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News Headlines for the month of
DECEMBER 2011

50MW alternative energy project launched

The ground breaking ceremony of Three Gorges First Wind Farm Power Plant was performed by Minister for Water and Power Syed Naveed Qamar and Liu Jian, Chinese Ambassador to Pakistan. The project will be installed in Jhimpir, Thatha, Sindh. “The project will help further strengthen China-Pakistan friendship and consolidate the strategic partnership”, said Liu Jian, the Chinese Ambassador. Wang Shenliang, Chief Executive Officer of Three Gorges First Wind Farm project said that the company would launch 20 similar projects having total production capacity of 1,000 megawatts by self investment during the next three to four years. Syed Naveed Qamar said that the government has tasked the Alternative Energy Development Board to add 1,500 megawatts to the national grid by 2013. Qamar said that under new policy the government has announced upfront tariffs and now the companies need the resolve and funding to put a power plant in Pakistan as it has removed all the bottlenecks. The AEDB’s Chief Executive Officer Arif Alauddin said that Three Gorges Pakistan has assured it would implement the project at the earliest. The company is already working on two other projects of 50MW each and seeking additional land for 450MW. Alauddin said what is more significant is that the renewable energy – and in particular the wind energy sector is now attracting the highest amount of private investment. He said the AEDB had set a target for Wind Power Generation at 500MW for the year 2012, however, the government has set the target of 1,500MW for early 2013 – a challenging target, which appeared unrealistic in the beginning, now seem to become achievable.

Copyright The Express Tribune, 2011

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Scientist invents machine for energy generation

A local scientist, Arbab Abdul Wakil, has invented machine for generation from untraditional mean through animals. Talking to Business Recorder, he said that in Pakistan beside, the main source of hydel energy, the other sources are oil, gas including nuclear energy and the whole country's power generation depends on these sources. But, there are also other alternate sources of energy available such as solar, wind and coal energy, but we have so far not been able to get full benefit from these sources. The technologies of power generation from wind, solar and coal are expensive and due to the weak financial position these technologies have not been properly adopted. Along with alternate sources of solar, wind and coal energies, there is a great need of research and investigation to look for other alternate sources of energy, which is not expensive and may be easily utilized. In Pakistan at least 75 percent of the people live in rural areas, where majority of the people are engaged in farming and for this purpose they keep animals like bulls, buffalos, cows, donkeys, horses and camels, which are mainly used in farming and for the transportation of crops, milk and meat products. In far remote rural areas, bulls are used for ploughing, pulling bullock carts for transportation and for extraction of oil and sugarcane juice. Similarly, he said that horses and mares are used in tangas and Raries and donkeys in ghanda ghari, therefore, if it is properly studied and observed, these pet animals which are used in rural areas by farmers and other people are another source of alternate energy, which is present is this world since ages. Before the modern inventions of buses, trucks and tractors, animals' use in urban areas they do the similar work in one way or the other, therefore, these animals are the treasures of energy which are available in abundance in rural areas; power generation is required everywhere in this world and for power generation it is necessary. Pet animals in the rural areas may be the other alternate source of energy in limited quantity for power generation. For crop production constant availability of water is necessary for irrigation purpose. Due to unfavourable climatic condition and shortage of water for irrigation constant irrigation throughout the year is not possible in some part of the country, if the climatic condition is favourable, and there is appropriate raining, then the crops condition is according to expectation and requirements. But the climatic condition is not so favorable for the last few years therefore the crops production is decreasing. In the canals irrigated areas, farmers get water for irrigation in time, but in barani and disserted areas the farmers depend on rains which is no longer on appropriate time. Due to shortage of rains in barani and even in canals irrigated areas the water level in the ground has gone deeper, therefore, the supply of water from deeper level. Wells are no longer possible with traditional Arhet system. Therefore, the supply of water from deeper well is only possible with the help of electric pumps. In rural areas of Pakistan the majority of farmers are small land holders who have little availability of water for irrigation, but almost all the farmers with small or large land holding keeps animals for daily farming works. There is no extra expenditure for keeping animals in rural areas, as most of these animals get their food requirement by grazing in fields and plains and are a free source of energy for power generation. By using pet animals' energy for power generation, not only required quantity of water for irrigation purpose will be available, but the power generation thus produced may be sufficient for limited use in rural areas for operating small power electricity machines, household and other equipment at the lowest cheaper rates. The machine which has three to five kilowatts capacity may be sufficient for limited use in rural areas for operating small power electricity machines and equipment. 1: With the help of pet animals driven device the rural areas farmers may have power generation almost free of cost. 2: In barani and desert areas where the water level is at the deepest level this machine may be operated for power generation with the help of donkey, horses, and camels. The required amount of water for drinking and irrigation purpose may be obtained form 300 to 400 feet deeper in the ground level. 3: If the water storage is situated at higher level and the sources of water is at the lower level, this machine may be able to supply water to storage tank from where it may be distributed to different houses through metal pipes. 4: With the help of machine small saw machine, flour grinding machine, drill and welding machine may easily be operated. As a whole a small factory at all the rural areas may be functioned, but only one or two machines may be operated at one time. Similarly other electric equipment of household with small power may also be operated. 5: In hilly areas and even in plain areas if the agriculture land is situated at higher level than the water sources, the water supply for irrigation will be cheaper with no extra cost. The irrigation of newly forest plants with this system is easier and fruitful. 6: For charging UPS, electricity is essential. In these rural areas where there is storage of electricity or no electricity, the charging UPS may be carried out easily for further power generation in houses of rural areas for three to four hours. 7: In fabricating this machine locally made parts are used which are easily available in the local market. The machine parts are simple and strong and need little repair. The repair works if there is any may be carried by local technicians. 8: The price of the machine is affordable for rural farmers. The machine is portable and may be carried out anywhere with the help of local animal transport. 9: Beside the irrigation work, the machine may be used for constant supply of power generation to the household or operating of small factory. One animal at one time may operate the machine for one to two and a half hours with intervals.

