraib Energy Limited.

The power project is located 7.5 kilometres downstream of Mangla Dam, in Azad Jammu and Kashmir and is expected to be commissioned by May, 2013 to sell electricity to Wapda /NTDC for supplying clean, reliable and cheap energy to the consumers.

The sponsors of the project are Hub Power Company Ltd i.e. Hubco (wherein majority shareholder is International Power of UK), Coate and Co (Private) Limited and Continental Power Limited who are investing $53.72 million through equity. The project is being financed with debt financing of $161.14 million through both local and foreign lenders.

The foreign lenders include Asian Development Bank (ADB), Islamic Development Bank (IDB), International Finance Corporation (IFC), Proparco of France while the local lenders include Habib Bank Limited (HBL) and National Bank of Pakistan (NBP).

Giving the details, sources said, in May 1995, GoP announced Hydel Policy 1995 to encourage private investment in hydropower projects. Under the provisions of 1995 Policy, the issuance of Letters of Interest (LoIs) and Letters of Support (LoSs) was the mandate of respective Government of AJK which issued LoS to New Bong Escape Hydropower project as well as Rajdhani.

The Hydel Policy 1995 envisaged 4.7 cents/ kWh levelised tariff over 25 years. Subsequently, in pursuance of the decision of the Cabinet Committee on Investment (CCoI) taken on December 27, 1997, National Transmission Dispatch Company(NTDC) renegotiated the levelised tariff at 3.336 cents/ kWh with Laraib Energy and Power Purchase Agreement (PPA) was signed in April 2004.

Later on, in September 2005, the company revealed that 3.336 cents tariff is not viable due to substantial increase in price of construction materials, freight, insurance and risk management costs after the event of 9/11/2001 and requested a tariff of $4.81 cents per kWh based on certain assumptions. However, the ECC, on April 14, 2006 reinstated 1995 Hydel Policy levelised to 4.7 cents per kWh.

Further, in October 2007 upon the Company's request, the ECC rationalised the levelised tariff of 4.7 cents/kWh against the adjustment /indexation due to inflation, inclusion of 7.5 percent withholding tax, exchange rate variation etc and revised the levelised tariff to 5.89 cents/kWh to reflect the impact of the aforesaid elements.

Subsequently, the ECC, on December 2, 2008, extended the applicability of tariff related provisions of Power Policy 2002 including the aforementioned Nepra Tariff Mechanism, to the Projects being dealt under Hydel Policy 1995 vis-à-vis New Bong, Rajdhani Hydropower Projects, both located in AJK.

Accordingly, sponsors of New Bong Escape Project, finalised negotiations with its EPC Contractor with firm EPC Bid Price and submitted a detailed tariff proposal to NTDC on 27th March 2009 for the determination of second stage (i.e. EPC stage) tariff under Nepra's mechanism for determination of tariff for hydropower projects requesting a levelised tariff of US 9.6306 Cents/KWh (cents 7.7906 + cents 1.84 special ROE component).

The special ROE component was included to recover the additional cost arising due to equity investment made over a period of 13+ years (1996 to 2009) and to ensure a reasonable Internal Rate of Return to sponsors/ investors. The justification, based on facts, provided by the company for the special component of tariff was that the LoS was issued to the Company in 1996 under the Hydel Policy 1995.

Sources said that unavailability of standard concession documents dealing with projects in AJ&K as well as certain legal anomalies had to be removed. Commercial factors, such as unavailability of hydrological risk coverage and retrospective withdrawal of policy tariff between 1997 and 2006 were also impediments.

Sources claimed that PPIB, after detailed and extensive negotiations, prudence check and verification of costs, agreed to a levelised tariff of 8.3326 cents /kWh (7.5726 cents/kWh+0.76 cents/kWh special ROE component) with NTDC and the company considering return on the invested equity from year 2004 (signing of PPA and Implementation Agreements) instead of date of LoS (1996).

KARACHI (December 06 2009): Sindh Engro Coal Mining Company has been set up to develop Thar Coal on fast-track basis and produce coal-based electricity, it is learnt. The project company is a joint venture between Sindh government and the Engro Powergen Private Limited (EPGL), which would operate within Block-II of the Thar Coal (a coal mine spread over 55kms) and associated mine mouth power station of up to 3,900MW for a maximum period of 30 years, sources told Business Recorder on Saturday.

In this regard, a Memorandum of Understanding was signed between the Sindh government and the Engro Chemicals Limited a few months back with the provincial share of 40 percent. The Sindh government would be responsible for the development of infrastructure such as roads, water, drainage system, electricity transmission line, etc, as per the list presented by the EPGL for the project and share studies being carried out under the World Bank Technical Assistance Programme.

The EPGL would lead all other development-related activities including mining and power generation, they added. The Engro would now purchase the historical exploration data and studies of Thar Coal Block-II, which is presently the property of Shenhua Group of China , they said, adding that the SinoCoal International Group of China would work as the consultant and carry out the bankable feasibility study of Block-II.

Both provincial government and Engro have also requested China Northwest Coalfield Geological Survey Bureau Exploration Design Institute (China Northeast Bureau) to undertake hydro-geological exploration work and desk studies for Block-II, which is a mining area, sources said, adding that the environmental and social impact assessment would be carried out by the Hagler Baillery and SRK (UK), they said.

