14TH INTERNATIONAL EXHIBITION FOR THE ENERGY INDUSTRY

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News Headlines for the month of
APRIL 2016

JSCL TO INVEST RS ONE BILLION EQUITY IN 35 MEGAWATTS SOLAR POWER PROJECT

Jahangir Siddiqui & Company Limited (JSCL) has got its board of directors' nod to invest up to Rs 1 billion in a 35 megawatts solar power project. Approved by JSCL board on Thursday, the long-term equity investment would be made in the power venture to be established in Khairpur District of Sindh. "The directors have also decided to incorporate a wholly-owned subsidiary for the purpose of investments in power projects and approved an investment of Rs 1000 million in its share capital," said Company Secretary Hasan Shahid. The proposed wholly-owned subsidiary would make the said equity investment in solar power project through a special purpose vehicle, he said.

Copyright Business Recorder, 2016

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50KW POWERHOUSE INAUGURATED IN KALKOT

A 50kw powerhouse was inaugurated in Kalkot, remote area in Kohistan Valley, which would provide electricity to thousands of population of the area. The powerhouse was established by NGO Sarhad Rural Support Programme (SRSP) funded by the European Union (EU). An inauguration ceremony was held in Kalkot on Friday which was attended by the local MPA, Muhammad Ali, SRSP Regional Programme Manager, Noor Ajab, representatives of the various political parties and elders of the area. While speaking on the occasion Noor Ajab said that the project would provide electricity on cheap rate as compared to Wapda to 3000 people of the area and would also help in providing opportunity of employment to local people. He said that the local community would spend the revenue into other developmental projects in the area including water supply schemes, pavement of streets and others. He said that SRSP is also making bridges and roads in the Upper Dir and playing a key role in the development of the area. He said that the people of the area would find some relief from the electricity load shedding after this power house.

Copyright Business Recorder, 2016

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MANGLA RESERVOIR WAPDA CHAIRMAN, AJK PRIME MINISTER DISCUSS REHABILITATION WORKS

Pakistan Water and Power Development Authority (Wapda) Chairman Zafar Mahmood held a meeting with Azad Jammu & Kashmir (AJK) Prime Minister Chaudhry Abdul Majid at Mangla to discuss ongoing rehabilitation works at Mangla Reservoir Rim adjacent to Mirpur-Kotli Road near Khaliq Abad. In addition, various development schemes implemented by Wapda in the area as confidence building measures (CBMs) were also discussed in the meeting. Wapda Member (Power) Badr-ul-Munir Murtiza, Mirpur Divisional Commissioner/ Mangla Dam Affairs Commissioner Amjad Ali Khan and Mangla Dam Organisation (MDO) General Manager/Project Director Ghulam Sarwar Memon also attended the meeting. While speaking on the occasion, Wapda chairman said that Mangla Dam has been playing a pivotal role for socio-economic development of the country since its completion in 1967 by releasing water for agriculture and generating low-cost hydel electricity. He said that Wapda initiated a number of development schemes for the people of AJ&K in the suburbs of Mangla Dam as CBMs in addition to compensation package for affectees of Mangla Dam Raising Project. Referring to the rehabilitation works for Mangla Reservoir Rim, the chairman said that Wapda is fully cognisant of the importance of these works and is taking all possible measures for their scheduled completion to materialise water impounding 2016. Later, Wapda chairman visited rehabilitation sites at Khaliq Abad and Mirpur Bypass Road to review construction work being carried out there. During his visit to the sites, the chairman said that completion of rehabilitation works of Mangla Reservoir Rim is of immense importance in view of filling of Mangla Reservoir and is tantamount to race against the time. He directed the project authorities and the contractors to make it sure that the works be completed as per schedule. Briefing the chairman, MDO General Manager said that rehabilitation works to strengthen the Reservoir Rim of Mangla Dam near Khaliq Abad are in full swing, and expected to be completed by the end of August this year in a phased manner. He further said that schedule for execution of rehabilitation works has been chalked out in such a way that construction activities shall not affect filling of Mangla reservoir.

Copyright Business Recorder, 2016

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1,000 MEGAWATT RENEWABLE ENERGY: SBI CHIEF INKS MOU WITH EUROPEAN CONSORTIUM

The chairperson of the Sindh Investment Board (SBI) who is on a visit to Germany has signed a Memorandum of Understanding (MoU) with a consortium of European companies in Munich for production of 1,000 megawatt renewable energy. An official of SBI said here on Monday that the companies were M/s Green Quest solutions UK, and M/s Alka Power Holding Netherlands. It was pointed out that the companies would generate energy through solar, wind and hydro power. Earlier, the SBI delegation led by its chairperson, Naheed Memon, attended a conference in Munich organised by the state government of Bavaria. The moot was also attended by the Pakistani businessmen, members of the delegation and the German officials. Naheed Memon gave a detailed briefing at the conference regarding the prospects of investment in the energy sector in the country especially in the province of Sindh and in particular in Karachi.

Copyright Associated Press of Pakistan, 2016

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PMPKL INSTALLS ECO-FRIENDLY SOLAR PANELS AT ITS OPERATIONAL SITES

Philip Morris Pakistan Limited (PMPKL) an affiliate of Philip Morris International (PMI) continues to be a socially responsible organisation through the introduction of sustainability initiatives in the areas that PMPKL operates. These initiatives also cover the primary objectives of Mother Earth Day, celebrated by the United Nations and the international community on April 22nd, 2016. Such initiative undertaken by PMPKL is the installation of solar panels at its manufacturing facilities in Kotri and Sahiwal as part of PMPKL's broader sustainability strategy that envisages tackling climate change. -PR

