14TH INTERNATIONAL EXHIBITION FOR THE ENERGY INDUSTRY

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News Headlines for the month of
OCTOBER 2011

Building regional energy supply chain

In a breakthrough, Pakistan and Turkmenistan have finally achieved a milestone in pushing forward the much talked about $7.6 billion Turkmenistan-Afghanistan-Pakistan-India gas pipeline project when they locked a deal on gas pricing last week. A deadlock on gas pricing between the two nations had been hampering the progress for almost six months now on one of the key regional energy interconnection supported by the US. Islamabad and Ashkabad would sign a formal Gas Sales and Purchase Agreement (GSPA) on November 15 to target first gas flows into Pakistan by December 2016. Finalised at 69 per cent of Brent Crude Parity Price for delivery of natural gas at Pakistan-Afghan border inclusive of eight per cent transit cost, the accord is estimated to provide a saving of about $12 billion over 25-year life of the project on import of 1.365 billion cubic feet per day of gas when compared with equivalent gas quantities at 78 per cent of Iranian gas price. But more importantly, it provides an opportunity to Pakistan to utilise price review mechanism clauses in Pakistan-Iran GSPA to seek reduction in gas price from Tehran one year before commencement of the first gas deliveries in December 2014 on the basis of alternate fuel prices. Islamabad hopes, it can earn another $6 billion saving over the project life by putting Tehran in competition with Ashkabad’s gas price. Keeping in mind Iran’s tough negotiation style on the one hand and its economic blockade by the West on the other, the outcome would need to be seen with interest. On top of that, the Pakistan -Turkmen gas deal would have a positive impact on import of about 2,000mw of electricity from Tajikistan and Kazakhstan (1000mw each) to Pakistan as cash-starved Central Asian States compete with each other for opening up their energy resources to the South Asian Region. Detailed feasibility studies by independent consultants have established that electricity trade with Central Asian countries was not only technically feasible but economically beneficial in terms of lower tariffs for Islamabad facing huge gap between energy demand and supply. On the downside, there is a strong possibility of New Dehli walking away from the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project in view of its concerns over uninterrupted gas supplies across Pakistan. Quoting similar concerns and after Pakistan’s refusal to give sovereign guarantees to ensure gas deliveries in India or pay for the interrupted quantities in unusual security situations, India had declined to be part of the gas pipeline project with Iran, although Islamabad had promised to put in place internationally acceptable standards of security of the pipeline. “The situation is unlikely to change in case of TAPI”, said an energy analyst. Pakistan can depute highly qualified security personnel to secure the pipeline coupled with international insurance but it cannot be forced to pay for the undelivered gas in India in view of an overall security environment that is beyond any state’s control. An alternate option under study is to divert about 1.325 BCFD of gas quantitiesearmarked for India through a pipeline to Gawadar port where it can be converted into liquefied natural gas (LNG) for export though ships to India, China or any other interested party. The option is not only secure but logistically feasible in view of neighbouring Indian ports. Earlier, the gas pricing issues had been hampering the gigantic TAPI gas pipeline project because Turkmenistan wanted separate price agreements with each country while buyer countries sought a uniform gas rate until recently when India unilaterally finalised a secret gas price deal with Turkmenistan. Pakistan that had been opposed to individual agreements was therefore compelled to negotiate separate gas prices The 1,640 km TAPI project is proposed to bring 3.2 billion cubic feet of natural gas per day from Turkmenistan’s Daulatabd fields to Afghanistan, Pakistan and India. Out of this, Pakistan will get 1.365 billion cubic feet of gas per day, India 1.365 bfcd and Afghanistan 0.5 bcfd. The project came into limelight when Pakistan and Turkmenistan signed a memorandum of understanding in March 1995, with Argentinean energy firm Bridas Corporation as the main sponsor. The US based UNOCAL and Saudi Delta Corporation offered themselves as alternative consortium and constituted a new firm Centgas consortium. Unocal executives had been engaged with Taliban to facilitate the pipeline to pass through Afghanistan. In the aftermath of attacks on US embassies in African countries, the Unocal pulled out of the talks in 1998 quoting security problems. The project talks revived when in December 2002 heads of Turkmenistan, Afghanistan and Pakistan signed a fresh memorandum of understanding and allowed Asian Development Bank to sponsor a detailed feasibility study. Conducted through the British Penspen, the ADB submitted the feasibility study. The United States also supported the project as an alternate to Iranian gas pipeline as India joined talks initially as an observer and then as a formal participating buyer. In April 2008. Pakistan, India and Afghanistan signed a framework agreement to buy natural gas from Turkmenistan. The inter-governmental agreement on the pipeline was signed in December 2010 in Ashgabat. ADB has funded the feasibility study of the project but its efforts to broker a deal among parties on pricing issues could not succeed. The most crucial aspect that still needs to be resolved is the issue of ‘lane packed gas” — a term used for pipeline that stays put in the pipeline and undelivered — as to who should pick up its cost. Turkmenistan is of the view that buyer countries always pay for lane packed gas as per international best practices but buyers want the seller to share the price of the lane packed gas. Perhaps, a middle ground would need to be found to ensure smooth progress on the pipeline. The progress on the pipeline would have far reaching impact on Pakistan economy that is currently facing over 40 per cent of electricity shortage in peak demand and over 30 per cent shortage in gas supplies in peak winter. The discovery of gas reserves in Sui in Balochistan in the 1950s helped Pakistan usegas as a primary means of energy security. Gas now accounts for more than 43 per cent of the country’s total energy generation. The project will bring 3.2 billion cubic feet of natural gas per day (bcfd) from Turkmenistan’s gas fields to Multan and end in the north-western Indian town of Fazilka. The ADB has already expressed willingness to sponsor Pakistan’s equity in the TAPI project. A cash-starved and energy-hungry Pakistan needs huge injection of gas to meet its growing energy needs and to that effect the ADB’s offer to sponsor the major chunk of Pakistan’s equity in the project will provide big relief to the country.

