14TH INTERNATIONAL EXHIBITION FOR THE ENERGY INDUSTRY

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News Headlines for the month of
DECEMBER 2010

Feasibility studies: funding for energy projects awarded to US companies

ISLAMABAD (December 31, 2010) : Washington has reportedly given a clear message to Islamabad that it is going to extend funding for feasibility studies for those energy sector projects which will be awarded to the US companies, well informed sources told Business Recorder. This was conveyed by the President, Energy Markets Group (EMG), Ahmad Ghamarian at a recent meeting with the top government officials including Water and Power Development Authority (Wapda) Chairman Shakil Durrani. Ghamarian, maintained that M/s EMG has been hired by the United States Trade Development Agency (USTDA) for energy sector projects in Pakistan. He said the USTDA will allocate funds for identified energy sector projects for bankable feasibility studies in Pakistan. "EMG will recommend to USTDA, the energy sector projects for which feasibility studies are required. The project may include hydel, biogas, wind, solar energy and transmission. The Terms of Reference (ToR) for the studies of these projects will be prepared and then Request for Proposals (RFP) for bidding will be formulated for which only the US companies can participate," sources quoted Ghamarian as conveying to the participants. The funds will be arranged by the USTDA. The concerned departments will select the consultants/contractors and set the benchmarks. On achievement of those benchmarks, USTDA will arrange payment. John Simmons, Commercial Counsel of the US embassy in Islamabad, revealed that the US embassy through Commercial Counsel co-ordinates and facilitates the American companies for trade development in Pakistan. He further stated that the US will be willing to send the delegation of trade development agency to identify projects for which further studies are required and both countries can work together for development of those projects. Dr Samar Mubarakmand, Member Science and Technology, Planning Commission, who was also present in the meeting, briefed the participants that the exploratory drilling data of Thar coal area has revealed that the coal of Thar area is covered with rock like a rook, so gasification of Thar coal will remain entrapped. According to him, there is no chance of escapage of gases, so underground coal gasification will be best option for power generation at Thar. The underground coal gasification is the most important clean coal technology of the future, which will also substitute for deep coal mining for power generation. It can further be converted into liquid diesel, as the same is practised in other developed countries. "The US should provide financial assistance for technology for power generation, conversion of Thar coal into liquid diesel and execution of projects," sources quoted Dr Mubarakmand as saying. He further stated that the study on coal gasification for power generation has already started as Thar coal can play a pivotal role in overcoming the energy crisis both in long term and short term. Mubarakmand claimed that the World Bank and Asian Development Bank are keen to provide funds for this purpose. President EMG, showed interest in the project and requested to provide further details/information about the project for further consideration. He stated that at the moment capital investment is required which will further be considered for developing a mechanism for arrangement of funds.

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APC by Schneider Electric launches 'EcoBreeze'

KARACHI (December 31, 2010) : APC by Schneider Electric, a global leader in integrated critical power and cooling services, today announced the launch of EcoBreeze(tm), a modular indirect evaporative and air-to-air heat exchanger cooling solution for tackling the energy requirements of today's data centres. With the unique ability to switch automatically between air-to-air and indirect evaporative heat exchange, EcoBreeze(tm) consistently provides cooling to data centres in the most efficient manner. Available in individual 50kw modules that can be grouped up to four modules (200kw) or eight modules (400kw) of sensible cooling, the system effectively reduces energy consumption by leveraging temperature differences between the outside ambient air and the return air to provide economised cooling to data centres. Pat Johnson, Vice-President, Rack and Cooling Solutions, APC by Schneider Electric said, "EcoBreeze not only provides multiple types of air economising, its modular design also allows the unit to adapt to the future cooling needs of a data centre.-PR

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WAPDA committed to optimum utilization of hydropower potential

LAHORE (December 30, 2010) : WAPDA is committed to optimum utilisation of hydropower potential in the country, as execution of hydel projects will not only help bridge the gap between generation and consumption of electricity but also improve the ratio of low-cost hydropower in the National Grid. WAPDA Chairman stated this while speaking in a ceremony held here at WAPDA House to sign a Rs 1.912 billion contract for lot-3.1 of 106-MW Golen Gol Hydropower Project, which involves civil works of the power house, tale race and switchyard. WAPDA signed this contract with a joint venture of SAMBU, a Korean firm, and SARCO, a Pakistani firm, for the purpose. It is pertinent to mention that an agreement of Rs 7.52 billion for lot-2 of the project was also signed with the same joint venture couples of days ago. Golen Gol Hydropower Project, scheduled to be completed in four years will generate about 436 million units of electricity annually. According to estimation, the project will add about Rs 9 billion per annum to the national economy through socio-economic uplift in the country caused by the project It is worth mentioning that Pakistan, blessed with ample resources, possesses an identified hydropower potential of 60000 MW which stands at about over half a dozen hydropower projects of more than 1400 MW accumulated generation capacity are in the construction phase, three projects of about 4800 MW are available for initiating construction work, another five mega projects with a total capacity of 13200 MW are in the detailed engineering design phase, while feasibility studies of several projects with thousands of MW of generation capacity are also in progress.

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350 megawatts power production by next year: KESC CEO

KARACHI (December 30, 2010) : Chief Executive Officer (CEO), Karachi Electric Supply Company (KESC) Tabish Gouhar has said that 560 MW under construction units will start producing 350 MW power by next year. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI), Gouhar said due to short supply of gas the company has incurred additional expense of Rs 25 billion on furnace oil to keep its units operating during January to December 2010. He noted that KESC is getting only 70 MMCFD gas against its agreed supply of 250 MMCFD gas. Oil prices are about 2.5 times higher as compared to gas and still KESC is running its units on oil for the sake of general public. He said the efforts are underway to import Liquefied Natural Gas (LNG) to reduce its dependence on government for supply of gas and oil. He said that around 50 percent of KESC units are closed due to short supply of gas. If we get required gas supply we will reduce load-shedding. Gouhar said that only three hours load-shedding is being carried out in the city and that too due to the shortage of funds to pay oil bills. However, the industrial areas are exempted from load-shedding, he added. Gouhar announced to carry out a campaign against kunda-system particularly in the areas of Mehran Town adjacent to Korangi Industrial Area from January 1, 2011. Gouhar said that there are 2.3 million consumers of KESC and around 500,000 Kundas are being used in the city. Efforts are underway to remove the latter. He advised the KCCI members to share the information of their future expansion plans such as setting up new units with the KESC. He agreed to form a committee comprising of representatives of KESC and KCCI to sort out problems being faced by business community. Leader of businessmen group, Siraj Kasim Teli advised KESC chief to replace 250,000 old electricity meters with new ones. President KCCI, Saeed Shafiq said that the chamber has received many complaints regarding over-billing without meter reading. He advised KESC to set up an independent meter-testing laboratory to test meters in case of complaints.

