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News Headlines for the month of
NOVEMBER 2011

Adding 20,000 megawatts to system: $3.2 billion annual investment needed for 10 years

The government would have to make 3.2 billion dollars annual investment in the power sector for the next ten years to add 20,000 mw to the system for bridging the rapidly increasing electricity demand, sources told Business Recorder on Tuesday.They said that 'Prime Minister's Vision 2020 Program' has been prepared and is being implemented to generate 20,000 mw with an estimated cost of $32 billion to meet the electricity shortfall in the country. Of the total 32 billion dollars required investment, $21.725 billion would be met through foreign borrowing, and $8.290 billion from self-financing/equity and local borrowing for completion of ongoing projects and projects expected to be commissioned to generate electricity by not later than 2020. Sources said that some of the project would start adding electricity to the system from 2013 as these are at the advanced stages of completion. An official said that 6.229 billion dollars have been estimated for next fiscal year with 3.539 billion dollars foreign borrowing and 1.932 billion dollars selffinancing/equity and 828 million dollars local borrowing. Sources said that so far multilateral and bilateral assistance projected for power sector projects in the Public Sector Development Programs (PSDP) did not materialise in the ongoing fiscal year. The government would be facing great difficulty to implement power program if the paucity of foreign inflows continued in the next fiscal year because most of the financing for 23 hydro, coal, gas and renewable projects was projected through foreign borrowings. The government plan envisages a 55-45 percent Public-Private mix in which government would provide 17 billion dollars (through foreign borrowing and budgetary funds) whereas l5 billion dollars is expected to be raised by the private sector. The total value of the power projects in the pipeline with expected commercial operation dates between 2010 and 2020 includes oil, coal, gas and hydel power with a cumulative capacity of 19,000 mw. According to sources, hydel capacity addition of 5920 mw with a total estimated project cost of 8.3 billion dollars including interest costs. The plan envisages indigenous coal capacity addition of 3,500 mw and imported coal based capacity addition of 2505 mw with total investment requirement of 8.2 billion dollars and interest or infrastructure expenses 3 billion dollars. The indigenous gas based capacity addition of 4000 mw and naphtha based capacity addition of 2000 mw with a total funding requirement of 8.l billion dollars including 5 billion dollars of capital investment whereas plan includes renewable based capacity addition of 2,000 mw with an investment of $3.9 billion. Sources said that power supply constraints have already had an impact on the GDP radar with estimate suggesting that power shortages have resulted in an output loss amounting to 2 percent of the GDP and the problem calls for immediate, medium and long term measures to provide uninterrupted electricity to the various sector of the economy to move towards high growth path.

Copyright Business Recorder, 2011

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Rs 50 billion allocated in Khyber Pakhtunkhwa for hydel power projects

The Khyber Pakhtunkhwa Minister for Industries and Commerce, Syed Ahmad Hussain Shah, has said that the government is endeavouring hard for the self-reliance in power sector, saying that Rs 50 billion has been allocated for the hydel power generation projects in the province. Presently, he informed that the industries would be provided subsidise electricity after establishment of the hydel projects. Addressing ground breaking ceremony of Hattar Industrial Estate, Phase 7 at Hattar, here on Tuesday, he said that businessmen and industrialists had badly affected by poor law and order situation, but the situation is improving with passage of time. He, however, said the industrialists are still facing problems to run units in the present electricity and gas shortage in the country. On the occasion, the Speaker Khyber Pakhtunkhwa Assembly Kiramatullah Khan, performed the stone laying ceremony of the Phase 7 project of Hattar Industrial Estate, besides a large number of industrialists from all over the country were present. The Provincial Minister for Excise and Taxation Liaquat Shabab, MPA Gohar Nawaz Khan and Secretary Industries Khalid Pervez also attended the ceremony. He said that the government had initiated different hydel generation projects to meet growing energy demands of the province. Shah went on to say that due to historic NFC award our province has received Rs 22 billion as over and above grants which were being utilised for the uplift of the common man we are also making efforts to provide maximum job to the people, according to the manifesto of PPP. While responding to the problems of the Hattar Industrial Estate, the Minister for Industries informed that Rs 350 million have been approved for the rehabilitation and maintenance for the roads of Hattar industrial estate. He said allotments of plots have been started forthwith, about 100 acres of land have been kept for the investment of Overseas Pakistani.

Copyright Business Recorder, 2011

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Neelum Jhelum Project: Wapda to deploy TBMs for early completion

Pakistan Water and Power Development Authority (Wapda) has decided to deploy state-of-the-art tunnel boring machines (TBMs) for on-schedule completion of the strategically important 969MW Neelum Jhelum Hydropower Project. Deployment of TBMs on the project will reduce the construction period by about two years resulting in an estimated benefit of Rs 90 billion. Wapda Chairman, Shakil Durrani expressed these views during his visit to the project's site. He was accompanied by Wapda Member (Water), Syed Raghib Abbas Shah and Neelum Jhelum Hydropower Company, Chief Executive Officer/ Managing Director, Lieutenant General Muhammad Zubair (Retd). Durrani inspected the diversion tunnel at Nauseri where the River Neelum was diverted in October 2011 to initiate construction of the weir. He also visited other components of the project including weir site, de-sander and main tunnels etc at Nauseri and powerhouse at Chattar Kalas. Speaking on the occasion, he said that Neelum Jhelum is a priority project of Wapda's least-costing energy generation plan. Since completion of the project is vital for the country, Wapda is taking all possible measures for the purpose including deployment of two TBMs on the project. The TBMs, being imported from Germany by the contractor, are expected to reach Pakistan by January 2012, he added. Lauding the efforts of the project authorities, he said that completion of the tunnel to divert River Neelum is a landmark in implementation of the project. The tunnel was completed in October in a record time of two years. Earlier, briefing Wapda chairman, Neelum Jhelum Hydropower Company CEO/MD said that overall progress on the project stands at 27 percent. He further said that about 17-kilometer long tunnels have so far been completed. These include both access and main tunnels. He also briefed the chairman about excavation work on the powerhouse and the main tunnels and piling for the composite dam. It is pertinent to mention that Neelum Jhelum Hydropower Project is underway at River Neelum in Azad Jammu & Kashmir. The project is scheduled to be completed in 2016. On completion, it will provide about 5.15 billion units of electricity annually to the national grid. Benefits of the project have been estimated at Rs 45 billion per annum. The project will pay back its cost in about seven years.