Copyright Business Recorder, 2016

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COAL PROJECT: PPIB ISSUES LOS TO CHINESE COMPANY

The Private Power and Infrastructure Board (PPIB) Friday issued Letter of Support (LoS) to China Power Hub Generation Company (Pvt) Limited (CPHGCL) for development of 1,320 MW imported coal-based power generation project at Hub, Balochistan. The project is being sponsored by Hub Power Company Limited and China Power International Holdings. Secretary Water and Power Younus Dagha and other senior officials of PPIB and Ministry of Water & Power witnessed the ceremony. The document was signed by Shah Jahan Mirza, Managing Director PPIB and from the company''s side it was signed by Zhao Yonggang, CEO of CPHGCL. Being included as ''priority project'' under the China-Pakistan Economic Corridor (CPEC), this project assumes further importance. The project will be instrumental in socio-economic uplift of the remote area of Hub besides generating employment opportunities for the local population. The project development is progressing at a rapid pace and it is expected that it will come online by 2019. According to an official statement, in order to get sufficient and affordable electricity in short time, PPIB has been mandated by the government to process power generation projects utilising coal, hydro and R-LNG through private sector. As a result of efficient processing by PPIB, so far two coal-fired power projects of 2,640 MW which include 1,320 MW power project by Sinohydro Resources/Al-Mirqab Capital Qatar at Port Qasim, Sindh and 1,320 MW power project by Huaneng Shandong Ruyi at Sahiwal, Punjab has already started construction activities. The 2 x 330 MW Thar coal based Engro Powergen at Thar Block-II, Sindh after achieving financial close has entered into the construction phase. With proactive support of the PPIB, all the project-related activities were timely completed which led to the groundbreaking of the project recently on 11th April, 2016. The PPIB also holds the honour of paving way for hydro IPPs in the country through successful completion of 84 MW New Bong Escape Hydropower Project by HUBCO Group. Currently, 147 MW Patrind and 102 MW Gulpur hydropower projects are under construction, which are expected to be completed by April 2017 and October 2019, respectively.-PR

Copyright Business Recorder, 2016

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CASA-1000 STONE-LAYING IN DUSHANBE ON MAY 11

The foundation stone laying ceremony of CASA-1000 project, envisaging transportation of surplus electric power available in summer months (May 1 to September 30) from Kyrgyz Republic and Tajikistan to Afghanistan and Pakistan, will be held in Dushanbe, Tajikistan on May 11, 2016. The decision was taken in a series of recent meetings of Joint Working Group (JWG) and Inter-Governmental Council (IGC) of CASA-1000 project held in Almaty from April 19-21, 2016. Pakistan would be able to import 300 MW additional power under this project if Afghanistan does not use its share of electricity in case of low demand in the country. The government has assured security protection and is charging 1.25 cents per kWh as transit fee. Pakistani side was represented by Federal Minister for Water and Power, Khawaja Muhammad Asif, Secretary Water and Power Younus Dagha and Joint Secretary Zafar Abbas. Energy Ministers of the members'' countries led their respective delegations during these meetings. The estimated cost of the CASA-1000 project is $1.170 billion including $208 million IDC & taxes-but the final cost would be determined through a competitive bidding process. This includes the estimated cost of $200 million required for the Pakistan portion of the DC Transmission Line and convertor station excluding the AC portion reinforcement in Pakistan. The total tariff of the energy is calculated at 9.48 cents/kWh which includes estimated Transmission energy, Afghan Transit and Tajik Wheeling Charges The World Bank in its Board of Directors meeting on 27 March, 2014 approved US $120m in IDA credit for Pakistan while ISDB committed US $35 million for DC transmission line part of Pakistan. During these meetings of Joint Working Group and Inter-Governmental Council of CASA-1000 project, the member countries also thoroughly reviewed the ongoing procurement process for three convertor stations of the transmission line. It was also decided to go for two convertor stations instead of three and to float fresh tenders for these two converters within two months. According to an official spokesperson of Water and Power Ministry, since the bid received for the convertor stations was very high and the technical capability of the bidder was also a major concern for all the member countries, the JWG/IGC meetings considered two options for quick materialisation of the project. These options include re-bidding and restructuring of the project by converting it to two terminal projects with convertor stations at Tajikistan and Pakistan and Afghan convertor station is taken separately. All countries and financing institutions have renewed their commitment to the project. The project will comprise the development, financing, construction, ownership and operation of a 750kms high voltage direct current transmission system between Tajikistan and Pakistan via Afghanistan together with associated converter stations at Sangtuda (1300MW), Kabul (300MW) and District Nowshera (1,300MW) and a 477km 500kv alternating current link between the Kyrgyz Republic (Datka) and Tajikistan (Khoujand). The CASA-1000 Transmission Line (T/L) to Pakistan would be capable of delivering 1300 MW (1000 MW) as Pakistan''s share & 300 MW as Afghanistan''s share; however, the Afghan share may be available for Pakistan as Afghanistan''s demand may be low.

Copyright Business Recorder, 2016

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$3.5 BILLION LNG PIPELINES: GOVERNMENT ALL SET TO INK DEALS WITH CHINESE, RUSSIAN COMPANIES

