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News Headlines for the month of
FEBRUARY 2016

YBG, Korean firm sign MoU to develop 215 megawatts power

Yunus Brothers Group has signed a Memorandum of Understanding (MoU) with a Korean company South Eastern Power Company to develop 215 MWs hydro electricity power project. This is a run of the river project titled Asrit Kedam Hydro Power Project at the Swat River. Hong Seok Bin, General Manager KOSEP and Abdul Sattar Jumani, Chief Financial Coordinator, YB Pakistan Limited inked the memorandum. Yoon Tae Hak, CEO Mira Power Ltd and Sultan Ahmed COO Mira Power Ltd was also present on the occasion. Spokesman of Yunus Brothers said, 'it will create job opportunities in the war affected area and will help in the overall economic and social uplift of the area by investing in Corporate Social Responsibility, which is evident from the past history of the group,' he added. He added that the project will help the country in reducing power shortage through cheap renewable resource. It will also reduce dependency on imported fuel and reduce consumption of indigenous natural gas fuel. Hong Seok Bin, General Manager KOSEP said, 'It is a big step towards clean, renewable and sustainable energy. It will also help other investors to move forward in such neglected regions due to earlier security issues. KOSEP is a socially responsible company that operates in accordance with best international practices.' Macroeconomic indicators are improving and foreign investments in such scenario will help creating trickledown effect of economic progress. Experts applauded the project and foreseeing it to be a game changer in targeted area.-PR

Copyright Business Recorder, 2016

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Power projects: government mulling purchasing coal from Indonesia

Pakistan is looking into possibility of procuring coal from Indonesia for its coal-fired power generation projects. A pre-bid conference was arranged in Indonesia's capital Jakarta to procure coal for 1320 mega watt government-owned Jamshoro Power Plant, funded by the World Bank and Islamic Development Bank. A delegation of Ministry of Water and Power led by Secretary Younus Dagha attended the pre-bid conference which was joined by Indonesian coal suppliers and Indonesian Coal Mining Association. Secretary Younus Dagha apprised the Indonesian investors that Pakistan required 15-20 million tons of coal from Indonesia annually once the plants become operational. Dagha was of the view that since Indonesia was the largest exporter of mid calorific value (CV) coal in the world, Pakistan expected from the companies of the brotherly companies to not only supply coal but also help Pakistan in developing Thar Coal reserves and invest in Thar Coal. He informed the Indonesian companies that Pakistan was constructing four coal-fired power plants of over 1000MW each, which would be completed by end of 2017. He expressed interest in importing Indonesian mid CV coal of 4,600 to 6,000 Kcal/kg to generate power. The participants were informed that one power plant was government-owned and three were owned by private sector. CEO of Jamshoro Power Company Limited, Engr Iftikhar Aziz said that 3.5 million tons of 4750 to 6000 kcal/ kg coal was needed from Indonesia annually for that plant alone for which 10 suppliers would be short-listed and also a Coal Supply Agreement would be signed with them. The last date of submission of bid to the Ministry of Water and Power, Government of Pakistan, Islamabad is March 29, 2016. The delegation had meeting with Indonesian Coal Mining Association Executive Director Supriatna Suhala and Vice Chairman. Suhala said the total coal production in Indonesia was estimated at around 425 million tons per year but reduced demand from China had a major impact on the coal price which had plunged to $50/ton. In 2015, coal imports from China fell by 30 percent from last year. "As a result of the low price, Indonesian coal miners have cut production volumes by about 20 percent. The new Pakistani market is a welcome news for Indonesia exporters and we will provide competitive rates to Pakistan." After the conference, Secretary Younus Dagha visited the Pakistan Embassy and exchanged views with Pakistan Ambassador, Aqil Nadeem regarding various aspects of coal import from Indonesia.

Copyright Associated Press of Pakistan, 2016

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CERAD, UET, Chinese company sign MoU

A memorandum of understanding signing ceremony between the Centre for Energy Research and Development, the University of Engineering and Technology and Chinese Zonergy Company was held at the vice chancellor's office on Tuesday. The agreement meant mutual collaboration for development of energy solutions and technologies which are within the domain of mutual expertise and are needed for the country. The purpose is to initiate further collaboration for projects of mutual interest. It also enables Zonergy to train 10 engineers from the University of Engineering and Technology for the Quaid-e-Azam Solar Park in Bahawalpur and CERAD-UET will help the training session. Zonergy Director Ma Yu briefed the audience about the project and how efficiently his company had worked in the field specifically in the Quaid-e-Azam Solar Park. Vice Chancellor Professor Doctor Fazal Ahmad Khalid said, "The friendship between Pakistan and China is so strong and deep that China has continued to help out the latter in every problem. Presently Pakistan is facing a massive energy crisis and China is working on many projects. So, in this regard, this agreement will help fulfil the desired quality human resource for solar project of Bahawalpur." He also talked about a Chinese centre and Chinese language training centres already working at the university.

Copyright Business Recorder, 2016

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Prime Minister opens fully solar-powered ''Green Parliament'' project

Prime Minister Nawaz Sharif on Tuesday launched the fully solar-powered Green Parliament project, making the parliament building world’s first-ever equipped with such facility. The 1.8 megawatt plant has been completed under a grant provided by China as an alternative source of energy to meet electricity needs of the Parliament House. Prime Minister Sharif formally inaugurated the project here at the Parliament House by pressing the button linked to the network of solar panels. Speaking on the occasion, the Prime Minister said Green Parliament project was a milestone in overcoming the shortage of electricity in the country. Nawaz Sharif called upon the public and private sectors to follow the exemplary project and work on similar projects utilizing the solar power. He expressed hoped that the government in its term of office would overcome the shortage of electricity and added he was personally monitoring the ongoing power projects. He thanked China for its support in materialization of the Green Parliament Project and termed it a testimony of the solid friendship between the two countries. The Prime Minister also lauded the efforts of the Chairman Senate and the Speaker National Assembly for taking personal interest in the completion of project. Speaker National Assembly Ayaz Sadiq said the project was a significant addition to the government’s projects of overcoming electricity crisis in the country. He said the solar power plant would meet the building’s power needs and set a precedent for others to switch to renewable sources of energy. Chairman Senate Mian Raza Rabbani, Chinese Ambassador Sun Weidong, ministers and parliamentarians were present. An array of solar panels has been installed in the premises of the parliament building that had also been linked to the national grid to pass on the surplus electricity. The Parliament House has also got the first licence of net metering. The initiative is environment-friendly with no fuel expenses and has also zeroed the electricity bill of the Parliament House.