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Rs 7.52 billion pact signed for 106 megawatts Golen Gol project

LAHORE (December 28, 2010) : Rupees 7.52 billion agreements was signed between Pakistan Water & Power Development Authority (Wapda) and Sambu-Sarco joint venture comprising a Korean and a Pakistani firm, here at Wapda House on Monday for Lot-II of 106-MW Golen Gol Hydropower Project. General Manager (North) Projects Fazal-e-Mabood and Sambu Board of Representatives Chairman Oh Sung Hoon signed the agreement on behalf of Wapda and the joint venture respectively. Golen Gol Lot-II involves construction of diversion weir, intake, gravel trap, sand trap, headrace tunnel, pressure shaft, pressure tunnel and roads. Construction work of Wapda offices and colonies for the project is at the advance stage of completion. Speaking on the occasion, Wapda Member (Water) Syed Raghib Abbas Shah dilated upon the significance of Golen Gol Hydropower Project and expressed the hope that the joint venture would complete the works in accordance with the schedule. Golen Gol Hydropower Project is a part of least-cost energy generation plan, being executed by Wapda on priority basis to harness the indigenous hydropower resources of the country with a view to improving the ratio of hydel electricity in the National Grid. The project is located on the River Golen Gol, a major tributary of the River Mastuj in Chitral district of Khyber Pakhtunkhwa province about 380 kilometres from Islamabad. On its completion, Golen Gol Hydropower Project will generate about 436 million units of electricity (GWh) to earn revenue of about Rs 1 billion annually. Being an environment friendly hydropower project, it will help reduce dependence on expensive thermal power, thereby saving foreign exchange amounting to US $34 million (equivalent to Rs 2.7 billion) per annum to the country. Wapda Member (Power) Muhammad Qasim Khan, Member (Finance) Syed Nazakat Ali Shah, Secretary Imtiaz Tajwar and other officers concerned also witnessed the signing ceremony.

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Pepco firms up five-year power generation plan

ISLAMABAD (December 27, 2010) : The Pakistan Electric Power Company (Pepco) has reportedly firmed up a five-year Public Sector Power Generation Enhancement Plan (2010-2015) whereby 10,000 MW of new capacity would be added to the national grid, official sources told Business Recorder. The defunct inefficiently run entity, which absorbed billions of rupees, has started load shedding across Pakistan, except Karachi due to shortage of power mainly due to annual canal closures. The plan, first in Pakistan, identifies locations, technologies and fuel that would be used to achieve the envisaged additions, sources said. They said that power generation enhancement plan was discussed between Pakistani and US officials recently for concept clearance. The National Power Plan 1994 is under review by Pepco/NTDC, and the five-year public sector power generation plan would be an addition and act as a catalyst. During Pak-US energy working group consultations a couple of months ago, in the wake of third ministerial level meetings in Washington, the US team leaders complimented their Pakistani counterpart Secretary Water and Power, Javed Iqbal. The Pakistani side energy sector review revolved around the role of power generation companies in order to secure capacity building. What Pakistan side presented was that four major power generation companies--JPGCL, CPGCL, NPGCL and LPGCL--operating in public sector needed prompt capacity upkeep to maintain sustainable availability of power. According to sources, the US team leaders were brought round to an understanding that the increased power outages, resulting from lowered engineering and mechanical reliability of gencos' existing machines needed urgent repair and revamping by way of rehabilitation of existing power plants through re-powering. The installed capacity of existing power sector generation companies is 4664MW with de-rated/dependable capacity of 3580 MW and requires upgrading through putting in place a set of nine modules-based strategic plan for re-powering Pakistan's existing generation capacities. The US side agreed that a total of 1237 MW needs to be re-powered to the gencos' tally against a price tag of $215 million. To obviate the capacity de-rated position, the implementation and execution of following schemes was discussed between Pak-US energy sector working group leaders i.e. Secretary Water and Power Javed Iqbal and David Goldwyn and David Lipton, who focused on the following: (i) combined cycle power plant at Nandipur 425 MW; (ii) combined cycle power plant at Chichonki Mallian 525 MW and; (iii) combined cycle power plant at TPS Guddu (replacement project) 747 MW. The future prospective power plants, contemplated for replacement of old and inefficient machines by Genco-III and Genco-II have, following technical specifications taken up with the US side for support. By NPGCL (Genco-III)--350 MW at NGPS Multan, 350 MW at SPS Faisalabad and 200 MW combined cycle plant at TPS Shahdara near Lahore. By CPGCL (Genco-III)--120 MW combined cycle plant at TPS Sukkur and 200 MW combined cycle plant at TPS Quetta. The implementation of foregoing exhaustive power generation program being capital-intensive has been suggested for financing through a combination of internal and external investments originating from domestic, PSDP, public-private partnership, grants/loans from MLBs/US supported aid agencies and bridge financing modes.

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PCMC identifies various locations for power projects

LAHORE (December 24, 2010) : Punjab Secretary Mineral and Mines, Shahid Mehmood has said the Punjab Coal Mining Company (PCMC) established by the provincial government, has identified various locations for 400-600MW coal based power projects in the province. He disclosed this in a meeting with Senior Vice President Lahore Chamber of Commerce and Industry (LCCI) Sheikh Muhammad Arshad here on Thursday. Executive Committee Member, Mian Zahid Javaid was also present. Mehmood said that a small Resource Strategic Unit has also been constituted for the fast track implementation of mineral strategies while evaluation of coal and iron ore reserves have been initiated to meet potential investors requirements in accordance with international standards. He further said that Mineral Strategic Plan for Punjab has been developed to make the mineral sector one of the major factors of economic growth. The Minerals and Mines Department in collaboration with the LCCI is also holding a seminar in January 2011 to generate debate among all the stakeholders. The seminar will be addressed by a number of notable local and foreign academicians. Some prominent businessmen and practitioners would help evolve a joint strategy to tap mineral potential of the province, he added. During the meeting, both the LCCI and the Punjab Mines and Mineral Department have decided to conduct a joint study to identify potential and constraints impeding investment and better utilisation of mineral resource base. Arshad said that the LCCI would also prepare two working papers on Rock Salt, its bye products and utilisation of coal for power generation. Appreciating the Chief Minister Punjab Shahbaz Sharif, he said that all out efforts would be made for the success of Punjab government's Mineral Strategic Plan as it was a shift from the regulatory mode to corporate working for attracting investment in this particular area. Arshad said that energy shortage could be bridged by putting in place coal-based energy plants for which they have marvellous reserves. He cited the examples of China and India where huge electricity was being produced through coal. He said that the contribution of the mineral sector in overall economic growth is not commensurate with the mineral resource potential of Punjab. He said that private sector was unable to make any investment in this sector due to lack of reliable data.

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1,800 megawatts added to transmission system in two years: Ashraf

ISLAMABAD (December 23, 2010) : Federal Minister for Water and Power, Raja Pervez Ashraf informed the National Assembly on Wednesday that 1,800 megawatt electricity was included in the country's power transmission system during the last two years. Replying to supplementary questions raised by parliamentarians, he said that there was shortfall of 5,000 megawatt and with the inclusion of 1,800 megawatt there has been improvement in power supply system. The minister said that the government has taken several measures to overcome the loadshedding adding that as compared to the months of October and November, last year, there was no loadshedding during the same months of this year. He said that loadshedding was not any new phenomenon; it has surfaced during 1973 and then in 1985, however, added that it has become regular feature since 2005. To another supplementary question, Pervez Ashraf said that keeping in view the shortage of gas in the country, the government has switched most the power generation units from gas to furnace oil. He said that the government had decided to exempt those areas, to pay electricity bill for a period, when these remained under flood and power was not restored. The delay charges for payment of the bill were also waived off, he added. He said that flood affected where power supply has been restored are regularly being billed and are not exempted. To another question, the minister said that the cost of service connection is recovered from the applicant for the connection. Under the criteria Rs 4,000 and Rs 15,000 was being charged from the applicant for domestic and commercial connection falling in the radius of 40 to 80 meter of electric pole, he added.

