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News Headlines for the month of
MARCH 2011

Punjab Cabinet approves hydropower project at Taunsa

LAHORE (April 17, 2011) : The Punjab Cabinet has on Saturday approved 120 megawatts hydropower project at Taunsa and mapping of wind power potential in Punjab. Cabinet meeting presided over by Punjab Chief Minister Muhammad Shahbaz Sharif, also reviewed in detail the law and order situation in the province, disclosed an official. It commended the performance of Punjab police over successful operation against the outlaws involved in heinous crimes in the Kacha area of Rajanpur and expressed gratitude to the Khyber Pakhtunkhwa government for providing equipment and logistic support during this operation. Addressing the cabinet meeting, Muhammad Shahbaz Sharif said Pakistan is facing serious crisis of energy that is leaving negative impacts on all sectors, including agriculture, industry and trade, and also affecting the process of investment. "The Punjab government is working on various projects for getting energy through alternate sources and Punjab Power Development Company has been set up in the province for this purpose. A plan of 120 megawatts hydro power project at Taunsa has been prepared and a formal approval to this project was given in the cabinet meeting," he added. According to him, during his visit to China, an agreement with regard to this project will be made with Chinese company China Water and Electric Corporation. Similarly, the same company will also carry out a survey about mapping of wind power potential in Punjab for generating energy through wind. The Punjab government will not have to provide any financial resources in this regard whereas the Chinese company will bear itself all expenses for carrying out this survey. Keeping in view data to be provided by the Chinese company, the Punjab government will seek co-operation of companies of other countries in the projects of generating energy through wind. On law and order situation in the province, the Chief Minister said the maintenance of law and order and protection of life and property of the people is responsibility of the government, and all resources are being utilised for this purpose. He stressed upon the law enforcement agencies to make intelligence system more effective and exchange information with each other so that timely action could be ensured against anti-social elements. "An effective system be evolved for checking of all important places, including inns, hotels and guest houses, and if any police official demonstrates negligence in this regard, strict action should be taken against him." He directed that a plan should be formulated for inducting new blood in police force and removing the shortage of jawans in police and Inspector General of Police and Home Secretary should submit their recommendations in this regard. He appreciated the performance of police over successful operation against the culprits involved in kidnapping for ransom, dacoities, murders and other heinous crimes in Kacha area of Rajanpur. He also thanked Khyber Pakhtunkhwa government for providing equipment and logistic support during this operation. He directed the Inspector General of Police that if such hideouts of the outlaws involved in heinous crimes are found anywhere, should be hit hard and the Punjab government will provide all possible resources for this purpose. "A vigilant eye should also be kept on those areas in future where operation against heinous crimes has been carried out," he added. The Chief Minister directed that the process of preparations be started from now onwards for averting any possible flood in future and wherever repair of protective spurs is needed these should be repaired and strengthened immediately. Earlier, Punjab Chief Secretary Nasir Mehmood Khan Khosa gave briefing on energy projects in the province. Secretary Irrigation Rab Nawaz Khan highlighted important aspects of Taunsa Hydropower Project and wind power projects. Inspector General Police Javed Iqbal gave the details of operation against the criminals in the Kacha areas of Rajanpur and Rahim Yar Khan, progress in investigation of Sakhi Sarwar incident and law and order situation in the province. He said 196 culprits involved in heinous crimes have been arrested during operation in Rajanpur and approval has been given to 41 riverine posts in the province and the construction work of these posts is going on. He further informed the meeting 49 motorboats would also be provided to these posts, which will further improve the performance of police deployed in these areas.

Copyright Business Recorder, 2011

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Pakistan and China ink 720 megawatts power project deal

ISLAMABAD (April 07, 2011) : Pakistan and China on Wednesday signed an agreement for the construction of a 720 mega watt hydel power project at Korrat bordering Punjab and Azad Kashmir at a cost of 1.2 billion dollars. Talking to media after the signing ceremony, Minister for Water and Power, Syed Naveed Qamar, said that this would be the biggest power project to be undertaken by a private company in Pakistan. He said that the project would be completed within four years. Naeem Barri has signed agreement on behalf of Pakistani company, Allied Technologies Limited (ATL), and Cao Guangjing on behalf of Three Gorges Corporation. The signing ceremony was also witnessed by the Minister for Water and Power. Naveed Qamar said that the Chinese company would also invest in wind energy and Thar Coal projects. He said that the project signed today would be completed in time and 720 MW would be injected into the national grid. He said that Chinese company, Three Georges, has been familiar with Pakistan as it has been involved in Mangla dam raising project. He expressed the hope that the project would open vistas of investment for hydel projects. The representative of Chinese company said that they have been working for the last three years in Pakistan and there is a lot of potential for investment in the power sector. An official said that an agreement on power tariff has also been reached ie, 7.5 cent per KW and it would soon be approved by National Electric Power Regulatory Authority.

Copyright Business Recorder, 2011

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Policy covers coal, oil, gas-fired plants; skips hydro units

ISLAMABAD (March 23, 2011): Small independent power projects running on coal, oil and gas, barring hydro units, will come under the new guidelines for up to 50-megawatt plants, documents available with The News show. According to the guidelines, the small power projects will pay 5 percent Customs duty on import of plant and equipment. There will be no sales tax on such plant, machinery and equipment as they will be used in the production of taxable electricity. The projects, to be launched under this new policy, will be exempt from income tax, including turnover tax and withholding tax on imports. It also offers free repatriation of equity and dividends, but subject to the prescribed rules and regulations. The parties may also raise local and foreign finance in accordance with the law applicable to the industry in general. Investors will also maximise indigenisation in accordance with the government policy. Investors in these small projects can issue corporate registered bonds and shares at discounted prices to enable venture capitalists, documents show. They can freely hire the services of independent rating agencies while making decisions about risk and profitability of their projects and bonds or term finance certificates. Tariff will be denominated in Pak rupees and comprise energy purchase price (EPP) and capacity purchase price (CPP). The power policy, announced by the government in 2002, essentially dealt with projects of more than 50 megawatts. The 2002 policy allowed provinces to launch power generation projects of up to 50 MW on their own, but they failed to make sufficient additions. The new guidelines are aimed at providing a policy framework whereby the private sector is facilitated to establish, operate and manage projects of up to 50 megawatts capacity on a commercial basis and through bilateral contracts with power distribution companies. Distribution companies will need to enhance their capability to monitor and implement these projects. They will also ensure that all the documentation with producers is standardized.

Copyright The News, 2011

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Reducing UFG: SSGCL seeks cooperation from Bangladesh company

KARACHI (March 31, 2011) : A team of Sui Southern Gas Company Ltd (SSGCL) is currently visiting Titas Gas Transmission and Distribution Co Ltd (TGTDCL) of Bangladesh to find out a mechanism for reducing unaccounted for gas (UFG) or transmission losses. Deputy Managing Director SSGCL Azim Iqbal Siddiqui, who is heading the team, told APP on telephone from Dhaka on Wednesday that he had been holding meetings with TGTDCL officials to find out the strategy for cutting UFG in Sui Southern Gas. "We are currently holding meetings with the largest T & D company of Bangladesh alongwith my team and would let the Pakistani press know about the outcome of this visit on my return from Dhaka", he said. However, Siddiqui mentioned that TGTDCL has reduced UFG from 8.3 percent to total gas supply to "less than 1 percent" in 2008-09 by using an effective gas supply mechanism for cutting line losses. "This is remarkable and we want to learn from their experience", he added. A source in SSGCL said that the team, which also included senior general manager Zuhair Siddiqui, would seek co-operation from TGTDCL for cutting SSGC's UFG, which is currently at 7.9 percent. It may be noted that during 2009-10, Titas Gas has slashed its UFG from 0.8 percent in 2008-09 to a negative 2.14 percent. The gas company has disconnected hundreds of unauthorised gas connections in its drive to discourage gas pilferage during the last three to four years. TGTDCL, with 74.4 percent market share in Bangladesh, has over 1.556 million customers and sold 14,962 mmcm gas worth 63.79 billion taka during 2009-10. The company is selling gas to 34 power generation companies (11 of them are state-owned), 4 fertiliser units, 4,557 industrial concerns, 329 CNG stations and 1,043 captive power units.

Copyright Associated Press of Pakistan, 2011

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IP gas pipeline project: German company likely to get consultancy services contract

ISLAMABAD (March 31, 2011) : Consultancy services for Iran-Pakistan (IP) gas pipeline project are expected to be awarded to Germany-based ILF Consulting Engineers, informed sources said. The Board of Directors (BoDs) Committee of Inter State Gas Systems (Pvt) Ltd (ISGS) is scheduled to meet today (Thursday) to finalise the modalities to award the Engineering and Project Management (E&PM) consultancy contract to ILF which will partner with National Engineering Services Pakistan Ltd (Nespak). According to sources, Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) have been the major impediments for the delay in the award of the contract to ILF as these two gas utilities had insisted on getting a portion of the contract. According to documents available with Business Recorder, SNGPL and SSGCL maintain that they had 40 years of pipeline experience including feasibility studies, engineering design for World Bank funded projects, pipeline construction and therefore had full capacity to undertake all portions of the work except social and environmental impact assessment (SEIA). The two utility companies had requested the government that feasibility study could be undertaken by the ILF but SNGPL and SSGCL could undertake Route Survey and Front End Engineering Design (FEED) on their own. "But now SNGPL and SSGCL are out of the race," sources said adding that these two gas utilities will participate in Engineering Procurement and Construction (EPC) contract of IP gas pipeline project. ILF waited for nearly two years after initiating the consultancy work and maintains that it had not only been selected through an open competitive bidding process but has also spent half a million dollar on the work. In addition ILF maintains that it was led to believe that the scope of the work would not be split, which according to ILF, would negatively affect both the cost and co-ordination to handle the project in an efficient manner and therefore it was not a good solution. The overall cost of services, through the international tendering, received by ILF-Nespak joint venture for both stages, amounts to $48.9 million ($15.5 million for stage-1 and $33 million for Stage-2) against the second lowest bidder, Worley Parson's $138.7 million. Only a pre-feasibility study has been undertaken on the IP gas pipeline project and a bankable feasibility study and FEED are required to approach investors and financiers for tendering and procurement of materials, equipment and appointment of construction contractors. The government will initially arrange around $15 million financing through National Bank of Pakistan (NBP), for consultancy services to the ILF-Nespak on the IP gas pipeline project. The Finance Ministry has assured the requisite financing in this regard.