Copyright Business Recorder, 2016

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Government seeks more investment in renewable energy realm

The current power shortfall in Pakistan reaches up to 6000MW and is estimated to cost the economy more than two percent of GDP each year. With the energy demand growing at about eight percent per annum, it is necessary that other renewable sources are added to the energy mix to prevent further damage. The government, through various incentives such as exemption from income tax, smoother capital flow and 100 percent equity participation, seeks to increase investment in the renewable energy realm. The government has also approved the net-metering policies for encouraging smaller scale renewable energy investments. Inam ur Rahman, CEO Reon Energy Limited, says: "Our current energy mix is heavily reliant on oil, natural gas and coal that makes us susceptible to both economic and environmental damages. With renewable energy especially solar and wind present in abundance, such governmental initiatives shall help make our businesses energy independent and secure from energy price volatility."-PR

Copyright Business Recorder, 2016

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Prime Minister urges Qatari investors to explore opportunities

Prime Minister Nawaz Sharif on Thursday invited Qatari investors to explore investment opportunities in Pakistan with particular focus on energy related projects, infrastructure development, and consumer based industry. The Prime Minister was talking to Chief Executive Officer of Qatar Investment Authority (QIA) Sheikh Abdullah bin Muhammad Al-Thani, who along with his delegation called on him here. Finance Minister Ishaq Dar, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, Special Assistant to the PM on Foreign Affairs Syed Tariq Fatemi and Pakistan Ambassador to Qatar Shahzad Ahmed were also present during the meeting. The Prime Minister invited Qatari Petroleum and Gas Companies to invest in Oil and Gas exploration and production sector of Pakistan. He said Pakistan is an agricultural country having vast fertile lands and invited Qatari businessmen to invest in the agriculture and livestock sector. The Prime Minister said Pakistan was wholeheartedly focused on expanding its physical infrastructure such as roads, railways, educational institutions, hospitals and industry, adding Pakistan offered most attractive incentives for FDI in those fields. The Prime Minister expressed his satisfaction at the progress made during the recent visit of a delegation of Nebras Power to Pakistan. A delegation from Nebras Power, an investment company in power sector, working under the overall umbrella of Qatar Investment, conducted due diligence in Pakistan in September 2015 in connection with LNG based power projects. CEO Qatar Investment Authority Sheikh Abdullah bin Muhammad Al-Thani lauding the liberal economic policy and favourable environment for investment in Pakistan said that Qatari investors would explore the vast economic opportunities in diverse fields in Pakistan.

Copyright Associated Press of Pakistan, 2016

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3 RLNG-fired power plants: Nepra withdraws upfront tariff

In a surprise move, National Electric Power Regulatory Authority (Nepra) has withdrawn upfront tariff for three RLNG-fired power plants on technical grounds, saying that since the efficiency of the three RNLG projects has different specifications, universal upfront tariff is not applicable. The Authority on April 3, 2015 determined and announced upfront tariff for RLNG-based new power projects on petition filed by Private Power and Infrastructure Board (PPIB) for determination of upfront tariff for new capacity generation on RLNG fuel. Nepra had approved upfront tariff of Rs 15 per unit for 1200 MW RLNG -fired project. The decision was intimated to the Federal Government for notification in the official Gazette which has not yet been notified. Ministry of Water and Power (MW&P) filed a motion for leave to review against the decision of the Authority requesting the review of the upfront tariff for RLNG-based new power projects on the following grounds: (i) provision of simple cycle operation; (ii) additional cost relating to gas compressors; and (iii) Quaid-e-Azam Thermal Power (Private) Limited (QATPPL), wholly-owned by Punjab government, also filed a motion for leave to review against the referred decision of the Authority requesting the review of the upfront tariff for RLNG-based new power projects on the following grounds: (a) increase financial close period ;(b) increase in construction period ;(c) backup fuel;(d) calculation of RLNG price and ;(e) increase in O&M cost. Engro Powergen Limited (EPL) also filed a motion for leave to review against the decision of the Authority requesting review of the upfront tariff for RING based new power projects on following ground. While the proceedings were in process, National Power Parks Management Company (Pvt) Limited (NPPMCPL), wholly owned by the federal government, initiated a competitive bidding for its two proposed RLNG based power plants of approximately 1200 MW each at Havali Bandur Shah, Jhang and at Balloki in the province of Punjab. The bidding results appeared in newspapers. NPPMCPL achieved very competitive EPC prices and thermal efficiencies for each of the proposed plants. As and when that information was revealed, the Authority decided to withhold further proceedings for the reason that the assumptions which formed basis of previous tariff changed altogether. Accordingly, NPPMCPL was asked on August 28, 2015 to file bidding information and results with NEPRA. NPPMCPL in its letter of September 3, 2015 submitted the following: "It may be noted that the EPC Contracts for the LNG Projects have not been awarded. In one case, financial bid has not even been opened. Moreover, these projects are being established under Nepra''s upfront tariff regime. Therefore, EPC and other project costs are not relevant for an already determined upfront tariff. In case we opt for the cost route it would convert the tariff regime from an upfront tariff to a feed-in (cost-plus) tariff regime." On February 9, 2016, Nepra heard a review request of the QATPPL for its proposed RLNG-based power plant of 1200 MW at Bhikki. Nepra maintains that it analysed the available information and determined that all the three projects have different capacitates with different EPC and LTSA costs, besides all the three projects have been guaranteed different thermal efficiencies ranging from 61.59% to 62.45%. The analysis clearly indicates that the evidence provided by PPIB and underlying assumptions on which upfront tariff was determined has materially changed which rendered the existing upfront tariff redundant. Therefore the Authority has decided to withdraw its upfront tariff determination of April 3, 2015 intimated to federal government for notification in official gazette and review proceedings were disposed of accordingly. Nepra had approved upfront tariff of Rs 15 per unit for RLNG-fired projects and allowed an additional cost of Rs 129 billion.