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China Mobile planning to invest in solar-powered cell sites

ISLAMABAD (December 22, 2010) : China Mobile is planning to make investment in project for developing solar-powered cell sites to overcome energy crisis following recent visit of Chinese Prime Minister Wen Jiabao to Pakistan which would encourage investment in energy and other sectors. According to an announcement of the China Mobile here on Tuesday, the company is focusing on development of solar-powered cell sites to play its role in energy saving through different measures. The telecom giant currently has the largest solar-powered telecommunication network in Pakistan. More than 150 cell sites are installed at different locations making ZONG the number one company in terms of solar cell sites. "The brotherly relations between China and Pakistan have become legendary and this is visible not just between the two governments but also between the people of the two countries", said Qian Li, CEO of China Mobile Pakistan - ZONG on the occasion of recent visit of Chinese Premier to Pakistan. "To further the cause of this friendship China Mobile resolves to help the government of Pakistan by bringing more Chinese investors to Pakistan" he added. More than 150 Chinese businessmen accompanied Chinese Prime Minister Wen Jiabao during his recent visit to Pakistan. Their main objective was to explore opportunities and to further enhance the existing bilateral trade and commerce relations between the two countries. Sino-Pak friendship and strategic relations have earned great reverence and allegiance for Pakistan by China. As a result, China Mobile is interested in expanding its operations in Pakistan. The company has made a very strong impact since its launch and is here to stay. After becoming the fastest growing network of Pakistan, ZONG has recorded 500 percent growth in terms of number of cell sites during the last three years. The company now has over 5,600 cell sites. Pakistan is a huge market, full of opportunities for foreign investors as it offers level playing field to both foreign and domestic investors. ZONG entered Pakistani market with an aggressive network expansion strategy and has continued to spread its coverage rapidly. "We truly believe that expansion to attain critical mass is key to gaining a competitive edge for our services in the still developing Pakistani market", says Qian. Pakistan, with a population of 170 million people, has tremendous potential for growth. Like other foreign companies ZONG is also aiming at capitalising on the opportunity by bringing in new products. Qian Li added that the Chinese people love Pakistan and despite critical law and order situation the Chinese love to work in Pakistan. ZONG's reach now stretches from the mountain tops of Ishkoman in Gilgit-Baltistan to the rocky plains of Buleda in Balochistan and to the mega cities. ZONG has invested US $1.66 billion in Pakistan so far. The company has generated more than 1700 direct and over 40,000 indirect jobs in the country. This investment has been made in less than two years since its launch and China Mobile is expected to invest more in Pakistan in coming years as a part of company's future investment plans, it added.

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Wapda, Harpo Hydropower Consultants sign agreement

LAHORE (December 21, 2010) : A Rs 70.434 million agreement was signed between Pakistan Water & Power Development Authority (Wapda) and Harpo Hydropower Consultants - a joint venture of three Pakistani and a German firms - here at Wapda House on Monday for updating of feasibility study of Harpo Hydropower Project. General Manager (Hydro) Planning Maqsood Shafique Qureshi and NDC Chief Executive Officer Chaudhry Ghulam Hussain signed the agreement on behalf of Wapda and the joint venture respectively. Feasibility study of Harpo Hydropower Project was completed by Wapda Hydro Planning Organisation with the technical collaboration of GTZ of Germany. KfW of Germany is providing grant for updating of feasibility study of the project. KfW has also committed to provide finances for detailed engineering design and construction of the project after successful updating of the feasibility study. Speaking on the occasion, Wapda Chairman Shakil Durrani thanked the assistance provided by the Germany, KfW in particular, for hydropower development in Pakistan.

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Deals worth $36bn signed with China

ISLAMABAD, Dec 18: Pakistan and China have signed 35 agreements and memorandums of understanding entailing investment of about $36 billion to cement what is perceived as a pragmatic trade and economic cooperation which will take the bilateral political trust and understanding to a new high. The signing of MoUs and agreements, which started hours after the arrival of Chinese Prime Minister Wen Jiabao here on Friday, continued on Saturday and culminated with the conclusion of Pakistan-China Business Cooperation Summit. Thirteen agreements and MoUs signed on Friday related to cooperation in the public sector, while 22 inked on Saturday were between private sectors of the two countries. Mr Wen and Prime Minister Yousuf Raza Gilani were present on both the occasions. The agreements relate to energy, rail transport, reconstruction, agriculture, culture, alternative sources of energy, banking, financial sector, chemicals, mineral development, livestock, fish harbour, cotton yarn, infrastructure development and enhancement of transmission capacity of NTDC. Information Minister Qamar Zaman Kaira said the projects would be completed during the next five-year development plan starting next year. Priority sectors for investment from China are: oil and gas, mining, infrastructure, power (coal, hydel, gasbased), information technology and telecommunication, chemicals, fertiliser, valueadded textile manufactures, engineering goods, textile machinery, automobile assemblies, electronics, automotives, agricultural implements, agriculture and agro-based industry, pesticides, cool chains, food and fruit processing and packaging, livestock and dairy farming. Addressing the business summit, the Chinese premier said his country would facilitate Pakistan to find markets for its products in order to reduce the trade imbalance. China will send trade promotion delegations to Pakistan for the purpose. He stressed the need for opening of bank branches in each other’s countries to help reduce the trade imbalance. Exchange of business delegations was an important pillar in trade and economic cooperation between the two countries, he added. Prime Minister Gilani said that Pakistan, with a thriving economy with political opinion of all shades supporting friendship with China, was a very advantageous location for outbound Chinese investment. “Pakistan can act as a conduit connecting western China to the Arabian Sea and South and West Asia as it is in the process of creating a national trade corridor connecting the north and south of the country.” Mr Gilani urged Chinese companies to invest in Pakistans energy sector as it had 185 billion tons of coal reserves. Hydropower, dams, agriculture and manufacturing sectors together with building of infrastructure, including road and rail networks, airports, sea ports and other facilities, held limitless opportunities of close collaboration, he added. The Chinese prime minister visited the National Disaster Management Authority and announced a grant of $10 million for the citizens’ compensation programme for flood vic tims and a concessional loan of $400 million to help meet their needs. Mr Wen said China would continue to help Pakistan in the post-disaster phase. Speaking at a banquet which he hosted for the Chinese premier, President Asif Ali Zardari said that the 60-year bilateral friendship continued to grow. “Our friendship has not only been mutually beneficial and contributed to progress, development and social harmony, but has also been an important factor for regional and international stability. “I am sure time-tested and all-weather Pakistan-China friendship should soar to new heights under your (Mr Jiabao) able leadership and wise guidance.Your visit is another watershed in the proud history of relationship between our two countries. I have no doubt it will serve to forge even closer bilateral ties and cooperation,” the president said. Prime Minister Gilani hosted a lunch for the Chinese premier. He said that Pakistan desired a peaceful environment in the region for development and improvement of the living standards of its people. “Consistent with this aspiration, Pakistan seeks a peaceful resolution of all issues with India, including the longstanding Kashmir dispute. Similarly, a stable Afghanistan will open up vast opportunities for Pakistan and other regional countries,” he said.