Copyright Business Recorder, 2011

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Qaim reviews work on Thar Coal project

Chief Minister Sindh Syed Qaim Ali Shah held on Friday a joint meeting with Sindh Irrigation Department and delegation of Engro Company engaged in joint venture for power generation at Thar Coal and Energy Project. Qaim said that the Thar Coal and Energy project was one of the important projects of the country. The Chief Minister directed the Irrigation Department to early arrange supply of water up to Block- 2 of the Thar Coal project. Qaim said that Prime Minister Gilani was expected to visit the Thar Coal and Energy Project soon. Sindh Secretary for Irrigation Khalid Haider Memon informed that necessary surveys had been conducted and reports would be submitted soon. Khalid Mansoor of M/s Engro said that the power plant was scheduled to be completed by 2016. The meeting was attended among others by Sindh Irrigation Minister Jam Saifullah Dharejo and Principal Secretary to CM Alamuddin Bullo.-PR

Copyright Business Recorder, 2011

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Secure power systems for industry, infrastructure: Schneider Electric launches new business line

Schneider Electric, a global specialist in energy management solutions, on Monday announced the launch of a new business line - 'Schneider Electric Secure Power Systems for Industry and Infrastructure', providing fast and effective solutions for large facilities to increase power availability and systems uptime of mission critical applications. As market leaders in deploying secure power services to the IT sector, Schneider Electric's new business line comes as part of its strategy to expand its products and services range for industries and facilities beyond data centers. The company's move comes at a time when organisations in healthcare, semiconductor fabrication, transportation, water, oil and gas as well as energy rely heavily on uninterrupted power for mission-critical processes such as security systems and automated manufacturing. Secure Power Systems will apply technologies from Schneider Electric's APC and GUTOR brands to provide secure power components for a range of industrial applications. In addition to a comprehensive roster of hardware and services applicable to a wide range of industries, as well as direct development of new technology and services to meet evolving customer demands, Schneider Secure Power Systems for Industry and Infrastructure will help customers meet their energy management and efficiency goals. Further complementing Schneider Electric's commitment to supporting partners and engineers throughout the region, the company has introduced an online Engineering Design Guide offering integrators a total solution while working with a broad range of APC by Schneider Electric products. The service extends guidance on the installation and management of cooling and power products including close coupled air conditioners and room air conditioners, data centre network and server, as well as room and row power distribution. The online engineering design guide also offers support on APC's vast range of offerings that include rack power distribution, racks and enclosures as well as security and environmental products such as sensors, cameras, licenses and security as well as environmental appliances. Software management guidance is also available to cover data center facility management, data centre infrastructure management and UPS management. Munib Khwaja - Vice President IT Business Pakistan and Afghanistan - APC by Schneider Electric, said "The online engineering design guide is an indispensable tool for integrators working with our solutions. Included within the service are approved configurations for a host of solutions available for download in PDF format. Brochures can also be obtained as well as step by step specifications detailing assembly and construction information. Submittal drawings are additionally available with stage by stage diagrams and illustrations, not to forget that a team of our own engineers is readily available around the clock."-PR

Copyright Business Recorder, 2011

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1000 megawatts power to be imported from Kyrgyzstan, Tajikistan: CASA project to be completed in five-year

The Central Asia South Asia Electricity Trade and Transmission Project (CASA 1000), under which an amount of 1000-MW electricity has been planned to import from Kyrgyzstan and Tajikistan via Afghanistan will be completed in five years time. It is pertinent to mention that the federal cabinet, chaired by Prime Minister Yousuf Raza Gilani has accorded its approval to the memorandum of understanding a day earlier as a part of the government efforts to bring the country out of ongoing energy crisis. According to the sources, the project has been under discussion since 2006, which is likely to be completed with the financial assistance of World Bank, Asian Development Bank and Islamic Development Bank. The project was launched during the Pakistan's Prime Minister's visit to Dushanbe and Tajikistan. As many as two memorandums of understanding have been signed regarding development of the Central Asia South Asia Regional Electricity Market (CASAREM). It is also notable that the Inter-Government Agreement was signed by four countries; The Islamic Republic of Afghanistan, the Kyrgyz Republic (Kyrgyz Republic), the Islamic Republic of Pakistan and The Republic of Tajikistan (Tajikistan). A consultant firm SNC-Lavalin International Inc, of Canada was hired to conduct techno-economic feasibility of the project that submitted its report in February 2011 with positive conclusions, sources maintained. The main secretariat relating to the project will be based in Kabul which would implement and complete the project of 750 kilometres transmission line out of which 117 kilometres in Tajikistan, 562 kilometres in Afghanistan and 71 kilometres in Pakistan. The project may be completed at an estimated cost of $873 million. Tajikistan government would provide $182 million, Afghanistan 238 million dollar, Pakistan 153 million dollar and Kyrgyzstan would contribute 160 million dollar while $140 million would be made available under the head of others/miscellaneous cost. The sources were of the view that the idea behind importing electricity from Kyrgyzstan and Tajikistan is to boost investment in Pakistan and development of CAR Business with reference to trade with India, particularly after providing MFN status. The sources further believed that the current Afghan India trade tie might be part of this project as the costs under the head of miscellaneous/others is the open end investment.