Copyright Business Recorder, 2016

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Pakistan, Qatar sign four MoUs

Pakistan and Qatar on Wednesday signed four Memoranda of Understanding (MoUs) including a long term LNG Sales and Purchase Agreement, cooperation in the fields of Radio and Television, Health and Academic Research activities. The signing ceremony was also witnessed by Prime Minister Nawaz Sharif and Emir of Qatar Sheikh Tamim bin Hamad bin Khalifa Al-Thani. The first MoU about cooperation between the two countries in radio and television was signed by Special Assistant to the PM on Foreign Affairs Syed Tariq Fatemi and Foreign Minister of Qatar Muhammad bin Abdurrehman Al-Thani. The MoU on cooperation between the two countries in health sector was signed by Finance Minister Mohammad Ishaq Dar and Qatari Health Minister Hanan Muhammad Alkwari. Both the countries signed Acknowledgement of Long-term LNG Sales and Purchase Agreement between Qatar Petroleum and Ministry of Petroleum and Natural Resources of Pakistan. The document was signed by Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi and Chairman Qatar Gas Board of Directors, Saad Sharida. While a Memorandum of Understanding in Academic Research and Cooperation Activities between the two countries was signed by Pakistan Ambassador to Qatar Shahzad Ahmed and Commander of Strategic Studies in Qatar Armed Forces Staff Major General Saud Ali Alnaeemi. Earlier, when Prime Minister Muhammad Nawaz Sharif and his delegation arrived at Doha International Airport, they were given a warm welcome. Prime Minister of Qatar Sheikh Abdullah bin Nasir bin Khalifa Al-Thani warmly received the Prime Minister and his delegation at the airport. Two children attired in traditional dress presented him bouquet. Later, the official receiving ceremony was held at Diwan-e-Emiri where the Emir of Qatar received the Prime Minister and his delegation. Guard of Honour was presented to the Prime Minister on arrival at the palace. Prime Minister Nawaz Sharif and Emir of Qatar Sheikh Tamim bin Hamad bin Khalifa Al-Thani reviewed the guard of honour. Both the leaders also held one-on-one meeting and exchanged views on regional and international issues of mutual interest while delegations level talks were held followed by signing of the MoUs. The main focus of the Prime Minister's visit and interaction with the Qatari leadership is to enhance bilateral relations in various fields including energy cooperation, trade and investment, defence and increase in employment opportunities for the Pakistani workforce in Qatar. The Emir of the State of Qatar paid a visit to Pakistan on March 23-24 last year. This return visit by the Prime Minister in a period of less than one year is a testimony of growing relations between the two brotherly countries. Qatar hosts more than 115,000 Pakistanis, who have been contributing towards the development and prosperity of the country and act as a bridge between the peoples of two brotherly countries. Pakistan gives great importance to its ties with Qatar. The two countries enjoy friendly and fraternal relations marked by close cooperation. Both sides share perception on various regional and international issues.

Copyright Associated Press of Pakistan, 2016

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Norwegian firms interested in power sector: envoy

The Norwegian ambassador has revealed his country's companies interest in planning to invest in Pakistan, especially in the power sector. Diplomat Tore Nedrebo, talking to the Lahore Chamber of Commerce and Industry Senior Vice President, Almas Hyder, on Monday, did tell the LCCI to help identify areas of common interest. A Norway-based company named the Telenor Group is already providing employment to 4,000 to 5,000 people in Pakistan. The group is an international provider of voice, data, content and mobile communication services in 13 markets across Europe and Asia and an additional 17 markets through its ownership in VimpelCom Ltd. Telenor started out as a public company in 1855. "There is a need to make more concerted and sector-specific efforts to enhance the economic cooperation between the two countries and Norway is ready to take all steps to expand its ties for socio-economic development of the country," the diplomat added. Senior Vice President Hyder said, "Pakistan is well positioned to take off as economic indicators are portraying an encouraging picture. The growth rate is expected to reach between six and eight percent in 2018. Therefore, businessmen of Norway should come forward and avail of the opportunities through joint ventures with their Pakistani counterparts. "Pakistan is a huge market and this is high time foreign investors taped a huge potential and take full advantage of the investment-friendly policies of the regime. The Lahore Chamber is ready to extend maximum cooperation to the businessmen of Norway." He went on, "The total mutual trade volume fell from $78 million in 2012 to $69 million in 2014. The trade figures of the last three years suggest that both countries must jointly make efforts to reverse the declining trend. A direct interaction between the two business communities can make it possible to cause quantum jump in trade figures. "Pakistan's exports to Norway include bed linens, articles of apparel & clothing, rice, sports goods and hosiery items. Pakistan's imports from Norway are limited to polymers of ethylene & vinyl chloride and some natural polymers in primary forms. Other items include electrical equipment and scrap of iron and steel." He then went on to talk about the China-Pakistan Economic Corridor, claiming it had opened up new opportunities of trade and investment in Pakistan. He also urged the diplomat to play role in projecting Pakistan as a good market for international buyers and investors.