Moreover, they said the finance department had also released Rs 199.200 million a few days back in respect of non-ADP scheme namely detailed feasibility study for Sindh Coal Mining Company. The funds have been deducted from the block allocation kept in the ADP under the name of Sindh Coal Development Package, they added. According to sources, a steering committee would also be constituted between EPGL and Sindh government shortly to oversee the progress on the feasibility study.

ISLAMABAD (December 07 2009): The Asian Development Bank (ADB) and Agence Francaise de Development (AFD) have jointly expressed concern to the Economic Affairs Division about non-readiness of executing agency (Planning Commission), and implementing agencies, which has resulted in the postponement of the first tranche release under the $ 980 million Energy Efficiency Investment Plan (EEIP), sources told Business Recorder.

On August 13, 2009, the government and ADB executed the framework financing agreement for the MFF. ADB approved the MFF, and the first tranche was to be released on September 2009. AFD approved the financing in October 2009.

Sources said that tranche 1 of the loan signing with ADB has been postponed from November 19, 2009 by the government due to non-readiness of the executing and implementing agencies.

"We are concerned that such delays will severely affect the implementation of the tranche 1 (national compact fluorescent lamp project and program management support project), and preparation of subsequent tranche projects, which are urgently needed," said Director, Energy and Natural Resources Division, ADB, and Yves Terracol, Country Director, Pakistan, in a joint letter.

Sources said that ADB and AFD financing is based on government commitment to strategy and reforms to mainstream energy efficiency into national planning and public investments.

According to the letter, extensive stakeholder consultations on policy, institutional structure and financing took place during the program development. The Planning Commission led the government's energy efficiency and conservation consultative group, which prepared a 10-year roadmap and investment plan.

The roadmap activities cover multiple sectors and require integrated planning and management. All stakeholders recommended that the Planning Commission, with its cross-sector policy and planning mandate, would be the most appropriate agency in the government structure to co-ordinate the activities.

Sources said that the government, the ADB and the AFD agreed that the Planning Commission be the executing agency for the program, and that a dedicated Program Management and Co-ordination Office (PMCO) be established in the Planning Commission. This office would be responsible for supporting the concerned agencies with (i) the roadmap implementation policy, planning, interagency and donor co-ordination, and capacity building support; and (ii) investment program co-ordination - reporting, monitoring, and consultant support. The individual investment projects would be implemented by the relevant line agencies and utility companies.

According to the letter, the program is critical to the government's plans to resolve the power shortage crisis. The government has been requested to expedite the establishment of the PMCO in the Planning Commission to effectively co-ordinate the program. "We hope that there will be no further delays with the PMO establishment and with the loan signing. ADB and AFD are ready to sign the tranche 1 loans at the government's convenience," sources quoted from the letter addressed to EAD Secretary Sibtain Fazal Halim.

Copyright Business Recorder, 2009

KARACHI (December 08 2009): A well reputed German solar company Azur Solar GmbH has signed a Memorandum of Understanding (MoU) with Raza Impex Pvt Ltd Pakistan during the visit of the Prime Minister of Pakistan Syed Yousuf Raza Gilani to Germany. According to Board of Investment (BoI) here Monday, the signing ceremony was attended by the officials of German Ministry of Economics and BoI officials.

The two companies have agreed to enter into a joint venture for installation of a 50-megawatts solar power plant in Pakistan . Bernd Sauter, CEO signed the MoU on behalf of Azur Solar whereas Zafar Hussain, CEO, and Khurram Bilal, Managing Finance Partner signed it on behalf of Rafza Impex Pakistan.

BoI chairman, Saleem H Mandviwalla, and Honorary Investment Counsellor of BoI in Germany , Sikander Mir-Kohler, have played a very active and effective role in bringing the private sectors of the two countries closer together in an unusual way. Furthermore, Mir-Kohler is determined to offer one window facilitation services for an early and solid realisation of the project.

Copyright Associated Press of Pakistan, 2009

KARACHI (December 10 2009): The First Tri-Star Modaraba would set up gas-fired power generation plant, with capacity of 110 mw, at Hawkesbay. In this regard, the National Electric Power Regulatory Authority (Nepra) has granted electric power generation licence to First Tri-Star Modaraba, managed by A R T Modaraba Management, under Section 15 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997.

The plant, to be set up at a cost of $102 million, would be commissioned/operational by December 31, 2010. The expected life of the facility would be 25 years from commercial operation date. The power of this generation facility would be dispersed to the system of NTDC through the system of KESC, at 132 KV level by constructing a new transmission line, approximately one kilometer in length, by making an in-out of 132KV D/C Baldia-Kanupp Transmission Line at the CCPP.

It would be a gas-fired power generation plant, having combined cycle gas turbine. The Sui Southern Gas Company (SSGC) would be the supplier of primary fuel (gas) through a 16 inches gas pipeline from the network of SSGC to power plant. The alternative/back-up fuel of the power generation plant would be high speed diesel, to be supplied by PSO, Shell, Bakri and Parco.

ISLAMABAD (December 12 2009): The peak electricity demand in Pakistan will be reduced up to 1,100 MW by replacing 30 million ordinary incandescent bulbs with CFLs (Condensed Florescent Lamps) resulting in saving of $1 billion. While setting up of a power station of the same capacity requires 7-10 years of completion along with much greater cost.