Pakistan is all set to ink commercial agreements with Chinese and Russian government-nominated companies for the construction of Gwadar-Nawabshah and Karachi-Lahore Liquefied Natural Gas (LNG) pipelines costing $3.5 billion. Mobin Solat, Managing Director (MD) Inter State Gas Systems (ISGS) said this while briefing the National Assembly Standing Committee on Petroleum and Natural Resources here Thursday. He said the agreement with Chinese state owned company will be finalised in the first week of May and the agreement with Russian company in June, 2016. The meeting was held under the chairmanship of Chaudhry Bilal Ahmed Virk, MNA was informed that China will lay Gwadar-Nawabshah LNG pipeline at an estimated cost of $1.5 billion and Russia will construct Karachi-Lahore pipeline at a cost $2 billion. Solat said that both the pipelines will be completed by the end of 2017, adding that construction of the pipelines will enable the country to transport up to 1.2 Billion Cubic Feet per Day (BCFD) imported LNG to up country. He said that in phase one LNG terminals in Gwadar and Karachi will be built each with a capacity to handle 600 Million Cubic Feet of LNG and in second phase additional one each LNG terminal in Karachi and Gwadar will be completed with same capacity. China Petroleum Pipeline Bureau (CPP) will construct pipelines from Gwadar to Nawabshah for which the commercial entities from both sides (ISGS from Pakistan and CPP from China) have formally engaged pursuant to the signing of Government to Government Framework Agreement on 20th April 2015. Both sides have held several meetings wherein the Confidentiality Agreement has been signed and project related information has been exchanged. Negotiations with Chinese side are at advance stage. Tender documents for the Project were handed over to CPP, in accordance with the contract documents, CPP submitted its proposal on 30th September 2015 and technical proposal has been evaluated by the Consultant (ILF-NESPAK JV) and approved by ISGS Board. The commercial proposal is currently under evaluation. To meet financing requirements, letter from the EAD has been issued to the Govt. of China. Funds to meet 15 percent of the local component are being arranged to meet land acquisition costs and security arrangements. The CPP has expressed its readiness to expedite the financing arrangement as soon as formalities of PC-I and loan application are submitted by EAD to China. Furthermore, financing arrangement directly to ISGS through preferential Buyers Credit can be explored if backed by sovereign guarantee. To complete the pipeline and LNG terminal at Gwadar by December 2017, CPP expects to conclude all technical and commercial aspects of the project implementation by the end of April 2016 including signing of the contract. CPP is ready to start construction of the pipeline segment of the Project from Gwadar to Nawabshah on immediate basis. The ECC in its meeting held on 11th April, 2016 considered the restructuring of the Project and approved immediate start of work on gas pipeline segment of the Project under the G to G Framework Agreement for which necessary financing arrangement will also be done by CPP. Work on Gwadar LNG terminal will be undertaken on BoT basis. The consultancy cost for LNG Terminal will be borne by GHPL. The approval of PC1by the Central Development Working Party and Ecnec will be expedited by MP&NR. The government of Pakistan will issue sovereign guarantee for the gas pipeline portion of the project. The committee while discussing the issue of provincial royalty on oil/gas production expressed serious reservations over under utilisation of royalty in oil/gas producing districts. The committee observed that provincial governments were discriminating with the Oil and gas producing district and Tehsil in terms of allocation and utilisation of royalty and production bonus. The committee directed the representative of Provincial Energy Departments to present details of the royalty remitted to the provinces by the federal government and its subsequent allocation by the provinces. The Committee also directed them to submit details of executed and ongoing schemes in the relevant oil and gas producing District and Tehsils. The Committee also directed them to involve local representatives in identification of development schemes in future. The officials of the four provincial energy departments failed to satisfy questions raised by MNA Nisar Khattak over the utilisation of 10 percent of oil/gas royalty in the gas producing regions. The committee directed provincial energy departments to give all the details of royalty utilizations in past three years within a month. The meeting also asked Director General Petroleum Concession (DGPC), Saeed Ullah Shah to verify the figures provided by the provincial energy departments. Ilyas Shahid, Director Federal Investigation Agency (FIA) while briefing the committee on the issue of crude oil theft in Karak and Bannu districts of KPK said that as per initial findings some officials of the MOL were involved in the oil theft. The committee directed FIA to acquire necessary documents from relevant departments and conduct a thorough inquiry into the reported theft of crude oil from NASHPA Oil field, District Karak, Khyber Pakhtunkhawa (KPK). Committee member Nisar Khattak and others expressed serious concerns over the arrest of MOL security staff member by police who brought the issue of oil theft into the knowledge of company officials. Additional Secretary Energy KPK informed the committee that as per rough estimates crude oil worth billions of rupee was stolen from the pipeline. The committee also directed FIA to submit its preliminary findings to the Committee by 24th May, 2016. The committee was apprised that initial findings of the FIA point towards involvement of employees of the company operating the oilfield besides several private individuals. The representative of Khyber Pakhtunkhawa Energy Department informed that this department also conducted an inquiry which substantiates involvement of several persons into the theft causing colossal loss to the national exchequer. The committee directed him to provide the report to the FIA so that inquiry could proceed ahead. The committee while discussing the current status of exploration and production companies whose licenses were either revoked or served with show-cause notices, directed the Director General (Petroleum Concession) to pursue the court cases for early decision. The committee was apprised that non-performing licenses were revoked out of which 12 licenses went into litigation and were granted stay orders. The committee also directed the FIA and the NAB to pursue inquiries of cases of Ministry of Petroleum and Natural Resources and its attached departments and submit cases to courts for decision.

Copyright Business Recorder, 2016

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PCJCCI CHIEF FAVOURS COAL IMPORT FROM INDONESIA

Pak-China Joint Chamber of Commerce and Industry (PCJCCI) President Shah Faisal Afridi has said the joint ventures with Indonesia in terms of importing eco-friendly coal could prove to be prolific in overcoming the voracious energy crises in Pakistan. He was speaking to an Indonesian delegation from Prosperity Indonesia Holdings Company. The delegation members included Wu Xin Qiang, General Manager Prosperity Indonesia, Ching Wenchang, Director Pakistan office and Tian li, Quality Manager, Prosperity Company. Pakistan needs to redefine the energy mix on the pattern of developed countries that are utilising coal as major source of power generation and for this he regarded Indonesian collaboration a positive development, he said. The coal should be given the highest priority to meet our energy needs, he said adding that coal is cheap and plentiful. It will cost less than Rs 1.5 per unit while the power generated by burning furnace oil costs around Rs 13 per unit and power from burning gas costs Rs 5.5 per unit, he added. Afridi said that conversion of power generation towards coal will halve the cost of electricity production and will boost industrial development, he said. He said that importing coal from Indonesia could be immensely beneficial for Pakistan and conversion of power plants to coal seems the only viable solution. He said that power projects could initially be set up on imported coal as a medium-term solution, meanwhile the country explores its own coal resources in the longer run. He proposed to seek assistance from the Chinese mining experts in this regard that would not only be cost effective but also easy to be installed. He mentioned that China is still producing more than 75 percent electricity from coal and we can learn a lot from them. The PCJCCI chief said the time has proved that the policy of running power plants on natural gas was the worst decision that has not helped in keeping electricity tariff low but depleted gas reserves at much faster pace". "This all has resulted in costlier electricity which has wiped out our competitive edge in the international market," he added. "We have relied too much on gas, oil and other sources to generate electricity whereas in all over the world 40 percent electricity is generated through coal but in case of Pakistan, less than 1-percent electricity is being generated from coal. Sitting on one of the biggest source of energy and facing chronic power deficits and abnormally high cost of energy is simply incomprehensible," he added. The delegation's visit was aimed to discuss the possibilities of exporting high quality eco-friendly harnessed coal to Pakistan from Indonesia. The Company's general manager Wu Xin Qiang said the coal from Indonesia is preferred all over the world due to the utilisation of clean coal technologies employed in mining, these clean coal technologies are focused on the reduction of emissions produced by coal-fired power generation, he added. While briefing about the Indonesia Holdings Company, he said that his company has invested about US $2 billion in coal mining, cement manufacturing, real estate development and hydro electrical power plants all around the country. Coal is the upcoming dominating force in power generation, he said, adding that about 27 percent of the world's total energy output and more than 39 percent of all electricity is produced by coal-fired power plants due to coal's abundance. It is relatively easy and low-cost extraction and less expensive infrastructure requirements has made it a preferred choice for power generation, he said.