Copyright Business Recorder, 2016

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US experts to help Pakistan modernise grid system: Jonathan

Praising Pakistan's focused efforts to surmount its energy shortage, US Assistant Secretary for International Affairs Department of Energy Jonathan Elkind Monday said American experts would help use its energy more efficiently by modernising its electric grid system. Briefing a group of reporters here at the embassy, Elkind, who along with energy experts was here to talk to their Pakistani counterparts in the sector, said the United States would be helping Pakistan under a $3 million project, which was meant to build its capacity in efficient use of energy. "A well-functioning energy sector is the very bedrock on which the rest of the economy in any country is based. We think a very high degree of focus that the Government of Pakistan has placed on the energy sector is appropriate," he said. The US was "proud of the progress" that had been made in Pakistan in the energy sector, he said, adding much more needed to be done in terms of development of this sector. Replying to a question, he said under the energy capacity building project, the US energy experts would assist Pakistan to attract both domestic and international investors as well. "We hope to work very closely with Pakistani counterparts to help Pakistan resolve the remaining issues in the energy sector." An efficient use of energy, he said, would help Pakistani companies produce cheaper goods. "The engagements that we are doing, there is an ambitious target also for the US-Pakistan energy partnership. We think that there is more than enough investors' interest from a number of different sources, including from the United States. Investors are looking for predictability in their treatment in a regulatory choice structure under which they would operate. And we think that there is very good reason to be optimistic about those investments" if one looked at the kind of changes and improvements mad e by the government in a last couple of years. To a question on Pakistan-Iran gas pipeline, Jonathan said international sanctions imposed on Iran had been lifted, which was a positive step and that certainly had made the conditions favourable in import of the natural gas from Tehran. However, he said there were still certain sanctions, which were in place against Iran in terms of using the US legal and financial system. He refused to further comment on the issue when questioned whether it would invoke the US sanctions if Pakistan and Iran went ahead with the multi-billion dollar gas pipeline. Jonathan said the prices of many clean energy technologies had come down drastically as a consequence of research and their broad application. He stressed the need on having a diversified mix fuel strategy and having a back up generating system to keep the wheel of the economy running. For instance if there was no sun, solar panels would not work. If there was no wind, wind energy would not be available hence diversification was an answer to deal with such situation, he added. Questioned on Pakistan making a choice for using its coal reserves to generate energy, he said even the US was using it for production of energy. However, over the years coal's share of US energy mix had decreased significantly due to availability of inexpensive domestic natural gas and its negative environmental impact.

Copyright Associated Press of Pakistan, 2016

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Co eyeing $400 million foreign financing for coal-fired power plant

Siddiqsons Energy Limited (SSEL), a power venture of Siddiqsons Group, is seeking foreign financing of up to $400 million for its 350 megawatts (MW) coal-fired power generation plant at Port Qasim. The SEL management, therefore, expects the federal government to include its state-of-the-art multimillion dollar power plant in China-Pakistan Economic Corridor (CPEC) under which some energy related projects are being financed by the Chinese financial institutions. Its cost totalling at $520 million with debt to equity ratio of 75:25, the total debt comes out to around $390 million. "UBL has arranged all the financing required so we are not dependent on the foreign financing. But we would like to help government control dollar outflows by arranging a foreign loan," A. Rahim Rafi, SSEL chief executive officer, told Business Recorder. The country's foreign exchange reserves stand at $20.5 billion (as of January 22). The CEO said all the efforts of trying to come in CPEC are for macro-economic reasons only. "On a project level, we are well positioned to achieve Financial Close within this fiscal year. We don't want to harm the project as well. The win-win situation is that we do achieve the Financial Close by June, 2016 by coming in the ambit of CPEC financing," said Rafi. Talking about the importance of local equity investors, he suggested: "We should focus on foreign loan and local equity. Foreign equity investment causes a continuous stream of dividend payout over the next 30 years". Also, he said, the foreign investors needed exit sometime and almost all foreign investors in the power generation sector had exited. "When they exit, they cause a lot of pressure on rupee". Equity, on the other hand, increases in value over time. "Hubco share was Rs 10 at inception and now it trades at Rs 100 while loan does not appreciate in value," the executive said. Asked why China? "Because Chinese financing is easy as long as a project is in the list of CPEC projects. No other country in the world finances coal projects," he replied. About the economy of coal-based electricity, the SSEL executive said coal was one of the cheapest sources of power generation which also could cater to the base load. The cost of coal power, he said, ranged from $0.07 to $0.08 per KWH. "The project is at the port making coal logistics smooth and environment friendly," he said. SSEL would be selling 350MW (gross) electricity to National Dispatch and Transmission Company (through Central Power Purchase Authority under a 30-year Power Purchase Agreement. Rafi lamented that the use of coal as a fuel for electricity generation in Pakistan stood at less than 0.1 percent against the world's 40-50 percent. Calling himself a front-runner in the locally owned coal-based power generation, he said his company was the only local Independent Power Producer. Warning that electricity demand in Pakistan would climb to more than 100,000MW by 2035, Rafi said in next 10 years the country would not only have to multiply power generation but also upgrade the existing broken transmission and distribution network. International Energy Agency in one of its publications, World Energy Statistics 2011, said average per capita electricity consumption in Pakistan is one-sixth of the world while average per capita electricity consumption stood at 451 kWh compared to the world's 2,730. Aiming to produce low-cost electricity through using untapped fuels like coal, SSEL is developing one of the country's maiden imported supercritical coal-fired power plants at the country's second largest seaport. To be completed in 36 months, the "environment-friendly" plant is being built under the upfront tariff regime prescribed by National Regulatory Electric Power Authority on June 26, 2014.