Copyright Business Recorder, 2011

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Parco board okays Khalifa oil refinery project

ISLAMABAD (March 31, 2011) : The Board of Directors of the Pak Arab Refinery Limited (Parco) on Wednesday gave the go ahead to sign a 'participation agreement' with Abu Dhabi oil giant, International Petroleum Investment Company (IPIC), to kick off work on the multi-billion dollars Khalifa Coastal Oil Refinery (KCR) project in Balochistan. The proposed refinery will have a capacity to refine 13 million tons of petroleum products per annum and the government of Pakistan has allotted 1000 acres of land for the project. The proposed Khalifa Refinery with an output capacity of 250,000 barrel per day (bpd) is expected to cost $6 billion. IPIC and other UAE government institutions will have the majority shareholding ie 74%, whereas Parco will have 26% shares. Parco itself is a joint venture between Pakistan and UAE. Sources revealed to the Business Recorder that during the meeting of Parco's Board which was chaired by Federal Minister for Water and Power and Privatisation, Syed Naveed Qamar, both sides expressed satisfaction over the progress made on Khalifa Refinery Project. "Both sides have agreed to sign participation agreement shortly," sources said. Parco Board as well as IPIC representative in Pakistan have expressed serious concern over the circular debt and have urged upon the Minister of Petroleum to resolve the issue speedily. Meanwhile, according to a statement issued here, Federal Minister for Water and Power and Privatisation, Syed Naveed Qamar, has said that clean environment is priority of the government and the newly completed low-sulphur content petroleum project of Pak-Arab Refinery Company (PARCO) will greatly contribute towards a greener environment in the country. He said this while presiding over the board meeting of Parco. Qamar is the Chairman of the Parco Board and the meeting was also attended by the Directors of the Government of Pakistan and Abu Dhabi. Qamar said that the government has planned environment friendly petroleum products and all the refineries have been asked to meet the EURO-II international requirements. He appreciated Parco for completing this environment friendly project. Parco's Board also reviewed the operational, financial and HR progress of the company. The management announced the successful commissioning of the Diesel Hydro Desulphurization (DHDS) project which was completed well before time and within the allocated budget. This pioneering project will make PARCO the only refinery in Pakistan that produces environment friendly fuel. DHDS project aims at meeting the international standards by reducing sulphur content in High Speed Diesel. The DHDS plant at Mahmood Kot, Muzzafar Garh, is equipped with a maximum capacity of 26,000 barrels per day, and reduces sulphur contents in High Speed Diesel from 7,000 parts per million to 500 parts per million which is an EURO-II requirement. The future plans of the company were also discussed and an update on the new Asphalt Production project was provided. The meeting noted with satisfaction the continued progress of the company and appreciated the PARCO team.

Copyright Business Recorder, 2011

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MoP wants to grant Jhakhro gas field''s lease to Sindh

ISLAMABAD (March 26, 2011) : Ministry of Petroleum (MoP) has expressed willingness to grant lease of Jhakhro field with oil and gas reserves worth million of dollars to Sindh province after the former refused to re-grant the field's lease to Oil and Gas Development Company Limited (OGDCL), Business Recorder has learnt. Sindh government had come up with a demand to grant lease of Jhakhro field termed by OGDCL management as 'dormant field' that has been very attractive for certain LPG investors. OGDCL management had scrapped the tender, for which bidding was scheduled in September last year. Jhakhro field is estimated to produce 500 barrels oil, 10 million cubic feet gas (mmcfd) and 21 metric tons LPG per day, respectively. The lease of Jhakhro field was granted to OGDCL in 2002 that expired in 2007 on account of non-commercial production as per rule 43 of Petroleum and Exploration Rules. OGDCL management had applied to Director General (DG) Petroleum Concession for extension in lease of Jhakhro field. But DG PC was of the view that there is no rule to re-grant extension in lease. "Ministry of Petroleum has agreed to grant the lease of Jhakhro field to Sindh government," sources said adding that OGDCL has lost right over the field and Sindh government is expected to get lease of the field. Sindh government is currently negotiating Gas Sales Agreement (GSA) with OGDCL management over dormant fields. The Economic Co-ordination Committee (ECC) in its meeting held in last week of January 2011 had decided that the gas from Nur, Bagla, Jhakhro and Sara West fields would be allocated to Sindh government, or its designated entity, subject to the conditions that (i) OGDC will be paid according to petroleum concession agreement, (ii) policy price for gas as well as products ie LPG and condensate, (iii) product disposal by the buyer, in accordance with the prevalent rules and regulation and (iv) all applicable taxes. Sources maintained that a certain group of officials in OGDCL had hatched conspiracy backed by certain investors who were interested in the field due to LPG production. Jhakhro field is 15 kilometers away from Sanjoro field and therefore the field could be linked with the Sanjaro field as many other fields like Hakeem Daod were being linked. "But certain group in OGDCL backed by some LPG groups had managed to declare the field as dormant to benefit some groups," sources said. OGDCL had scrapped tender for sale of hydrocarbon resources at wellhead Jakhro condensate Gas last year after Sindh government had written to OGDCL that it had the right to get field after 18th Amendment. OGDCL had declared Jhakhro field as dormant and advertised bids on July 11, 2010 for the first time. OGDCL management on August 28, 2010 after revision in wellhead gas sale formula extended date of opening bids till September 30, 2010, which was canceled.

Copyright Business Recorder, 2011

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Quantum Geoservices launches operation

ISLAMABAD (March 18, 2011) : A seismic data processing company Quantum Geoservices has launched its operation in Pakistan, the launch event held at Marriott Islamabad was attended by over seventy key oil and gas experts from various oil exploration companies. Quantum Geoservices will be the first independent privately owned seismic processing multinational company with its Head Quarter in Singapore. President Quantum Geoservices; Sami Khan, a Pakistani by origin expressed that the company would like to ensure quality service provision to help and guide Pakistan's oil and gas sector in its quest for further building Oil and Gas reserves. He said that Quantum's 3d seismic data processing capability can potentially reduce drilling risk exponentially for oil and gas exploration companies. The launching ceremony drew tremendous attention and appreciation from relevant quarters of the industry, the public sector and the attending guests who warmly welcomed Quantum's arrival to Pakistan.-PR

Copyright Business Recorder, 2011

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IP gas pipeline: Pakistan seeks China''s help

ISLAMABAD (March 12, 2011) : Pakistan will seek assistance from China to import 750 mmcfd to one billion cubic feet gas per day (bcfd) from Iran to meet its domestic demand under Iran-Pakistan (IP) gas pipeline project. "Government will seek assistance from China for 32 projects in different sectors and Pak-China Energy Group will meet next month to discuss these projects," Secretary Petroleum Imtiaz Qazi said while addressing a press conference here on Friday. Qazi said. that China had also been asked to set up an oil refinery at Gwader. Secretary Petroleum said that Public Procurement Regulatory Authority (PPRA) rules were followed in hiring consultant for the IP gas pipeline project. Managing Director (MD) Inter-state Gas Systems (ISGS) Hilal A Raza said that Pakistan and Iran had signed sovereign guarantee on IP gas pipeline project and both sides will make a move forward on the project as per commitment. "Government will seek financing from international as well as local market to carry out the IP gas pipeline project after completion of feasibility report," he said and dispelled the impression that IP gas pipeline project had been put on backburner after resumption of talks on Turkmenistan-Afghanistan-Pakistan-Iran (TAPI) gas pipeline project. "Government is to follow 'take or pay' regarding penalty on IP project due to delay and first penalty would be applicable if Pakistan fails in receiving gas till 31 December 2014 under the agreement," he said adding that Pakistan will have to pay guarantee equal to amount of 750 mmcfd gas based on agreement that amounts to $7 to $8 million per day. Replying to a question about possible UN sanctions on Iran, he said that despite United States (US) sanctions imposed on Iran, Iran was importing gas from Turkmenistan to supply gas to Turkey. "UN sanctions will be political issue rather than technical one," he added. Hila said that according to estimates of gas utilities, constrained demand of gas will stand at 8 bcfd against local supply of 2 bcfd by 2020.At present constrained demand is 6 bcfd against supply of 4 bcfd. "Pakistan will have gas supply of 1.3 bcfd under TAPI project, 0.75 bcfd under IP gas pipeline project to be extended in volume to one bcfd and 2 bcfd under LNG projects," he maintained. Responding to question about imposition of Reformed General Sales Tax (RGST) on consultant services-Joint Venture (JV) of ILF and Nespak, he said "RGST could not be imposed on services of consultant," and added "consultant will walkout if RGST is imposed after signing the contract that would escalate the cost." He said that the seller had the right to terminate the contract and claim damages if there would be delay in route survey, social environmental impact study, technical feasibility study and engineering designs under IP gas pipeline project. Managing Director (MD) Sui Northern Gas Pipeline Limited (SNGPL) Rasheed Lon said that gas utilities had not participated in bidding for consultancy contract for the construction of pipeline. "97 percent work relates to construction and therefore we will participate in construction work of IP gas pipeline," Lon added.