Copyright Business Recorder, 2011

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'Pakistan should be producing 500 megawatts of wind power by 2012 end'

President Asif Ali Zardari on Friday said that by the end of 2012, Pakistan should be producing 500MW of wind power. For this purpose, he called for periodic reports to be submitted to the Presidency, indicating the progress, made and the bottlenecks encountered. During a briefing by Alternative Energy Development Board, Board of Revenue Sindh and Sindh Investment Board on wind power projects, here at Bilawal House Friday, it was informed that three wind power projects of 50MW each would start producing power within a year while the work on another 10 projects of 50MW each would start early next year. The President was informed that another 5 projects were at initial stage of financial close in 2012. He directed that land allocation process for 18 other wind power projects also be expedited. Spokesperson to the President, Farhatullah Babar said the President was informed that all projects companies involved with wind power projects, have suggested announcement of upfront tariff to save at least six months project time which is spent in tariff determination by the authority concerned. The President directed NEPRA to examine the suggestion and expressed the hope that NEPRA would soon arrive at a consensus upfront tariff regime for all the projects till the capacity to produce 2000MW is achieved. However, the option of opting for normal tariff determination system would remain open for the companies, which do not opt for the upfront tariff, he said. President said that incentives would be given to the companies that would be able to start their power productions within one year. During the briefing, the President expressed satisfaction that Zorlu Energy of Turkey, FFC Wind Energy and CWE of China, each with 50MW capacity have reached advanced stage and would be able to generate power by December 2012. The President said that such project were a good start in the quest for finding alternative resources of energy which are efficient as well as would help to reduce the dependence on traditional modes of electricity generation and at the same time expand the power supply capacity to remote locations where grid expansion is not practical. The President said that wind energy being clean and renewable source of energy was also the world's fastest growing energy resource and Pakistan needs to tap all available resources including that of solar energy. The President said that the demand for energy has increased in tremendous proportions in the last few decades and is expected to increase further in the coming years. He said "meeting the energy requirements is also crucial for our development, therefore we need to utilise all available resources for meeting the energy challenge". Those who were present during the meeting included, among others, Provincial Ministers Ms Shazia Mari, Syed Murad Ali Shah, Mir Nadir Khan Magsi, Agha Siraj Durrani, Sharjeel Memon, Chief Secretary Sindh, Shahzar Shamoon, Senior Member Board of Revenue (SMBR), and concerned Provincial secretaries. Syed Naveed Qamar, Minister for Water and Power, Malik Asif Hayat, Secretary to the President, Ms Fouzia Wahab and Arif Allauddin Chairman Alternative Energy Board were also present during the meeting.

Copyright Associated Press of Pakistan, 2011

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Integrated energy model ADB to provide $1 million fund

Asian Development Bank will provide one million US dollars under Technical Assistance Special Fund for Mainstreaming Pakistan Integrated Energy Model to increase energy security in the country and improve planning for the sector. According to a Planning Commission report, establishment of an independent Pakistan Energy Research and Information Centre (PERIC) is a major objective, which will develop IEM capacities. It revealed that ADB-TA will operationalise and mainstream PAK-IEM, which will help Pakistan government, through the Planning Commission, develop the country's energy planning capability. The assistance will also establish a public-private partnership to house the model and its operations. The partnership might be called Pakistan Energy Research and Information Centre (PERIC). Government energy companies and universities and other energy sector stakeholders will be partners and contributing entities. It will provide energy information management, project evaluation, and energy policy analyses for government and private entities. The assistance will define the purpose and scope of the PERIC, develop its legal framework and prepare the business plan to ensure a self-sustaining organisation. It will train a core group to use the full range of the model's capabilities. Staff of the PERIC will be trained to perform studies with the model. Also, a technical support unit that has expertise in all energy sectors will be organised, trained and made available to assist staff to update and improve PAK-IEM. The ADB assistance would also support start-up activities of the PERIC such as (i) baseline updates (ii) focused studies and (iii) establishing Pakistan energy information system, a web-based platform for dissemination of energy data, forecasts and analyses. These services will eventually form a part of PERIC sustainable business line while the capacity will be built over a 24-months, including training workshops, advisory seminars and assessments and certification.