For an expenditure of 70 million dollars the country would save 1100 MW, the capital cost of which is over 1 billion dollars. The Planning Commission under the chairmanship of Deputy Chairman Planning Commission, Sardar Aseff Ahmed Ali approved the project "National CFL Programme", in the CDWP meeting held on November 19, 2009.

The primary aim of the project is to reduce peak electricity demand during evening and early morning hours when mostly light bulbs switch on simultaneously all over the country. According to the project CFLs will be distributed to the domestic consumers free of cost in exchange of ordinary 40-100 Watt incandescent bulbs.

For the same amount of light a CFL consumes about 1/3rd of electricity as compared to a standard incandescent bulb. The programme envisages for simple replacement of the bulb, in the same lamp holder, by a CFL lamp. For the replacement of an existing tube light, the procurement of a proper fitting is required, which not only needs much more space, but involves the installation charges.

The CFLs will be purchased in bulk by Pepco according to the international standards and international competitive biding system by Asian Development Bank (ADB). Only high quality lamps with life span of 10,000 hours, two years warranty and total harmonic distribution of less than 30 percent will be purchased. The Planning Commission has no role in the bidding or purchase process.-PR.

NEW YORK (December 14 2009): Power company AES Corp on Sunday said it agreed to sell its entire interests in its Oman and Pakistan businesses for about $200 million. The deals will allow $276 million of debt to be removed from AES' consolidated balance sheet. The transactions are expected to close in the first half of 2010 and are subject to customary purchase price adjustments and approvals.

Until the transactions close, the businesses will be reported as discontinued operations and earnings will not be reported as part of income from continuing operations.

During 2009, the Oman and Pakistan businesses are expected to contribute net income of $25 million, or 4 cents a share and to contribute subsidiary distributions of $16 million in 2009. They are projected to contribute net income of $15 million, or 2 cents per share in 2010.

The sale of the Pakistan assets is expected to result in a noncash, after-tax impairment of $107 million, or 16 a share in 2009. The Oman sale is expected to result in a noncash, after-tax gain of $78 million, or 12 cents per share, which will be recorded when the transaction closes in 2010. Neither the impairment nor the gain will have an impact on adjusted earnings per share.

"Our decision to sell the businesses is in line with our strategy to unlock the value of our portfolio. We continue to see compelling development opportunities throughout the world as countries look for more sources of affordable and sustainable power," Paul Hanrahan, AES president and CEO, said in a statement.

The businesses are being sold to two separate buyers as a result of an auction process that began in the second quarter of 2009. AES indirectly holds interests in the Oman and Pakistan facilities through AES Oasis, which is owned 61.1 percent by AES and 38.9 percent by the IDB Infrastructure Fund. Shares of AES on Friday closed at $13.08, up 34 cents, on the New York Stock Exchange.

ISLAMABAD (December 14 2009): The government has decided to constitute an energy sector high level task force whose membership will be sold to the Friends of Democratic Pakistan (FoDP) for at least $100 million, sources told Business Recorder.

Sources said that the Ministry of Foreign Affairs is in close liaison with Islamabad-based diplomats representing FoDP countries. Giving the background, they said that FoDP Summit meeting in New York in September 2009 had recognised the hardship persistent energy shortages imposed on Pakistan 's economy and livelihood. The Summit agreed to support Pakistan in preparing a sustainable and integrated energy plan.

Sources said that the Summit mandated the Asian Development Bank (ADB) to lead in mobilising international assistance to Pakistan for energy sector. Leaders also requested a report on energy sector at the next ministerial meeting of the FoDP. A draft note proposes to set up a sector task force comprising FoDP members to prepare an action plan and a report on the energy sector.

The note suggests setting up a secretariat for the task force to organise preparation of the action plan and the report. It also recommends that a steering committee should provide oversight and direction to the task force. The way forward on the energy report, suggested in this draft note, will be finalised in consultation with the government and FoDP members. Sources said that the task force would create a forum for international partners and the government to work together on an integrated action plan and a report on the energy sector. This report, to be released at the next ministerial FoDP meeting, would also help the members to prioritise areas for supporting the energy sector.

Regarding composition of the task force, all interested partners under the FoDP would be invited to join the task force. The task force secretariat, a select group of partners, would serve as its executive. The task force will decide the secretariat membership. One membership criterion could be a minimum $100 million ongoing investment in the energy sector. The secretariat will prepare an integrated energy action plan and the report with international and national expert support. The secretariat will regularly inform the task force of its progress.

The task force secretariat will report to a steering committee co-chaired by the ADB and the government. The steering committee will oversee the preparation of the action plan and the report and provide guidance and direction to the exercise. The steering committee will approve the final report of the task force for submission to the next ministerial FoDP meeting. The task force secretariat will prepare a work plan with a timeline for the preparation of the action plan and the report. The work plan will include a budget and will identify consultancy expertise required for the assignment.

The secretariat will develop the Terms of Reference (ToR) to hire technical experts who will contribute to the action plan and the report. Likely required expertise includes a sector expert, an energy economist, and legal and regulatory affairs specialists. ADB, through a technical assistance, can finance some of these experts. Other task force members will assist in any of these technical areas. The timeline for the report assumes that the next ministerial FoDP meeting, at which the report is to be presented, will be held around May 2010.