Copyright Business Recorder, 2011

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Hi-Tec Lubricants launches new motor oils

LAHORE (March 10, 2011) : Hi-Tec Lubricants successfully launched latest technology API SN, ILSAC GF-5, resource conserving ZIC motor oil for gasoline engines in a ceremony at a local hotel, here on Wednesday. Young Daey Chae, Vice President SK lubricants, South Korea reached Pakistan for the launch of all new SN ZIC motor oils. The performance of New SN ILSAC GF-5 ZIC motor oils is approved by all International Car manufacturer Associations such as JAMA (Japanese Automobile Manufacturers Association), KAMA (Korean Automobile Manufacturers Association) & All American Cars manufacturers for delivery of Advanced Fuel Saving, Quicker Engine Starting, Longer Drain Period, Cleaner Engine, Low Noise and Extended Engine Life. Young Daey Chae said that all ZIC motor oils are best choice engine oil solution for getting maximum fuel economy and reducing fuel expense when fuel prices are increasing day by day. About the new API SN, ILAC GF -5 resource Conserving ZIC Motor Oil Young said that it is designed to improve the fuel economy, designed to improve the life of emission components (such as the catalytic converter and oxygen sensors). It will also improve sludge deposit and oxidation control. He also said that oil have better low-temperature viscosity, high and low temperature corrosion protection, better turbocharger protection and improved filter clogging protection.-PR

Copyright Business Recorder, 2011

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TAPI gas line deal getting closer: ADB

ISLAMABAD (March 10, 2011) : The Asian Development Bank (ADB) Country Director, Rune Stroem on Wednesday said Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline deal is getting closer. Negotiating parties have made satisfactory progress on the deal and gas price issue is under negotiation," he said while addressing select group of journalists here. He added that all parties on TAPI gas pipeline deal had reached the point of no return. He was accompanied by a delegation of Central Asia Regional Economic Co-operation (Carec) programme. Comprising Shigeko Hattori and Ronald Antonio Q. Butiong, the delegation is currently visiting Pakistan. Pakistan is a fresh entrant to the Carec programme whereas other members are Afghanistan, Azerbaijan, China, Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan. "Carec secretariat is currently reviewing the strategy to include Pakistan and Turkmenistan in the Carec strategy 2020," he said, adding that Pakistan will also have access to seaports as well as Gwadar and Karachi ports will have brisk trade activities. "We see huge potential regarding regional activities in oil, gas and electricity in Carec bloc," he said, adding that TAPI project is a commercial deal and tremendous progress has been made on the project. Rune said that Carec Programme was a partnership of 10 countries and 6 multilateral institutions were facilitating regional co-operation in the priority areas of transport, trade facilitation, trade policy and energy. The program is a proactive facilitator of practical, result-oriented regional projects and policy initiatives that were critical to trade expansion and sustainable development. Six multilateral partners of Carec are the ADB, European Bank for Reconstruction and Development (EBRD), the International Monetary Fund (IMF), Islamic Development Bank (IDB), United Nations Development Programme (UNDP) and the World Bank. Stroem said since 2011, the Carec programme had mobilised over $15 billion worth investment in transport, trade and energy sectors. Responding to question on US interests in the region, Stroem said, "US is a major partner in the programme and is involved through the IMF, IDB and the World Bank". He agreed to the concern that there were lot of disputes in the region among member countries but the donors were bringing all the parties on table to resolve the issues. He was of the view that they are promoting inter-regional (Carec) trade activities that would be followed by intra-regional connectivity in years to come. The ADB officials said the Carec programme is improving six regional transport corridors that will link Carec countries to each other and to other Eurasian sub-regions, creating opportunities for more efficient trade. The officials mentioned Europe to East Asia corridor that links Europe to China and East Asia. "Touching Torkham border of Pakistan, the route traverses from the border with the Russian Federation to China via Kazakhstan and the Kyrgyz Republic," they added. The ADB report named "Strategy for Regional Co-operation in the Energy Sector of Carec countries" says that the domestic investment made in the Carec countries will focus on energy efficiency and clean energy. Energy efficiency investments will encompass efficiency improvements in energy production, transportation, distribution and energy use and will cover the areas such as; loss reduction, rehabilitation of existing assets and least-cost system expansion and operation while the cross-border investment will focus on production of ecologically clean energy and energy trade and will be pursued with mutual agreement among all relevant parties in cross-border energy transmission, facilitation of access to third country energy markets and production for exports. The report says that there may be investments, trade, security, and geo-political risks. Another ADB report 'Trade Policy Strategic Action Plan' says that the average tariffs in Carec countries are generally below 10 percent, lower than the overall average of about 11 percent for developing countries in 2005. The Central Asian countries have been bestowed with strong power transmission networks in the regions constituting about 1600 kms of 500 kV and 1400 kms of 220 kV lines. Pakistan will be able to get both the economical as well as the social benefits from the project. "Our project is being implemented in Afghanistan very successfully as we know the fact that Afghanistan can not stand alone. We have already set up a power transmission line from Uzbekistan to Afghanistan while the second power transmission line has been set up from Tajikistan to Afghanistan." "We have focused on three sectors - energy, transport and trade facilitation under Carec programme." An ADB official on condition of anonymity told BR that the bank is still under the process of negotiations with the government of Pakistan on the issue whether to provide funding to the country for Diamer-Basha dam or not.

Copyright Business Recorder, 2011

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International tender for LNG project on the cards

KARACHI (March 09, 2011) : After Law Division's nod, the petroleum ministry has decided to re- tender for liquefied natural gas (LNG) project and the officials hint at issuance of an international tender for it shortly. "After going through all legal requirements, the Law Division has given us a go ahead for a fresh international tender for interested parties to bid for a contract for LNG project," said an official of Petroleum ministry. With sheer energy shortfall and growing demand Pakistan had conceived an LNG project a few years back. After going through initial homework the government undertook a process for this project. This was followed by issuance of an international tender. Since it was a promising project, the international tender got good response. The world giants like GDF Suez and Shell joined the race to win the contact worth billion of dollars. Bidding process was put in to select the best available party to award the contact. It was a nerve-breaking race for interested parties. Besides fulfilling the legal requirements to stay in the game, hectic lobbying was done. The parties in the run wanted to secure the contact no matter how and who made it possible for them. Some parties entered into the game to oust the competitor. The process was inching forward at a normal pace. It was finally submitted to the Economic Co-ordination Committee (ECC) of the Cabinet for approval of grant of contact to GDF Suez which was declared successful on the bid money basis. The approval of the competent forum was also granted and now GDF Suez had nothing in its way in initiating the project. But the contact award procedure was questioned by a court of law and the government was asked to look into the procedure again. The matter was referred to the Law Division for guidance which, sources said, disagreed with the ministry of Petroleum asking it to scrap the pervious procedure and come up with a new tender for seeking bids for LNG project. The officials in petroleum ministry concede that re-tendering is going to delay the project for months if not for years but they do not have any other option but to accept the Law Division's advice and go for retendering for the project.

Copyright Business Recorder, 2011

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Refineries throughput increased to 673,000 tons in February 2011

KARACHI (March 08, 2011) : The local refineries throughput has increased to 673,000 tons in February 2011, up by a massive 20 percent as compared to the same period last year. However, during the first eight months of current fiscal year, the refineries throughput stood at 5.1 million tons, down by 6.3 percent over the same period a year back. "Despite much speculation regarding the change in oil pricing formula and its adverse implication on refinery operations, domestic refineries operated at 14 month high level of 76 percent capacity in February 2011", Nauman Khan, an analyst at Topline Securities said. However, during the first eight months of FY11 refineries throughput continues to lag behind from that of last year, primarily on account of month long plant closure of Pakistan's largest refinery - PARCO and operational issues cast by circular debt on BYCO and PRL, he added. During the eight-month period of FY11, refineries throughput declined to 5.1 million tons as compared to 5.4 million tons in the corresponding period last year. Amongst the individual companies, Attock Refinery Limited (ATRL) and National Refinery Limited (NRL) capacity utilisation stood at 90 percent and 86 percent, respectively and were the only two refineries to show an up-tick in their throughput in the eight months in FY11. With lower exposure to the circular debt and superior product quality, these refineries are reaping benefits of rejuvenated refinery margins, he added. On the other hand, Parco throughput declined by a 20 percent on account of aforementioned reason while Pakistan Refinery Limited (PRL) and BYCO Petroleum (BYCO) depicted a decline of 3 percent and 37 percent, respectively, due to revamping and circular debt issues. Product wise break-up shows that production of all the products (with the exception of HOBC) witnessed a declining trend. The production of furnace oil (FO) and high speed diesel (HSD) declined by 5.3 percent and 1.6 percent to 2.0 million tons and 1.6 million tons, respectively.