Copyright Dawn, 2011

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Sale of gas share: government intends to allow E&P companies

The government intends to allow Exploration and Production (E&P) companies, operating in the oil and gas sector of Pakistan, to contract gas transmission/distribution companies and third parties for sale of their share of gas in Pakistan at negotiated prices in accordance with applicable laws, rules, and regulations. The draft of the Petroleum Policy 2011, envisages not allowing E&P companies operating in Pakistan to contract the residential and commercial consumers. On the request of E&P companies the government proposes in its policy draft to purchase 90 percent of the their share of pipeline specification gas through nominated buyer, which is effectively controlled by it in acceptable daily, monthly and yearly volumes to meet the internal demand in an economical manner provided there are no infrastructure constraints. The E&P companies would have the right to sell 10 percent of their share of pipeline specification of gas to any buyer with the prior consent of the government with the delivery point shall be at the outlet flange. "GOP/gas buyer nominated by GOP shall pay the price for gas at the outlet flange as set out in this Policy In addition, the 'guaranteed percentage' for foreign exchange remittance as contained as mentioned above will apply to such sales" the draft adds. The companies would also be allowed to construct and operate pipelines for local requirements and for exports of their share of petroleum which shall be regulated by the regulator concerned in accordance with applicable laws, rules, regulations and the policy based on an open-access (third party) regime. The E&P companies constructing such pipelines would be allowed priority access based on a firm utilisation plan. Irrespective of whether a connecting pipeline from outlet flange to the nearest transmission system is constructed and operated by a producer, a third party or a government nominated entity such a pipeline shall be regulated pursuant to the provisions above, unless the regulator concerned decides that the pipeline shall be a non-regulated pipeline, the draft notes. If an inter-connecting pipeline is proposed to be constructed by a third party or the buyer, the producer will be required to confirm the requisite gas supply volumes, pressures, reserves and other technical parameters on standard supply term contract basis for a period to be agreed between the parties. "The basis of the tariff allowed and paid monthly for delivery from outlet flange into the transmission system will be determined by the regulator based upon a 'rate of return on equity' basis at the rate of 12 percent with the capital cost being amortized over a minimum of 15 years. Allowable costs will include operating cost and interest payable on the initial capital over the minimum 15 years amortisation period. Post the repayment period the Operator will be able to make a 12 percent margin over operating costs. If such pipeline is used by more than one shipper, the calculation basis for each year shall be done on an overall pipeline volume nomination basis at the start of each year, through the aggregation of all shippers' nomination. Any shortfall or excess of volume delivered from the nomination in the year shall be deducted/ received from the tariff payment of that year or charged to the party responsible for such a shortfall" the draft policy adds. Unless a pipeline is specifically constructed in order to facilitate a third party access agreement agreed between operators/contractors and a third party duly approved by the regulator all pipelines from field to outlet flange, in case of offshore, are proposed to be constructed with an excess capacity equal to thirty percent, depending upon projected plateau rates unless otherwise allowed by Directorate General of Petroleum Concessions (DGPC) based on an objective assessment of future likely use of such capacity. E&P companies are proposed to exhaust options to make efficient use of the current transmission system and co-operate in the construction and operation of pipelines upstream of the outlet flange or transmission system. Shared ownership and spare capacity is proposed to be based upon the combined planned coincidental shared plateau of the operators unless otherwise agreed by DGPC or the regulator concerned. Companies would also be encouraged to co-operate in any extension of an initial system to ensure economies of scale, maximum utilisation and ensure that the overall pipeline stays below the tariff limit as specified. In the event such pipeline is located in offshore area and the excess capacity is subsequently utilised by a third party, the tariff proposed to be charged by the party, providing access to such pipeline as approved by DGPC and revenues generated therefrom may be treated as a part of profit oil/profit gas for its production sharing purposes. The tariff payable to any third party or the producer for pipeline connecting the outlet flange to the transmission system is proposed not to exceed $0.5/MMBTU in aggregate. Any tariff in excess of this limit will be determined by the regulator on a case-to-case basis but only in exceptional circumstances, and subject to the approval of GOP. The indexation of the tariff limit is to be based on OGRA's recommendation and approved by the government. The public utility companies will continue receiving tariff under a separate tariff regime within the frame work of OGRA Ordinance.

Copyright Business Recorder, 2011

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Exports of petroleum, coal surge 38.59 percent during first quarter

The export of petroleum and coal products increased by 38.59 percent during first quarter of the current year as compared to the same period of last year. The country exported petroleum and coal products worth $374.48 million during July-September 2011-12 against the export of $270.56 million during July-September 2010-11, Federal Board of Statistics (FBS) reported. Out of the petroleum group and coal, the export of petroleum products (Excluding top naphta) registered an increase of 11.59 percent by growing from $164.95 million last year to $184.07 million during period under view. The export of petroleum top naphta was recorded at $190.73 million during first of quarter of current year, witnessing growth of 80.65 percent as compared to $105.58 million during the same period last year. The export of solid fuels (coal) has registered the increase of 347.22 percent during period under review. On year-on-year basis, the export of petroleum group and coal has registered an increase of 51.29 per cent during the month of September 2011 over the same month of last year.

Copyright Associated Press of Pakistan, 2011

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China to invest in coal sector of Pakistan

Sino Resources Group Limited China showed interest in coal processing of removing moisture to turn it into high version coal, which is highly efficient in upgrading the commercial value of lignite. The company also gave detailed presentation of the most advanced coiled tubing, drilling and nitrogen stimulation technologies. A six member delegation of Sino Group, Shaanxi Dingbian Lide Oil well technology Service Limited and China Cultural Heritage Foundation, led by Jane Geng, Chairman called on Zia Uddin, Executive Director General of Board of Investment (BOI). The China Cultural Heritage Foundation members were interested to open up super stores in Islamabad for the availability of Chinese products in Pakistan. This store will promote the Chinese products and culture in Pakistan to create a cultural bonding between the two countries. In this regard, the delegation will meet the competent authority of Capital Development Authority for the allocation of the site and other acquisitions for the super stores. Zia Uddin appreciated the efforts being made by the company for their investment plans and briefed that in order to attract investment in Thar, a comprehensive incentive package has been developed with consultation from all stakeholders, which included 20 percent IRR to firms, 30 years exemption on corporate tax, all custom duties on import of coal mining projects allowed at zero percent to reduce the initial capital investment, exemption on withholding tax to shareholder etc to reduce the initial capital investment