Copyright Business Recorder, 2011

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PCRET, SME Leasing to promote renewable energy technologies' usage

Pakistan Council of Renewable Energy Technologies (PCRET) and SME Leasing Limited have agreed to collaborate for the promotion of renewable energy technologies' usage in Pakistan. The decision was made in a meeting held recently at the main office of SME Leasing Limited between PCRET Director General Dr Zafar lqbal Zaidi and SME Leasing Limited's Chief Executive Officer Mrs Arjumand A. Qazi. In the meeting both parties have agreed to promote the use of renewable energy technologies for addressing the energy problems in Pakistan with specific focus on small and medium enterprises. PCRET will be assisting in the technical aspects of the projects, whereas SME Leasing Limited will be catering to the financial needs of the feasible projects. SME Leasing Limited, a subsidiary of SME Bank Limited, specialises in providing financial solutions to SMEs in Pakistan. The company has been a pioneer in the field and has assisted in establishing several SMEs from the start to bringing them to a sizeable and bankable entity. PCRET is committed to research, develop, promote, disseminate, impart training, provide energy services to the people living in remote areas, and create renewable energy culture in the country.-PR

Copyright Business Recorder, 2011

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New Bara Dam to generate 5-MW electricity: Khyber Pakhtunkhwa Speaker

Speaker Khyber Pakhtunkhwa Assembly, Kiramatullah Khan has said that besides generating five mega watt electricity, the construction of New Bara Multipurpose Dam will irrigate thousands of acres land of Khalil and Mohmand localities. He expressed these views while presiding over a high level meeting here on Saturday. The meeting was informed that the construction of the reservoir of the New Bara Dam will cost Rs 14 billion and Peshawar will be supplied 4.6 cusec drinking water. The meeting was informed that the feasibility study of the dam has been prepared and the construction besides generating electricity will also resolve the problem of irrigation water into some extent in the area. According to the programme, construction work on the project will be launched in July 2012. Furthermore, the water of Jabba Dam will not only be utilised for drinking purposes, but will also protect the adjacent areas of Peshawar for ever from flood.

Copyright Associated Press of Pakistan, 2011

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10 million energy savers project bidding: Singaporean firm tops bidders

A bidding for 10 million energy savers was held at the PIA building where a Singaporean company topped the bidders. The quotations of the bidders have been referred to the evaluation committee for further action. The project envisages purchase of 30 million CFLs under ADB Tranche-1 of Energy Efficiency Programme funded by ADB & AFD of France for $40 million and $25 million respectively for all the Discos and KESC. The loan will be extended to GOP which will bear the cost of CFLs. PEPCO will purchase the CFLs in bulk (in two rounds of 10 million and 20 million) on behalf of GOP and will distribute among the domestic consumers through all the Discos and KESC free of cost in exchange for 40-100W incandescent bulbs. The distribution cost will be borne by the Discos and KESC. Those who participated in the bidding included M/Syang Zhou with $1.62, M/s Philips Electronics $1.65, M/s CE Lighting $1.7, M/s Zhejiang $1.85, M/s Beauty Shadow $1.6 and M/s GE Lighting $1.72 for each energy saver. The National CFL Programme aims at replacing 30 million incandescent bulbs in domestic sector spread in eight Discos & KESC with high quality CFLs. As energy efficiency is the least cost solution for demand side management and to address the current power shortages. It would help reduce peak demand of over 1000MW, in avoiding generation of 1600 MW ($1.84 billion) and a saving of about 2000 million units of energy equivalent to Rs 17.5 billion. It will also help save lifeline subsidy by $60 million per year. The project will yield Clean Development Mechanism (CDM) revenues of about $32 million by 2018. It will also help reduce consumers' bills by Rs 300 per bulb per annum. The electricity saved could be sold to higher tariff consumers generating additional revenues of approximately $29 million per year for Discos. The government led free distribution CFL programme has been executed in many countries including Thailand, Vietnam, Philippines, Indonesia, USA and Cuba. As per CFLs Change Monitoring Website, USA is saving $27 million per year on account of free distribution of 2.9 millions CFLs.

Copyright Business Recorder, 2011

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Energy-intensive industries: 'Pakistan has potential to sell garbage as fuel'

Pakistan has a potential to sell its solid garbage as fuel to energy intensive industries of the world following the concept of Global Green Growth, Danish Ambassador to Pakistan Uffe Wolffhechel said. He said Pakistan has got outstanding innovative human resources, which should be put into play in this field. "If public-private partners develop solutions in co-operation, there is almost certainly some place on the earth where the same problem exists and where the solution can be sold," the ambassador said. "In the Pakistani context," the ambassador points out, "the concept of Global Green Growth could eg translate into public-private partnerships where a municipality is selling its solid garbage as fuel to energy-intensive industries. Rather than burning the garbage on the spot causing respiratory diseases not least among children and youngsters, the garbage can be removed and turned into cheap fuel reducing the costs of the industries involved and thereby making them more competitive in the world market. But it does not end there. Whenever a Pakistani company is developing the technologies involved in the process, it creates a new potential for export as similar problems exist in all parts of the world where innovative sustainable and affordable solutions can be commercialised. More generally, every environmental problem could be seen as a commercial opportunity. The Global Green Growth Forum "3GF offers a space for world economic leaders to challenge conventional thinking and find new green avenues to growth. Jointly we can promote the bold decisions, which will make all of us winners of tomorrow's green industrial revolution," says newly elected Danish Prime Minister Helle Thorning-Schmidt in a statement. The 3GF initiated and hosted by the Danish government, positions public-private partnership on the international agenda for green growth. The Forum's inaugural event was attended by UN Secretary-General Ban Ki-Moon, OECD Secretary-General Angel Gurría, Prime Minister of Ethiopia, Meles Zenawi, Prime Minister of Kenya, Raila Odinga, 12 Ministers and deputy ministers, five leaders of UN organisations, 50 global corporate leaders, leading civil society organisations and world leading experts. The 200 participants came from 27 countries across five continents. In his keynote speech Secretary-General Ban Ki-moon stressed the importance of public-private collaboration, "The green growth agenda can help drive the advancement of sustainable development for the twenty-first century. It is good business - good politics - and good for society." This point was further emphasised by Danish Minister for Foreign Affairs, Villy Søvndal, "The transition to a green economy will not happen without strong determination on our part. And most importantly, it will not be possible unless governments and the private sector go hand in hand." Several initiatives will be proposed in international policy processes going forward, including those in energy efficiency, renewable energy and finance leading to the next Clean Energy Ministerial (CEM) in London, April 2012. The founding government partners, Denmark, Korea and Mexico, committed to support public-private interaction in the next G20 summit hosted by Mexico, and Rio+20 in Brazil. The 3GF has been developed in association with the Global Green Growth Institute and was formed as a public-private partnership with a number of businesses and international organisations. Progress of 3GF initiatives discussed and advanced this year will be revisited next year, when the second Global Green Forum will be held in Denmark on 9-10 October 2012.