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Pakistan to seek China's assistance in overcoming energy crisis

ISLAMABAD (December 17, 2010) : Pakistan may seek China's assistance to overcome power crisis through three gorge dam technology. The three gorge dam plant, world's largest electricity-generation plant having the capacity of producing 36,000 Mega Watt electricity can become a major energy source for the country. Talking to APP here on Thursday Ahmed Kamal, spokesman National Disaster Management Authority (NDMA) said that China is a time tested friend of Pakistan and its assistance in disaster management can help boost capacity to take concrete measures for the future. He said that floods badly affected power infrastructure in different parts of the country and there is a dire need to get help from friendly countries for the rebuilding process. He lauded China's role during calamities including Attabad landslide and devastation caused by the country's worst flooding. "At the start of this year China extended its support to Pakistan for the affected people of Attabad land sliding and offered to construct a 'replacement road' to continue Pakistan-China trade", Ahmad Kamal said. He said that expenditure of replacement road was around $160 million, which was fully sponsored by China, adding, it also provided food and fuel to the stranded population of the area. This year during the two major calamities including floods and Attabad land sliding, China has so far provided around 74 tons diesel, 15 tons petrol and 300 tons coal to meet the fuel requirement of Attabad population. Whereas it also distributed 2,719 tons food items, 0.9 million liters diesel and 0.18 mln liters petrol for the natives of Attabad, Sarat and adjoining areas. For 20 million affected population of devastating floods, which hit large part of the country in July, China also opened its door and come forward to help people. During relief operation China operated 14 relief flights with the help of four helicopters and established two field hospitals, including one in Thatta and one in Sehwan. China also provided 12,800 tents, 40 tons medicines, 70 tons food items, 1,850 generators, 242 water purification plants, 200 cartoons of water bottles, 100 cartoons of First Aid boxes and 58 tons miscellaneous relief items. Ahmed Kamal stated China is well equipped with the meteorological and seismology technology adding if it helped Pakistan in this field it would be instrumental in reducing losses of any calamity in future.

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Ensures 93 percent guaranteed power supply: 'Turkish power ship connected to Karachi Grid'

ISLAMABAD (December 17, 2010) : The Turkey-based Company KARKEY on Thursday said the world largest power ship has directly been connected to the Karachi Grid, which will ensure 93 percent guaranteed physical supply of electricity. According to details of the 'Mounted Power Project', prepared by Turkish investor for the government of Pakistan, the country will save over Rs 10 billion during the contract period of five years on account of power transmission and fuel transportation through Power Ship at Karachi. The details show that the cost of electricity will be Rs 10 per kWh through the power ship project. According to break-up of financial savings, the transmission savings over the rental period of five years, will be over Rs 6.61 billion whereas savings on account of fuel transport will be over Rs 5 billion. The National Transmission Dispatch Company (NTDC) losses range between 6 to 8 percent depending upon voltage level, transmission distance and transformation mechanisms. The Power ship is directly connected to the Karachi Grid, which will ensure 93 percent guaranteed physical supply of electricity. Ship-mounted Power Plants use seawater for cooling purposes; whereas the land-based plants use either ground water or the surface water for cooling purposes. Thus this ship-mounted power project will also conserve sweet water. The project is the largest investment by a Turkish company in Pakistan. Keeping in view the global economic recession and specific conditions of Pakistan, it was not easy to bring investors to the country.. The Power ship project is entirely financed by International Banks, sources said.

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Kohala hydro-power project likely to be awarded to a Chinese company

MIRPUR (December 17, 2010) : China is playing a pivotal role in speedy development of hydro-power sector in the country, besides sharing technical support and assistance for reconstruction of quake-hit areas of Azad Jammu and Kashmir (AJK). The proposed Kohala hydro-power project in Muzaffarabad district, the largest private sector hydro-power project in Asia, was one of the mega projects next to the under-construction Mangla dam raising project and 969 Megawat Neelam-Jhelum hydel-power project, and was likely to be handed over to a reputed Chinese construction company, official sources told APP on Thursday. Talks between the top officials of the governments of both the countries were expected to be held on multi-million dollar 1100 Megawat Kohala hydro-power project during the scheduled three-day visit of the Chinese Prime Minister to Pakistan commencing from Friday December 17, the sources revealed. Elaborating the salient features of the Kohala Hydel Power project, the sources revealed that Kohala hydro-power project, a run-of-the project between Garhi Dopatta and Domel Band, consists of 14 kilometer long tunnel and a simple diversion between Garhi Dopatta and Domel. The project has already been found environmentally up to the World Bank standards. It may be added that a plant and machinery for 84 Megawat hydel Independent Power Project (IPP), "the New Bong Escape", at Mangla, is also being imported from China.

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76 power transformers installed in Bajaur Agency

PESHAWAR (December 17, 2010) : To provide the electricity facility to the local communities, government has completed the rehabilitation of electricity distribution system by installing seventy six transformers and 48,600 meters long main transmission line in different villages of Bajaur Agency. These schemes would benefit more than 22 thousands of locals in the area. According to FATA Secretariat under these schemes, 22 electrical transformers along with all accessories have been installed in Badan, Dabar and Sewai villages of Mamund Tehsil. The electric supply system has also rehabilitated in Kotkai Sharif Khana village of Charmang valley by installing 20 transformers along with all accessories while 16 transformers have been installed in Khazana village and surrounding areas of Khar Tehsil. Likewise in Hazar Nao, Shago, Shin Katai and Tanarai villages of Mamund tehsil 18 electrical transformers and electric polls have been installed to rehabilitate the electricity system in these areas. Press release added that some 48600 meters long electricity main transmission lines have also been installed and 60 HT poles, 220 double arming bolts and other accessories were fixed in Nawagai 2 Loisum corridor of Nawagai Tehsil to rehabilitate electricity system in the area. These schemes in Bajaur Agency not only rehabilitate the damaged electricity system but also would benefit more than 22 thousands of locals in the area. The local elders appreciated the government efforts by rehabilitating the damaged electricity system and said that through this activity most of peoples have re-opened their shops, which will restore the economic activities in the area.

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Chinese company completes survey of two blocks of Thar Coal deposits

ISLAMABAD (December 16): Chinese company Chin Wa has completed survey of two blocks (blocks 5,6) of Tharcoal deposits and many Chinese companies have shown interest in power generation project from coal. It is expected that formal signing ceremony of the project would be held during upcoming visit of Chines Prime Minister Wen Jiabao to Pakistan. According to the survey, the total estimated deposits of coal in eight blocks of district Tharparkar is around one trillion and 75 billion tons, which could be utilized for producing five thousands megawatt for several decades. Keeping in view interest expressed by chines companies in investment, President Asif Ali Zardari has directed Thar Coal Energy Board to finalize report on latest situation. Geological Survey of Pakistan has also completed survey from Block 1 to 4 which revealed that deposits of 2566.91 million tons are in block one, 1558 million tons in block 2, Block 3 contains 2008 million tons whereas the block 4 has deposits of 2471 million tons. It is estimated that in block (5) around 1394 million tons is present in area of 63.5 square kilometer and 1656 million tons in block 6. On block 2, Engro Chemical has finalized arrangements to stark work after completion of feasibility report whereas machinery has been installed at block 1. Managing Director, Tharcoal project, Dr. Samar Mubarik Mand informed that 10,000 MW electricity could be produced in two and a half year from every block. He said that on block 5, power plant will be installed to convert coal into gas to electricity generation. Block 6 is given to Pakistani company Orical Coal Field which has completed preparation of coal excavation and power generation.It is expected that work on the project will be further expedited after agreements with Chines companies. According to representatives of World Bank, the final feasibility report is being prepared after collecting data of survey.