Copyright Business Recorder, 2016

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2,320 megawatts energy projects in Southern Punjab: two accords signed with Chinese, Danish companies

Two separate agreements were signed between Punjab Government and Chinese and Danish companies for setting up 2320 megawatt energy projects in South Punjab Chief Minister Shahbaz Sharif was the chief guest. Under the agreement signed between Punjab government and Danish wind power generation international company VESTAS will set up four wind power plants of 250 megawatt each at Rajanpur in South Punjab whereas under the second agreement, renowned Chinese Company Hauneng Shandong will set up two coal power plants of 660 megawatt each at Rahimyar Khan. The Chief Minister gave Letter of Intent to Vice President of VESTAS. Gerard Carew with regard to the agreement of one thousand megawatt energy project between Punjab government and Danish company VESTAS, under which four wind power projects of 250 megawatt each will be set up in South Punjab on which an investment of 2 billion dollars will be made. Talking to the media men Shahbaz Sharif said that last year it was announced that there are vast opportunities of generating energy in south Punjab and sites had been identified where plants of generating electricity through wind could be set up, former Danish Ambassador in Pakistan Jesper Moller Sorensen had extended cooperation for identifying wind corridor. He said the wind corridor was identified with the cooperation of world renowned company VESTAS for which we are thankful to Danish company for providing free assistance in this regard. As a result of these efforts, a big achievement has been made with regard to one thousand megawatt wind power project between Danish Company VESTAS and Punjab government. Political Director of Ministry of Foreign Affairs of Denmark Jesper Moler Sorensen who served as ambassador in Pakistan from 2013 to 2015 addressing the function said Pakistan is coming as a surprising market for Danish companies in energy sector and is marching forward in the field of renewable energy where Danish companies are very strong. He said that technical abilities of VESTAS were introduced to Punjab government one and a half years ago and Denmark is ready to provide more technical assistance to Punjab government in renewable energy sector. He said Danish government has planned to transfer Danish expertise in wind policy, technical field and financing sector to concerned Pakistani stakeholders. 2018 is the target of starting commercial operation from first 250 megawatt project. Vice President of VESTAS Jerad Cereu addressing the ceremony said that VESTAS provides wind energy to 74 countries and it has provided jobs to 19500 people. VESTAS has set up 52 percent more megawatts than others in the industry and the projects of 71 gegawatts have been set up all over the world. VESTAS is committed to play important role in the increasing market of Pakistan, he added. Provincial Ministers Sher Ali Khan, Ayesha Ghous Pasha, Chairman Planning and Development and other officials were also present on this occasion. Earlier, an agreement of 1320 megawatt coal power plant was signed between Punjab government and Chinese company Hauneng Shandong, an investment of two billion dollars will be made on this project. Under this agreement, Chinese company will set up two coal power plants of 660 megawatt each in Rahimyar Khan. Secretary Energy Asad ur Rehman Gilani signed on behalf of Punjab government and President of Chinese company Wang Wen Zong on behalf of his company. Speaking on the occasion Shahbaz Sharif said that the agreement of 1320 megawatt between Punjab government and Chinese company is a good omen. The Punjab government will provide all possible facilities for implementing this project. He said that Sahiwal coal power project is being forwarded expeditiously and 50 percent construction work has been completed. The Chief Minister said that a new history of speed, transparency and high standard is being written in Sahiwal coal power project. He said that Chinese companies have made investment of 1.8 billion dollars in the project. this project of China Pakistan Economic Corridor will be helpful in removing darkness from Pakistan. Shahbaz Sharif said that Punjab government and federal departments are working with devotion and dedication on energy projects. Railways, Port Qasim Authority and NTDC have assured to complete their respective work within stipulated period. The Chief Minister said that work is continuing on 1320 megawatt coal power plant in Sahiwal. He said that the work was started on this project six and a half months ago and 50.8 percent construction work has been completed so far.

Copyright Business Recorder, 2016

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Development of Thar coal power plant top priority: Ahsan

Minister for Planning, Development and Reform Professor Ahsan Iqbal said development of the Thar coal power plant is top priority of the government, which with 175 billion tonnes of coal would produce 5,000MW annually for 400 years. He said this while chairing a meeting held here on Tuesday to review progress of coal gasification project in Thar. Dr Samar Mubarak Mand, who is heading the project, briefed that the syngas purification plants, eight power generators and horizontal directional drilling machinery had been installed, while power production of five MW had started in May 2015. He mentioned that eight more generators and other machinery would be installed in the near future. The Minister asked about the financial modelling, cost calculations and evaluation of the scientific model for making the project commercially viable after validation of its technological model. Dr Mand informed 322 million cubic feet gas could be produced along with other useful materials, including diesel. He clarified that the plant was not emitting environmentally hazardous gases in the air since the whole process was being done underground. The Minister desired that the commercialisation feasibility be prepared, and said the private or public investment could be made available for the project if it was found commercially feasible. "Since the prototype has been developed and functional, and now a business model must be prepared. In order to dispel any negative perception about the project, we must have a scientific validation of the project by a panel of eminent experts," he said. The Minister assured to visit the site at the earliest to see the processes of generating gas and electricity. Professor Ahsan Iqbal said Pakistan had very talented engineers who could find solutions to problems in a cost-effective manner. "The government is focusing on developing strong technological base for future knowledge economy of Pakistan," he said.-PR

Copyright Business Recorder, 2016

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Government signed 15-year LNG supply deal