Given the consequent scarcity of time, Islamabad is closely consulting with the FoDP representatives to agree on the draft concept note for the task force. The first steering committee to review and approve the work plan to be drafted by the task force secretariat will be held by mid-December 2009. Sources said that ADB will co-ordinate the work of the energy sector task force. However, preparing of the action plan and the report will be a collective and collaborative effort. "This will ensure the ownership of all members of the task force and bring international experience to bear on the action plan and the report. Focused attention of the task force over the next 5-6 months would be needed to prepare the action plan and the report, which would include clear recommendations on the way forward," sources added.

ISLAMABAD (December 15 2009): Chief Minister Gilgit-Baltistan Syed Mehdi Shah has said that the main focus of his government will be on power generation. Talking to a private news channel he said that electricity plays vital role in bringing prosperity in any region, as the government will encourage investors to invest in this area, set up industries and factories and establish mills.

He cited unemployment as a major challenge for his government. He said that as there are no industries and factories, therefore, the government jobs are only option for the youth of the area. Mehdi Shah said that Gilgit-Baltistan had a lot of potential for tourism, but the sector was not fully utilized due to lack of resources and means of communication. He said that all efforts will be made to ensure implementation of Prime Minister's recent announcement in which he had declared Gilgit and Skardu Airports as international airports. He said that by doing so, the tourists could ensure their schedule.

ISLAMABAD (December 15 2009): The construction of Jinnah Hydropower Project is expected to be completed in February 2010 which will add 96 megawatt electricity to the country's transmission system. "Work on the dam was initiated in February 2006 and was set to complete in February 2010." sources told APP here on Monday. They said work on the project was scheduled to start in July 2002 and its completion date was June 2007.

However, they added, the construction could not be started on the stipulated time and date was later extended till February 2010. They said the preliminary cost (PC) of the project was estimated Rs 13,546 million. "Rs 8,103 million have been spent on the project so far and the government has allocated Rs 1940 million under Public Sector Development Programme," they added.

The sources said that power generation was the main objective of the project, which is being built on right side of Jinnah Barrage on Indus River, about 5 km of Kalabagh Town and 234 km from the federal capital. The project envisages installation of 96 MW hydropower plant and would generate 688 Gwh per annum of electricity, they added.

The sources said excavation work of cut-off-curtain and de-watering of drilling channel, installation of wells and pumps has been completed. Colony of the project was not included in the approved PC-1 and a separate PC-1 was submitted to the Planning Commission for approval on February 14, they added.

ISLAMABAD (December 15 2009): The Economic Co-ordination Committee (ECC) of the Cabinet, scheduled to meet on Tuesday, is likely to approve allocation of 18.5 mmcfd additional gas for rental power plants (RPP) 1 and 11 at Naudero, owned by US based Walters Power International (WPI) Limited. The WPI has already been allocated 12 mmcfd gas for existing RPP-1 at Naudero and has requested an increase in its gas quota to 15.5 mmcfd.

The WPI has also requested allocation of 15 mmcfd additional gas for 49.52 MW rental power plant-11 at Naudero. Sources told Business Recorder on Wednesday that the Water and Power and Petroleum Ministries had proposed to the ECC to approve additional allocation for rental power projects at Naudero. However, the Ministry of Industries and Production opposed the proposal, requesting the ECC to provide gas to already established industry.

According to the sources, based on the commitment of the Sui Southern Gas Company Limited (SSGCL), the Petroleum Ministry proposed diversion of an additional 15 mmcfd gas from the SSGCL's system, including diversion of 14 mmcfd gas currently supplied to the cement sector, for use by the PPIB/Ministry of Water and Power for power generation on "as and when available basis" for five years up to October, 2014.

The SSGCL has maintained that it has revised its pipeline design to ensure supply of gas at 500 psig, and, therefore, the installation of compressors by project sponsor and relevant gas allocation was not warranted. For additional capacity of 49.52 MW, the SSGCL can divert around 14 mmcfd gas, currently supplied to cement sector, to the Water and Power Development Authority (Wapda) and later to the rental power project at Naudero, subject to Natural Gas Allocation and Management Policy 2005.

THE MINISTRY OF INDUSTRY HAS COMMENTED ON THE SITUATION AS FOLLOWS:

-- Already established local industry needs should be met on priority basis.

-- The existing industry should be given incentives to switch to other energy sources for fuel.

-- Only such industry should be encouraged that utilises gas as a feed stock and not as fuel.

-- The new power generation units are designed to operate on coal fuel as a policy measure.

According to the sources, the Ministry of Industry is of the view that the natural gas policy needs to be prioritised in view of the proven gas reserves that are inadequate to meet total national demand. "Our proven vast coal reserves are expected to be tapped in the near future and it is only pragmatic to invest in new coal fuelled power plants infrastructure that may be utilised in the long term," the Ministry of Industry said in its comments.

The sources said that the Ministry of Water and Power had supported allocation of additional gas for power generation purposes. Keeping in view the contracts of rental projects, the ministry suggested that the gas allocation should be on firm basis instead of "as and when" available basis.

The ministry argued that the services contract of rental power projects did not provide dual firing arrangement and conversion in combined cycle plant and the increase in efficiency of aero derivative gas turbine in combined cycle mode was limited. Moreover, the units are not easily susceptible to dual fuel arrangements.