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Most expensive rental power plant: Ministry alters agreement for benefiting Karkey

ISLAMABAD (December 10, 2010) : The Ministry of Water and Power has reportedly altered agreement to extend extra financial benefit to the most expensive rental power plant of a Turkish company, Karkey, currently engaged in setting up ship-based rental power plant near Karachi, sources close to the Managing Director, PPIB told Business Recorder. The sources said, at a meeting last month under the chairmanship of Secretary Water and Power, M/s Karkey averred that the Federal Board of Revenue (FBR) has issued special exemption order no. 35/2010 on August 6, 2010, exempting the power ship from payment of customs duty chargeable thereon subject to certain terms and conditions. However, the company has been specified as importer of the power ship whereas the Rental Services Contract of April 23, 2009 between the company and the Lakhra Power Generation Company Limited (the buyer) stipulates that it (the buyer) shall be importer of record and shall be responsible for obtaining the required temporary import and export licences. According to sources, the meeting decided that PPIB shall convey a request to the FBR for partial modification of the special exemption order such that M/s Karkey is substituted with the buyer as importer of the ship. The FBR representative of expressed no objection to change the name of the importer in accordance with the Rental Services Contract. With regard to sales tax, the FBR stated vide letter No 4/4-STB/2007 (pt) 110921-R248 and Sixth Schedule of the Sales Tax Act, 1990 that power plants and ships are separately not chargeable and are exempt. With regard to the income tax, sources said, the company pleaded that six percent withholding tax shall be treated as full and final tax liability without the requirement of filing or declaring its annual income. The FBR was of the opinion that no project specific exemption can be provided and the income generated from the production and sale of electricity has to be assessed and taxed according to the applicable taxation regime and for that the company has to approach the relevant Income Tax Commissioner. The PPIB pointed out that the company was liable to pay withholding tax at the rate of 6 percent and had to be assessed in accordance with applicable laws of income tax as the rental services contract was governed by the laws of Pakistan. Moreover, it was explained that in order to avoid discrimination the tax regime and/or its applicability should be neutral and irrespective of the status of the company whether resident or non resident. It was decided that the company will take up the matter with the FBR for its resolution prior to the end of financial year 2010-11. It was further agreed and decided that only amendments to the extent of section 9 of the 'side agreement' (and nothing beyond that whether material or otherwise) shall be discussed and finalised. Similarly, it was decided that M/s NTDC would undertake maintenance of approximately 350 meters of interconnection and transmission line between the switchyard of the company on board the power ship and first tower erected by KSEC, M/s Karkey undertook to provide sufficient spares to facilitate maintenance with no extra charges.

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PCC-USA organises first-ever coal forum in Houston

LAHORE (December 04, 2010) : Pakistan Chamber of Commerce-USA (PCC-USA), the leading trade organisation of Pakistani-American businessmen, organised the first ever coal forum in Houston in November to attract investments in coal sector of Pakistan According to a press release issued by PCC-USA here on Friday, President of the chamber, Abdul Quayyum Khan Kundi in his welcome address stressed the need to use indigenous resources to bridge the supply-demand gap in electric power. He insisted that the clean coal technologies are now available to use coal for power generation. He requested the government of Pakistan to put bilateral investment treaty (BIT) negotiations on a fast-track to attract more foreign direct investment from US investors. Keynote speaker at the forum, Ambassador Hussain Haqqani thanked PCC-USA for organising this first coal forum. He informed the audience that Pakistan Peoples Party government realises that coal is the most viable energy source for Pakistan. To realise the full potential of coal, government has so far awarded four blocks to foreign investors. He agreed with the PCC-USA position that BIT should be negotiated on fast track. On the occasion, Managing Director Thar Coal & Energy Board, Ajaz Ali Khan presented an extensive presentation on Thar coal deposits and the efforts made by the government to speedily tap it. He also provided an insight into the volume of deposits, estimated to be 187 billion tones.-PR

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Iranian company to set up 1,000 megawatts wind power plant

KARACHI (December 03, 2010) : An Iranian Company M/s Sanir has signed a $100 million with a Pakistani company to provide 1000 MW electricity to Sindh province by setting up wind power plant. This was disclosed by Ahmad Fasihi, Iran's Commercial Counsellor in Karachi at a meeting with members of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) here on Wednesday. In addition, Iranian companies can also assist Pakistan in constructions of highways, railways, bridges, huge building complexes, grain depots and dams. Joint ventures in these fields could be fruitful for both countries. Pakistani investors can participate in various projects, including buying or starting private banks in Iran, he said adding that with the launch of an Iranian bank in Pakistan and vice versa could help bi-lateral trade reach USD three billion yearly. Iran has a great potential in the technical service sector relating to installation and exploration of energy power plants, which could assist Pakistan in over-coming power shortages, he said. Fasihi said that with the efforts of its commercial office in Karachi, a trade delegation from Hamadan province headed by President of Hamadan Chamber of Commerce and Industry and Mines and another trade delegation from Fars province (Shiraz), headed by its president are expected to visit Pakistan early next year. Similarly, a trade delegation from Pakistan is expected to visit Kermanshah and Kordistan provinces in Iran. Earlier Tariq Sayeed, Chairman, Pak-Iran Business Council of FPCCI appreciated the efforts of Iran's Commercial Counsellor in Karachi in arranging exchange of different trade delegations to both the countries which resulted in signing of agreement in various fields and increased mutual (non-oil) trade volume from $350 million in the last four years to $800 million in the previous year and it is expected that the trade volume would exceed $1 billion in the current year as a result of 45 percent increase in bi-lateral transactions.