Copyright Business Recorder, 2011

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Execution of three major fields: OGDCL finding it hard to arrange $600 million

ISLAMABAD (March 06, 2011) : The Oil and Gas Development Company Limited (OGDCL) with receivables accumulated to Rs 120 billion may face problem in arranging around $600 million (Rs 51 billion) funds to implement three major oil and gas fields development projects - Kunner Pesakhi, Uch-11 and Jhal Magsi, Business Recorder has learnt. Two public sector companies - Pakistan State Oil (PSO) and OGDCL are facing serious financial crunch and receivables of both companies have accumulated to over Rs 286 billion. PSO receivables against different clients mainly power sector swelled to Rs 166.43 billion on Saturday. "We have no financial issues to carry out the current operations of the OGDCL but may face financing problems to execute oil and gas projects which require $600 million financing," sources said, adding that OGDCL receivables have touched Rs 120 billion. OGDCL has also received no plan to clear these dues either from government side or clients. OGDCL had received bids to develop these development projects. However, it put the decisions on hold regarding award of contract of multimillion dollars Kunner Pesakhi and Jhal Magsi development projects till three-member inquiry committee completes its probe on the controversies raised on receipt of amended bid bond on $186 million Uch-11 development project. OGDCL is currently in the process of developing five oil and gas fields in a bid to produce 400 mmcfd natural gas and 500 tons LPG per day to overcome energy crisis. According to OGDCL Managing Director Naeem Malik, 8000 to 9000 barrels per day crude oil would also be produced from these new fields. OGDCL has also initiated work on Zin field which development has been delayed for the last two decades. Zin field has a potential of 6 to 7 trillion cubic gas reserves. The work on Zin field will also help OGDCL initiate work on other four blocks. OGDCL has completed construction of 35 kilometers road and access to water has also been ensured to start work on Zen field. Uch-11 gas field will produce 160 mmcfd gas and 280 mmcfd gas and 350 tons LPG per day will be produced from Kunner Pesakhi and Tando Allahyar fields.

Copyright Business Recorder, 2011

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'Thar coal field excavation work to begin in 2012'

KARACHI (March 05, 2011) : Chief Minister Sindh, Syed Qaim Ali on Friday said work on coal excavation in Thar field would begin next year at the cost of 450 billion dollars. There is no decision to reduce the provincial government's cabinet at present, he said at a press conference held at CM House. He said under the renowned scientist, Dr Sammar Mubarak, spadework on the project to convert coal into gas at the Thar field continued at full scale. He said the project would start its production in next April and termed it an important programme for the country. He said power generation at the coal field would soon begin. He said China had agreed to invest its capital in the project and was keen to undertake the work. He said the federal government had only disbursed Rs 2.5 billion to Sindh to repair and rebuild the embankments fully destroyed in recent catastrophic flood, although it had pledged Rs 5 billion for this purpose. Qaim said the government was fully committed to follow its policy of reconciliation in the country and was consulting its all ruling partners on all issues.

Copyright Business Recorder, 2011

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OGDCL conducting study to further improve security of gas pipelines

ISLAMABAD (March 05, 2011) : Oil and Gas Development Company Limited (OGDCL) is reportedly conducting a study to suggest measures for further improvement in security of gas pipelines, informed sources revealed to Business Recorder. Replying to the letter written by Uch Power Limited after two gas pipeline explosions, OGDCL stated that it was the company's prerogative in the circumstances of an explosion rupturing its pipeline to serve a notice of force majeure under article 13.2 of the GSA. "Though UPL can raise a dispute with reference to our notice of course without raising the kind of privilege that you have raised and such dispute is to be resolved in terms of the relevant provisions of the GSA, our notice will nevertheless remain in the field," said Asif Saeed Sindu, Executive Director Finance, OGDCL He claimed that OGDCL discharged its obligations in terms of the article 13.2 of the GSA by giving UPL prompt notice and relevant information of the events constituting force majeure and has also updated UPL with regard to mitigation efforts undertaken by it. OGDCL has acknowledged that the general legal principle that the onus of proof with regard to force majeure is on the party alleging it, that obligation, if at all it falls on OGDCL in the circumstances, can arise only when the parties are contesting the dispute in adversarial proceedings. Therefore, at the time of marking a declaration of force majeure in terms of the GSA, OGDCL is under no obligation to establish or demonstrate beyond doubt the existence of the force majeure events. What is required is that the company has provided with the information required under Article 13.2 of the GSA. Further, Uch Power Limited stated in the letter that if the explosion was "caused by an act of terrorism/sabotage" OGDCL has failed to satisfy the requirements of section 13.1 of the GSA that the event was beyond the reasonable control of the party claiming force majeure. Article 13.1 of the GSA states in the relevant part that: "In this agreement, "force majeure" shall mean any event or circumstance of combination of events or circumstances beyond the reasonable control of a party which, or the effects of which, materially and adversely affect the performance by that Party of its obligations under or pursuant to this agreement. Without limiting the generality of the foregoing, "force majeure" shall include each of the following events and circumstances, but only to the extent that each satisfies requirements. (a) Political events that occur inside or directly involve Pakistan (Pakistan Political Force Majeure Events), including but not limited to: (i) any act of war (whether declared or undeclared), invasion, armed conflict or act of foreign enemy, blockade, embargo, revolution, riot, insurrection, civil commotion, act of terrorism, or sabotage". OGDCL further claims that a bare reading of the provision reveals that each of the specific events listed in item 13 1(a) (i) are stated to constitute events of force majeure, if they are beyond the reasonable control of the affected party and have materially and adversely affected the performance by that party of its obligations under the GSA. "There can, practically, be no question that the explosion on our pipeline, despite active security measures, was beyond the reasonable control of OGDCL and also that it materially and adversely affected our ability to deliver gas to your complex. The language of article 13.1 cannot be interpreted to require the affected party to take extraordinary measures in order to prevent acts or civil commotions, terrorism and /or sabotage," Sindu maintained. With regard to second blast, OGDCL pointed out that it occurred when the pipeline was depressurised because of the 1st blast and was discovered when the repair work was completed and the pipeline could not be brought to the required pressure. Unfortunately incidents of terrorism and sabotage are experienced in Balochistan since quite some time. Therefore, it is pertinent to note that OGDCL has regular and continuous patrolling parties of Frontier Constabulary, Balochistan (FC)'s 14 Platoons, moving along the Uch pipeline, with additional security pickets to monitor dangerous circumstances, on a difficult terrain. "Besides security pickets at about 2 km distance from each other, FC is carrying out day and night foot patrolling to ensure that no untoward incident happens, however, sabotage activities are always beyond control and may happen any time. In order to further improve our security arrangements a study is going on and we may enhance it with technology to further reduce the chances of sabotage actions," he further clarified OGDCL's position. "It is obvious that the reasons cited in your letter for rejection of our declaration of force majeure are not maintainable in terms of the GSA," Sindu maintained. According to OGDCL to handle matters amicably in the conduct of business in terms of the GSA the parties should be able to accept each others statements made in good faith especially with regard to the facts on ground. "We suggest that unless you are aware of any facts that point to the incidents of force majeure being any thing other than sabotage activity, our force majeure declarations should not invariably be rejected," Sindu concluded.

Copyright Business Recorder, 2011

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Investment in petroleum sector: FBR allows decommissioning cost to E&P companies

ISLAMABAD (March 04, 2011) : The Federal Board of Revenue has issued the draft of the ''decommissioning certificate'' to the Exploration and Production Companies to allow decommissioning cost to such companies to facilitate investment in petroleum sector. In this regard, the FBR has proposed amendment to the Income Tax Rules, 2002 through an SRO.164(I)/2011 issued here on Thursday. It is learnt that the de-commissioning cost is to be allowed to be amortised over a period of 10 years or the life of the field whichever is less. Under the income tax law, with effect form the Tax Year 2010, the decommissioning cost as certified by a chartered accountant or a cost accountant, in the manner prescribed, shall be allowed over a period of 10 years or the life of the development and production or mining lease whichever is less, starting from the year of commencement of commercial production or commenced prior to the 1st July, 2010, deduction for decommissioning cost as referred earlier shall be allowed from the Tax Year 2010 over the period of ten years or the remaining life of the development and production or mining lease, which ever is less. According to the notification, draft of certain further amendments in the Income Tax Rules, 2002 has been published for the information of all persons likely to be affected thereby and notice is hereby given that the draft will be taken into consideration after 15 days of its publication in the official Gazette. Any objection or suggestion which may be received from any person, in respect of the said draft before the expiry of the aforesaid period, shall be considered by the Federal Board of Revenue. As per "decommissioning certificate'', it would be ensured that the amortisation charge of decommissioning cost for current year, claimed by the company in its return of total income for Tax Year is in accordance with sub-Rule (4A) of Rule 2 of Part I of the Fifth Schedule to the Income Tax Ordinance, 2001. It would also be certified that taxpayer has not included amounts of exchange loss, unwinding of discount, mark-up or interest, cost of funds or inflationary impact in computing the decommissioning cost.