Copyright Business Recorder, 2016

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NEELUM JHELUM HYDROPOWER PROJECT TO BE COMPLETED IN OCTOBER

The civil works of both underground powerhouse and transformers hall of the 969 MW-Neelum Jhelum Hydropower Project are expected to be completed in October this year, as progress of civil works on these components of the project stands at 95.5 percent and 99 percent respectively. This was briefed to the Pakistan Water and Power Development Authority (Wapda) Chairman Zafar Mahmood during his weekly visit to the project on Tuesday. The chairman visited powerhouse, transformers hall, manifold area and switchyard of the project to review progress of construction work. Project Chief Executive Officer Engineer Muhammad Zubair, Project Director Nayyar Ala-uddin and representatives of the consultants and the contractors were present on the occasion. During the on-site briefing, the chairman was apprised that subsequent to the completion of civil works of Unit No 3 and 4 of the powerhouse, both units had already been handed over to the electro-mechanical contractor. It was further told that civil works of the switchyard are substantially completed, while electrical and mechanical works will also be completed by October 2016. Project CEO said that October 2016 is going to be an important month as tunnel boring machine, deployed on the left tunnel will breakthrough during the said month after completing the excavation work on the left tunnel. Overall progress on the project stands at 80 percent. The construction work on all three sites namely C1, C2 and C3 is moving ahead at a good pace. The progress on C1 is 78 percent, on C2 is 80 percent, while on C3 is 83 percent. Out of total 68.6 kilometres, 62 kilometres long tunnels have so far been excavated.

Copyright Business Recorder, 2016

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GERMAN COMPANIES INTEND TO INVEST IN ENERGY PROJECTS IN SINDH

Sindh Board of Investment (SBI) delegation on Monday was briefed that RWE, a German Company was working with the Sindh government and Sindh Engro Coal Mining Company in Thar coal power plant and mining project in block 2. It was also informed that the company wanted to increase the volume of their work and to collaborate with their experience, expertise and technology in Thar coal power plant and the other projects as well. A delegation of SBI led by its chairperson Ms Naheed Memon, is on a visit to Germany, met the officials of the German Company RWE in its head office. The SBI delegation arrived in Germany Sunday night, said a statement issued here on Monday. Other members of the delegation include Additional Chief Secretary P&D Sindh Muhammad Waseem, Finance Secretary Sindh Sohail Rajput, Secretary Energy Sindh Agha Wasif Abbas, Director SBI Abrar Ahmed Shaikh and CEO Sindh Engro Coal Mining Company Shamsuddin Shaikh. The delegation discussed regarding exploration of coal mines and gas reservoirs in Sindh and to produce the electricity with the help of coal with the head of Coal of German Company E.ON/UNIPER, Carlos Sacristan and Director Coal and Freight Gustavo Farnandez here in city Dusseldorf in Germany. It was also discussed in the meeting the Sindh government wanted to work with the German company to utilise its experience for the purpose of investments in public private partnership sector. Talking to the delegation, Carlos Sacristan showed his keen interest in the projects regarding the producing electricity through coal in Sindh and said that their company had a vast experience in the exploration of oil and gas. Talking to the officials of the German Company, Chairperson SBI, Ms Naheed assured the company regarding provision of all facilities for investment in Sindh. She said that the Sindh government was giving valuable incentives to the international companies for investment in Sindh in energy and other sectors.

Copyright Associated Press of Pakistan, 2016

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MINISTRY TO ARRANGE RS 25 BILLION TO INJECT INTO POWER SECTOR

Ministry of Water and Power is to arrange Rs 25 billion from commercial banks to inject into the power system immediately which will be made part of tariff at an appropriate time, well-informed sources in Finance Ministry toldBusiness Recorder. The proposal has been approved by the Economic Co-ordination Committee (ECC) of the Cabinet presided over by Finance Minister Senator Ishaq Dar. According to sources, power Distribution Companies(Discos) are facing financial constraints in payment of long-outstanding power dues to Central Power Purchasing Agency (CPPA) mainly due to high distribution losses, arrears of subsidy amounts, low revenue collection and lower applicable tariff, which do not fully cover the cost of services delivered. The sources said during 2015, recoveries have increased from 88.6% to 93.4% (all time high) and the T&D losses have reduced from 19.1% to 18.0% (all time low). Payments to Generation Companies (Gencos )/IPPs are made out of revenues generated by the Discos from the consumers out of collections and various subsidies from Ministry of Finance, for the set of consumers as decided/announced by the Federal Government from time to time. Power sector dues on account of various subsidies, current and accrued, totalled about Rs 168 billion, details of which are as follows: (i) Peshawar Electric Supply Company (Pesco) Rs 33.082 billion; (ii) Discos (others) Rs 7.196 billion; (iii) K-Electric Rs 15.21 billion; (iv) FATA Rs 14.868 billion; (v) AJK unpaid/ verified claims of subsidy till February 2016, Rs 63.893 billion; (vi) KE subsidy invoices received in 2015-16- unpaid, Rs 22.05 billion; (vii) Discos'' current pending claims Rs 9.45 billion; and (viii) FATA current pending claims Rs 2.6 billion. The sources further stated that the Ministry of Water and Power and Ministry of Finance are working on a settlement plan for power sector liabilities. The sources also maintained that a financing facility is proposed to be arranged for immediate liquidity injection into the sector. The proposed loan will be arranged on behalf of power distribution companies by Power Holding (Pvt) Limited (PHPL) through STFF from a consortium of local commercial banks. Power Holding (Private) Limited will be responsible for arranging a loan amounting to Rs 25 billion for power sector companies. Ministry of Finance will provide a government guarantee for repayment of loan as well as interest, for the facility amounting to Rs 25 billion, arranged through a consortium of local banks. The sources stated that the servicing of mark-up, principal repayments and all other amounts becoming due and payable in respect of the subject facility shall be the responsibility of Finance Division, adding that once any space is available in the tariff regime, this may be collected through revenue generation though imposition of surcharge. Power sector payables arise from: (i) non recoveries from supply to AJ&K, other federal and provincial governments including FATA, private consumers and Balochistan tube-wells; (ii) accrued mark-up from servicing of PHCL; (iii) line losses and non-collections that are not recognised by Nepra; (iv) GST non-refund; (iv) late payment surcharges; and (v) delay in tariff determinations.