Copyright Business Recorder, 2011

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Vestas says gets 50 megawatts turbine order in Pakistan

Danish wind turbine manufacturer Vestas said on Friday it had received a 50-megawatt turbine order for a project in Pakistan. The order from Zorlu Energy Group was for 28 of Vestas' V90-1.8 MW turbines for a project in Nooriabad in the Jimphir region of Pakistan, Vestas said in a statement. Delivery of the turbines was scheduled to start in the first half of 2012 and the project to be completed by the end of the year, Vestas said. The Pakistani order lifted the company's total year-to-date announced order intake to 6,078 MW, still below Vestas' guidance for a full-year 2011 order intake of 7,000-8,000 MW.

Copyright Reuters, 2011

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49.5 megawatts wind farm project: China's Yangtze Three Gorges Development Corporation given incentives after majority decision

The National Electric Power Regulatory Authority (Nepra) has granted fiscal incentives to China's Yangtze Three Gorges Development Corporation for building the first 49.5 MW wind farm on the basis of majority decision instead of consensus within the authority. Minister for Water and Power, Syed Naveed Qamar will preside over groundbreaking ceremony of the project on December 30 which has been allowed maximum reference tariff up to Rs 13.939 per unit. One of the members of Nepra, Shaukat Ali Kundi, has written a dissenting note on the amount to be given to SINOSURE, an account receivable management Chinese company that in 2003 became a member of the International Association of Commercial Collectors. According to its website SINOSURE "is mandated, in accordance with the Chinese government's diplomatic, international trade, industrial, fiscal and financial policies, to promote Chinese exports and investments, especially exports of high-tech or high value-added capital goods, by means of offering export credit insurance against non-payment risks, and providing services in financing, information and receivables management." "I disagree with the majority decision in this case, except for the grant of fee to SINOSURE of $6.806 million @ 6.53 per cent of the loan facility, in addition to the interest rate of six-month Libor plus spread of 4.5 per cent allowed on long-term debt," said Kundi in his note. SINOSURE has claimed $7.039 million on account of its fees. The company submitted that it is the condition of lending by the Chinese banks to companies with Chinese equity that the debt must be insured with the Chinese government agency 'China Export & Credit Insurance Corporation' and without SINOSURE insurance, lending will not be provided by the Chinese banks. In support of its claim the petitioner has submitted a term sheet dated March 29 2011, of 'China Development Bank Corporation' requiring overseas investment insurance by SINOSURE for financing the project. Further, letter dated March 29 2011, of 'China Export and Credit Insurance Corporation' confirms that they are interested in providing overseas investment insurance to the financing by 'China Development Bank Corporation' and the total premium rate will be not less than 6.53% based on the loan facility. Furthermore, the petitioner vide letter no. TGF/EX/OUT/2011-019 dated August 25, 2011 has also submitted SINOSURE policy of another project outside Pakistan for consideration of the Authority. NTDC has commented that the SINOSURE fee is high and is in addition to high financial charges claimed by the petitioner. It has opined that sponsor may be advised to get it waived from the Chinese Government. The Authority for comparison purposes also obtained information about SINOSURE insurance from Neelum Jhelum Hydropower Company (Pvt) Limited. After considering submissions of the petitioner and facts of the case the Authority has decided to allow SINOSURE fees of US $6.806 million ie SINOSURE fees @ 6.53% of the loan facility allowed. The Authority however directs the petitioner to make efforts for getting waiver of SINOSURE fees from the Chinese government. Further, simultaneously with making efforts for getting the aforesaid waiver, the petitioner should also negotiate for reduction of SINOSURE fees as the Authority understands that the premium rate of SINOSURE fees needs to be further negotiated. The SINOSURE fees will be adjusted at COD on the basis of actual expense, not exceeding the maximum limit of 6.53% of the loan facility allowed, on production of authentic documentary evidence. According to the dissenting Nepra member, SINOSURE insurance allowed by the Authority provides additional comfort to the lenders. "I am of the opinion that the cumulative impact on tariff of interest rate on long term debt plus SINOSURE fees allowed should not have exceeded the impact on tariff of interest rate of 6 months LIBOR plus spread of 4.50% allowed in a recently determined comparable case. I do not approve the demand of the petitioner regarding grant of SINOSURE fees in addition to the interest rate allowed on long term debt of 6 months LIBOR plus spread of 4.50%," Kundi stated in his note. Tariff determination suggests that all project costs ie costs incurred prior to the project Commercial Operation Date (COD) have been allowed in the tariff determination in dollars as the exact currency of payment is not known yet. At the COD for all projects costs payable in rupees, the amounts in dollar will be converted into rupee using the reference rupee dollar parity of Rs 85. According to the regulator, reference tariff has been calculated on the basis of net annual benchmark energy generation of 138.700 GWh at annual net plant capacity factor of 31.99 per cent for installed capacity of 49.50 MW. These charges will be limited to the extent of net annual energy generation of 138.700 GWh. Net annual generation supplied to the power purchaser in a year, in access of benchmark energy of 138.700 GWh will be charged at 10 per cent of the prevalent approved tariff. Nepra, has also granted onetime adjustments to the reference tariff which are as follows: (i) charges for the letter of credit to be opened in favour of the EPC contractor, will be adjusted at the Commercial Operation Date (COD) on actual basis, not exceeding the maximum ceiling of $0.335 million upon production of verifiable documentary evidence to the satisfaction of the Authority; (ii) duties and/or taxes, not being of refundable nature, imposed on the company up to the commencement of its commercial operations for the import of its plant, machinery and equipment will be subject to adjustment at actual on COD as against $0.419 million allowed now, upon production of verifiable documentary evidence to the satisfaction of the Authority. Withholding tax is pass-through item just like other taxes as indicated in the government guidelines for the new Independent Power Producers (IPPs). The power purchase will make payment on account of withholding tax at the time of actual payment dividend, subject to maximum of 7.5 per cent of 17 per cent return on equity (including return on equity during construction). In case the company does not declare a dividend in a particular year or declare partial dividend, then the difference in the withholding tax amount (between what is paid in the year and the total entitlement as per the net return on equity) would be carried forward and accumulated so that the petitioner is able to recover the same as the pass through from the power purchase in future on the basis of total dividend payout.