The Water and Power Ministry pointed out that as per the fuel arrangement in the Naudero-1 Rental Services contract dated June 4, 2009, the buyer, ie concerned Genco, had to arrange sufficient quantity of gas for full load operation of the plant. The Water and Power Ministry stated that the WPI had solicited for allocation of 27 mmcfd gas on account of elimination of compressor load due to supply of gas at 500 psig instead of earlier committed 150 psig.

The compressor load is limited and does not significantly alter the over all gas requirement of 30.5 mmcfd gas for Naudero-1 and 11 rental power projects. The Water and Power Ministry proposed to allocate 30.5 mmcfd gas for five years on round the year basis for the Naudero 1 and 11-rental power projects instead of 27 mmcfd.

KARACHI (December 16 2009): The Karachi Electric Supply Company has signed a Memorandum of Understanding (MoU) with Oracle Coalfields, a company incorporated in England and Wales and primarily engaged in coal drilling, exploration, mining and production, to set up a major coal-fired power plant fuelled by coal to be mined at Thar Coalfields in Sindh.

According to the MoU, Oracle Coalfields will own and operate the mine supplying coal to the power plant, said a KESC press release issued here today. The integrated coal mine and power generation structure will ensure long-term fuel supply from Oracle Coalfields, of quality and specifications as desired for the operation of coal-fired power plant.

Moreover, it will create interest and momentum for other investors to explore huge coal reserves in Thar, which in turn will contribute greatly towards the economic revival of Pakistan . It said the MoU was another step, in the light of Karachi Electric Supply Company Limited's initiative, to develop and implement several power projects based on local alternate energy sources on fast-track basis to overcome existing and projected energy shortage in Karachi .

On the occasion of the signing of MoU from KESC side were, Syed Naveed Ahmed, Group Head Corporate Strategy & Business Development, Syed Ali Hyder, Director Corporate Strategy & Business Development; Syed Muhammad Rizvi, Adnan Rizwi, Aamir Rizwan Qureshi, General Managers; and Samia Aslam, Deputy Manager Corporate Strategy. From the Oracle Coalfields, Shahrukh Khan, CEO, Tony Scutt, Non-Executive Director; Shafiq-ur-Rehman Khan, Director; and Iqbal Umer, Director, attended the signing ceremony-PR.

KARACHI (December 16 2009): The Sindh government has failed to properly utilise 2 million dollar provided by the World Bank for the Thar Coal and Power Technical Assistance Project, it is reliably learnt. However, the provincial government has recently surrendered Rs 42 million unutilised funds aimed at establishing a project, monitoring unit of the technical assistance of the WB, sources told Business Recorder on Tuesday.

They said that the Sindh government had signed an agreement of 30 million dollar with the World Bank in May this year for the technical assistance in Thar Coalfields. Under the agreement, the bank would provide 30 million dollars loan in four years with a ten-year payback time.

Out of total amount, $25.8 million would be provided to the provincial Mining Board, while the remaining 4.2 million dollar would be given to the federal government's Private Power and Infrastructure Board (PPIB) to provide technical assistance for the development of Thar Coal, they said.

They said that the bank had provided project preparation advance of 2 million dollar in the month of September with a condition to utilise these funds until December 31, 2009. Out of these funds, an amount of 1.177 million dollar is being utilised for different project's activities.

Moreover, the mines and minerals department of Sindh government had forwarded a letter to the Economic Affairs Division requesting it to seek an extension of six months ending June 2010 for utilisation of the funds but the bank did not give any extension, the sources further said.

The funds amounting to Rs 50.615 million were sanctioned and drawn for the establishment of project monitoring unit under the Thar Coal and Power Technical Assistance of the WB, out of which only Rs 8.627 million was utilised. However, the funds to the tune of Rs 42 million were deposited in the National Bank of Pakistan (NBP) in accordance with the instruction received by the Finance Department.

PESHAWAR (December 25 2009): NWFP Minister for Industries, Syed Ahmad Hussein Shah has said that Rs 110 billion under the net profit on electricity by the federal government, would be spent on initiating projects hydropower generation, industrialisation, tourism and mineral development sectors. He was addressing a meeting here, presided over by the President SCCI Riaz Arshad at Sarhad Chamber of Commerce & Industry (SCCI).

The minister also hinted at introducing of reforms in Sarhad Development Authority (SDA) through the promulgation of ordinance. He said that four members of the Sarhad Chamber would be nominated on the Board of Directors of SDA. He also announced the constitution of a committee on the matters related to electricity and natural gas in the province. He sought the names of four nominees from the chamber on the committee concerned.

The minister for industries said that government is taking measures for the up-gradation and revival of the infrastructure in the industrial estates of the province. He said that the selection of site for the phase-II of the small industrial estate is being carried out. In coming budget, a handsome amount would be sanctioned for the project, he added.

To demands relating to the shifting of necessary machinery from Gadoon Industrial Estate, he directed Secretary Industries for the resolution of the problem in collaboration with industrialists. On this occasion, General Manager SNGPL Imdad Hussein assured the resolution of the problem of low pressure of natural gas, except two-day load shedding, saying that the growing demand of gas is forcing the company on load management. Besides the issue, he also assured the resolution of other problems.