Pakistan said on Wednesday it had signed a 15-year agreement to import up to 3.75 million tonnes of liquefied natural gas a year from Qatar, a major step in filling Pakistan''s energy shortfall. The deal, Pakistan''s biggest, will help the country add about 2,000 megawatts of gas-fired power-generating capacity and improve production from fertiliser plants now hobbled by a lack of gas, a government official said. "This is a huge and significant achievement because this diversifies Pakistan''s energy mix," the official said. "This is the single largest commercial transaction that Pakistan has entered into." Supplies will start in March, Qatar''s state news agency QNA said. They will eventually come to around five LNG cargoes per month, the official said. Pakistan, a nation of 190 million people, can only supply about two-thirds of its gas needs. The ruling party, which campaigned on promises of resolving the energy crisis, wants to ease shortages by expanding LNG shipments before a 2018 general election. The deal signed between Pakistan State Oil company and Qatari''s Qatargas-2, the world''s biggest LNG producer, was witnessed by Pakistan''s Prime Minister Nawaz Sharif, the official said. According to the statement, LNG arriving in any particular month will fetch 13.37 percent of the preceding three-month average price of a barrel of Brent crude oil. A price review is permitted 10 years after the start of supply. A cancellation option could shorten the deal to 11 years if the parties fail to agree a new price. A period to build up supply is provided for. Spot LNG prices are trading at multi-year lows of $5.75 per million British thermal units (mmBtu). Pakistan, along with Egypt and Jordan, was a newcomer to the LNG import market in 2015, helping drive up demand and absorb growing world supplies from a wave of new projects. Pakistan''s first floating import terminal got its first spot imports last April and has import capacity for around 4.4 million tonnes of LNG per year. The country has also tendered for a second terminal, which should be operational by mid-2017. In 2016, Qatargas, the world''s biggest LNG exporter, will supply 2.25 million tonnes, followed by a ramp-up to 3.75 mt/year from the second quarter of 2017. Under the take-or-pay deal, Pakistan retains flexibility to reduce or raise Qatari LNG intake by three cargoes per contract year. APP adds: Pakistan and Qatar on Wednesday inked an agreement on supply of around US one billion dollars worth of Liquified Natural Gas to Pakistan annually to help the country meet its energy shortfall. The agreement on Long Term LNG Sale and Purchase was signed during the Prime Minister Muhammad Nawaz Sharif''s two-day visit to Qatar. Minister for Petroleum Shahid Khaqan Abbasi and Chairman of Qatargas Board of Director Saad Sherida Al-Kaabi signed an agreement at a ceremony at Diwan-e-Emiri. Under the agreement the price for each LNG cargo in a particular month has been agreed at 13.37% of Brent, where Brent value is average of the preceding three months Brent value. According to details of the Long-Term LNG SPA with Qatargas the Qatar Liquified Gas Company Limited would sell Pakistan State Oil Company Limited, LNG for a period from 2016 to 2031. The annual Contract Quantity for 2016 has been agreed at prorate of 2.25 mt, for 2017 Q1: prorate of 2.25 mt, and for 2017 Q2 to 2031: 3.75 mtpa. The Long-Term LNG SPA also provides for annual upward and downward flexibilities upto three LNG cargoes per contract year. Downward flexibility can be accumulated for two contract years. The payment terms state that PSO would make payment 15 days after completion of unloading. Pakistan is currently facing a severe shortage of natural gas for its electricity generation and industrial use and estimates put the supply-demand gap at around 2 to 4 bcfd. Minister for Petroleum later told media persons that the import of LNG from Qatar would boost Pakistan-Qatar ties. He said LNG from Qatar was being purchased at the best available rates and would help start production of 2000 MWs of electricity from power houses that were currently not operational. The Petroleum minister said under the agreement Qatar would provide around $1 billion of LNG annually to Pakistan that would meet 20 per cent requirements of the country. He said the deal would help the country get out of its energy crisis and provide 35 million tons of LNG. He said it would also help provide gas for the fertiliser factories and domestic users. The Economic Co-ordination Committee of the Cabinet (ECC), authorised negotiation with Qatargas for import of LNG upto 500 mmcfd in July 2013. In August 2014, the ECC constituted LNG Price Negotiation Committee (PNC) comprising Secretary Petroleum as Chairman, Representatives of Finance Division, Water and Power and BOI, Managing Director SNGPL, Managing Director SSGCL, Managing Director PSO and Managing Director ISGSL (Secretary Committee). The Price Negotiation Committee after a series of meetings with Qatargas finalised the price and key commercial terms of the Long Term LNG SPA with Qatargas. The ECC in its meeting held in January 13 accorded, in principle, approval to the recommendations made by PNC and also allowed PSO as Buyer to execute the Long-Term LNG SPA with Qatargas as Seller. Under the agreement the two sides can review the price once after the 10th anniversary of the start date. "And if it fails either party may terminate the SPA with effect from the end of the contract year in which the termination notice was served in which case the supply period can be as short as 11 years," the agreement said. According to the details available Qatargas has a cap on port charges at US $320,000 per shipment. Port charges over and above of that will be paid by PSO. PQA charges are presently around USD 750,000. The price comparison provided by the Ministry of Petroleum at $40 Brent states: The prices mentioned above are based on last three months of Brent average of US $40.

Copyright Reuters, 2016

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Chinese group to invest $100m in mining sector

A Chinese industrial group, Kirrich Corporation, has announced to invest $100 million in mining sector of Pakistan. This was stated by the Chief Executive Officer of SME Business Solutions Ltd, Wali Ullah Khan at a ceremony of providing services to the Chinese investors in Pakistan. Wali Ullah Khan said that Kirrich Corporation of Beijing would have a network of mineral exploration mainly in Punjab province which possessed many natural resources and minerals especially gypsum, iron ore, lime stone, silica, China Clay, Dolomite, coal, rock salt, chalk and bauxite. The delegation from Kirrich Corporation led by its Director, Ma Qui Yun, has also visited the office of SME Business Solution and signed an MoU on behalf of her company. Motia Junejo, the local director of the Chinese investors and CFO/Company Secretary of SME Raeel Fatima were also present on the occasion. According to agreement, SME Business Solution would provide Corporate and legal services to Kirrich Corporation in Pakistan. Ma Qui Yun said on the occasion Pakistan is the land of opportunities and Punjab region has mineral resources in abundance and only an affective mining is required to exploit these rich resources.