Copyright Business Recorder, 2011

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Domestic joint venture partners: MOL's aggressive stance to yield positively

KARACHI (March 03, 2011) : MOL, an integrated oil and gas group in Hungary, has indicated towards an aggressive stance for their exploration and development programme in Pakistan. MOL's aggressive stance would also yield positively on its domestic joint venture (JV) partners, particularly Pakistan Oilfields Limited (POL). "In its 'Investor Presentation March 2011' the presented production if materialises could translate into earning up-tick of an average 18 percent from our base-case POL's FY12-15 earning forecast", Nauman Khan, an analyst at Topline Securities said. "Furthermore, by looking at the few big and mid size discoveries in last few years by MOL, we believe the company could materialise its aggressive policy specially when oil prices are expected to remain firm at least in short to medium term due to unrest in Middle East, boding well for POL", he added. The investor's presentation reiterate MOL's conviction in its hydrocarbon reserves in Pakistan, including Tal, Karak and Margala block in its key projects. The presentation highlights key features of working programme in Pakistan, includes acquisition of 279km 2D seismic, construction of necessary surface facilities and pipeline for EWT of Makori-East 1 well, continuation of early production of Mamikhel-1 and Maramazai-1, drilling of 2 appraisal well in Tal block and 4 exploration well (1: Tal, 2: Margala and Margala North and 1: Karak), drilling new production well Manzalai-9 and implementing of tie-in facilities and additional components related to central processing facility, award of EPCC (Engineering, Procurement, Construction and Commissioning) contract of Markori 150mmcfd CPF and drilling 2 development wells and 2 production wells in 2012-13. Furthermore, company has highlighted a production boost from 4,700boepd (barrels of oil equivalent per day) in 2010 to 23,000boepd by 2016, depicting a 6-year CAGR of 30 percent, which is far above our base-case assumption of 6-year production CAGR of 21 percent. Impact on POL's earnings based on MOL estimates "Based on MOL's six discoveries (all in Tal block) in Pakistan, we believe the projected production enhancement to come primarily from Tal block as other blocks have yet to deliver discoveries", he said. "Aligning the production assumption with that of company's projection will translate into an up-tick of our earning projection for POL by an average 18 percent for FY11-15, with a potential to push our TP from Rs 400 per share to Rs 482 per share, up 17 percent", he added.

Copyright Business Recorder, 2011

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Gas for Punjab: GEH negotiating for LNG import

ISLAMABAD (March 03, 2011) : The Global Energy Holding Limited (GEH), supported by Punjab government, is negotiating for import of LNG with the federal government, Business Recorder has learnt. GEH trading portfolio currently consists of oil, oil products, natural gas, LNG, and electricity. GEH group companies currently operate in Dubai, Istanbul, London, Luxemburg, and Switzerland, and plan to expand to other countries/regions. It is currently negotiating with Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline (SNGPL) in a possible joint venture with Mansha Group for supply of gas through their systems. The GEH plans to provide LNG equal to 500 mmcfd in the first phase. In its presentation, GEH said that it had a fast track solution to resolving the country's gas crisis by end-2011 that would cause annual savings of more than one billion dollars against HFO; and over $2.4 billion against high speed diesel (HSD), based on 2010 prices. "We are ready and willing to increase our capacity and supply to deliver all the required gas to Punjab and other provinces at the same speed of pipeline construction and will provide secure long-term supply," GEH stated, adding that uninterrupted and continuous gas supply would enhance power generation efficiency. Compared to HFO and HSD, turbine life of units will extend up to ten years longer and fuel supply logistics will be eliminated. "More environment-friendly fuel is consumed compared to oil and due to higher calorific value (99 percent methane component) of LNG, dispatching authorities (Sui companies) will have a chance to adjust the energy level of gas within all the grid system," GEH presentation added. This will bring stability of quality and better Wobbe index will add further efficiency and decrease maintenance requirements. A meeting was held in the Chief Minister's office in Lahore on December 13, 2010. It was also attended by former Petroleum Minister Naveed Qamar to discuss the proposed LNG import project. During that meeting it was decided that: (i) the terminal will be set up by the private sector and terminal company will take the imported LNG on behalf of the importer, re-gasify it and supply to the SSGC pipelines for onward swap of gas with SNGPL and transportation at an agreed charge; (ii) a private sector consortium consisting of large gas users--power, fertilizer or other large industrial units--will be mobilised by the government of Punjab to become the importer of LNG. This consortium could include a small stake by the government of Punjab, if needed. SNGPL or the LNG supplier could be invited to take a small equity stake in the consortium, if deemed appropriate. However, it would be led by the private sector and would, therefore, not be required to follow government procurement rules; and (iii) the federal government will ensure that whatever gas is freed up from the system on account of this import would be diverted to other users in the SNGPL system based on a priority agreed with government of Punjab.

Copyright Business Recorder, 2011

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Turkish investors show interest in Khyber Pakhtunkhwa energy sector

PESHAWAR (March 01, 2011) : The visiting Turkish investors' team has shown keen interest in energy and construction sectors of Khyber Pakhtunkhwa. The investors were talking to Khyber Pakhtunkhwa Minister for Industries, Syed Ahmad Hussein Shah and Minister for Law and Parliamentary Affairs, Arshad Abdullah at a dinner held in honour of the Turkish guests Sunday. Ghulam Dastgir, a young businessman hosted the dinner for the visiting investors and local businessmen. Those who attended included provincial chief of Small & Medium Enterprises Development Authority (Smeda), Javed Iqbal Khattak, Managing Director, Bank of Khyber, Bilal Mustafa, former presidents, Sarhad Chamber of Commerce & Industry (SCCI), Adeel Rauf, Riaz Arshad, Noman Wazir and others. Talking to the Turkish investors, Provincial Minister for Industries, Syed Ahmad Hussein Shah said the provincial government had planned setting up of Pak-Turk Industrial Zone on the pattern of Pak-China Industrial Zone in the province. The scheme, he said would be included in the next Annual Development Programme of the province. The investors on the occasion inquired about the potential and beneficial sectors for investment. They were informed that presently Pakistan in general and Khyber Pakhtunkhwa in particular require investment in energy sector to overcome the prevailing shortage and manufacturing construction material and technology. They were informed that after the devastated earthquake of 2005, the provincial government now instead of heavy material is using hollow material in construction of buildings. He said the import of latest technology to Pakistan would help promote this sector in the country. Provincial minister for law and parliamentary affairs, Arshad Abdullah informed the delegation about the potential of the oil and gas sector, saying that the government is setting up its own company in this regard. He offered Turkish investors joint ventures in the fields of oil and gas in the province. He said Pakistan is spending a significant portion of its foreign exchange reserves on the import of oil as the local production is about 23 percent and remaining over 70 percent is imported. He said the provincial government has started giving priority to the development of oil and gas sector. He assured the delegation that the provincial government would provide all possible facilities to foreign investors.

Copyright Business Recorder, 2011

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Coal mining, power generation: President for using sub-soil water

KARACHI (March 02, 2011) : President Asif Ali Zardari has advised to use sub-soil water for coal mining, power generation and other purposes in the Thar coalfield instead of using sweet water which should be utilised for irrigation. He was presiding over a meeting at Bilawal House here Tuesday which reviewed the progress on development of four blocks in Thar coalfield. Sindh Chief Minister Syed Qaim Ali Shah, provincial ministers, advisors and senior official were also present on the occasion. Talking to APP, Media Co-ordinator of Sindh government Taj Haider said that the President was briefed about the development work, investment, communication network and transmission line. He said the vision of the government is to develop Thar coal as a major source of power generation for energy and economic security of the country and as a hub of petro-chemical industry. He said the investment is being attracted for Thar coal energy projects during the President's visits to various countries including USA, Japan, China and Gulf countries.

Copyright Associated Press of Pakistan, 2011

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Saudi development fund delegation arrives

ISLAMABAD (March 04, 2011) : The Saudi Development Fund delegation headed by Chief Engineer Abdullah Al-Shoaibi had reached Islamabad along with Engineer Yaser Al-Bakri and Engineer Muhammad Al-Masood to monitor and follow up the implementation of Neelum/Jehlum hydroelectric power project. The Saudi delegation visited the site and examined the progress of the work. A number of meetings were held with Executing agency, the consultant of the project and the contractor. In the mean time, the Saudi Development Fund delegation held several meetings with a number of officials in the Ministry of Water and Power and the Ministry of Economic Affairs Division to over see the projects funded by the Saudi Fund. The Pakistani side in EAD promised to present projects in the different Provinces of Pakistan to utilise the Saudi assistance amounting ($300 million) announced during Pakistan Development Conference held on November 2010. Coinciding with the visit made by The Saudi delegation to Muzafar Abad city, the site Project of King Abdullah University was handed over to the project contractor to initiate the execution at an estimate amounting to $60 million with duration of three years.-PR

Copyright Business Recorder, 2011

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'Thar coal field excavation work to begin in 2012'

KARACHI (March 05, 2011) : Chief Minister Sindh, Syed Qaim Ali on Friday said work on coal excavation in Thar field would begin next year at the cost of 450 billion dollars. There is no decision to reduce the provincial government's cabinet at present, he said at a press conference held at CM House. He said under the renowned scientist, Dr Sammar Mubarak, spadework on the project to convert coal into gas at the Thar field continued at full scale. He said the project would start its production in next April and termed it an important programme for the country. He said power generation at the coal field would soon begin. He said China had agreed to invest its capital in the project and was keen to undertake the work. He said the federal government had only disbursed Rs 2.5 billion to Sindh to repair and rebuild the embankments fully destroyed in recent catastrophic flood, although it had pledged Rs 5 billion for this purpose. Qaim said the government was fully committed to follow its policy of reconciliation in the country and was consulting its all ruling partners on all issues.