Earlier, president SCCI Riaz Arshad urged initiating of projects for the revival of the economy of the province and asked the provincial government for taking measures at both provincial and federal level in this regard.

He stressed the need of promoting trade with Afghanistan and Central Asia and provision of priority to the promotion of hydropower sector in the province. Riaz Arshad proposed holding of meetings of Industrial Facilitation Centre and Industrial Facilitation Committee on regular bases and establishment of Industrial Advisory Committee on the pattern of the province of Punjab . He further stressed for initiating steps for the establishment of the phase-II of Small Industrial Estate and conversion of Risalpur Export Processing Zone into an industrial estate. He also took up the matters of the load management and low pressure of gas and called for immediate measures in this regard.

KARACHI (December 27 2009): The Sindh government and Al-Abbas Group is likely to form a joint venture (JV) for the vast high quality coal reserves of district Badin with an equity ratio of 40:60 between the two partners, informed sources told Business Recorder on Saturday.

They said that Al-Abbas Group had recently showed keen interest to form joint investment venture with the Sindh government for the high quality coal reserves of district Badin. The representative of Al-Abbas Group met with Chief Minister Syed Qaim Ali Shah and briefed him about the joint venture which he admired, they said. Qaim also constituted a committee few days back, which was later notified by the Services, General Administration and Co-ordination Department (SGA&CD).

Additional Chief Secretary (Dev) has been made the Chairman of the committee while Secretaries of Finance, Law and Coal and Energy Development Department and the Secretary to CM as committee members, they said. They said that the committee would examine and evaluate the joint venture proposals of Al-Abbas Group both in technical and financial terms, parameters and benchmarks on the basis of which other such joint ventures proposals may be approved.

The representatives of Al-Abbas Group would brief the committee members and the Thar Coal Energy Board (TCEB) Director Asad Ali Shah on December 30, 2009 and it is likely that the JV would be signed in February, they added. Sources said that another meeting of the representatives of State Bank of Pakistan and leading national banks would also be held next month in Islamabad to discuss the financing structure of the Badin Coalfields.

It has been proposed that the Sindh government would make 40 percent while Al-Abbas Group would invest 60 percent investment under the JV agreement, which would soon be signed, in recently discovered Coalfields of Badin district, they said, adding that the project envisages generation of some 600 to 1000MW coal-based electricity to overcome the persisting power outages in the country. Whereas, one or two percent of the profit would be utilised for the welfare of the people of the Badin district.

LAHORE (December 27 2009): Managing Director Pepco Tahir Basharat Cheema instructed Chinese contractors and local counterparts to boost up the construction of 425 MW Combined Cycle Power Project at Nandipur near Gujranwala . During his visit of the site, MD Pepco said that such power scheme in public sector is an integral part of Pepco`s strategy to exit rental power plants, which will ultimately result and help in phasing out these RPPs.

These Power schemes would provide reliable and cost effective power to the public and will contribute to overcome the menace of load shedding in the country which shows the commitment of Pepco to utilise the Rental Powers for least possible periods.

MD Pepco said that this contract was signed last year on 28 January 2008 with Chinese company Dongfang Electric Corporation (DEC) at total EPC cost of 329 million dollar. The power project is located at an ideal place, in close proximity to the cities of Gujranwala and Sialkot and will cater for the power generation of both the cities, which form the hub of industrial activities in Pakistan.

Tahir Basharat said that, Chinese contractors have already mobilized at project site with execution of civil works of pile foundation for Gas and Steam Turbine, which is fairly in advance stage. Besides, appreciable progress has also been made towards manufacturing of the power plant equipment. The delivery of Gas Turbine with associated equipment is scheduled in January 2010.

As per contractual commissioning schedule of the project, the first gas turbine will be ready by October 2010, followed by other two gas turbines and one steam turbine with a gap of two months each, so as to achieve the final completion of the whole combined project in April 2011 of 425MW power generations. Talking about the pace of construction work of power project along with Chinese team of Engineers.

Tahir Basharat Cheema highlighted the stages of commissioning of various units of the project and informed that the Major Gas Turbine will be shipped in January 2010.The first unit will be commissioned in October 2010 and will generate 95.4MW. The Second unit will be commissioned in December 2010 with the same power generation. Whereas the third gas Turbine unit will be completed in February 2011 with capacity of 95.4MW.

However, the last and fourth unit of Steam Turbine Combined Cycle of (138.8) MW will be operational in April 2011. Thus will add 425 MW of power generation to National Grid. This Gas Turbine contemplated for the project is General Electric (GE). Which is amongst the most effective and best in the world. The gas turbines utilize the latest metallurgical advances and coating to produce one of the highest possible efficiencies.

The site of the Coffer Dam being built on the Upper Chenab canal for evolving water needs of the plant was also visited. In this regards, the Project Director apprised the MD that in conjunction with Punjab Irrigation Department all preliminaries to the construction of the work has been firmed before the Annual Canal Closure and consequently the work was in full swing. MD Pepco also held a detailed discussion with the Chinese Contractor and Pakistani Counterparts, to acquire updates about the construction activities and progress of the project.

While appreciating the pace of work and their efforts, Managing Director desired to maintain the high spirits and urged to expedite to its maximum possible extent, so that the there may be no delay in the timely commissioning of the project. Tahir Cheema also directed the project director about the security and administrative matters of Chinese and local Contractors of the project.