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Chinese company to invest in hydrocarbon projects

ISLAMABAD (December 03, 2010) : Federal Minister for Kashmir Affairs & Gilgit-Baltistan, Mian Manzoor Ahmad Wattoo held a meeting with a Chinese delegation headed by Lio Zhong, head of Sinohydro Corporation, here on Thursday. Wattoo said Pakistan has immense resources for the generation of hydropower energy and government of Pakistan wants to exploit these for the welfare of people. Lio Zhong expressed the interest of his company in hydropower projects in Pakistan. He assured that his company would visit the sites in AJK and Gilgit-Baltistan and then present an offer for further proceeding in the matter. The meeting was also attended by Additional Secretary Kashmir Affairs & Gilgit-Baltistan, Ghulam Abbas Nakai and other officials of the ministry.-PR

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Call to exploit alternative energy resources

KARACHI (December 01, 2010) : Pakistan needs to exploit the alternative energy resources, as there will not be enough gas available for generating electricity by 2030. Pakistan could be forced to buy costly electricity from rental power plants if the efficiency of existing power plants was not improved. These views were expressed by speakers at a book launching ceremony organised by Humdard University here at Karachi Pres Club on Tuesday. Addressing the ceremony, Khalid Umer, Provincial Minister for Environment and Alternative Energy, said that his ministry would always welcome those who could contribute for development of new energy sources. Talking about the book titled "Energy Resources and their Utilisation in Pakistan" authored by Dr Nasim A. Khan, Tahir Saleem from Institute of Electrical and Electronics Engineers Pakistan (IEEEP) said that it was the first book based on local data on the alternative energy, which could be a guideline for the country's future energy policy. Nasim A. Khan, who is also Vice Chancellor of Hamdard University, said that almost 70 students including four PhD students were studying alternative energy in the university. According to data of the author, the quantum of solar energy reaching Pakistan has 77 million times more potential than her hydropower potential. Solar energy is directly converted into electricity by photovoltaic cells. Although the voltage attainable by one cell is insufficient, large number of cells can be connected together in series to attain high voltage and currents. The only solar-cell manufacturing industry in Pakistan is in Taxila by the name of Akhter Solar, with a production capacity of 3 MW per year. To demonstrate the performance of wind turbines in Pakistan, 40 wind turbines, of 750 watts capacity each were installed at Karachi coast. The energy produced by these turbines was stored in a bank of batteries that was subsequently used to lit street lights of a small area in Clifton. Technology in bio-energy has gained initial foothold in Pakistan and due to the effort of Pakistan Council for Renewable Energy Technology 2000 biogas plants have now become operative in the country. Energy can be extracted from the ocean in the form of tides, or Ocean Thermal Energy Conversion (OTEC). Several tidal sites have been identified by National Institute of Oceanography (NIO) while tidal stream velocities on the creeks have also been ascertained. An investor based in USA has obtained a letter of interest to initiate tidal power project with 50 MW of power.

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OGDCL approves uplift plan for Sanjaro gas field

OGDCL approves uplift plan for Sanjaro gas field RECORDER REPORT ISLAMABAD (December 31, 2010) : The Board of Directors (BoDs) of Oil and Gas Development Company Limited (OGDCL) has approved a development plan for Sanjaro gas field, with the capacity to produce 30 million cubic feet per day gas and 100 barrels per day condensate, that would cost $63 million, Business Recorder has learnt reliably. BoDs of OGDCL approved development plan in its meeting held on Thursday with Secretary Petroleum Imtiaz Qazi in the chair. OGDCL would, reportedly, hire consultancy services of Enra. The Dhodhak field of OGDCL has depleted and OGDCL has decided to shift plants from Dhodhak to Sanjaro field, sources said adding that OGDCL authorities informed its Board of Directors that development project will be completed in one year's time. OGDCL is also working on development plan of Kunnar Pasakhi Deep Project (KPD), Uch, Dakni and Jhal Magasi fields. The Board was informed that OGDCL had received bids for KPD, Dakni and Jhal Magasi fields which are under evaluation. OGDCL has received three bids for multi million dollar KPD following a controversial formula which gives discretionary powers to OGDCL management to award the contract to the higher bidder. OGDCL has adopted an inexplicable formula: to award the contract for a KPD project based on 30 percent mark-up for price bid and 70 percent for technical proposal. Kunnar Pasakhi field will produce 250 million mmcfd and 286 metric tons LPG. A powerful group operating in the energy sector was reportedly eyeing the KPD field and the bid formula has, therefore, reportedly been manipulated to award the contract to a favoured party, sources confided. OGDCL received bids from three parties-Petrosin, PDIL backed by Hyundai and Malaysia-based Company KNN. Senate Standing Committee on Petroleum and Natural Resources has also expressed concern over the revised bid formula fearing that it may lead to litigation. One party has already challenged the revised formula in Islamabad High Court. Senate body observed that a powerful group in LPG sector was behind a move to corner the LPG extraction market. The senate committee has directed OGDCL management to submit details of revised criteria.

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Cooperation in energy field: pact with Russia to be signed during Zardari''s visit

ISLAMABAD (December 26, 2010) : Pakistan and Russia are to sign a pact on co-operation in the energy field during the forthcoming visit of President Asif Ali Zardari to Russia, sources in the Ministry of Petroleum told Business Recorder. The Cabinet in its meeting on November 10, 2010, had approved, in principle, an MoU on co-operation in energy sector with the Ministry of Energy of the Russian Federation. The MoU was initiated by the Ministries of the two countries on November 19, 2010, in Moscow and is to be signed by the President of Pakistan during his forthcoming visit to the Russian Federation for which dates are being finalised by the two countries. The draft MoU envisages mutual co-operation in the field of fuel and energy, covering the following sectors: (i) exploration, development and operation of oil and gas fields; (ii) hydrocarbon processing; (iii) coal industry; (iv) creation, operation and development of the energy infrastructure; (v) improvement of energy efficiency; and (vi) other areas of co-operation by mutual consent of the parties. Sources said that the MoU, which was duly vetted by the Ministry of Law, Justices and Parliamentary Affairs, was cleared by the Cabinet, in its meeting on December 15, 2010, which was presided over by Prime Minister Yousaf Raza Gilani.

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Iran cuts subsidy on POL: import volume may soar by around $6.3 billion

KARACHI (December 22, 2010) : As a result of subsidy cuts especially on petroleum products (POL) by Iran, the Pakistan's import volume of POL is expected to soar by around 6.3 billion dollars in coming months, analysts said. They further said although the removal of subsidy in POL products in Iran would discourage bootleggers to transport Iranian POL products to local markets, the same would create more pressure on imports bill. The analysts said the import of POL products, which is presently stood at over 30 billion dollars approximately, would be surged by 6.3 billion dollars in coming months due to said reason. Moreover, they said the smuggled Iranian POL products were presently catering 21 percent of market demand and after the withdrawal of POL subsidy in Iran, the country's imports bill would be jumped by 6.3 billion dollars in couple of months. Replying to a question, they said the bootleggers, who earlier marketed Iranian diesel at Rs 22 per liter in local markets, including all other expenses, would now purchase the same at Rs 47 from Iran. They therefore, opined that the subsidy cuts of Iran in POL products would discourage its illegal trade but put excessive financial burden on the country's imports bill. The analysts also urged the government, who is already facing serious financial problems to meet foreign commitments, to find other resources to maintain its import bill at sustainable level.