Copyright Daily Times, 2011

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1.4BCFD LNG import: Ogra makes capacity allocation to three companies

The Oil and Gas Regulatory Authority (Ogra) has made capacity allocations to import 1.4 Billion Cubic Feet Per Day (BCFD) of Liquefied Natural Gas (LNG) to three companies ie Global Energy (500MMCFD), Engro Corporation (500MMCFD) and Gasport (400MMCFD), with first delivery expected by the mid of 2012. Acting Chairman Ogra, Sabir Hussain, while addressing a press conference along with other high ups of the authority said that the three companies were required to provide performance bank guarantees of $10 million each to meet their LNG delivery deadlines within 90 days. He said the Global Energy of Turkey was expected to start importing LNG in October 2012, followed by Engro Corporation in December 2012 and Pakistan Gasport in 2013. He said the companies were now required to submit their timelines for the import, while two gas utilities Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) would arrange Rs 1.2 billion financing to put in place infrastructure to receive LNG to be imported by the three companies. He said the capacity allocations were made by the Ogra in consultation with the ministry of petroleum and other stakeholders. Mansoor Muzaffar, Member Gas Ogra, said that the companies were required to pay fee along with requisite information in response to Ogra's letter of October 21, 2011 at Rs 40,000 per 10 MMCFD and firm commitment from LNG buyer needed to be provided within 90 days of capacity allocation and duly authenticated through required procedures. "Ramp-up period to achieve full pipeline allocated capacity utilisation should be provided within 90 days duly agreed between the project proponent and gas utilities. Entry and exit points should be indicated by gas utility companies within 90 days," he added. Performance bank guarantee of US $10 million, en-cashable in Pakistan, to be furnished within 90 days of capacity allocation. The utility companies, SNGPL and SSGCL, would start investing in capacity enhancement after receipt of performance bank guarantee from a bank acceptable to Ogra and en-cashable in Pakistan, Muzaffar added. He said that the companies were required to submit engineering contract and design along with detailed schedule and time line within 15 days of capacity allocation. In addition the investors have been directed to submit provisional financial plan regarding the funding of the project to Ogra within 15 days of capacity allocation. Financial closure must be achieved within six months of the capacity allocation with due intimation to Ogra. Engineering & Construction contracts/EPC contracts with reputable companies should be submitted immediately after financial closure. Mansoor said that Heads of Agreement (HoA) in respect of floating storage/re-gasification unit to be provided within 90 days of the capacity allocation and master agreement with credible LNG supplier to be provided within 45 days of capacity allocation. The Implementation Agreement with Port Qasim Authority should be submitted to the authority by project proponent within 30 days of capacity allocation. "Failure to achieve the above milestones may tantamount to cancellation of allocated capacity and encashment of bank guarantee," he added. It must also be noted that capacity allocated cannot be transferred to another person by way of sale, assignment, transfer or surrender without prior approval of the authority. The Ogra had issued construction licenses to the three companies to set up LNG terminals on a fast-track basis to offset severe gas shortfall, which at present is estimated at 1.5 mmcfd and in winter would touch 2 billion cubic feet per day. The PQA was already working with investors to develop a jetty and terminal facilities for handling LNG. Under the Third Party Access rules now finalised by Ogra, LNG importers would use pipelines of gas utilities for transportation of the fuel across the country. About 500 mmcfd of LNG could produce about 2,500mw of electricity. Because of higher import costs, LNG would primarily be used for power generation.

Copyright Business Recorder, 2011

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LNG importers to get special fiscal incentives

The government would give special fiscal incentives to all LNG importers in an effort to deal with the looming energy crisis in the country and to promote the use of Liquefied Natural Gas (LNG). According to LNG Policy 2011 draft, the incentives include zero percent customs duty to be charged on imported LNG, LNG buyer and developer; and importing LNG will also be exempted from withholding tax at import stage in respect of such import. The Federal Board of Revenue will issue necessary notification in this regard. There would be exemption from custom duty in excess of 5 percent with total exemption from sales tax in respect of plant, equipment and machinery, not locally manufactured, imported by that LNG developer, as the case may be, by expanding the scope of SRO 678(1)/2004, dated 7/08/2004. Apart from the incentives, the Petroleum Ministry has also proposed that regulations in the LNG sector be framed keeping in mind the overall development of the sector. In a set of liberalised norms, the Ministry has suggested import of natural gas as well as LNG be allowed without any restriction. Import of such plant, machinery, equipment and parts will also be exempted from withholding tax at import stage as allowed under clause 56(vii) of the part (vi) of the second schedule to the Income Tax Ordinance, 2001, the draft of the LNG policy 2011 added. "Initial allowance will be admissible at the rate of 50% of the cost of depreciable assets under section 23 of the Income Tax Ordinance, 2001. In addition, normal deprecation at the rate of 10% will be also allowed on plant and machinery. Exemption from withholding tax on interest payments to foreign lenders will be allowed as permissible under various provisions of the Income Tax Ordinance, 2001. Sales tax and Federal excise duty will be charged on import and supply of LNG at applicable rates" the draft notes. When an LNG developer or LNG, as the case may be, has identified a suitable site (whether land based or offshore), the government will actively assist the LNG developer as the case may be, in obtaining land and port facilities for an LNG terminal at a reasonable cost and within a reasonable time frame. The government will encourage the participation of multi-lateral development banks (MDBs) in LNG import projects to facilitate the financing of such projects inter alia through equity participation by MDBs and MDB instruments such as political risk guarantees and partial credit guarantees. The public sector entities including SNGPL and SSGC at present could only facilitate up-to 500 MMCFD LNG in its existing capacity, while to overcome the current energy crisis the country needs about 2 BCF of LNG. The government has constituted a Task Force headed by the Secretary Petroleum to facilitate the implementation of LNG import projects, as notified under LNG Policy, 2006, will remain intact.