Pak Observer News

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Iran can supply cheapest gas, power to Pakistan, says Iranian envoy

Mehdi Honardoost, Ambassador of Iran to Pakistan has said that Iran can supply cheapest gas and electricity to Pakistan while Pakistan was working with Iran on some projects to import electricity. He said that Iran was ready to give more facilities to Pakistan for materialisation of gas pipeline project. He said Iran has 15 neighbours and it preferred to strengthen trade and economic relations with Pakistan as both countries are one nation. According to a press release he stated this during an interaction with business community at Islamabad Chamber of Commerce and Industry.He urged the Pakistani private sector to set up efforts for promoting trade with Iran as both neighbours have immense potential to enhance two-way trade in many areas. He said that Iran-Afghanistan bilateral trade was over $2 billion but Pak Iran bilateral trade of around 270 million was very low despite huge potential and businessmen of both countries should become active to fully realise the available untapped trade potential. He said that after the lifting of sanctions Iran was poised to undertake many infrastructure development projects while lot of European companies were visiting his country to explore business opportunities. However he said time was ripe for Pakistani investors to focus on mega projects in Iran otherwise others would grab such opportunities.He said ICCI should take a delegation to Iran to explore new avenues of cooperation as private sectors of both countries have to take the lead to promote bilateral trade. He assured that his Embassy would extend all possible cooperation to ICCI delegation for making its visit productive. In his address Atif Ikram Sheikh President Islamabad Chamber of Commerce and Industry said Pakistani businessmen were interested in promoting trade with Iran however lack of direct flights between Islamabad and Tehran, lack of Pakistani banks branches in Iran and vice versa, high import tariffs of Iran on Pakistani exports, Iran’s import permit system and non tariff barriers etc. were the major hurdles in promoting bilateral trade. He said if these issues were resolved bilateral trade between Pakistan and Iran could go up to $5 billion in the next few years.He said that Pak-Iran preferential trade agreement should be activated and both countries should facilitate businessmen in holding single country exhibitions. He said both countries have the potential to compliment economies of each other in many areas including tourism and they should encourage holding of regular meetings of Joint Border Trade & Joint Trade Committees.He said both governments should focus on opening of additional crossing points on Pak Iran border that would help in improving bilateral trade. He assured that ICCI would consider taking a trade delegation to Iran to find out business match makings.

The News

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OGDCL discovers hydrocarbons in Nashpa Block

The Oil and Gas Development Company Ltd (OGDCL) together with its joint venture partners — the Government Holdings Private Ltd (GHPL) and Pakistan Petroleum Ltd (PPL) — has discovered crude oil and gas in Nashpa Well X-5, district Karak, Khyber Pakhtunkhwa. The OGDCL stated in a stock-filing on Thursday that the structure of Nashpa Well X-5 was delineated, drilled and tested using in-house expertise. The well was drilled down to the depth of 5,056 metres, targeting to test the hydrocarbon potential of Shinawari, Lumshiwal, Samanasuk and Lokhart formations. The Lokhart formation successfully produced 1,032 barrels per day crude and 0.78 mmscfd gas through 32/64” choke at a well head flowing pressure of 600 psi. “The discovery will add significant hydrocarbon reserves base of OGDCL, PPL, GHPL and the country,” the OGDCL said, adding that the completion strategy would be finalised based on bottom-hole data. In a separate statement, PPL confirmed the discovery in Nashpa X-5 and said that it has 28.55pc working interest in the block. Oil sector watchers said that OGDCL has the major interest of 56.45pc and GHPL has a 15pc stake in the joint venture. Energy sector analysts at brokerage Arif Habib Ltd stated that as per the latest drilling report, OGDCL was exploring for hydrocarbon presence in Kup-1, Loti Deep-1, Surqamar-1 and Shawa-1. PPL had meanwhile plugged and abandoned its exploration ventures in Lakki-XI coupled with Hadi X-1. “Both (OGDCL and PPL) also hold stakes in TAL block whereby the operators are involved in exploring three wells (Tolanj South-1, Makori Deep-1 and Tolanj West-1),” analysts said.

Published in Dawn, February 5th, 2016

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Japan to give $43m loan for energy sector reforms

The Japanese government on Tuesday announced to provide a concessional loan of $43 million (Rs5 billion) to Pakistan for the second phase of energy sector reforms programme. The development policy credit for which the agreement was signed is part of the ‘Energy Sector reform Programme’, co-financed by the Asian Development Bank, the World Bank and the Japanese government. The Japanese government had provided last June a loan of similar amount for the first phase of the programme. The ADB, World Bank and the Japanese government have worked with the government to develop a reform programme and set agreed policy targets to manage tariff and subsidy; improve sector performance and open the market to private participation; and improve accountability and transparency in the energy sector. The loan was facilitated to achieve the targets by the government. Briefing a group of newsmen, Takashi Harada, Counselor of Economic and Development at the Japanese Embassy, said: “Our first year target has been achieved, and now we move to the second year of the project with the fresh loan.” About the structural problems facing the project, Mr Harada opined that the government needs some time to overcome the difficulties. The Japanese government believed that the reform programme would not only promote the energy sector reforms but also improve the government’s fiscal situation and stimulate economic activities. Notes for the second loan were signed and exchanged between Ambassador of Japan, Hiroshi Inomata and Secretary Economic Affairs Division, Tariq Bajwa. In his remarks, Ambassador Hiroshi Inomata applauded the government’s efforts towards the energy sector reforms. “The government of Japan expects the energy sector reforms will contribute to the economic stability of Pakistan as it is the highest priority of the government of Pakistan to resolve the energy issues, and we recognise that the energy sector reforms will unleash the huge economic potential of Pakistan,” he said. The Japanese government intends to continue providing necessary assistance to Pakistan in the energy sector, while closely monitoring the progress of the reforms in coordination with other development partners, he said. Speaking on the occasion, Mr Tariq Bajwa thanked the government of Japan for extending their timely development support to the efforts of Pakistan government to address the ongoing energy crises in the country. Furthermore, this loan is expected to contribute to efficient production of electricity and energy conservation, so as to mitigate the emission of greenhouse gases from the energy sector. Japanese Prime Minister Shinzo Abe has recently pledged to provide 1.3 trillion yen of public and private climate finance in 2020 to assist developing countries including Pakistan at COP 21 in Paris. Japanese government will cooperate with the Pakistan government for a fair and effective international framework in which all countries will participate to achieve the below 2C objective. Representative of Japan Inter¬national Cooperation Agency, Kenji Ogasahara told newsmen that a feasibility study has been completed for setting up of a new 660MW Lakhra coal project. The cost of financing of the project is yet to be determined but 80 per cent requirement of the project will be imported while remaining 20pc will be from domestic coal reserves.