Copyright Business Recorder, 2011

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Pakistan must tap alternate energy resources: Rana Iqbal

LAHORE (March 06, 2011) : Speaker Punjab Assembly, Rana Muhammad Iqbal Khan has said that Pakistan should develop coal fired power plants and tap alternate energy resources like wind and solar energy. He was addressing the 33rd annual convention and general meeting of Institution of Electrical and Electronics Engineers Pakistan (IEEEP) on Saturday. The newly elected President of IEEEP, Engineer Tahir Basharat Cheema and sitting president, Engineer Muhammad Anwar Khalid also spoke on the occasion. Iqbal said that country is facing shortage of power as well as the ever increasing power rates which need to be stemmed and brought in line with the paying capacity of the consumers. This needs to be done on priority otherwise both the industry and agriculture would simply have to shut down. He observed that the development of industry is only possible when ample energy is available at reasonable rates, which is only possible through innovative solutions. He called upon the IEEEP to come forward and harness the energy resources available in the country. He said that our country is a developing country and we need both traditional and modern knowledge. He stressed upon the electrical engineers to collectively as well as individually strive hard to maintain the performance of the existing thermal and hydel power plants. They should also try to expedite commissioning of the power plants under construction to increase generation capacity and tackle shortage of power, he maintained. Speaking on the occasion Tahir Basharat Cheema said that an endowment fund with the cost of rupees 100 million will be established for research at IEEEP. Some noted and trusted worthy personalities will be taken, as its trustees while it will be registered with the Securities and Exchange Commission. He further said that IEEE's national commission on energy will be formed which will comprise notables and experts from the Pakistani civil society. This commission will guide the government and other public sector organisations in formulation of established policies and implementation plans to overcome the ongoing energy crisis. Highlighting other initiatives that will be taken by the new body, he said these would be to include membership revival, reshaping of technical journal, construction of IEEE building in Islamabad and Lahore and introducing IEEEP awards to honour engineering excellence. Expressing his views, Muhammad Anwar Khalid said that being the biggest professional organisation in the country, IEEEP has a membership of more than 5,000 engineers that unconditionally offer services in the overall development and promotion of national policies. He said that the engineers should be consulted in the matters pertaining to professional and carrier development of other engineers. It would also be appropriate if our nominees are placed on various committees, taskforces and allied bodies, he added. Khalid informed that IEEEP is a purely technical body and its recommendations will be considered as unbiased because they are purely based on the precept of engineering.

Copyright Business Recorder, 2011

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Turkish team to discuss rental power project

KARACHI (March 07, 2011) : A high level meeting is being held here on Monday (today) to sort out the issues related to first 232 Megawatt rental power project to be linked to KESC's power distribution system. A project manager of the project linked with Board of Investment (BoI) told APP here on Sunday that a few Turkish based directors of the private ship named Karkey Karadenz, Utem Power Ships, will be visiting the ship anchored near Ibrahim Hyderi, off the Korangi Creek in this regard. The officials of Private Power Infrastructure Board (PPIB) are also likely to visit the ship along with the KESC officials as the ship, which anchored in November last year has yet to be linked to main grid of the metropolis to off-load the burden on KESC. The rental ship agreement has been consolidated by Government of Pakistan to offset the load on KESC and provide regular energy to its customers. "We have no idea yet when the rental power ship will start its supply," said Project Manager of BoI Nadeem Akhtar.

Copyright Associated Press of Pakistan, 2011

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Water, power sectors: 'Concrete steps to be taken to meet challenges'

ISLAMABAD (March 08, 2011) : Federal Minister for Water and Power, Syed Naveed Qamar has said that effective and concrete steps will be taken to meet the future challenges of water and power sectors. He said that all the resources will be utilised in order to encourage the investment in the power sector. He made these remarks while presiding over the meeting of the Ministry and its allied departments after assuming the charge of the Ministry here on Monday. Additional Secretary of the Ministry, MD Private Power and Infrastructure Board (PPIB), Chairman Federal Flood Commission, Chairman IRSA, CEO IESCO and senior officials of the Ministry and AEDB participated. The Minister said that we all have to work hard to bring out the power sector from the crisis and all the matters should be resolved on priority basis. The Minister emphasised for evolving a comprehensive strategy to provide maximum relief to the people in the forthcoming summer season. Earlier, the MD PPIB, N A Zuberi gave him a briefing on the private sector power projects. He informed that total 25 projects of 7900 MW are generating power in the private sector initiated by the PPIB since its inception. He said that during the last three years of the present government, nine projects of 1800 MW were commissioned while three projects of 600 MW will start generation within couple of months. He added that 232 MW ship mounted Karkey power plant is on test run now a days and will start full generation by end of current month. He highlighted that the investor friendly environment has been provided to the investors by the PPIB under the able guidance of the Prime Minister Yousuf Raza Gilani and the President Asif Zardari. The representative of the AEDB informed that various projects of alternative energy are under process as it has planned to generate 700 MW through alternative energy resources, which will be added in the national grid by 2015. The Chairman Federal Flood Commission, Chairman IRSA and CEO IESCO also briefed him on their respective departments and the ongoing projects.-PR

Copyright Business Recorder, 2011

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Power sector offers a preferred area for investment: Haqqani tells US, Pakistani businessmen

NEW YORK (March 08, 2011) : Highlighting Pakistan's growing electricity needs, Pakistan's Ambassador to the United States Hussain Haqqani told American and Pakistani businessmen on Monday that his government was planning further structural reforms in the economy to attract investments both foreign and domestic. "The power sector offers a preferred area for investment," Haqqani said at a gathering billed as this year's biggest investment roadshop - "Pakistan Day Conference 2011". "Pakistan is looking for investments in power production," he said, while pointing that the country was short by about 5,000 MW in peak season. Citing facts and figures, Ambassador Haqqani said Pakistan's economy remained resilient in the face of multiple challenges posed by rising food prices, oil prices, the catastrophic floods in 2011, global financial crisis and the cost of fighting war against terror. "All foreign investment in Pakistan is fully protected by law and in addition to this; Pakistan has signed bilateral agreements for protection of investment with 47 countries and Avoidance of Double Taxation with 52 countries, including the US," Ambassador Haqqani told the well-attended conference. The Pakistan envy said new incentives and further liberalisation measures include: (1): The capital markets are being developed along modern lines with the assistance of Asian Development Bank. (2): The establishment of the Securities and Exchange Commission has improved the regulatory environment for stock exchanges, corporate bond market and the leasing sector. (3): Pakistan is home to over 600 foreign companies, which means Pakistan facilitates liberal investment policy. (4): There has been stabilisation in policies which is extremely vital for investors. (5) Pakistan has a liberal foreign exchange regime with few restrictions on holding foreign exchange and bringing it in or out of the country. (6): There are no limits on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, returns on intellectual property, or payments for imported inputs. (7): The facility for contracting foreign private loans is available to all those foreign investors who make investment in the approved sectors. (8): Foreign controlled manufacturing concerns are allowed to borrow on the domestic market according to their requirement. (9): There is a greater degree of transparency in procurement practices. International tenders are properly advertised. (10): There is no restriction on payment of royalty / technical fee etc. in the manufacturing sector. (11): Zero import duties on capital goods. The import tariff on agriculture machinery (not manufactured locally) for registered corporate agricultural projects will be zero-rated. (12): The investors who invest in the newly opened sectors can import plant, machinery & equipment (not manufactured locally) at discounted rate of customs duty which is 5% and also avail first year allowance @ of 50% of the cost of plant, machinery & equipment. (13): Zero import duties on raw materials used in the production of exports;(13)Foreign investors are allowed participation in industrial projects, on the basis of 100% foreign equity, without any permission from the Government. (14): The manufacturing sector is open to foreign investment. (15): Oil and gas is another sector in which investor can have offshore and onshore exploration. They can invest in refinement, pipelines and storage facility. (16): Full repatriation of capital gains, dividends and profits. (17): There is no requirement to obtain a No Objection Certificate (NOC) from the Provincial Governments for the establishment of projects, and, (18): Regulatory reforms have led to the establishment of a legal framework for licensing and regulating private housing lenders. "The financial sector of Pakistan is regarded as one of the best performing sectors in our region," Ambassador Haqqani said. "The banking sector has shown robust performance. Other sectors with untapped potential like horticulture dairy, construction, infrastructure development, manufacturing and tourism can also prove highly profitable for any prospective investor. The initiative taken to set-up Special Economic zones (SEZs) and other industrial Zones will further harness the investment potential in the country."