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SSGC's efficiency project: World Bank to provide $200 million

ISLAMABAD (December 19, 2010) : The World Bank has agreed to provide $200 million to Sui Southern Gas Company (SSGC) for 'Natural Gas Efficiency Project' to replace pipeline, metering equipment for consumers and rehabilitation works in a bid to reduce 'Unaccounted for Gas' (UFG). SSGC has prepared a $272 million project, and $200 million financing was being sought from the World Bank. A World Bank mission visited Islamabad and Karachi on December 8-18, 2010, to work with government of Pakistan counterparts and implementing agencies to execute the proposed 'Natural Gas Efficiency Project'. "The mission agreed with the government and SSGC on a list of project issues which require finalisation by SSGC," sources said. Training and capacity building will be included, as will be financing of an 'Owner's Engineer' and a 'Lender's Engineer'. The SSGC has a substantial debt burden which currently, in part, is serviced by rolling over loans. SSGC has agreed with World Bank to control and target its capital expenditure as a prime measure for managing its debt burden, so that a satisfactory debt service ratio (debt service requirements vs. free cash flow) can be maintained within the project period. The company will provide the Bank with a plan to that effect. The project shows healthy economic and financial rates of return of more than 30 percent based on conservative assumptions, reducing UFG by about 21 billion cubic feet per year. SSGC and the mission agreed on the assumptions to be used for the analyses. SSGC will utilise an Owner's Engineer (a firm) to assist with implementing the project and to help ensure the company access to latest technological developments. The procurement of the Owner's Engineer shall be well under way when the project is sent to the Bank's Board. Furthermore, SSGC will have a full-time Project Manager, supported by a small team and with project services provided by dedicated persons within the company's departments (such as for various field operations, procurement, financial management, safeguards, etc). The Project will include a Technical Assistance (TA) component that will seek to enhance SSGC's competence level notably in areas related to the project activities, which will be the company's focus in a five-year project period and beyond. SSGC has a Gas Training Institute that requires upgrade and funding, and SSGC will make a proposal to the Bank for TA (and other) in support of the institute. SSGC, assisted by a consultant, has developed an Environmental and Social Management Framework (ESMF) that describes the (benign) environmental and social impacts of the Project. The ESMF includes an Environmental and Social Management Plan as guidance for the upcoming operational work. Following a minor revision, SSGC will upload the ESMF to its website and make it available at the Sindh/Balochistan libraries in project-impacted districts. The Executive Summary shall be made available in Urdu and Sindhi. This work should be urgently undertaken since the Bank requires a notification from SSGC that the document distribution has been undertaken before the Bank can declare the Project appraised and move to negotiations. The mission discussed the various elements of the comprehensive procurement plan that has been drafted. SSGC will undertake a final review, notably of phasing of procurement activities before resending to the Bank for clearance. The agreed Procurement Plan will be attached to the Minutes of Negotiations. SSGC agreed with the mission on indicators, to monitor progress and fulfilment of objectives. SSGC will complete draft, notably concerning annual goals and incomplete information relating to indicators for technical assistance. It was agreed to add a new governance indicator relating to more detailed UFG reporting to Ogra.

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China will be requested to revive refinery project

ISLAMABAD (December 15, 2010) : Pakistan will request Chinese Prime Minister Wen Jiabao to revive Coastal Oil Refinery project at Gwadar in Balochistan which was shelved in 2009-10 due to China's declaration of the province as a no-go area for Chinese nationals, sources in the Petroleum Ministry told Business Recorder. According to official documents the reason for the Chinese government's decision to abandon projects in Balochistan is slow progress and economic recession. The proposed project was part of China's plan to invest $12 billion in multiple schemes in Pakistan. During former president Pervez Musharraf's visit to China in February 2006, China had expressed interest in constructing an oil refinery in Gwadar with the capacity to refine 60,000 barrels crude oil per day. If the Pakistan government succeeds in convincing China to restart the oil refinery project the country would have two refineries as UAE state run International Petroleum Investment Company (IPIC) has also expressed interest in setting up Khalifa oil refinery in the country on which work is suspended due to the controversy with Pakistan government over the extension of the Managing Director of Pak-Arab Refinery (Parco) Rasheed Jung's tenure. Pakistan is ready to offer incentives to lure the Chinese back to Balochistan: 20-year tax holiday and waiver of one percent Workers Profit Participation Fund (WPPF) to set up Coastal Refinery is also part of the incentives. The Chinese companies will be urged to participate in oil and gas exploration activities either separately or in a joint venture with Oil and Gas Development Company Limited (OGDCL). Pakistan and China are expected to sign a Memorandum of Understanding (MoU) on energy co-operation during Prime Minister Jiabao's visit scheduled for 17-19 December 2010. Pakistan and China had also considered a feasibility study for an oil pipeline from Gwadar port to western China to link it to the Persian Gulf. This proposal was shelved after China's withdrawal from the coastal oil refinery project. "Now the proposal for oil pipeline will also be discussed," sources added.

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Refineries' capacity utilisation rises to 69 percent

KARACHI (December 11, 2010) : The country's refinery capacity utilisation increased to 69 percent in November 2010 as compared to average utilisation of 63 percent in the first five months of FY11. "The production ramp-up from Parco has pulled up country's refinery capacity utilisation to a decent 69 percent in November 2010 as against average utilisation of 63 percent in the five months of FY10, partially mitigating the impact of curtailed throughput from Byco in November 2010", analysts said. During November 2010, Parco capacity utilisation stood at 69 percent while BYCO's stood at a mere 28 percent. On the other hand of the spectrum, ATRL and NRL capacity utilisation continued to be above 80 percent, standing at 85 percent and 81 percent in November 2010, respectively. PRL's refining capacity also stood at a respectable level of 80 percent in November 2010. "Refinery sector recorded an improved throughout performance during November 2010 despite a steep decline in production from Byco which was bridged by ATRL, NRL and PRL", Nouman Khan, an analyst at Invest Capital and Securities said. However, Byco and PARCO's throughput declined by 29 percent and 12.5 percent on year-on-year basis in November 2010 while ATRL, NRL and PRL throughput witnessed a significant jump of 6.9 percent, 9.7 percent and 30.0 percent on year-on-year basis respectively.

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$7.6 billion TAPI gas project signed