Copyright Business Recorder, 2016

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WAPDA HYDEL POWER GENERATION UP BY 18 PERCENT IN Q3

Pakistan Water and Power Development Authority (Wapda) hydel power stations delivered as many as 4.731 billion units of low-cost hydel electricity to the national grid during the third quarter of the current fiscal year. It was due to better hydrological conditions and efficient operation and maintenance of hydel power stations, according to the statement issued by Wapda. This is an increase of 722 million units (18pc) if compared with the generation during corresponding period of the last fiscal year. This increase in hydel power generation has been achieved at a time when the country is in dire need of electricity. It is worth mentioning that Wapda delivers more than 31 billion units of hydel electricity to the national grid every year on the average. Hydel is the cheapest, cleanest and environment-friendly source of electricity generation, which plays a pivotal role to stabilise electricity tariff in the country. According to the data of Central Power Purchasing Agency (CPPA) regarding per unit cost of electricity generated from various sources in February 2016, it is Rs 1.83 for hydel, which is far lower than per unit cost of electricity generated from all other sources. In comparison to hydel electricity, it is Rs 8.16 per unit for gas, Rs 11.67 for residual furnace oil (RFO), Rs 18.62 for high speed diesel (HSD), Rs 9.01 from IPPs, Rs 12.16 for coal, Rs 7.53 for nuclear, Rs 14.40 for wind, Rs 11.79 for bio-gases, Rs 22.55 for solar, and Rs 10.50 per unit for electricity imported from Iran. At present, hydel power generation capacity of Wapda is 6902MW, which is about one third of the total installed capacity in the country. Despite some of Wapda hydel power stations being as old as 50 years, their generation capacity has stayed intact due to their proper maintenance and efficient operation by Wapda.

Copyright Business Recorder, 2016

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NORTH SOUTH GAS PIPELINE PROJECT: IMPLEMENTATION APPROVED BY ECC

The Economic Co-ordination Committee (ECC) of the Cabinet has approved implementation of North South Gas Pipeline project and has decided that Finance Division will issue a sovereign guarantee for term finance certificate of Rs 25 billion for the power sector. A meeting of the ECC, which met with Finance Minister Ishaq Dar, on Monday, took up proposals of Ministry of Water and Power and Petroleum and Natural Resources. On a proposal of Ministry of Water and Power, the ECC decided that Ministry of Finance will issue a sovereign guarantee for syndicated term finance facility worth Rs 25 billion for the power sector. On another proposal of Ministry of Water and Power, the ECC gave approval to non-cash settlement of Rs 70.167 billion in respect of power sector payables/receivables among various government entities. The ECC approved Ministry of Petroleum and Natural Resources'' proposal on implementation of North South Gas Pipeline Project under a government to government agreement with Russia. The meeting constituted a price negotiation committee with Secretary petroleum, Secretary Law, Secretary Board of Investment (BoI), Representative of Finance Division, Managing Director Sui Northern Gas Pipeline Limited and Managing Director Inter State Gas System (ISGS) to negotiate the project details and pricing with the Russian side. Sources added that the meeting was informed that the project would be able to transport 1.2 BCFD from Karachi to Lahore by laying 1100 kilometer pipeline system that would enable the government to transport RLNG as well as gas from IP and TAPI gas projects. The ECC also considered the proposal on re-structuring of Gwadar-Nawabshah LNG terminal and pipeline project and approved implementation of the project on Build Own Operate and Transfer (BOOT) basis. The ECC also directed the Ministry of Petroleum and Natural Resources to complete the formalities in this regard by ensuring that revised strategy does not result in any cost escalation. The meeting also decided that Secretary Petroleum and Natural Resources will chair the price negotiation committee and secretary law, secretary Board of Investment, representatives of Finance Division, MD SNGPL and MD ISGS will be members of the Committee. The ECC considered the proposal of Ministry of Petroleum and Natural Resources on LPG Air Mixture projects and decided that in view of CCI approval on February 29 regarding LPG Policy 2016, any further approval from ECC was not required in the matter. The meeting observed that now it was up to Oil and Gas Regulatory Authority (OGRA) to implement the approved policy in letter and spirit.