Copyright Business Recorder, 2011

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SSGC planning gas efficiency project with World Bank

The Sui Southern Gas Company (SSGC) is planning a Natural Gas Efficiency Project (NGEP) in cooperation with the World Bank to bring phased reduction in unaccounted for gas (UFG) losses over a five-year period, officials said. The project is being evaluated and will get off the ground soon, they said. UFG losses have been the major impediment in the way of the company’s efforts to augment transmission and distribution network across Sindh and Balochistan. The company’s UFG percentage has risen due to reduction in bulk sale of uninfected gas by about 26 percent, sources said. Pakistan has requested the World Bank for a loan of about $200 million to enhance the supply of natural gas by reducing physical and commercial losses of gas in the pipeline system, officials said. High levels of UFG losses contribute to the worsening gas crisis in the country, they said. UFG in Pakistan was recorded at about 9 percent last year compared with around 2 percent in the countries of Organisation for Economic Cooperation and Development (OECD), a World Bank report says. The beneficiaries of the NGEP would mainly be the consumers of natural gas in Sindh and Balochistan which would have more gas available with reduced UFG cost in their tariff and adequate gas pressure. The project is expected to be approved by the executive board of the World Bank by the end of this year, officials said. The benefits to Pakistan will be more gas availability for power generation and lower greenhouse emissions, they said. The household gas appliance industry in the country generally produces low-efficiency appliances, which fail to meet Pakistan’s thermal efficiency standards, officials said.

Copyright Business Recorder, 2011

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MGCL discovers big oil reservoir in Karak

Mari Gas Company Limited (MGCL) has discovered a big oil reservoir in Karak district of Khyber Pakhtunkhwa initially with a production capacity of 1,700 barrels per day. The Halini well was spud on January 07, 2011. The well has been drilled up to a depth of 5,350 meters. During the initial short duration tests, the well flowed at the average rate of 1,700 barrels per day crude oil of API gravity 26 at 32/64" choke size. Managing Director MCGL General Raza Muhammad Khan (Retd) informed Dr Asim Hussain Federal Minister for Petroleum and Natural Resources in a meeting held here on Thursday. The minister directed the MD MGCL to supply 44 MMSCFD gas from Mari Deep Reservoir to Sui-Northern Gas Pipelines limited (SNGPL). The company has made a significant crude oil discovery with the additional potential of associated gas, during the drilling of Halini well (near the village Kamar Sar, Tehsil Essa Khel) in its Karak exploration block. The block is located at the boundaries of KP and Punjab provinces (between the districts of Karak and Mianwali). An official of MGCL talking to Business Recorder said that gas exploration is also expected from the site and this is first discovery in the last two years. At present, Pakistan is producing only 15 percent ie 65,000 barrels per day of oil locally and the rest is imported from Gulf countries, the discovery would help reduce the import bill of Pakistan. The country is also facing severe shortage of natural gas up to 2200 MMFCD which would jump to 3200 MMCFD in upcoming winter and currently the government is managing it through gas load management plan and increase in gas price. The discovery is estimated to have huge foreign exchange savings, which could range in billions of dollars at the current oil price trend and thus contribute towards the nation's endeavour to reduce dependence on imported energy, MD MGCL informed the minister. The flow rates from the well are expected to increase with further testing and stimulation treatment, which is planned to be conducted, shortly. The prospect is expected to spread over a large area and the company is planning to drill additional wells to delineate the exact extent, size and reserves potential of this discovery. The Karak block was granted to MGCL, as operator and 100 percent interest owner, on April 14, 2005. Subsequently, MOL Pakistan Oil & Gas Company B.V.(an E&P Company of Hungary) acquired 40 percent interest share in the block from MGCL. MGCL has also made a gas/condensate discovery last year in its 100 percent operated Sujawal block in Sindh, which is being put on test production by installing early production facilities. MGCL is also proud of discovering the first ever oil in Balochistan when it's Ziarat well flowed crude oil which is currently being evaluated. Other recent discovery of gas by MGCL in its Sukkur block has also been put on test production for gas supply to SNGPL.

Copyright Business Recorder, 2011

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IPI gas pipeline project: Iran completes work, will soon reach Pakistani border

Deputy Interior Minister Iran Hassan Qadeemi said on Sunday that Iran had completed work on gas pipeline project and it would soon reach Pakistan border. Talking to media persons at a Mehfil-e-Mushaira held in connection with the birthday of Hazrat Imam Ali Raza (AS), here at Islamic Iranian Cultural Centre, he said that gas pipeline was only 80 miles away from Pakistan border and now it was the responsibility of Pakistan government to complete the project on its side. To a query, he said that Iran was extending full support to the flood effectees in Sindh, adding that Iranian Government would help Pakistani brethren in the rehabilitation of the flood victims. On the occasion, different poets including Shahzad Ahmad, Nasir Zaidi, Prof Tahira Jabeen, Jamil Turabi, Prof Muzammal and Prof Raf presented "Monaqabat" Imam Ali Raza. Samina Khawar Hayat MPA presided over the function while Director Islamic Iranian Cultural Centre Dr Abbas Famori, Iranian Consulate in Lahore Bani Asadi was guest of honour. The speakers said that it was need of the hour to introduce the teachings of Hazrat Imam Ali Raza among young generation of the world. They urged the media to highlight the teachings of Imam Raza through its TV channels. Earlier, Samina Khawar Hayat inaugurated an exhibition where books on Imran Raza, calligraphy and pictures on Iranian culture were put on display. The exhibition will continue for a week.

Copyright Associated Press of Pakistan, 2011

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Gas supply schemes for Thall Block, Karak District: Prime Minister approves Rs 210 million for 8 localities