ASHGABAT (December 12, 2010) : Pakistan on Saturday joined Turkmenistan, Afghanistan and India in signing the long-awaited over $7.6 billion dollars gas pipeline project to help it meet its sharply rising industrial and domestic demands. The "inter-governmental agreement" (IGA) and the "Gas sales and purchase agreement" (GSPA) were signed by President Asif Ali Zardari, Afghan President Hamid Karzai, Turkmenistan President Gurbanguly Berdimuhamme-dov, Indian Petroleum Minister Murli Deora and President of the Asian Development Bank Haruhiko Kuroda here at a local hotel, almost 15 years after the project was envisioned. Prime Minister Manmohan Singh did not attend the summit as he was away to attend the India-EU summit at Brussels. The 1,680 km long Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline backed by the Asian Development Bank will bring 3.2 billion cubic feet of natural gas per day (bcfd) from Turkmenistan's gas fields to Multan in Central Pakistan and end in the north-western Indian town of Fazilka. Under the IGA, the four nations will commit to provide government support including security for the pipeline. Construction of the pipeline is likely to commence soon and will be completed by 2013-14. The project would help overcome Pakistan's growing energy crisis that has caused electricity shortages and protests across the country. President Asif Ali Zardari in a statement to the media said gas connectivity through the project would add to regional prosperity by increasing synergies of economies, and will reinforce the institutional framework for expanding co-operation with each other. The President said Pakistan was an energy deficient country and welcomes its partnership in the project. He said Pakistan's keenness for successful implementation of TAPI was an evidence of its quest for shared prosperity and economic development. The President said Turkmenistan's policy of permanent neutrality has ensured focus on economic development. He said it has enabled it to enter into a strategic energy partnership with its South Asian neighbours. "Pakistan and Turkmenistan share bonds of a common religion and history," he said and conveyed best wishes of the people of Pakistan. President Zardari said the gas pipeline project would also bring economic dividends for Turkmenistan and contribute to the impressive pace of development under the visionary leadership of President Berdimuhammedov. He wished continued progress and prosperity to the people of Turkmenistan and other TAPI countries and congratulated all on the successful summit. Under the agreement Afghanistan's share would be 500 million cubic feet per day (MMcfd), Pakistan 1,325 MMcfd and India 1,325 MMcfd. The demand for natural gas in Pakistan has increased by almost 10 percent annually from 2000-01 to 2007-08, reaching around 3,200 MMCFD, against the total production of 3,774 MMCFD, according to the sources at the Ministry of Petroleum. During 2008-2009, the demand exceeded the available supply, with production of 4,528 MMCFD against a demand for 4,731 MMCFD, indicating a shortfall of 203 MMCFD. The project was initially designed to provide Turkmen gas to Pakistan through the volatile Afghanistan in an agreement signed in May 2002 in Islamabad and was known as Turkmenistan-Afghanistan-Pakistan pipeline project. India was later invited to join in April 2008. The four countries signed the framework of an agreement to construct the gigantic pipeline pumping natural gas to South Asia on September 20. Pakistan's federal cabinet gave approval to the Gas Pipeline Framework Agreement (GPFA) of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project in its meeting on October 27, 2010. Minister for Petroleum and Natural Resources Syed Naveed Qamar representing Pakistan inked the GPFA at Ashgabat to lay down the terms of gas supply. Pakistan has sought guarantees of gas supply from Turkmenistan and proposed a route that closely follows the Afghan-Iran and Pakistan-Iran borders and is shorter and safer. The participating countries earlier agreed that the gas shall be supplied from Douletabad and adjacent gas fields of Turkmenistan, which was subsequently changed to the South Yolotan-Osman and adjacent gas field with consent of TAPI members during 5th Technical Working Group meeting in August 2010. According to the initial plan the gas pipeline was to run alongside the Herat-Kandahar Highway in Afghanistan and pass through Chamman-Zhob-DG Khan-Multan in Pakistan. The project would not only bring millions of dollars in transit fee for Afghanistan and Pakistan, but also create jobs during and after the construction. The TAPI pipeline project was also part of the discussions at high-level donor meetings in 2006 and 2010 and was included in Afghanistan's 2008 National Development Strategy. The G8 Foreign Ministers endorsed the project this year at Gatineau, Quebec and approved the new initiative to facilitate joint infrastructure projects identified by Afghanistan and Pakistan. Turkmenistan has the fourth largest proven reserves in the world. According to International Energy Outlook 2010, published by the US energy Information Administration, the world's top reserves of gas are 6.609 trillion cubic feet. The top countries holding the biggest world reserves are Russia, followed by Iran, Qatar, Turkmenistan and Saudi Arabia.

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Kabul pledges to secure gas pipeline

KABUL (December 13, 2010) : Afghanistan will deploy up to 7,000 troops to secure a major transnational gas pipeline slated to run through some of the most dangerous parts of the war-torn country, an official said on Sunday. The pledge comes a day after Turkmenistan signed broad agreements with Afghanistan, India and Pakistan at a summit in its capital Ashgabat on the ambitious venture. The 1,700-kilometre (1,050-mile) TAPI pipeline, Ashgabat's dream project that first appeared in 1995, has been on hold for many years due to the Taliban insurgency in Afghanistan. The pipeline aims to transport over 30 billion cubic metres of gas annually from the Dauletabad gas fields in south-east Turkmenistan and could turn into a cash cow for Afghanistan in transit fees. "This huge project is very important for Afghanistan," Wahidullah Shahrani, the minister of mines and industries, told a press conference in Kabul. "Five thousand to seven thousand security forces will be deployed to safeguard the pipeline route. "The proposed Afghan section of the pipeline passes through southern Taliban heartlands including Helmand and Kandahar, where the central government has a tenuous grip on the territory. "We will also keep an eye on the security situation as it develops. If we conclude that more troops are needed, we will take action," the minister added. According to Shahrani, the pipeline will generate thousands of job opportunities for local communities during and after construction. "This (job opportunities) will encourage local communities to contribute more in securing and protecting the pipeline," he said. The pipeline will allow the Afghan government to earn "hundreds of millions of dollars each year" from transit fees, he added. Construction of the pipeline is due to start in 2012 and be completed and operational by the end of 2014, he said. The pipeline is slated to go through the Quetta area in Pakistan and end in Fazilka, an Indian city near the India-Pakistan border.

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Khalifa Coastal Oil Refinery: IPIC to go ahead with project

ISLAMABAD (December 13, 2010) : Abu Dhabi oil giant International Petroleum Investment Company (IPIC) has finally agreed to go ahead with the multi-billion dollar Khalifa Coastal Oil Refinery (KCR) project and a 'participation agreement' is likely to be signed between Pakistan and IPIC next month," Business Recorder has reliably learnt. KCR is estimated to have projected output capacity of 250,000 barrels per day located in Balochistan. The IPIC had suspended work on KCR in January 2009 due to global recession and a row over management issue with Islamabad. Total cost of KCR has been estimated at around $6 billion. Parco was to hold 24 percent shares and IPIC the other 76 percent in the refinery to be built in the coastal area of Hub, Balochistan. Parco is a joint venture between the government of Pakistan and IPIC. "IPIC has now expressed willingness to resume work on KCR and Pakistan and IPIC are expected to sign 'participation agreement' next month," sources said, adding that work on refinery will be completed in year 2013. "Pakistan is emerging as a big market for oil especially furnace oil (FO) after rising demand of power generation to overcome energy crisis," sources maintained. Abu Dhabi oil giant IPIC representative had expressed reluctance to resume work on multi-billion dollars KCR project due to circular debt during the 126th meeting of the Board of Directors, chaired by Naveed Qamar, Minister of Petroleum and Natural Resources on October 7, 2010. During the meeting, IPIC representative expressed serious concern over the rising circular debt, which was compromising Parco's ability to continue operations in Pakistan. The meeting was also informed that Parco was also facing problems due to non-payment of dues by Pakistan State Oil (PSO). "IPIC representative requested the Petroleum Minister to resolve the issue so that it could resume work on KCR," sources added. "According to latest development, IPIC management has agreed to sign participation agreement to kick off the work on the projects," sources added. Parco's Board of Directors (BoD) in the 121st meeting held on October 5, 2009 had granted approval for initial funding of $500 million for KCR. It had also approved immediate release of $13 million to kick off subcontracting work related to the implementation of the KCR project. "After approval of funds by Parco, IPIC management decided to go ahead with the project in December 2009, but the circular debt issue became the major reason for a delay in the project," sources said. An accord on implementation of the Khalifa Coastal Refinery Project was signed at the Prime Minister House in Islamabad on November 13, 2007. Abu-Dhabi has 30 percent equity in Parco, the country's largest oil refinery with capacity of 100,000 barrels oil a day. Total refining capacity available in Pakistan is over 200,000 barrels per day.

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