Copyright Business Recorder, 2011

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'Bosnia can help Pakistan in areas of energy, defence production'

Ambassador of Bosnia Armin Limo has said that bilateral trade between Pakistan and Bosnia can be increased five times from the current two million Euros per annum. Bosnia can help Pakistan in areas of energy and defence production as having expertise in these sectors. He was speaking at the Lahore Chamber of Commerce and Industry, here on Monday. He further said that Bosnia possessed expertise in the construction of mega dams, transmission lines and grid stations and Pakistan could avail its experience to overcome its energy crisis "Pakistan can send its products to Bosnia directly. Currently Pakistani products are reaching our homeland through other countries that results in increased prices," he observed. The ambassador said that the five independent states that had been part of former Yugoslavia now had population of over 20 million and Pakistan could boost trade ties with them by enhancing its exports of textile, rice and surgical and sports goods. He said that good relations of the two countries needed to be translated into enhanced economic co-operation. Bosnia and Herzegovina and its neighbouring countries are safe, stable and an excellent gateway to EU countries, he maintained. They have modern legislation adapted to the highest international standards ready to accept foreign investors, he added. Speaking on the occasion, the LCCI President Irfan Qaiser Sheikh urged the Pakistan government to sign Preferential Trade Agreement (PTA) with Bosnia Herzegovina without any further delay. The delay in signing of the much-needed PTA with a country that is a gateway to Europe was badly hitting the bilateral trade and economic relations, therefore concrete measures were needed to remove impediments in the way of Preferential Trade Agreement, he observed. He said that there are vast opportunities of investment in Pakistan and the businessmen have ability and capacity to launch joint ventures with Bosnia in various sectors including dairy farming. He said the economic relations between the two countries did not reflect their close fraternal ties and there was a need to cement trade and economic relations. He stressed upon the business community to establish their warehouses in Bosnia because European Union was excellent market for Pakistani products. Sheikh further said that solid measures should be taken to enhance the trade volume between the two countries, adding that the exchange of trade delegations and holding joint exhibitions would pave the way for increasing the bilateral trade volume.

Copyright Business Recorder, 2011

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Electrification of more villages under way

Sindh Power Department has electrified over 800 villages of the province since 2010 while electrification of more villages is well underway, Business Recorder learnt on Friday. Sindh Chief Minister Syed Qaim Ali Shah approved Rs 1000 million for electrification of various villages of the province. According to the sources, the fund was utilized by the Power Department through Karachi Electric Supply Corporation (KESC) and Hyderabad Electric Supply Company (HESCO). KESC has electrified many villages situated in suburbs of the city while HESCO has electrified more than 750 villages of various districts of the province, they added. The power department, a few months ago, has notified Monitoring and Implementation Unit (MIU) in order to oversee village electrification scheme. The Sindh chief minister had also approved the budget in this regard. The office of MIU has been established in Hyderabad.

Copyright Business Recorder, 2011

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7 to 15 megawatts capacity: Sindh government plans small hydel power projects on Indus River