Copyright Associated Press of Pakistan, 2011

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IAEA BoG meeting begins in Vienna

ISLAMABAD (March 08, 2011) : International Atomic Energy Agency (IAEA) Board of Governors (BoG) meeting scheduled for 7-11 March 2011 opens at its Headquarters in Vienna on Monday. Dr Ansar Parvez, Chairman, Pakistan Atomic Energy Commission will preside the meeting. Pakistan was elected as Chairman, IAEA Board of Governors (BoG) by acclamation for the term 2010-2011, in September 2010. The Board is the executive organ of the Agency. It considers all major questions including applications for membership and the Agency's programme of work. It approves the Agency's Annual Report and the budget under its own authority. The Board also approves all safeguards agreements, important projects, safety standards and technical assistance grants to member states.-PR

Copyright Business Recorder, 2011

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Fauji Foundation sponsored Renewable Energy (Wind) Project kicks off

ISLAMABAD (March 09, 2011) : Fauji Founda-tion today, entered into an agreement for equity commitments of approximately PKR 6 billion (of which approx. USD 20 million is being provided as Foreign Direct Investment) by CapAsia Singapore through the Islamic Infrastructure Fund managed by them. Islamic Infrastructure Fund is primarily funded by Islamic Development Bank and Asian Development Bank. The two wind farms of 50 MW each to be establishedare located in Gharo Sindh with total project cost estimated to be USD 260 million.These two Projects will be implemented through Special Purpose Vehicles, namely Foundation Wind Energy-I Limited (formerly Beacon Energy Limited) and Foundation Wind Energy-II (Pvt) Limited (formerly Green Power (Pvt) Limited). The Sponsors of these Projects are Fauji Foundation, Fauji Fertiliser Bin Qasim Ltd, Tapal Group and CapAsia, which is their first investment in Pakistan. Project Debt Financing of USD 195 million is being finalised, for which National Bank of Pakistan (NBP) has been mandated to arrange the equivalent USD 70 million Rupees under Shariah compliant modes. The balance of funding of USD 125 million is to be financed by Multilateral Development Banks for which the Sponsors are in discussions with Asian Development Bank and Islamic Development Bank. Financial Closure of both Projects is expected in early September 2011. Financial and Legal advisors to these two projects are Bridge Factor and Orr, Dignam & Co and lenders local legal counsel are Haidermota & Co. Pakistan has huge potential for wind energy more then 20,000 MW capacity can be harnessed in the wind corridor at Gharo and Jhimpir, Sindh. Accordingly, Fauji Foundation has targeted establishing four projects in Sindh, one of which, FFC Wind Energy is being implemented by Fauji Fertiliser Company. FFC Wind Energy has already achieved Financial Close and operations of this wind farm are expected to commence by June 2012. The entire transaction framework for all these projects is under the auspices of the Alternative Energy Development Board, which is spearheading the development of Renewable Energy projects in Pakistan.-PR

Copyright Business Recorder, 2011

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Ongoing power projects: Expedite work, says Naveed

ISLAMABAD (March 10, 2011) : Minister for Privatisation, Syed Naveed Qamar, has directed the Ministry of Water and Power and Private Power Infrastructure Board (PPIB) to expedite and timely complete the ongoing private and public sector power projects. Qamar, who has been given additional charge of Ministry of Water and Power, gave these instructions while presiding over a meeting on ongoing power projects, power sector reforms and the current power situation, held in the PPIB office on Wednesday. Senior officials of the Ministry and PPIB participated. He further asked the PPIB to focus in the development and implementation of the indigenous power projects based on hydro, coal, wind, and solar for medium and long term needs. While appreciating the role of PPIB in bringing investment in the power generation sector, he advised it to resolve all the issues of IPPs and ensure their timely generation. The Minister also stressed the need for energy conservation, efficiency improvement and reduction of system losses. Qamar was informed that currently 40 percent of the total power production is being generated through private power projects. PPIB has also initiated International Competitive Bidding (ICB) for three projects of 100MW each. It was also informed that a 300MW project of imported coal is being under process. He was also apprised of guidelines for fast track processing of hydropower projects which are also under process. Minister was also given detailed presentation on the current power generation, future needs and to ensure and maintain maximum generation in the peak demand. The meeting was also informed that new Boards of Directors (BoDs) of Discos have been constituted and various steps are being taken under the power sector reforms plan to make them independent.-PR

Copyright Business Recorder, 2011

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USAID provides $6.66 million for repair of Tarbela power station

LAHORE (March 10, 2011) : The United States Agency for International Development (USAID) has released $6.66 million to the Pakistan Water and Power Development Authority (Wapda) for repair and rehabilitation of Tarbela power station. According to Wapda spokesman, the USAID had signed an agreement with Wapda to provide a financial assistance amounting to $16.5 million for Tarbela power station. The assistance is to be utilised for repair and rehabilitation of three units of the powerhouse, including units 1, 3 and 4. Rehabilitation of the three units will add another 60MW to the installed capacity of Tarbela powerhouse, which is 3478MW at present. The major activities of rehabilitation work include replacement of class-B stator winding of the three units with superior class-F insulation winding. With the replacement of winding, said spokesman, the capability of unit 4 will enhance by 108MW under over-load condition. Similarly after the repair, the units 1 and 3 each with a capacity of 175 MW would provide additional 40 MW to the national grid. The repair and rehabilitation work of Tarbela power station, undertaken with the USAID financing, is expected to be completed by end of the year 2011. It is pertinent to mention that in addition to constructing new hydropower projects, Wapda has also undertaken rehabilitation of the electro-mechanical equipment of its aged powerhouses, including Warsak, Tarbela, Mangla, Jabban, Renala etc. It is also worth mentioning that the USAID is also providing another $66 million for completing the Gomal Zam Dam in FATA and Satpara Dam in Gilgit-Baltistan.

Copyright Business Recorder, 2011

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'Fesco chalks out strategy to improve performance'

FAISALABAD (March 12, 2011) : The newly constituted Faisalabad Electric Supply Company (Fesco) board of directors has chalked out a three-pronged strategy to protect the interests of the company, its clients and employees, said Nadeem Aftab, Sindh, chairman of the board. Addressing the 76th meting of the board here Friday, he said that people belonging to all walks of life have been given representation in the BoD and would definitely perform their duties in the best interests of the country and the company. Spelling out his priorities, he said that the BoD will maintain a strategic check and balance to ensure interest of the customers and employees. He vowed to make concerted efforts to make Fesco one of the best distribution companies of Pakistan Electric Power Company. Earlier, the board members unanimously elected Nadeem Aftab of Mediacom Group as chairman BoD. During the election process, board members and vice chancellor of Agriculture University, Professor Dr Iqrar Ahmed presided over the meeting. Also, Mian Muhammad Latif of Chenab Group was elected as Chairman Audit committee and Mian Hamid Javed and Wasif Majeed members. The board members thanked ministry of water and power for giving representation to all sectors in the board. Chief Executive Officer, Tariq Mehmood Chattha gave a detailed presentation on the overall performance and development projects of Fesco.

Copyright Business Recorder, 2011

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Russian electricity giant interested in ''Casa 1000''

ISLAMABAD (March 13, 2011) : A major investor and a leading exporter and importer of electricity, Russian giant INTER RAO UES has shown interest in the power project - 'Casa 1000', which will provide cheap electricity to Pakistan and Afghanistan, reducing their power deficit. Ambassador of Republic of Tajikistan to Pakistan, Dr Zubaydullo Zubaydov disclosed this at a press talk on Saturday. He said Russian government the next door neighbour of Tajikistan has shown interest in undertaking the World Bank funded Casa 1000 project. He said the homework on the project has nearly been completed and it would be finished in three years. "There is strong possibility that construction work on the project will kick off from April 2011," he said. He said a Canadian company completed the feasibility study of the project and international bidders would soon be called to participate in the tendering process. Prior to visit of Tajik President Emomali Rahmon to Pakistan, he had a meeting with the Chairman of INTER RAO UES, Kovalchuk. In the meeting both had discussion on the Casa 1000 project, which unites four countries (Afghanistan, Pakistan, Russia and Tajikistan). The company has been engaged in Sangtuda HPP-1 hydropower project in Tajikistan. The ambassador told media that Tajikistan has potential to produce 4000 MW electricity during August-October, as enough water would be available. Dr Zubaydullo said President Asif Ali Zardari will visit Tajikistan in September 2011 in the framework of the quadripartite meetings of the heads of state -Tajikistan, Pakistan, Russia and Afghanistan. "We have planned that the stone laying ceremony of the building of Pakistani High Commission will be held in Dushanbe during President Zardari's visit," he said. He said initiation of direct flight operations of Pakistan International Airlines Corporation was under discussion and will be materialised soon. Earlier, a private airliner suspended its weekly flight operations, as the route was financially not viable for the company. Replying to a question regarding Tajik President meeting with the Director General Inter Services Intelligence, General Ahmed Shuja Pasha, he said the meeting was very significant. He said both sides agreed to enhance intelligence sharing to counter international terrorism and curb drug trafficking. "Intelligence sharing among regional countries is pivotal to counter terrorism," he added. The ambassador termed the recent visit of Tajik President as a significant step towards promoting economic, trade and other relations. "The agreements on agriculture, health and sports were signed between the two countries and also a joint declaration on comprehensive co-operation was signed," he added. He appreciated the warm welcome he received in Pakistan.

Copyright Business Recorder, 2011

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Pakistan's nuclear power plants functioning safely: PAEC

ISLAMABAD (March 16, 2011) : Pakistan Atomic Energy Commission PAEC Tuesday said its nuclear power plants located at Karachi and Chashma were "functioning safely." In a statement PAEC said it was continuously monitoring flow of events in nuclear plants in Japan in the wake of recent earthquake and tsunami there. Pakistan's nuclear plants are regulated by Pakistan Nuclear Regulatory Authority PNRA that is an independent body. There is also a Safety Division at PAEC headquarters, which provides safety oversight. "Moreover, there are several built-in features in our nuclear plants to handle accidents. Karachi Nuclear Power Plant KANUPP has already been assessed to be safe against effects of earthquake and tsunami. Two Chashma Nuclear Power Plants are safe against earthquake and flooding due to worst possible sequence of dam breaks," PAEC stated. "There was no cause of concern regarding safe operation of nuclear plants. Over the years, plant safety has also been assessed by experts from International Atomic Energy Agency IAEA & World Association of Nuclear Operators WANO. Any lessons learnt from accidents in Japan will be implemented at our plants as well," statement added.