Prime Minister, Syed Yousuf Raza Gilani on Sunday approved an amount of Rs 210 million to lay infrastructure for supply of gas to eight localities of Thall Block, Karak District. The PM gave approval of the schemes on the recommendations of Governor of Khyber Pakhtunkhwa, Masood Kausar and political parties. The localities of the Thall Block, which will be provided gas are Noshpa, Al Wagries, Rotay Kalay, Chalkhwni/Tashi, Chanda Manzai, Chanda Khurram, Chakhto Village and Makori East. It was disclosed in the meeting that oil and gas from the Thall Block Oil and Gas Field will start production early next year. The initial estimates are that 15MMCFD of gas and 4,700 barrel of oil per day will be added to the national energy grid. Thall Block is the joint venture of Oil and Gas Development Company (OGDC) and Hungarian Oil and Gas Company, MOL Ltd. The drilling at the field started about seven years ago. The lease period, according to the agreement, spans over 25 years. According to OGDCL, the operation of Thall Block will add 237 million dollars in the foreign exchange, 117 million dollars from oil and about 65 million dollars from gas per annum. It may be recalled that the Prime Minister had made the announcement to initiate work for supply of gas while addressing a big public meeting, on July 28 this year, on the occasion of inauguration of Khushal Garh Bridge, Khyber Pakhtunkhwa. Prime Minister, Syed Yousuf Raza Gilani on Sunday approved an amount of Rs 210 million to lay infrastructure for supply of gas to eight localities of Thall Block, Karak District. The PM gave approval of the schemes on the recommendations of Governor of Khyber Pakhtunkhwa, Masood Kausar and political parties. The localities of the Thall Block, which will be provided gas are Noshpa, Al Wagries, Rotay Kalay, Chalkhwni/Tashi, Chanda Manzai, Chanda Khurram, Chakhto Village and Makori East. It was disclosed in the meeting that oil and gas from the Thall Block Oil and Gas Field will start production early next year. The initial estimates are that 15MMCFD of gas and 4,700 barrel of oil per day will be added to the national energy grid. Thall Block is the joint venture of Oil and Gas Development Company (OGDC) and Hungarian Oil and Gas Company, MOL Ltd. The drilling at the field started about seven years ago. The lease period, according to the agreement, spans over 25 years. According to OGDCL, the operation of Thall Block will add 237 million dollars in the foreign exchange, 117 million dollars from oil and about 65 million dollars from gas per annum. It may be recalled that the Prime Minister had made the announcement to initiate work for supply of gas while addressing a big public meeting, on July 28 this year, on the occasion of inauguration of Khushal Garh Bridge, Khyber Pakhtunkhwa.

Copyright Associated Press of Pakistan, 2011

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$166 million LNG import project deal signed

The first liquefied natural gas (LNG) terminal project for import of 400-500 million cubic feet (mmcf) LNG was signed here on Friday to overcome the energy crisis in the country and to reduce the growing dependence on expensive furnace oil. The agreement was signed between Overseas Private Investment Corporation (OPIC)-an American company--and Pakistan Gasport Limited (PGP), which was also witnessed by Federal Minister for Finance Dr Abdul Hafeez Shaikh and Federal Minister for Port and Shipping Babar Ghauri. The $166 million project's capacity would be 400-500 million mmcfd and the project will start its work by January 2012, and its completion period is one year. "With the growing demand of energy, the country desperately needs to import electricity and gas in order to provide electricity and other facilities to the people on cheaper rates", Dr Hafeez said while talking to media after the signing ceremony of the agreement. He said that the private sector can play its role to overcome the energy needs of the country and what the government can do is to facilitate the private sector and to help remove hindrances in their way. Hafeez said after completion of this project the country would be able to produce 500 mmcfd LNG, which would help reduce the cost and shortage of energy. Babar said that at present the country has been facing acute energy crisis and it was needed to take some practical steps in this regard. He said that the signing of this project was first of the three projects and work on the other two projects would also be started soon to eliminate shortage of energy from the country. During the ceremony it was stated that the country is facing gas shortage of 1000 mmcfd during summer and 1500 mmcfd in winter. The current primary energy demand and supply gap is approximately 22 million tons oil equivalent (mtoe), which is expected to increase to 71 mtoe by 2020. The location of the project of Pakistan GasPort Limited would be at Kaderio Creek, Port Qasim, Karachi. The technology being used for the project is Fuel Storage and Regasification Unit (FRSU) connected via a sub-sea pipeline to the onshore metering station. The main sponsor of the project is Joint Venture Limited (JJVL) which is also a nominee this year for the prestigious Platts Energy Awards. Natural gas is a much cleaner fossil fuel and its price would also be invariably cheaper vis-a-vis furnace oil. It will give 50 percent savings in operation and maintenance (O & M) for power plants, and eventually lower costs for the end user.

Copyright Associated Press of Pakistan, 2011

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Coal-fired power generation: 50 percent work completed, says Dr Samar

Renowned scientist Dr Samar Mubarakmand said that fifty percent coal-fired power generation works has already been done, while the rest would be completed within two months. With the completion of this project, the nation would get cheap and sufficient power supply thus resolving the current pestering energy crisis. Addressing a seminar under the aegis of IEEEP here, coal-fired power generation project's Chief Dr Samar Mubarakmand made this disclosure. A good number of leading power experts and economists also spoke on the occasion. Dr Samar Mubarakmand said the coal gasification project would be completed in two months, ultimately putting the coal on fire to generate electricity. He said 50 percent work on the project has completed, which means drilling and other infrastructure. According to him, it is for the first time in Pakistan that the coal gasification is being launched on commercial basis and abundant and cheap electricity would be available if it gets through. The issue of power shortfall would be resolved accordingly, he said, adding: An economic growth of 8 to 10 would be ensured. He said the coal gasification was already producing 50000MW around the world, as the cost of electricity per unit is relatively low. He said the four continents in the world are working on this project, as this method has enhanced energy efficiency reaching to 76 percent. He said layers of aqua fire are a major obstacle in digging out coal reserves. According to him, the coal gasification has bypassed such issues. He said Pakistan was full of natural resources, including copper, gold and silver but still the development of the country was halted. He negated the impression that Pakistan was lagging behind in the comity of nations due to lack of capacity and said Pakistan has missile technology indigenously, which means Pakistani can do everything. He said the planning commission was working on furtherance of such possibilities. He said that coal gasification has potential to provide substitution to different usages including diesel, petrol, furnace oil and gas. He said solution to the present energy problems lies in cheap and abundant electricity and Thar coal is the answer to these problems. He said the new growth strategy of the country is being emphasised on power generation through coal. He said our installed capacity of thermal generation is 12000MW against hydel generation of 9000MW. He said the depleting gas reserves have led to excessive use of furnace oil in power generation, which carries high sulphur contents that cause negative maintenance impact on generation plants.