Copyright Business Recorder, 2016

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GROUNDBREAKING ON 11TH: FINANCIAL CLOSE OF 660 MEGAWATTS THAR COAL-FIRED PLANT ACHIEVED: CM

Sindh government has completed the financial close of Thar Coal Power Project at Thar Block-II and groundbreaking of the project will be performed on April 11 by Prime Minister Nawaz Sharif. Chief Minister Sindh Syed Qaim Ali on Friday presided over a meeting regarding the visit of Prime Minister Nawaz Sharif to perform the groundbreaking ceremony of the project. The meeting was told that the financial close of the project had been achieved on April 4. Funds worth $1.5bn are available to start work on the project on war footings. The Sindh Engro Coal Mining Company (SECMC) is going to establish 660 MW coal-fired power plant at That coalfield. Once the project is completed, expansion would be carried out by installing another 660 MW power plant. It may be noted that Sindh government is partner with SECMC in the coal mining which would be completed by the end of 2018. "It would be a great breakthrough in the history of the province," the chief minister said. He recalled that it was former Prime Minister late Benazir Bhutto who had brought a Hong Kong-based company to Thar Coal-field to make feasibility of coal fields, start mining and power generation at Thar and KT Bander. He said that had the project was allowed to complete Pakistan would have been exporting electricity to neighboring countries today. "Sorry to say, the project was scrapped on political grounds," he said and added that now the Sindh government would extend all possible support to the federal government to complete this project in the national interest. Syed Qaim Ali Shah thanked Prime Minister Nawaz Sharif for taking his interest in Thar coal. The prime minister on his request had made a commitment that onward Thar coal would be used in all the coal-based power plants in the country, he said and added that it was the Thar coal which can provide power to the entire country for unlimited time if it was utilized for the purpose. The chief minister said that the security of the Chinese engineers was most important for which necessary measures as approved by him must be taken immediately. On this IG Sindh AD Khwaja told the chief minister that the recruitment process of 2000 ex-army men for the security of CPEC projects was in progress. "We would ensure their security as per commitment of the government," he assured. Those who attended the meeting include Senior Minister for Finance & Energy Syed Murad Ali Shah, Chief Secretary Siddique Memon, Principal Secretary to CM Alamuddin Bullo, IG Sindh AD Khwaja, Secretary Finance Sohail Rajput, Secretary Energy Agha Wasif, Commissioner, DIG Mirpur Khas and others.

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SMALL BIOMASS-BASED POWER PLANTS: SHAHBAZ SPEAKS ABOUT RENEWABLE RESOURCES

Punjab Chief Minister Shahbaz Sharif has said that generation of electricity through renewable sources is very essential to overcome energy crisis and there is a lot of potential in setting up of small biomass based power plants in the province. He was addressing a meeting to review the project of setting up of biomass based small power plants here on Friday. He expressed indignation over the delay in setting up of small power plants based on biomass in the province and said that lip service will not be tolerated. He said that practical measures would have to be taken in the right direction and he wants only results and work. The concerned authorities should have furthered the project of biomass based small power plants in an active manner as elimination of energy crisis is a national responsibility. He said if billions of rupees were being spent on gas power plants projects then biomass based power plant project should not have been delayed. The concerned officials should discharge their duties efficiently while realizing their responsibilities as delay in the execution of power projects could not be tolerated. The Chief Minister said that PML-N government is determined to overcome energy crisis and struggling to ease the life of common man through low cost energy generation.

Copyright Business Recorder, 2016

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R-LNG-BASED POWER PROJECTS: ECC ALLOWS CPPA TO DEVELOP, EXECUTE PPA

The Economic Co-ordination Committee (ECC) has allowed Central Power Purchasing Agency (CPPA) to develop and execute a Power Purchase Agreement (PPA) for three R-LNG-based power projects in public sector only. Sources said these projects are being established in Punjab and ECC meeting presided over by finance minister Ishaq Dar on Tuesday was requested to authorise the CPPA to develop and execute a PPA by incorporating some concepts which are peculiar to the R-LNG-based power plants. Ministry of Water and Power stated in the proposal submitted to the ECC that the government is striving to reduce the electricity demand-supply gap in the country by adopting a multi-pronged strategy. Under the strategy, the government initiated a clean, affordable and reliable energy programme, which is an integrated approach towards sustainable energy for Pakistan through import of R-LNG for setting up of power plants. The ECC was informed that 600 MMCFD of R-LNG for the power generation projects is anticipated in 2017-18 and as per decision of the Cabinet Committee on Energy (CCOE), three power houses of total capacity of 3600 MW R-LNG-based power plants would be located at Bhikki, Balloki and Haveli Bahadar Shah. The meeting was further informed that Prime Minister has already performed the ground breaking ceremonies of all the three projects with a capacity to produce 1200 MW each. According to Ministry of Petroleum, a necessary set of agreements amongst PSO, Engro terminal, SNGPL and SSGCL has finalised for transportation of R-LNG to the sites of the projects. The Nepra has also notified an upfront tariff for LNG-based power projects and Quaid-c-Azam Thermal power plant at Bhikki has already filed an intervention with Nepra for the revised determination of its tariff, which has yet to be notified by Nepra. Sources added that the draft agreement was prepared by the Quaid-e-Azam Thermal Power Company, fully owned by government of Punjab for its power plant at Bhikki, after provisional discussions with Ministry of Water and Power and CPPA. As the draft of the proposed PPA contains a number of concepts, which are not covered under the current PPAs regime and are peculiar to R-LNG-based Power Plants PPAs, the ECC was requested to allow the CPPA to adopt the draft PPA by incorporating the concept papers.