Published in Dawn, February 3rd, 2016

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Import of 6 LNG cargoes legalized by ECC

Economic Co-ordination Committee (ECC) of Cabinet has legalised import of six cargoes of Liquefied Natural Gas (LNG) arranged by Pakistan State Oil (PSO) from Qatargas on government-to-government on FoB bases, on board FSRU in spite of OGRA disagreement on price of four cargoes, official sources told Business Recorder. Ministry of Petroleum & Natural Resources has revealed that while considering its summary of January 12, 2016, a committee was constituted to examine legal and commercial aspects of four proposals which are as follows: (i) MSPA on FOB/ DES with Qatargas Operating Company may be approved; (ii) section 3.2(a) of the LNG Policy 2011 provided that procurement of LNG by the LNG buyer(s) will be undertaken through direct negotiations with one or more LNG suppliers for a reasonable time to be determined by OGRA. In view of this section of LNG policy, OGRA be directed to approve the terms of the SPA; (iii) the port charges in excess of $320,000 (being the maximum payable by QG2 under the SPA) will be invoiced in the DES price and will form part of price of RLNG/swapped gas as determined by OGRA and notified by PSO; and (iv) since SSGC has already entered into LNG Services Agreement for receiving, storage and re-gasification of LNG with EETPL, therefore PSO will not be required to enter into such arrangement/agreement. The committee was asked to submit a report within ten days. Accordingly, the committee held its meeting on January 20, 2016 and recommended that Ministry of Petroleum & Natural Resources may place a separate summary before the ECC for obtaining ex post facto approval for procurement of LNG cargoes by PSO from Qatargas signifying its relevance with the Master Sale Purchase Agreement (MSPA). According to the Petroleum Ministry under the LNG Service Agreement (LSA), SSGC was obliged to pay capacity charges from the commissioning date of the terminal, therefore, it was considered expedient to start import of LNG to synchronise with commissioning of terminal for optimal utilisation of re-gasification facilities. So far, PSO has imported 18 cargoes, out of which first six cargoes were procured from QG2 under the G to G agreement. It was further explained that on June 6, 2015 the ECC had decided that PSO, being a commercial entity, has the autonomy to import LNG either on FOB or C&F basis and take appropriate decisions for import of the LNG at its own level. The ECC, however, directed that the PSO must keep commercial prudence and provision of the relevant rules and regulations in view while making such decisions. The Ministry further stated that on March 14, 2015, the ECC had allowed PSO to bring a commissioning cargo on board the FSRU on FOB basis. For this purpose PSO entered into FOB MSPA with Qatargas and signed confirmation notice for one cargo on March 19, 2015 for Pak Arab Fertilizer on board the FSRU on FOB basis which arrived at Port Qasim on March 26, 2015. Moreover, in the first week of April, 2015, the Qatargas revealed that Port Qasim was not yet ready to receive Q-Flex whereas the commissioning cargo was expected to be fully re-gasified by mid-April, 2015 and the terminal was entitled to receive a daily capacity charge. Various alternate options both in terms of tenders and Government to Government arrangements were examined by the consultants. As potential options were severely limited given the time constraints, five more LNG cargoes were procured from Qatargas on FOB basis using FSRU as LNG carrier under the confirmation notices signed on April 15, 2015 (for 4 cargoes) and July 2, 2015 (for 1 additional cargo). Out of these, one cargo received on May 11, 2015 was supplied to Pak Arab Fertilizers whereas other four cargoes were sold to SNGPL as per the arrangements between PSO, SSGC and SNGPL. The average slope on delivery ex-ship basis was worked out at 13.36% of Brent for five cargoes while the slope for the remaining 12 cargoes procured through tendering process worked out at 14.5008% (on average) of Brent. For commissioning cargo, the price included freight, boil of gas, loading port charges and gassing of FSRU. It was further explained that the Qatargas had offered (14.30% of Brent) under long term sale purchase agreement on January 30, 2015 and on June 4, 2015 (13.90% of Brent) during which FOB cargoes were contracted. It was further stated that the MSPA was an umbrella document which set out general terms and conditions without creating any binding sale and purchase obligations on the parties. The cargoes sourced from Qatargas were delivered on March 26, 2015, April 24, 2015, May11, 2015, May 28, 2015, June 15, 2015 and July 9, 2015. Out of these six cargoes, two cargoes were delivered to a private customer. The PSO took up the matter with OGRA for price determination of four cargoes but the latter did not agree. The MoI&P requested the ECC for grant of ex-post-facto approval in respect of six cargoes arranged by PSO from Qatargas under Government to Government arrangement on FOB basis, on board FSRU. After a detailed discussion, the ECC accorded ex-post facto approval of six cargoes.

Copyright Business Recorder, 2016

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