LAHORE (December 31 2009): Pakistan Electric Power Company (Pepco), is striving hard to upgrade its generation and distribution system for managing electricity supply for its over 18 million consumers. Now-a-days the electricity demand and supply gap exists due to canal closure and fuel shortages, which is being managed professionally to cause minimum inconvenience to the consumers.

According to the spokesman, Pepco has a vast network of its field offices in the jurisdictions of its 8 distribution companies, as 925 sub-divisions and 192 divisions with 262674 km HT lines, 197514 km LT lines and 493696 transformers installed. Consumers may face problems like power disruptions, faults in metres or cables, low voltage and defects in transformers. Pepco line staff is available round-the-clock in the field offices to rectify all sorts of problems in all types of weather, at any time. Pepco has intensified its efforts to cope up with the growing demand of electricity.

New IPPs and rental power plants are being commissioned. System augmentation programme is also being executed to tackle the problems of power disruptions, low voltage and over loading. Pepco staff replaced faulty meters and cables, upgrades transformers, strengthened and bifurcated feeders. They also replaced power transformers of the grid stations with the heavy ones in all sorts of weathers, endangering their lives for public service.

The Netherlands will provide Rs. 356 million for Pakistan Domestic Biogas Programme being implemented under Rural Support Programme Network (RSPN).

An agreement to this effect was signed in Islamabad on Tuesday between the visiting Dutch Minister for Development Cooperation, Bert Koenders and Chairman of RSPN Shoaib Sultan Khan.

The programme, a public-private partnership between the government and private sector agencies, is said to be unique and designed to lay the foundation for a commercially viable biogas sector in Pakistan, which can relieve 30 to 40 million people in the rural zones of the country from the energy shortfall.

Initially, the contribution of the Netherlands will be used to construct 14,000 biogas plants in Punjab which has the largest potential for biogas and simultaneously this will lay the institutional foundation for the sector.

Speaking at the signing ceremony, Mr Koenders said that the programme will be a step towards reaching Pakistan 's objectives in the field of renewable energy policies and will be, in view of the Copenhagen Summit this month, an important contribution to the reduction of CO2 emissions.

A successful development of a commercially viable biogas sector in Pakistan with an unused potential of five million biogas installations will not only substantially reduce CO2 emissions, but it will in the long run also create thousands of jobs in rural areas, save thousands of hectares of forest, increase agricultural production by using biogas slurry as an excellent fertilizer and it will also significantly reduce the workload of women and improve the health of women and children by giving them access to biogas for cooking, instead of firewood or cow dung.

The Dutch Minister for Development Cooperation held a meeting with the Federal Finance Minister Shaukat Tarin and assured the Netherland's full support to the economic progress in the country.

A Hungarian oil and gas exploration company has announced to conduct drilling activity in March 2010 at the Margalla south block which falls in the federal capital and Rawalpindi district.

Janos Feher, the managing director of MOL Pakistan, told Dawn that the company had completed initial studies, adding large reserves of crude oil are expected in and around the Islamabad territory.

"We plan to start drilling activity in Margalla south block at the end of the first quarter of 2010 and in the north block in the last quarter of next year," Mr Feher said but declined to identify the drilling sites.

"This is not allowed not only due to the security situation but also it is our business secret," he added.

However, sources in the petroleum ministry said the first drilling activity is expected near the airport area, Islamabad .

MOL Pakistan is the operator of Margalla south and Margalla north blocks, covering the federal capital and parts of Punjab and NWFP. It is also a joint venture partner with 30 per cent shares in these blocks.

The company has conducted basic activities in these blocks including environmental studies, G and G studies, 2D seismic acquisition, surface study and the processing and interpretation of 700 kilometres of new seismic lines in both the blocks.

The company expects to discover large reserves of crude oil and substantial quantities of natural gas in these blocks.

"We expect the reserves in Margalla blocks to be equal or may be higher than those in Tal block but these blocks have more oil than gas," Mr Feher said.

However, he declined to identify the findings of the initial studies. MOL is also the operator of Tal block in NWFP which is already producing 250 mmscfd gas and 4,000 barrels oil per day.

MOL signed petroleum concession agreements with the government in November 2006 for Margalla south and north.

The United Arab Emirates (UAE) has decided to go ahead with the construction of a 5-billion-dollar oil refinery in Balochistan, officials said Sunday. The refinery with an output capacity of 250,000 barrels per day was postponed in January, due to the global recession and a row over management issues with Islamabad.

"The major contentious issues have been resolved and the project will soon be kicked off," a senior official of Ministry of Petroleum and Natural Resources said. The Khalifa Coastal Refinery project is a joint venture between the Abu Dhabi state-owned International Petroleum Investment Company (IPIC) and the Pak-Arab Refinery Limited (PARCO), which is jointly owned by Pakistan and Abu Dhabi.

PARCO will hold 24 per cent of shares and IPIC the other 76 per cent in the refinery to be built in the coastal area of Hub. The Pakistani government will own 60 per cent of PARCO's share.

According to the official, who spoke on condition of anonymity, PARCO approved initial funding of 500 million dollars as part of its contribution to start the project.