Copyright Business Recorder, 2011

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IP gas pipeline most feasible option: ECC informed

The government considers IP gas pipeline as the most feasible option, compared to others, for meeting the growing energy requirements of the country, sources told Business Recorder. They said that the Economic Coordination Committee (ECC) of the Cabinet was informed that keeping in view the need of energy in the country, the IP projects appears to be the most feasible option. They said that minutes of subcommittee of the ECC on gas import project show that the country would be facing severe gas crisis in the coming years. The Managing Director of Inter-State Gas System (ISGS) reportedly stated that, based on current estimates, gas demand would increase from present 4 bcfd to 12 Bbcfd by 2025. Moreover, indigenous gas supplies are expected to fall to 2 bcfd, to increase shortfall to nearly 10 bcfd. The ECC was informed that a study to determine the cost of power generation at Multan, using imported gas as well as other competing fuels, RLNG, HSFO and imported coal, indicated that IP gas, despite revised gas pricing formula by the Iranian side, is the most cost-efficient fuel. It was also proposed that as a strategy the country should develop additional IPPs so that these are ready to consume the gas when the project is materialised. The estimates of Pepco, Wapda and the PPIB suggest that the country would be required to set up additional power generation capacity of nearly 11,000 megawatts (mw) to meet future electricity requirements. The Iran-Pakistan gas pipeline project in the Phase-1 would be able to support additional power generation of 5,000 mw. And economic impact of alternative fuels indicates that using IP gas would result in average annual savings of $ 1.217 billion against using RLNG as alternative fuel at crude price of $ 100/bbl. Using HSFO as an alternative fuel indicates that IP gas will result in average annual saving of $ 1.707 billion at crude price of $ 100/gb. About the economics of alternative options of solar and wind based generation, the meeting was informed that the projected electricity shortfall in 2020 is about 11,000 mw, and, given the technical limitations, such a large scale generation is not possible on solar energy, whereas, wind mills have availability of around 30-35 percent only. To the questions about the economics of hydel and coal-based generation, the meeting was informed that the issue with the hydel based generation is the availability of hydel power round the year due to seasonal fluctuations in the availability of the water resources. Moreover, hydel projects required longer time period to set up as well as are highly capital-intensive and should be part of long-term energy plan.

Copyright Business Recorder, 2011

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Next 5-6 six years: energy sector to attract $8-10 billion Chinese investment, says Khuhro

Speaker Sindh Assembly Nisar Ahmad Khuhro on Wednesday said that energy sector of the province was expected to attract about $8-10 billion investment from China in the next five to six years. Speaking at a press conference at the committee room of Sindh Assembly along with Chairman Sindh Board of Investment, Zubair Motiwala and Secretary Sindh Investment Department, Younus Dagha, he said a Chinese firm - 3 Gorgeous Corporation, had signed three MoUs with the provincial government to invest in the energy sector. He said that Sindh government delegation's visit to China had been 'successful', as the Chinese corporation was interested in coal, wind and manufacturing of energy generation apparatuses' sectors. He said the corporation had agreed to install an energy plant at Thar coal filed to produce 4,000 MW of electricity, besides setting up a plant in Thatta to generate 400 MW power. He said the Sindh government had also singed an MoU with United Energy Limited for initiating 150 MW project in the province. However, he made it clear that the work on these projects would take time to begin. He said that Pakistan had great potentials to attract global investments in the energy sector, but there was a need to restore the confidence of investors. He said all the MoUs were singed in Beijing. Khuhro pointed out that India was producing 15,000 MW of electricity from wind, whereas Pakistan could not utilise the natural resource to generate even a five MW of energy. He said the PPP-led coalition government was committed to restore the foreign investors' confidence, in line with President Asif Ali Zardari's vision to develop Pakistan. He, however, termed the political stability in the country "very significant" to the continuation of the uplift projects. He ruled out that no power generating or any other project would be rolled back on political grounds. He said the Chinese officials' delegation would soon visit Sindh province on the invitation of the government. To a question, Dagha said the government had earmarked Rs 11 billion to build road infrastructure to Thar coal filed while Rs 21 billion allocated to establish transmission line for the supply of electricity from the field. Regarding water supply to the field, he said, a project to supply 1,100 cusec water to Makhhi filed had been undertaken. Motiwala said Thar coal had become a provincial subject after the passage of 18th Constitutional Amendment and the federal government had no role in the decision making process regarding investment and other matters.