Copyright Pakistan Press International, 2011

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Constituting a National Energy Authority proposed

KARACHI (March 17, 2011) : Chief Executive Officer (CEO) EMR Consultant and former Managing Director of SSGC and Pepco, Munawar B Ahmed has proposed constituting a National Energy Authority (NEA), as a statutory body, through a legislative process, which will have the overall responsibility to plan, manage and oversee the implantation of energy sector projects. The NEA would be tasked to prepare a 20/25 year national energy plan based on the framework of the 2005-2030 national energy plan, but with a revised primary energy mix, with the key policy objective of achieving sufficiency, suitability, affordability and sovereignty in the energy sector for Pakistan in the 21st century. In a paper on Pakistan energy sector on the brink of collapse presented at PHMA, he said that a new primary energy mix for Pakistan has been proposed. Without sufficient, sustainable and affordable energy, namely eclectic power, natural gas and petroleum products, the economic engine will not be able to move forward. With the continuing apathy and complacency of the new government over the past two-and half-years, no major new power plant (Hydel, gas, coal) has been formulated for commercial operation (COD) between 2012 to 2015. The much trumpeted nine new IPPS (gas and fuel oil) contributing 1350MW, which have achieved COD in 2009 and 2010, were all contracted and financial closure achieved prior to May 2008. There were originally planned for COD in 2007-08. Three additional IPPs with a combined capacity of 650MW are on track for completion in the next three months. These were also part of the past governments new IPP contracts signed between 2004 and 2007. The Chasma 2, nuclear power plant of 300MW, the contract and ground breaking for which also pre-dates. The government had completed about 85 percent and was expected to achieve COD in 2011. There have been major policy lapses, as well as non-implantation of doable energy projects by successive governments over the past decades. However, the new government apart from tall claims and rhetoric, has not launched any new major hydel project for water storage and power generation, nor have been taken steps to supplement the country's indigenous primary energy supplies, namely coal, (Thar) and additional gas, nor have any of the three gas import projects through Trans National Pipelines (TNP's) (IAP, GTAP, GUSA) or LNG import (Mashal) been finalised. Munawar B Ahmed said this has put Pakistan's energy sector on "The brink of collapse". In the short-term 2010-2012 and medium term 2012-2015 there is no clear plan or solution in sight for the 1200 to 1500mmcfd gas shortage, nor is there any major power project in the pipeline that can cover the power supply gap of 3,000MW - 5,000MW. No credible actions to bring on line the unutilised and some derated capacity up to 2000MW of existing IPP's and GENCOs have been undertaken.

Copyright Business Recorder, 2011

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Gilgit-Baltistan has potential to generate 42,000 megawatts of electricity: report

ISLAMABAD (March 18, 2011) : Gilgit-Baltistan (GB) region can contribute 42,000 MW to the national grid while the Basha dam will generate 4,500 MW alone and 7,500 MW power can be generated from Bonji dam, says a report jointly launched by World Bank, Asian Development Bank, Aga Khan Development Network and GB government. The report 'Gilgit-Baltistan Economic Report: Broadening the Transformation' was launched here at a ceremony on Thursday. The event was attended by Chief Minister GB Syed Mehdi Shah, representatives of WB, ADB, AKDN and GB government. The 200-page report covers key potentials/challenges being faced by Gilgit-Baltistan region. Speaking on the occasion, Mehdi Shah said that despite having huge energy potential, the region has the lowest rate of access to electricity. The GB government faces financial constraints and is largely dependent on the federal government, he added. "About 1.2 percent of the total area in GB is used for agriculture. Our yield of wheat is 2.2 tons per hectare while we have 150,000MT wheat shortfall every year. Overall Potato production in the region is 88,000MT but we don't have sufficient storage capacity," Mehdi Shah said. He maintained that the government of Pakistan has formulated National Mineral Policy which aims at offering suitable institutional arrangements at federal and provincial levels including time-bound investment-friendly regulatory regime and internationally competitive fiscal incentives along with the development of Mineral Resources but this policy is yet to be implemented in GB. According to the GB Economic report, while taxation in Pakistan is generally a federal subject, the royalties from minerals are collected and spent by the government of Gilgit-Baltistan. This means that revenue from mining could become a significant source of fiscal resources at the local level. Mehdi invited both domestic and foreign investors to invest in power, mining, and tourism sectors in GB where significant opportunities are still to be tapped. The report says that growth in GB has been supported by the gradual commercialisation of agriculture, as well as economic diversification outside the farm sector. The marketed agricultural surplus was estimated at only 15 percent of the total output, but there has been a gradual shift from subsistence farming to cash crops and fruit production. The report points out that the deteriorating security situation undermines economic activity. Tourism, for example, has much potential, but the absence of direct entry points and the increasingly negative perception about Pakistan mean fewer arrivals. The total number of tourists from all over the world has reduced from 60,000 to 7,000. "We need Rs 1.5 billion to fund Gilgit-Baltistan sewerage and drainage system. We have 30 percent water contribution in Indus irrigation system that increases 5 times in summer," the report says. The donors at the ceremony, highlighted the significant potential for private sector-led growth in agro-business, mining, tourism and hydro power in Gilgit-Baltistan and urged for integrated and concerted efforts by both the government and private sector to explore and exploit the indigenous resources. The report highlighted that the region is geographically isolated, the population is small and dispersed, the distance are more accurate due to the harsh terrain and variable weather conditions and longstanding internal and external division. Arrangements are complicated by the unresolved constitutional status of GB, the limited institutional capacity of the government of GB and the complete fiscal dependence on the GoP. It adds that the GB enjoyed better security than any other parts of the country and the deteriorating law and order situation in the neighbouring provinces harms its development prospective. The report recommended spurring of private sector led growth, with good potential evident in agribusiness, minerals, tourism and trade. It further recommended enhancing public service delivery, in the areas of social protection, education, health, and water and sanitation, ensuring the adequate maintenance of existing infrastructure assets, while scrutinising new capital projects for maximal development impact in GB and contribution to national level progress. The report says that GB has made rapid progress in education in recent decades. Indeed, in many areas it has kept pace with national institutions. Literacy rate in the region has increased rapidly over the last few decades, rising to 50 percent in 2004-05 from 37.8 percent in 1998 and 14.7 percent in 1981.

Copyright Business Recorder, 2011

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Need to generate solar energy to overcome power crisis stressed

FAISALABAD (March 28, 2011) : It is need of the hour to generate solar energy as power crisis is not only shrinking industries but also affecting agricultural production. This was stated by speakers while addressing a seminar titled "role of agricultural machinery in poverty alleviation and food security in Pakistan", organised by the Department of Farm Machinery and Power University of Agriculture Faisalabad. Dr Ashraf, Dean, Faculty of Science, UAF was the chief guest on the occasion. He quoted the example of Turkey, saying that the said country is generating 35 percent of the total electricity production from solar energy. The solar energy is vital to cope with the prevailing power crisis that has started making life tough. He said that 70 percent of agricultural production of our country consists of small farmers. He stressed the need to introduce modern technology among the farmers, adding that per acre production of our country is comparatively low because of non-availability of modern technology. He said that major challenge is to increase the production of agricultural per acre. He said that wheat can be attained 60 mand per acre but unluckily, the country is getting 30 mand per acre. He said the land of Pakistan is fertile and we can earn of billions of rupees by using our all out resources and adopting modern techniques. Faculty of Agricultural Engineering and Technology Dean Rai Niaz said that unluckily the persons who are using the modern machine don't know how to properly use the machines. It is must to train the farmers regarding the modern technology. He said that with the adoption of agri machine, the country can earn millions of rupees by exporting agri products. Dept of Farm Machinery and Power Chairman Dr Iqbal said that the country has 32 million hectic land while only 23 million hectare of land being utilised due to water shortage. Dr Mazoor also spoke on the occasion.

Copyright Business Recorder, 2011

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NTDC initiates work on six Fesco projects

FAISALABAD (March 29, 2011) : National Transmission and Dispatch Company (NTDC) has initiated work on 6 projects of national importance in Faisalabad Electric Supply Company (Fesco), said Tariq Mehmood Chattha, Chief Executive Officer of Fesco. Addressing a high level meeting, he said that a grid station of 500 kV and 3 grid stations of 200 kV each have also been included in these projects aimed to fulfil the increasing demand of electricity. He said work on the installation of 4th power transformer of 160 MVA in 220 kV Jaranwala grid station would be completed on war-footing to ensure best quality services to the consumers of this important load center. Chief Engineer EHV Sharafat Hussain Sial, CE Design Nazar Abbas, Manager Planning and Power Akhtar Hussain briefed the meeting about the salient features of various projects. They said that most important project of this region is construction of 500 kV grid station while 125-KM long 200 kV double circuit transmission line from Chashma to Ludewala is nearing completion. It would ensure electricity from 325 MW Chashma-II Nuclear Power Plant to Fesco, while 220 kV grid stations at Bandala, Toba Tek Singh and Chiniot would also be constructed. They said that 100 MVA power transformer at 220 kV Nishatabad has been replaced with 160 MVA power transformer. Chief Engineer Development Sheikh Muhammad Ashraf also addressed the meeting and said that launching of these projects by NTDC in Fesco is very encouraging and these would help in ensuring uninterrupted power supply to this region. It would also ease out overloaded grid stations of this region. Later, the high level team visited the proposed site for 500 kV grid station at Pensara-Bhawana Road. They declared it most suitable for 500 kV grid station. Chief Engineer Development Sh. Muhammad Ashraf was also included in the team and he assured full co-operation on behalf of Fesco.

Copyright Business Recorder, 2011

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