"Out of this total amount, the PARCO board of directors approved immediate release of 13 million dollars to start subcontracting work related to the implementation of the KCR project," he added.

Mehmood Saleem, a senior official in the Ministry of Petroleum and Natural Resources, confirmed that "the project will hopefully be launched" next month, since PARCO had approved the initial funds.

"Now the IPIC and government of Pakistan will finalise the modalities to kick off the project next month," Saleem told German Press Agency dpa. The proposed refinery will produce energy fuels out of Arabian and Iranian crude oil, and its final cost is expected to go beyond 5 billion dollars partly due to the "foreign exchange component," as well as the project expansion plans.

The Pakistani rupee stood at around 60 to the dollar in 2007, when the agreement was first signed, compared to 83 rupees currently. Ahsanullah Khan, Pakistan 's former ambassador to Abu Dhabi , said in mid-2008 that the cost estimates of 5 billion dollars for the refinery project would "increase substantially."

It includes a 250-megawatt power generation plant, mini port terminal, an electric power grid station, road network and other necessary infrastructure, he said.

M/s Cameron International Corp (CIC), the second-largest US oilfield gear maker, has signed a preliminary agreement for a joint venture with Akbar Associates, a Pakistani oil services firm. This was stated by Syed Asghar Abbas Rizvi, director general of Board of Investment (BoI), at an informal meeting with media held at BoI office here on Thursday.

He said that the agreement was signed during a visit to US by the delegation of the high-ups of the Pakistan 's top oil and gas companies led by Saleem H Mandviwalla, Minister of State/Chairman, BoI. The trip was jointly organized by the US Embassy and the BoI to strengthen ties between two countries.

According to the US Energy Information Administration (EIA), Pakistan 's natural gas production was a modest 1.1 trillion cubic feet in 2008. Despite having one-in-three success rate for the 725 wells that have been drilled to date, the natural resources remain unexplored. Pakistani oil and gas companies are interested to get assistance from US companies for exploring the country's gas potential.

Fauji Foundation is ready, willing and able (RWA) to build LNG import terminal with a storage capacity of 3.5 million metric tons per annum and LNG gasification facility in Pakistan . In a statement issued by the Board of Investment (BoI) here on Thursday revealed that Hamid Rab Nawaz, managing director of the foundation has disclosed it during his recent visit to US, which was led by Saleem H Mandviwalla, Chairman/Minister of State, Board of investment.

He said that Fauji Foundation plans to build LNG import terminal and LNG gasification facility once the Pakistan government makes a request for project and added that the bidding process is going to be taken place in the first quarter of 2010. An LNG terminal would likely be built within a short span of 12 to 18 months, he added.

Furthermore, he said that Ministry of Petroleum and Natural Resources has planned to hold further talks with Anglo-Dutch major Shell to finalise pricing for the supply of LNG to the country as Pakistan is seeking the supply of 3.5 to 4 million metric ton LNG per annum from Qatar through Shell.

Nawaz said that Foundation is also contemplating to hold joint-venture talks with BP or Vitol and added that Shell has 30 percent holdings in the Qatargas LNG project, which is expected to be operational in 2011.

Nawaz was amongst Pakistan energy delegation visiting Houston and New York in an effort to drum up investor interest from integrated and independent companies. The US embassy staff based in Islamabad accompanied the delegation comprising Khalid Rahman, CEO of Pakistan Petroleum Limited (PPL), Irfan Qureshi, managing director of Pakistan State Oil (PSO) and Javed Saifullah Khan, a board chairman of conglomerate Saif Group in a bid to bring investment to Pakistan .

Khalid termed 2010 as a crucial year for striking up joint-venture agreements, saying that the country has been evaluating the risk-reward equation... we have been improving the pricing incentives."

Irfan cited that the circular debt has plagued the Pakistan's oil sector with a long-term solution expected within 90 days and added that it refers to a situation in which the government and its entities default on payments to PSO, which in turn cannot pay refiners and other suppliers.

Sindh Engro Coal Mining Company has been set up to develop Thar Coal on fast-track basis and produce coal-based electricity, it is learnt. The project company is a joint venture between Sindh government and the Engro Powergen Private Limited (EPGL), which would operate within Block-II of the Thar Coal (a coal mine spread over 55kms) and associated mine mouth power station of up to 3,900MW for a maximum period of 30 years, sources told Business Recorder on Saturday.

In this regard, a Memorandum of Understanding was signed between the Sindh government and the Engro Chemicals Limited a few months back with the provincial share of 40 percent. The Sindh government would be responsible for the development of infrastructure such as roads, water, drainage system, electricity transmission line, etc, as per the list presented by the EPGL for the project and share studies being carried out under the World Bank Technical Assistance Programme.

The EPGL would lead all other development-related activities including mining and power generation, they added. The Engro would now purchase the historical exploration data and studies of Thar Coal Block-II, which is presently the property of Shenhua Group of China , they said, adding that the SinoCoal International Group of China would work as the consultant and carry out the bankable feasibility study of Block-II.

Both provincial government and Engro have also requested China Northwest Coalfield Geological Survey Bureau Exploration Design Institute (China Northeast Bureau) to undertake hydro-geological exploration work and desk studies for Block-II, which is a mining area, sources said, adding that the environmental and social impact assessment would be carried out by the Hagler Baillery and SRK (UK), they said.