Copyright Business Recorder, 2011

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SIDB launches biogas plants project in Khyber Pakhtunkhwa

The Small Industries Development Board (SIDB) has launched a new project of Biogas plants in Khyber Pakhtunkhwa, under the management of its director Dr Syed Akhter Hussain Shah. The biogas projects were funded by Pakistan Italian Debt, SWAP agreement. Biogas originates from biogenic material and is a type of bio-fuel, which primarily comprises of methane and carbon dioxide. Biogas can be used as a low-cost fuel for heating, cooking and power generation. The gas can also be compressed, much like natural gas and used to power motor vehicles. Being a renewable source of energy, biogas qualifies for renewable energy subsidies in some parts of the world. According to the spokesman of SIDB Noman Qasir, Biogas technology can benefit the country in economic, social and environmental sectors. The technology can play a vital role in overcoming problems of energy sectors both domestic and commercial and is successfully in operation in various parts of our country. He said that Pakistan did try biogas production in seventies but it could not succeed due to lack of state-of-the-art technology and awareness among the communities. The USA is using Biogas since decades to produce electricity and for other purpose. The SIDB, for the first time would work on government level in the history of province through private partnership. The Board would set-up at least 400 small and medium biogas plants developed at household level in Peshawar, Abbottabad, Charsadda, Mansehra, Haripur and Nowshera districts. Small and medium scale domestic biogas plants cost not more than 50-70 thousand rupees even in the courtyard of rural houses. It can generate 03-07 cubic meter of natural biogas, which possesses, 50 to 75 percent methane, the major source of energy that burn instantly and produce heat. The gas could also be used to produce electricity by using common patrol generators with little alteration. The facility will also help reduces expenditure on fuel production, transformation, distribution and generate jobs by creating micro, small and medium scale enterprises.

Copyright Associated Press of Pakistan, 2011

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Tapi gas pipeline transit fee: Asim to visit India for talks

Minister for Petroleum and Natural Resources Dr Asim Hussain would visit India in December 2011 to negotiate the transit fee for planned Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Business Recorder has learnt. Pakistan on November 14 signed initial Gas Sales Purchase (GSP) agreement with Turkmenistan, which was a landmark achievement. Talking about the next steps regarding the TAPI project, sources said that this would be followed by the signing of 'Heads of Agreement' and Transportation and Transit accords by the end of the year. Sources said India is reported to have already finalised gas price with Turkmenistan under the TAPI project, and it has negotiated a transit fee with Pakistan. An encouraging aspect of the deal is that it would help to open up a price accord which Pakistan had signed with Iran about two years ago for delivery of 750 mmcfd at about 78 percent of the price of crude. Under the price review mechanism inbuilt in the Pak-Iran GSPA, the pipeline gas price has to be renegotiated on the basis of alternative fuel prices (Turkmen gas in this case) a year before the commencement of the gas deliveries scheduled by December 31, 2014. The 1,680 km long TAPI gas pipeline would bring in 3.2 billion cubic feet per day (bcfd) of natural gas from Turkmenistan's gas fields to Multan and end at the north-western Indian town of Fazilka. Under the agreement, Afghanistan's share would be 500 million cubic feet per day (mmcfd) while Pakistan and India would receive 1,325 mmcfd each. Petroleum Ministry officials dispelled reports of slow progress on the $7.5 billion Iran-Pakistan (IP) gas pipeline project, and said the project was proceeding as per the target. They said that the construction of the 2,775 km long pipeline was likely to start by March next year, adding that Iran has already completed around 900 km of pipeline on its side, with around 200 km long still remaining.

Copyright Business Recorder, 2011

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OGDCL hits another landmark oil discovery in Khyber Pakhtunkhwa

The OGDCL Operator of Nashpa Exploration Licence, together with its Joint Venture partners Pakistan Petroluem Limited (PPL) and Government Holding Private Limited (GHPL) have discovered a new hydrocarbon bearing horizon from its appraisal well Nashpa 02, located in District Karak, Khyber Pakhtunkhwa. The structure of well was delineated, drilled and tested utilising indigenous expertise. Nashpa Well No 02 was drilled down to the depth of 4340 metre targeting to test the oil and gas potential of Datta, Shinawari, Samanasuk, Lumshiwal, Hangu and Lockhart formations. Significant reserves of hydrocarbons have been found at Nashpa Well No II. The first targeted zone "Datta Sandstone" has been tested and produced 3370 barrels per day of crude oil and 11 MMCFD gas through 32/64" choke at well head flowing pressure 3800 PSI. This discovery will add to the hydrocarbon reserves base of the company and joint venture partners, bringing significant savings to the country in term of oil import bill. Testing of another four potential reservoir formations will also be undertaken wherein similar encouraging results are expected. The full flow potential of this well and the extent of the discovery will be determined after completing the testing program.-PR

Copyright Business Recorder, 2011

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Pakistan has 35 TCF tight gas reserves