Copyright Business Recorder, 2011

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Singaporeans keen to invest in diverse fields

Prime Minister of Singapore Hsien Loong Lee on Friday said his country's private sector was keen to invest in Pakistan's agro-based industry, small and medium sized industry and renewable and solar energy, as these promised higher returns. Talking to Prime Minister Syed Yusuf Raza Gilani here at the sidelines of the Commonwealth Heads of Government (CHOGM) meeting, he said his country had already made huge investment in Pakistan's telecom sector and its entrepreneurs were identifying new areas for enhanced co-operation. Prime Minister Lee termed the private sectors as engine of growth and urged increased interaction between the two countries for enhanced economic activity. He said economic interdependence would lead to a durable and sustainable relationship between the two business communities and the people. Prime Minister Gilani appreciated the support of Singapore to Pakistan in its bid for a seat at the United Nations Security Council and sought a backing on its efforts to get a Full Dialogue Partnership at the Association of Southeast Asian Nations (Asean). Prime Minister Lee said his country would take up the matter with other member states. He also called for increased exchanges between the parliaments of the two countries and said high-level interaction can go a long way in bringing the two peoples together. Regarding Pakistan's ties with the United States of America, Gilani said Pakistan has always been urging the need to pursue the policy of 3Ds - Development, Dialogue and Deterrence and said now they too desire resolution of the matters by pursuing a policy of reconciliation. The meeting was also attended by Foreign Minister Hina Rabbani Khar, Commerce Minister Makhdoom Amin Fahim, Pakistan's High Commissioner to Australia Abdul Malik Abdullah and senior officials.

Copyright Associated Press of Pakistan, 2011

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Wind power project in Sindh: IFC investing $38.1 million in Zorlu Enerji Pakistan

IFC, a member of the World Bank Group, is investing $38.1 million in Zorlu Enerji Pakistan Limited to build a landmark wind power project in Sindh Province, that will increase the country's renewable energy generation capacity. The 56.4MW Zorlu Pakistan wind project is the first internationally financed wind power development in Pakistan. The Asian Development Bank, ECO Trade and Development Bank and Habib Bank are also financing the $159 million project. When constructed, the project is expected to be one of the first two wind power projects to operate commercially in Pakistan. The project supports the entry of a Turkish power sector player in Pakistan, thereby promoting south-south investment. Few international players are currently operating in the power sector in Pakistan and IFC's support was instrumental in realising financing for the project. Zorlu Enerji is a key IFC client in the renewable energy sector, dating back to 2009, when IFC financed the project developer's 135MW-wind power project in Turkey. Zorlu Energy General Manager Arif Özozan said, "Pakistan's first wind power plant project to be built with international finance was made possible by the support we received from IFC. By demonstrating the viability of Pakistan's local and renewable resources, this project is expected to have a considerable impact on the economy. "IFC's partnership with Zorlu Enerji, one of our key clients, enables us to extend additional support to the renewable energy sector in Pakistan. We hope the project will stimulate the interest of other investors in harnessing the country's favourable wind resource," said Gulrez Hoda, IFC Director for Infrastructure and Natural Resources in Eastern Europe and the Middle East and North Africa. The project will help alleviate Pakistan's severe power deficit by developing an indigenous, renewable resource for power generation. It will also contribute to reducing the country's reliance on imported fuel for power generation.-PR

Copyright Business Recorder, 2011

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'22 wind-energy projects of 1,100 megawatts under way'

Around 22 wind energy projects of 50MW each are at different stages of development and upon completion would help meet the energy requirements and development goals. Out of these, 11 developers have completed their feasibility studies, said an official at Alternative Energy Development Board (AEDB), here on Thursday. The official said six Independent Power Producers (IPPs) have acquired generation license from National Electric Power Regulatory Authority (Nepra), three have been awarded tariff and three IPPs are negotiating Energy Purchase Agreements (EPA) and Implementation Agreements (IA) with the concerned authorities. He observed wind energy resources are abundantly available across the country that can be effectively and efficiently utilised for economical generation of power. Therefore, it is envisaged as an important ingredient of its future energy mix to meet the shortage. He informed that keeping in view the huge potential and the anticipated future energy needs, government has set a target of at-least five percent (to be checked) of the total national power generation capacity ie 9,700MW. This would be generated through renewable energy technologies, especially wind energy, by year 2030. He disclosed that Zorlu Enerji Pakistan, awarded tariff of US cents 12.1057 per kWh, is in the process of executing its 50MW wind-power project in Jham-pir, Thatta. Moreover, three companies have acquired their own private land for their 50MW wind power projects each and are in the process of completing their feasibility studies. He furthered that AEDB is also encouraging use of wind energy for self-consumption and grid spill-over. A 150KW wind turbine installed by a private industry is currently availing the net metering facility, he added. The official also highlighted the incentives for development of renewable energy for power generation that include Wind Risk, Guaranteed Electricity Purchase, Attractive Tariff, No Import Duties on Equipment, Zero Sales Tax and many more. He also said there exists immense potential of wind energy with approximately 346,000 is available in the country.

Copyright Associated Press of Pakistan, 2011

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CDWP to consider 10 energy projects worth Rs 54 billion today