Copyright Business Recorder, 2016

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POWER CONSORTIUM ARRANGES RS 540 MILLION FOR SOLAR PLANT

Nishat Group Companies and Associates (Nishat) has arranged over Rs 540 million through its subsidiaries for the construction of 20 megawatts solar power project at $31.2 million in Punjab. The grid-connected photovoltaic (PV) modules solar power plant would be developed by Nishat, having submitted an Expression of Interest to Punjab Power Development Board, at Mehmood Kot of District Muzaffargarh under the revised Punjab Power Generation Policy 2009. Incorporated on November 19 last year, Lalpir Solar Power, a wholly-owned subsidiary of Nishat Power Limited (NPL), would be building, owning, operating and maintaining or investing in the project. With its notional cost estimated at $1.56 million per megawatt, the alternative energy venture''s financing is based on 75 percent debt and 25 percent equity. "The equity will be apportioned in terms of joint venture agreement executed among consortium members," said Khalid Mahmood Chohan, Nishat''s company secretary, in a stock filing Wednesday. Tuesday saw the Boards of Directors of Lalpir Power Limited and Pakgen Power Limited, members of the Nishat consortium, allowing their respective company managements to invest Rs 270.27 million each in the shares of Lalpir Solar. The authorised investment would be made "by way of acquisition", from time to time in a three-year period, of 27.027 million ordinary shares of the targeted firm each at a face value of Rs 10. Also, the board has allowed Lalpir Power to extend a loan of up to Rs 1 billion to Pakgen Power as running finance facility when required by the latter. As a separate stock filing shows, Pakgen Power is supposed to further lend this Rs 1 billion financing to Lalpir Solar as and when required by it. "The return on such running finance shall be equivalent to the average borrowing cost of the company for each month with minimum rate of one month KIBOR + 0.50 percent," Chohan said. The loan in question, he said, shall be for a renewable period of one year. In a statement under Section 160(i)(b) of the Companies Ordinance 1984, the secretary said NPL shall be the main sponsor of the project with equity stake of 34 percent finally. NPL would be entitled to hold, until the sixth anniversary of successful commissioning of the project, not less than 20 percent of the total issued and paid up share capital of Lalpir Solar. The consortium members shall collectively hold at least 51 percent of the total issued and paid up share capital of Lalpir Solar until the sixth anniversary of successful commissioning of the project, he said. "The directors have carried out their due diligence for the proposed investment," he said.

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CPEC TO HELP END LOAD-SHEDDING: PRIME MINISTER

Prime Minister Muhammad Nawaz Sharif Wednesday said the China Pakistan Economic Corridor (CPEC) would help eliminate load shedding, enhance industrial development and ensure economic growth leading to reduction in unemployment and poverty. He was talking to Member of the Political Bureau of Communist Party of China, Zhang Chunxian who called on him here at the PM House. The Prime Minister termed the fusion of multiple development projects as game changer that would bring prosperity and well-being of the citizens of the country and the region at large. The Prime Minister said he was monitoring the progress on projects under the CPEC on daily basis. Appreciating the support of Chinese leadership in laying the foundations of CPEC, the Prime Minister said that the Pakistani nation was grateful to the Chinese leadership for taking bilateral relationship to the highest level. The Prime Minister highlighting China's great support to Pakistan in security, trade and infrastructure development said that Pakistan and China have a shared future and China Pakistan Economic Corridor (CPEC) was the largest comprehensive project with any foreign country. Prime Minister Muhammad Nawaz Sharif warmly welcomed Zhang Chunxian to Pakistan and said both countries enjoy close co-operation and hold identical views on important issues at regional and international levels. "Our all-weather friendship is based on shared principles and interests, and forms the foundation of co-operation in diverse fields," a press release from the PM House said. The Prime Minister said there was a strong resonance of the long and rich history of close and cordial ties both at the official as well as popular levels. Zhang Chunxian appreciated the commitment of the Prime Minister in eliminating terrorism and extremist mind set from Pakistan. He said the Chinese leadership was impressed by the performance of the government in turning around the economy and maintaining peace and security. "The Chinese leadership is happy to see broad public support for CPEC," Zhang said and added "Pakistan is witnessing deep and profound changes under the leadership of the Prime Minister." Lauding the leadership role of the Prime Minister, Zhang said. "Prime Minister Muhammad Nawaz Sharif is an outstanding statesman and we have complete faith in his abilities to transform Pakistan into a developed country." The Prime Minister said that Gwadar Port would be made the gateway of development of Pakistan, as connecting Kashghar with Gwadar was the key objective of CPEC and will result in massive industrial growth and development in the country. The Chinese delegation included Sun Weidong, Ambassador of China in Pakistan and Zhan Kongchao, DG Assistant Foreign Affairs. Minister for Water and Power Khawaja Muhammad Asif, Minister for Planning, Development and Reform Ahsan Iqbal, SAPM Tariq Fatemi and senior officials were present in the meeting.

Copyright Associated Press of Pakistan, 2016

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POWER SECTOR: 'PUNJAB GOVERNMENT ENCOURAGING INVESTMENT'

The Punjab government is encouraging foreign companies, including Chinese, to cooperate and tackle the country's energy crisis and enhance industrial and economic bond by creating job opportunities in the power sector. The announcement by Provincial Ministers for Finance Ayesha Ghaus Pasha and for Mines and Mineral Chaudhry Sher Ali Khan came in their addresses to the Pak-China Energy Forum on Tuesday. The ministers claimed that the country's gross domestic product would have increased by two percent had there never been an energy crisis. "But the Punjab government is taking concrete steps to overcome this menace by initiating mega projects in the power sector with the help of Chinese investors. Investment-based power projects will also increase jobs and the Punjab government is fully facilitating and encouraging foreign investment in this sector," they claimed. "Pakistan has a great environmental potential for creation of energy and the China-Pakistan Economic Corridor will realise this dream as it will prove a game-changer in the region with the role and efforts of the Chinese government to overcome this energy crisis and its huge investment comprising $36 billion for the power sector development programmes." The vice chairman of the China Western Power Industrial Company then briefed the participants about his company's services in the power production sector, particularly in industrial specific solutions, by planning, management and financing. Those who also spoke were the university vice-chancellor, Lahore Chamber representative Shehzad Azam, and the chief minister's Advisor, Shahid Riaz Gondal. The forum also saw University of Engineering and Technology Fazal Ahmad Khan, Energy Secretary Asad Rehman Gillani, industrialists and investors.