Pakistan has an estimated 35 Trillion Cubic Feet (TCF) tight gas reserves, which are more than the existing approved natural gas reserves of 28.5 TCF, officials said. They said that at present the country was facing severe gas shortage and to deal with the looming crisis, the government had approved Tight Gas Policy 2011 besides allowing import of Liquefied Natural Gas (LNG) through third party allocations. To a question they explained, "tight gas is typically stuck in very tight formations underground - trapped in hard rock or in a sandstone or limestone formations that are usually impermeable and non-porous." Referring to a report of Pakistan Petroleum Exploration and Production Companies Association (PPEPCA), they said that the country would have sufficient natural gas if tight gas was explored which required advance technology and huge investment. As tight gas exploration is more difficult and the required technology is more expensive, companies don't typically go in for exploration until given attractive incentives. They said that due to the law and order situation in the country international gas exploration companies were reluctant to invest in the country. The officials said that to attract the international companies the government has announced a number of incentives including security guarantee and better prices. Companies, which succeed in recovering gas from tight fields within two years will get 50 percent hike against 2009 price and if it takes more time they will get only a 40 percent hike. Besides, the lease for the fields will now be for 40 years instead of 30 as per the 2009 policy, the official said. Even with the improved prices for the tight gas to be paid to the exploration companies, it is estimated that Pakistan will have to pay a maximum of $6.5/Btu for the gas compared to $12.3/Btu for imported gas. They said that investors will be offered 40 percent premium on the current gas price for exploring tight gas. Similarly, 50 percent premium will be offered on current gas price to investors if they commission their project within two years. Pakistan can also produce gas from Thar coal with the help of underground coal gasification (UCG) technology. There is a potential to produce 35 TCF of coal-bed methane from Thar coal, sources added. Pakistan has approved a new tight gas exploration policy with improved incentives as compared with its 2009 policy, to overcome the country's gas shortfall and attract foreign investment, the official added. "Tight gas is a more feasible option for the economy as even after giving additional incentives the cost of gas available will be less than imported gas and there will be no burden on the foreign exchange reserves for additional imports," the officials said.

Copyright Business Recorder, 2011

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World Bank to provide $200 million for 'Natural Gas Efficiency Project'

World Bank considers of providing US $200 million for "Natural Gas Efficiency Project" to enhance the supply of natural gas in Pakistan by reducing the physical and commercial losses of gas in the pipeline system, while Pakistan will bear US $72 million. In a project update report, Bjorn Hamso, Sr.Energy Economist of World Bank, stated that Project beneficiaries will be mainly consumers of natural gas in Sindh and Balochistan, who would have more gas available and see less high levels of Unaccounted-For-Gas (UFG) cost in their tariff as well as adequate gas pressure. The benefits to Pakistan would be in terms of more gas potentially available for power generation and lower greenhouse gas emissions (natural gas is nearly all methane, CH4). The key benefit to SSGC would be an improved bottom line, he added. Bjorn Hamso Sr. Energy Economist mentioned that the Project has three components (estimated World Bank financing in parentheses). According to Component-1 UFG Reduction will be completed with the cost of US $190 million, while segmentation and pressure management (US $18 million) are at the core of the Project. Under this project, this entails ring-fencing segments of the network by installing bulk meters at inlet points. Input-output gas measurements (the difference is UFG) will be complemented by pressure testing and leakage surveys to rank segments for rehabilitation work and theft control. About 400 bulk meters will be procured. In conjunction, automatic pressure management and monitoring systems will be procured to match pressure levels to demand. Bjorn Hamso pointed out that "Pipeline Rehabilitation" (US $117 million) will involve replacement of 5,750km of irreparable leaking pipes and rectification of 18,700km of less damaged ones. The Project will finance pipelines of varying types and diameters, mostly polyethylene (PE) pipes, but in special cases steel pipes. Operational equipment will also be procured. Cathodic Protection (CP) programme will be completed with the cost of US $20 million. CP reduces the rate of corrosion from underground steel pipes, thus arresting the increase in leakages. This subcomponent will finance the installation of recoating material for 450km of pipes, installation of power sources, battery back-up systems, magnesium anodes, and remote CP monitoring systems. Advanced metering systems (US $35 million) will replace inaccurate, tamper-prone meters and install surveillance equipment to monitor gas theft. About 270 turbine meters for large industrial customers, 12,500 ultrasonic meters for commercial customers, data acquisition/monitoring systems, and provers (for testing meter accuracy) will be procured. Under Component-2, Appliance Efficiency Pilot Project will be completed with the cost of US $5 million. This subcomponent will finance the deployment of high-efficiency gas appliances and/or the retrofitting of components in consumers' existing appliances to enhance thermal efficiency. Under Component-3, US $5 million will earmark for Technical Assistance. This sub-component will finance technical audits, training of trainers for SSGC's Gas Training Institute, the Owner's Engineer, the Lender's Engineer, support for the consumer appliance efficiency pilot project and customer satisfaction surveys of project-related service improvements. WB report stated that Pakistan has important strategic endowments and development potential. The country is located at the crossroads of South Asia, Central Asia, China and the Middle East. This places Pakistan at the fulcrum of a regional market with a vast population, large and diverse resources, and an untapped potential for trade. But Pakistan faces long-term challenges to realising its growth potential. It requires a strong and stable tax base, and more efficient public spending to expand fiscal space. Other measures required include creating adequate employment opportunities; improving income distribution; and harnessing economic competitiveness through trade, investment, improved business environment and competition. Today, Pakistan's key economic challenges are the large fiscal deficit and energy shortages. Electricity and gas shortages plague households and industry alike. The energy sector is experiencing deficits of energy as well as finances. Key contributors to the energy deficit are: declining gas supply from domestic fields; slow expansion of low-cost power generation capacity; inefficiency in power generation; high losses in electricity and gas distribution networks, etc. And key contributors to the financial deficit are: high cost of imported furnace oil (which is now a leading fuel for power generation); inadequate power tariff increases; inadequate subsidy payments by the government; low collections from government entities; sub-optimal commodity-based subsidies, etc. All these factors contribute to the circular debt problem across the sector. Commenting over the "Sectoral and Institutional Context", WB report stated that natural gas is a vital energy source for Pakistan. In FY2010, Pakistan consumed about 1.3 trillion cubic feet (tcf) of gas, all domestically produced and representing about half of primary energy consumption. Proven remaining reserves of conventional natural gas were estimated at 27.6 tcf in FY10. Pakistan has a mature gas industry that has been operating since 1950s. Domestic gas exploration and production is undertaken by state-owned and private firms (Pakistani as well as international). By international standards, and compared to oil products, natural gas is inexpensive in Pakistan which leads to inefficient use. Natural gas is transmitted and distributed by two companies: Sui Southern Gas Company Ltd (SSGC, the sub-borrower in this Project) supplying Sindh and Balochistan; and Sui Northern Gas Pipelines Ltd (SNGPL) supplying Punjab and Khyber-Pakhtunkhwa. Both are listed on the domestic stock exchanges but have significant government stakes. WB report pointed out that Pakistan's main challenges in the gas sector are related to: scarcity of gas, suboptimal gas allocation, high levels of Unaccounted-For-Gas (UFG), and inefficient end-use. The sector supply gap is forecasted to reach about 0.5 tcf in 2015 that is set to increase to almost 2 tcf by 2025. Many large gas fields are in decline and low wellhead prices have led to little upstream investment. But, new customers have consistently been added. The Government is planning to introduce LNG as well as pipeline import of gas. Pakistan also has unconventional gas resources in 'tight' reservoirs and shale-both more costly to extract. The Government is introducing financial incentives to exploration and production companies to invest in both conventional and unconventional gas. WB report revealed that Pakistan's "Natural Gas Allocation and Management Policy" of 2005 gives low priority to government-owned (PEPCO) power plants without firm gas purchase agreements. For many years, major PEPCO plants have operated without binding gas purchase agreements and have received less gas for power generation while electricity demand has increased sharply. The plants have substituted gas with furnace oil. Commenting over the "High levels of unaccounted-for gas (UFG)" WB report mentioned that UFG is the difference between the total volume of metered gas purchased by a gas utility and the volume of gas sold. In OECD countries, UFG is typically 1-2 percent. In Pakistan, UFG was recorded at about 9 percent in FY10. UFG is, therefore, a major contributor to the gas supply crisis. Most of the UFG is due to dilapidated/deteriorating pipelines. Other sources are leaking joints in service connections; gas theft (tampered meters, illegal connections), malfunctioning metering equipment, and gas leakage due to higher than required pressure. WB report mentioned that the dollar equivalent of Pakistan's UFG in FY10 was US $362 million in terms of gas purchased. If the volume of lost gas could be channelled to power generation, the furnace oil substitution value would be three times higher. The Oil and Gas Regulatory Agency (OGRA) has punished both gas companies for excessive UFG by reducing their returns dramatically (in FY09, SNGPL: US $58 million, SSGC: US $35 million). The household gas appliance industry in Pakistan generally produces low-efficiency appliances that do not meet Pakistan's thermal efficiency standards. Furthermore, residential gas consumers have limited incentive to shift to more efficient appliances because of relatively low gas prices. Improvements are necessary in appliance certification, energy efficiency labelling and enforcement of standards, WB report added. Against this backdrop, WB report stated that Pakistan Government has requested World Bank support to address the UFG problem. The Government believes Bank support is suitable because: (a) the gas companies have over the last decade been unable to solve the problem on their own; (b) significant financial resources are necessary; (c) the UFG problem is increasingly intolerable in view of the growing gas and power shortages; (d) a UFG reduction project would give significant results over the medium term (3-5 years). The Project is also seen as a catalyst for organisational improvement in capacities and accountability.