Central Development Working Party (CDWP) today (Friday) would consider 10 projects of energy sector worth Rs 54 billion, 13 projects worth Rs 28.32 billion of water resources, 20 projects of transport and communication amounting to Rs 204.9 billion and eight projects of industry and commerce worth Rs 36.6 billion. Similarly the CDWP would also consider two projects worth Rs 5.46 billion of agriculture sector, one project costing Rs 1694.93 million of education, nine projects worth Rs 19.43 billion of Physical Planning and Housing, one project worth 2.76 billion of Manpower and others of Culture & Sports, Mass Media, Science and Technology and Higher Education. Some projects would be supported by World Bank (WB), Asian Development Bank (ADB) and USAID Grants. Similarly soft loan, Japan social development fund, French loan, Multi-tranche Financing Facility and Italian soft loan would also given for the projects. The CDWP would discuss almost 59 projects for approval and recommendation for the Executive Committee of the National Council (Ecnec). About energy sector, according to official documents, the CDWP would consider Detail design and construction of Multan hydro Power Project (84MW) District Swat costing Rs 15.14 billion, construction of Lawi Hydropower Project (69.0 MW) District Chitral, Khyber Pakhtunkhwa worth Rs 12.24 billion, Replacement of Conventional Street Lights with Light Emitting DIOE(LED) Lights at Islamabad(ADB funding and CDA self financing)of Rs 6.524 billion, Long Term Operation of Karachi Nuclear Power Plant (LTOK)(Revised) of Rs 868.197 million, PC-II for joint Pre-project feasibility and design Study of a large size power plant of Rs 1.139 billion, 26MW Shagarthang, Hydropower Project, District Skardu (Revised)(ADB funding) of Rs 4.843 billion, 04 MW hydel Power Project Thak Chilas (Revised)(ADB funding) of Rs 1.282 billion, Establishment of 48 MW Jagran-11 Hydro Electric Power Station(Phase-2) District Neelum in AJK(Revised)(French Loan) of Rs 7.056 billion and others. The CDWP would also consider projects relating to Industry and Commerce including Expansion of Pakistan Steel's Production Capacity up to 1.5 Million Tons per year worth Rs 30.45 billion, Establishment of Provincial Training Centre for Mine Workers and Emergency Response Training Quetta (Government of Australia) costing Rs 1.15 billion, Up-gradation of NFC Institute of Engineering & Technology (NFC IET) Facilities, at Multan worth of Rs 100 million, Development of Infrastructure in Various Estates of Sindh Industrial Trading Estates (SITE) Limited Rs 2 billion and others. Similarly, CDWP would also discussed projects about Transport & Communication including Construction of Bridge Across River Indus Linking Jheruk with Mulla Katiar of at Hyderabad & Thatta Rs 5.883 billion, Hasanabdal-Havellian-Mansehra Expressway E-35 (110 KM) ADB 88.9% of Rs 46.81 billion, Construction of Interchange at Aziz Chowk, Gujranwala (N-5) of Rs 2.35 billion, Improvement and Widening of N-45 (141 KM) Section-1: Chakdara - Timargara, Section-2: Akhagram - Dir Section- 3: Kalkatak - Chitral of Rs 9.202 billion, Lowari, Tunnel and Access Roads Project Modified as a Road Tunnel of 18.132 billion, Rehabilitation of Rolling Stock and Track in Connection with Bail out Package of Rs 4.66 billion, Doubling of Track from Lodhran to Khanewal via Multan Cantt. (Revised) of Rs 3.678 billion, Rehabilitation of Track on Lahore - Lalamusa Section with New Signalling and Telecommunication System of Rs 17.11 billion, Khyber Pakhtunkhwa Road Development Sector & Sub Regional Connectivity Project (ADB Assisted) of 13.3 billion and others. Flood Schemes including Post Flood Reconstruction/ Replacement Projects in Communication Sector FATA Sub Head: Southern FATA (North & South Waziristan) of Rs 977.314 million, Post Flood Reconstruction/ replacement Projects in Communication Sector FATA (Sub-Northern FATA & FR's)(Bajaur, Khyber Agencies FR's Peshawar/ Kohat/Bannu and Tank) of Rs 515 million and Post Flood Reconstruction/ replacement Projects in Communication Sector FATA Sub-Head: Central FATA (Kurram and Orakzai Agencies) of Rs 640.695 million and others. The projects about flood areas and Water resources are Punjab Irrigated Agriculture Productivity Improvement Project of Rs 12.77 billion, Rehabilitation and Restoration of Water Management Infrastructures, Office Buildings and Land Development and Purchase/Repair of Machinery in Flood Affected Areas in Naseerabad, Jaffarabad, Jhal Magsi, Sibi, Kachi, Ziarat, Loralai, Killa Saifullah, Harnai, Zhob, Kohlu, Barkhan and Musakhail Dist of Balochistan of Rs 1.217 billion and others.

Copyright Business Recorder, 2011

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Construction starts at world’s largest Diamer-Bhasha Dam in Pakistan; which will generate 4,500MW electricity

SARGODHA: Chairman Prime Minister's Inspection Commission Malik Amjid Ali Noon has said that Diamer-Bhasha Dam will generate 4,500 megawatt electricity and it will earn its actual cost in seven years after its completion. He said the total estimated cost of the mega project was Rs 894 billion, out of that the exchange of Rs 313 billion will be provided through international banks while the government of Pakistan have approved Rs 20 billion under public sector development programme (PSDP) 2011-12. Noon said the dam will be built at the Indus River 315 kilometres away from Tarbela Dam in the opposite direction of water flow, 165 kilometres from Gilgit and 40 kilometres from Chilas towards the water flow whose height would be 272 metres, moreover, its water storage capacity would be 8.1 million acres feet. Two power houses would be constructed, one at Gilgit-Baltistan and the other at Khyber-Pakhtunkhwa, he added. He elaborated that recommendations have been approved to provide alternate place, the construction of nine villages with job opportunities to the affected people of the area and the compensation amount would be Rs 40.7 billion whereas the higher committee of National Economic Council had approved Rs 26.44 billion. Almost 37,420 acres land was required for the project and by the construction of Diamir-Bhasha Dam, 30,350 people, 4228 homes, 32 villages and 85 kilometres of Karakuram Highway would also be affected, he added.

Copyright Pak Tribune, 2011

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'Power projects in GB to help meet energy demand'

Chief Minister Gilgit-Baltistan Syed Mehdi Shah has said that initiating power projects in this part of the region, would help resolve energy crisis in the country. Talking to Pakistan Television, he said that Gilgit-Baltistan (GB) is the region where various power projects could help resolve the issues of shortfall of electricity in the country. He said that President Asif Ali Zardari had asked the concerned staff to pursue the Chinese companies for investing in the power sectors. Syed Mehdi Shah said that credit goes to the leaders of the Pakistan Peoples Party (PPP) who have initiated a big power project to produce electricity for meeting growing demand of the people of the country. He said: "This is the third largest project in the country after Tarbela and Mangla which would be completed in near future."