Copyright Business Recorder, 2016

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KP OFFERS ONE-WINDOW FACILITY TO HYDEL POWER INVESTORS

Pakhtunkhwa Energy Development Organization (PEDO) will provide one-window facility to investors and sponsors in setting up hydro power projects in the province. The facility has been offered in KP Hydro Power Policy 2016 announced by the PTI led coalition government in February 2016. The aim of the policy is to promote least cost power generation, encourage sector investment through full cost recovery with attractive rate of return, ensure fast track and transparent development of power projects and provide environment friendly energy. The Policy covers private sector, public sector under Independent Power Producers (IPPs) model where relevant concessions under power policy are applicable, Public Private Partnerships (PPP) where relevant concessions under power policy are applicable and captive power plants. Under the policy hydropower generation projects of any size, capacity, configuration and technology can be developed for supply of power to power purchasers. Types of hydropower projects include raw site hydropower projects, semi raw site hydropower projects, hydropower projects with completed bankable feasibility study or detailed engineering design carried, hydropower projects under PPP mode or any other mode of investment. International Competitive Bidding (ICB) will be followed for sites/projects where bankable feasibility study or detailed engineering design is available. Bidding criteria will be based on lowest levelized tariff along with any other bid parameter as specified in the RFP. Under the policy, semi-raw sites projects will be awarded to highest ranked applicant as per criteria in the Qualification Document (QD)/ Expression of Interest (EOI) document. For raw sites which are identified by investors/sponsor and are not enlisted with PEDO or any other public and/or private sector entity, will be registered on first come first serve basis and subsequently awarded for implementation provided that the sponsor fulfils the requirements as prescribed in the QD/EOI document. The hydropower projects including transmission and distribution lines may, on the recommendation of the provincial cabinet, be processed under government to government (G to G) or intergovernmental agreements pursuant to the terms and conditions and mechanism as prescribed under such agreements. All the hydropower projects under the Power Policy 2006 where the power stations are located in the province of Khyber Pakhtunkhwa will be implemented on Build own Operate Transfer (BOOT) basis and shall therefore be transferred to government of KP or its entity at rupee one at the expiry of concession period. The Power Policy 2016 also contains some key financial incentives announced for investors or sponsors of hydropower projects in the province. Under the policy the investors are permitted to issue corporate bonds, 100 percent foreign ownership, support and facilitation to protect sponsors in acquisition of land or PEDO may acquire land for the project concerned and least it out to the project company on mutually agreed terms and conditions, provision of adequate external security for projects and its personnel in the province on mutually agreed terms. Under fiscal incentives, the policy offers attractive return on equity/IRR, exemption from income tax including turnover tax and withholding tax on imports, exemption of sales tax on plant, machinery & equipment, exemption of provincial sales tax, concessionary rate of 50 percent custom duty on import of plant and equipment not manufactured locally. The tariff of the electricity produced in the province will comprise of two parts; Capacity Purchase Price (CPP) and Energy Purchase Price (EPP) will be approximately 90-95 percent of total tariff. Water Use Charge (WUC) will be paid @ Rs 0.425/kWh by the power projects producers. In captive power plants, the projects sponsor will pay lease money/price inline of WUC to PEDO at the rate of Pak Rs 1,500/kW/Annum after commissioning of the power plant. Under Corporate Social Responsibility (CSR), there shall be deliberate effort by the sponsors to develop social, health and educational projects in the project area as part of the corporate social responsibility and Community Welfare Development Programme. The province will also spend reasonable amount of Water Use Charge (WUC) for projects in local area. In order to ensure the highest quality and long term sustainability in the development and operation of hydropower projects, transmission and distribution lines, police guidelines under the power policy will be prepared and approved by the Board of Directors of the PEDO.

Copyright Business Recorder, 2016

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INTERCONNECTION GRID TO BE BUILT BETWEEN PAKISTAN AND CHINA

Ministry of Water and Power and State Grid Corporation of China are working closely to build an Interconnection Grid for electricity Between Pakistan and China which will mutually benefit both the countries by utilizing each other energy potential. This was stated by Secretary Ministry of Water and Power, Muhammad Younus Dagha in Beijing on the occasion of Global Energy Interconnection Conference where more than 700 delegates are participating. The secretary said that the building of an interconnection grid between Pakistan and China will allow Pakistan to meet its energy demands when there are requirements. It will also benefit China to benefit from the potential of clean energy in Pakistan, especially hydroelectricity on the Indus River cascade lying all along the route of China-Pakistan Economic Corridor (CPEC), he added. Younus Dagha said that Pakistan is very much positioned to become energy corridor for the region and facilitate the exchange and optimize use of clean energy available in the region of South Asia, Central Asia, Middle East and China. He said that Pakistan can play an active role in the Global Energy Interconnection. While apprising about CASA-1000 project, Secretary Water and Power said that Pakistan has a unique geographical position, strategically located at the confluence of South Asia, Central Asia, Middle East and China. "We are aware of the opportunity offered by our geographical location. Working on it since past many years, we succeeded in signing an agreement on Central Asia South Asia transmission line, known as CASA-1000, with Tajikistan, Kyrgyz Republic and Afghanistan to build a 1400 kilometers long HVDC transmission line which will bring 1300 MWs of clean power to Pakistan." "We already have grid interconnection with Iran and plan to further enhance it. We are also working with South Asian countries to bring interconnectivity within South Asia. We have found a lot of interest in CASA-1000 in the countries of the region such as Turkmenistan, Kazakhstan and Russia," he added. He congratulated four countries which through a Memorandum of Understanding (MoU) signed their commitment to work on Global interconnectivity. The MoU was signed among China, Russia, Japan and South Korea. He said that the four countries signing MOU represent more than 70 percent of Asia’s power demands. They, however, need to tap the unutilized resources of clean energy lying in the neighborhood of the proposed global grid, in those countries which might not have developed that much demand. Pakistan can be one of those countries, he stressed. Although at present, Pakistan might be facing a deficit of transformed energy, especially power, but has a sizeable potential in terms of its untapped energy resources. Such untapped resources have a large share of clean energy, apart from fossil fuels. While we hope to become self-sufficient in Power generation in 2018, we will still be left with an untapped potential of more than 60,000 MWs of Hydroelectricity Power, most of which lies right across the Pakistan-China border; also an untapped potential of more than 90,000 MWs of Wind Power in our South and an unlimited potential of Solar power all across the 850,000 sq kms of its area, with almost 300 days of bright sunshine. At present, Pakistan produces more than 40 percent of its electricity from non-fossil sources, mainly hydro-electricity. In the coming days, working closely with international players, we hope to explore the possibility of further advancement towards sustainable energy.-PR

Copyright Business Recorder, 2016

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