Copyright Business Recorder, 2011

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131 exploratory wells drilled to meet oil and gas needs

Ministry of Petroleum and Natural Resources has drilled 131 exploratory wells during the last five years to meet growing needs of oil and gas in the country. "It is a fact that the production of oil and gas in the country is less than their demand. However, the government has taken numerous steps to enhance their production," official sources told newsmen on Thursday. The sources said exploration licences for 30 blocks were granted during the year 2010. In the Petroleum Exploration and Production Policy - 2011, additional incentives had been offered to the investors for exploration of oil and gas in Pakistan, they added. The sources said the additional incentives would take care of extra risk taken by exploration and production companies for doing business under the prevailing security, law and order situation in the country. They said presently 133 exploration licences had been granted for exploration of oil and gas in the country, while 130 D&P leases were operative for the enhancement of production of oil and gas. Some 127 fields were producing 64,655 barrels of oil and 4,215 million cubic feet gas per day. They said efforts were also being made to put newly made discoveries on production during 2011-2013. The sources said the completion of pending development projects would enhance daily oil and gas production, adding that enhanced exploration in all areas would add new oil and gas reserves by improving law and order and providing conducive environment to local and foreign companies. A basin study has already been carried out to co-relate entire data of different basins which will help identify new play types while through state-of-the-art data repository centre, digitized data is also available to existing and new companies to participate in exploration which will help in expediting exploration of oil and gas. The sources said concentrating on more exploration in deeper prospects and under-explored geological frontiers would add new reserves. A tight gas policy had been notified which would offer 40-50 percent higher prices than petroleum policy-2009 gas price to attract exploration companies to invest in tight gas fields, they added. The sources said the country had estimated recoverable tight gas reserves of 24 TCF and initially 100-150 mmcfd would be added depending on its success rate. The Ministry of Petroleum and Natural Resources is also working on "Low Btu Gas Policy and Shale Gas Policy" to encourage the investors to exploit these reservoirs.

Copyright Associated Press of Pakistan, 2011

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