Copyright Associated Press of Pakistan, 2011

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President for implementation of energy projects

President Asif Ali Zardari on Friday presided over a briefing meeting at President's House. The meeting took stock of oil and gas situation in the country. The meeting was attended among others by Dr Abdul Hafeez Sheikh, Finance Minister, Syed Naveed Qamar, Minister for Water & Power, Dr Asim Hussain, Minister for Petroleum & Natural Resources, M. Salman Faruqui, Secretary General to the President, and other senior officials. The president called for early implementation of all projects and plans aimed at meeting the energy requirements of the country and enhancing oil and gas production besides reactivation of abandoned and depleted gas fields. Dr Asim Hussain while briefing the meeting identified key issues faced by oil and gas sector. He also explained the proposed short (2011-2012) as well as medium (2012-2013) and long term measures 2013-2014 for enhancing oil and gas production in the country and the efforts afoot to recover gas from abandoned and depleted wells. He also briefed the meeting on the progress thus far made on President's earlier directive for reactivation of abandoned gas fields in the country to improve much needed energy supplies. Syed Naveed Qamar, Minister for Water & Power, gave a briefing on the proposed wind power projects in the country.-PR

Copyright Business Recorder, 2011

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ADB to provide $97 million for Patrind hydropower plant

The Asian Development Bank (ADB) will provide 97 million dollars to fund a new private sector hydroelectricity plant to ease power shortages as well as creating new jobs opportunities in the country. A statement issued by the Bank here on Tuesday said that approval of 97 million dollars loan for 147 megawatt (MW) run-of-the-river Patrind hydropower plant between Kunhar and Jhelum rivers near Muzaffarabad will help mitigate power shortages and diversify the energy mix. The loan is being provided to start Hydro Power Limited which is jointly owned by Korea Water Resources Corporation (K-water), along with Daewoo Engineering and Construction Company and Sambu Construction Company. Both the companies are listed on the Korea Stock Exchange. The project marks the first investment in Pakistan's power sector by a consortium of companies from the Republic of Korea. The independent power producer (IPP) which will revert to government ownership after 30 years is expected to create 2,700 local jobs and generate over 240 million dollars from purchases of local goods and services. It will also avoid about 280,000 tons of carbon dioxide emissions a year. The plant is expected to be up and running in 2016.

Copyright Associated Press of Pakistan, 2011

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Study on two blocks of Thar Coal project completed

Sindh Secretary for Coal and Energy Department, Younus Dhaga, has said that out of four, study on two blocks of Thar Coal and energy project has been completed while work on remaining two is being carried out with rapid pace. He said that execution work by two companies is expected by next June 2012 while the project would start its generation by 2013-2014. Talking to official media at Mirpurkhas on Tuesday, Younus Dhaga said that after power generation, Thar Coal and energy project would not only fulfil the energy requirement of the country but gradually it would enable the country to export the same in future. About taking more time in generation, the Secretary said that actually the coal reserves were under the depth varying from 100 to 200 metres and the job of excavation and removal of waste is time consuming. He informed that many other relating schemes of laying infrastructure were in the way to make the project successful. Giving details of some major schemes, he said that PC-I for construction/reconstruction of road from Karachi to Thatta, Badin, Mithi and Islamkot with its estimated last of Rs 4.5 billion has been submitted for approval and shortly it will be approved. Similarly another scheme for disposal of waste water from excavated coal mines has been approved with estimated cost of Rs 3.5 billion. He said that the PC-I of the most important scheme of laying transmission line from Islamkot to Matiari prepared by Water & Power Development Authority is also under approval and it is expected that work on this scheme to be started in December 2011. Responding to the question about utilisation of effluent of LBOD in Thar Coal Energy Project, the Secretary Coal and Energy said that study on this scheme is in progress and execution work could be started in February 2011. He said that according to the scheme the water coming through LBOD would be utilised for Thar Coal and Energy Development Project after its treatment at the point of store. He said that this water would be stored at RD-362 of LBOD near Nabisir from where it to be treated and supplied to the Islamkot. He said that work on Thar coal project is in full swing and many national and international companies have expressed their interest of investment on its other blocks. He said that this project would not only to fulfil the energy requirement of the country but also to create job opportunities and other business activities particularly at areas of Tharparkar and generally in Sindh province and subsequently it to raise the purchasing power of the people. He said that this project to be proved a project of prosperity for the country.

Copyright Business Recorder, 2011

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Karkey RPPs optimise operations

Karkey Karadeniz Elektrik Uretim AS, the Turkish Rental Power Company, conducted its six monthly operational test recently by its two powerships - KARADENIZ Powership Kaya Bey and Karadeniz Powership Ali Can Bey - that are anchored at Korangi. According to Karkey Karadeniz here Friday, this was the first operational test after the company had achieved commercial operational date (COD) in April 2011. The test was supervised and witnessed by officials of Lakhra Power Generation Company Limited, NTDC and KESC to analyse the performance of the power generating engines. The facility successfully generated 239 MW of electricity during the test conducted. The company had entered into a contractual agreement with Lakhra Power Generation Company (PEPCO) to provide 231.8 MW of electricity to curb the growing energy crisis in the country. The total power generating capacity of the plant installed on the Karkey Powerships is 330 MW. Earlier the company also succeeded to achieve the same test in the first attempt in April 2011. Company official of Karkey said that the successful biannual operational tests of Karkey's powerships is testament to the expertise and technological competency in the area. "The company has successfully produced more electricity than the contracted amount of 231.8 MW of electricity. With a history of successful projects running in different parts of the world, Karkey's investment in the power sector of Pakistan reflects the company's long term commitment to Pakistan," he added. He said that the current operations can further be optimised if the relevant stakeholders fulfil their contractual obligations and the powerships continue to receive uninterrupted supply of fuel as per the buyer's commitment. It was further said that the company recently brought an oil tanker with a capacity of 6500 tons to import furnace oil to the Powership. Karkey has made a direct foreign investment of over $330 million for the project which is considered as one of the biggest foreign investments in Pakistan.

Copyright Associated Press of Pakistan, 2011

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Comstar working to ease power woes

Comstar's c-LEAN enerGy initiative is to provide alternate energy solutions with the vision to ease the power crisis in Pakistan through small incremental improvements and reduce the carbon footprint simultaneously. c-LEAN enerGy is providing affordable energy solutions to overcome peoples frustrations due to lack of availability of energy sources with both the electricity and natural gas. They services are targeted to address the consumer, corporate and industrial sector. c-LEAN energy strives to provide solutions in a manner where colossal amounts of investment is not needed, to power up a home, a factory, a municipality one at a time. Lastly, c-LEAN energy is to keep solutions simple, yet effective and long lasting.-PR

Copyright Business Recorder, 2011

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