With a view to overcoming electricity shortage, Sindh government has planned to initiate small hydel power projects having capacity of 7 to 15 megawatts on Indus River through Public Private Partnership (PPP), Business Recorder has learnt on Thursday. Sindh power department had decided to hire a private firm to make feasibility reports of small hydel power plants, sources said. The department had forwarded a summary in this regard to Chief Minister Syed Qaim Ali Shah for final approval a few weeks back. After the approval, the private firm would start its work and has to complete the proposed work within 8 months, sources added. According to sources, Earnst and Young, a private firm has to conduct survey on the Indus River and to identify 6 top sites for installation of hydel power projects. The firm has to select machinery which to be used on identified sites and will also conduct environmental survey in this regard, sources said. According to experts there are many sites on Indus River which have the potential to generate 8 to 15 MW electricity through hydel power plants. Experts say if the Sindh government would accelerate its work in this regard, it could control persistent load shedding which is causing numerous problems. When contacted, Secretary Power Rabia Javeria Agha told Business Recorder that accelerated development of energy resources is one of the top priorities of Sindh government as ever-mounting electricity shortage is major bottleneck hindering growth of provincial economy. She said there is a big space in hydro generation field so that power department is trying to fill this gape in collaboration with private sector.

Copyright Business Recorder, 2011

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Supplying 3000 megawatts electricity to Pakistan: Malaysian company offers to set up power plant in Iran, Senate told

The government has informed the Senate that a Malaysian Company has offered to set up a plant in Iran to generate and supply 3000MW electricity to Pakistan. Replying to questions during question-hour in the Senate on Thursday, Minister for Water and Power Syed Naveed Qamar said that Quetta would become hub for import of electricity if on-going negotiation becomes successful and a power plant was set up in Iran to produce electricity for Pakistan. The minister further explained that the company which expressed desire to set up plant to generate and supply electricity to Pakistan is from private sector and making the entire investment. In reply to a question of Senator Professor Ibrahim, Qamar said that a campaign has been launched against electricity theft, and more than 2000 cases have been registered. He said that in the past no strict action was taken in cases of electricity theft but now the government has decided to strictly deal with the issue and all the officials have been directed to take action against the people involved in power theft. The minister said that the government is making a harsher law in this regard. The minister also informed the Senate that there is a proposal for construction of 220KV Grid Station at Chakdara and its associated 220KV Chakdara-Mardan Transmission Line, which is expected to be constructed during 2013-14. About the land acquisition for Kurrain Tango Dam, he said that Rs 100 million have been allocated in PSDP 2011-12 for the project including cost for land acquisition. In the approved PC-I three years have been indicated for the land acquisition for the entire project. However, this is subject to provision of budget allocation/ security arrangement by Political Agent. He said that at present the up-gradation of National Power Control Centre is in advance stage of implementation and major activities of design, manufacture, delivery, installation of material and telecommunication equipment at 500/220 KV substation and power plants has been completed. Now their testing/commissioning and linkage with new SCADA computers at National Control Centre is in progress. The project is expected to be completed in February, 2012. On completion of the project NPCC will be able to efficiently control and monitor the NTDC's 500/220 KV transmission network and power plants. Replying to a question of opposition leader, Senator Abdul Ghafoor Haidri on derogatory attitude of Sui Gas official with the common man, Minister for Labour Syed Khurshid Shah said no official has the right to insult the respectable citizen of the country and if any official of the gas company was involved in this kind of behaviour, action would be taken against him. Senator Ismail Buledi staged a walkout from the House in protest of ignoring Balochistan in job quota and other senators from the provinces also followed and joined him. Acting Chairman Senate Jan Muhammad Jamali also remarked that quota of Balochistan should be implemented. Senator Zahid Khan of Awami National Party (ANP) complained that Punjab was given excessive than allocated quota in employment.

Copyright Business Recorder, 2011

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IDB to give $60 million Patrind hydropower project

The Islamic Development Bank (IDB) will extend long-term lease finance (Ijara) facility up to $60 million to Star Hydro Power Limited for the development of the Patrind hydropower project. A message received here on Wednesday said that the Korea Water Resources Corporation (K-Water), the leading water resources and hydropower provider in South Korea, is the main sponsor of the project. It said that the Daewoo Engineering and Construction Limited and Sambu Construction Company Limited are the other sponsors as well as the EPC contractors in the project. The project, it was pointed out, will add a net generation capacity of 147 mw to the national grid. The project is expected to become operational from 2016 and supply clean energy under a 30-year contract with the National Transmission and Dispatch Company (NTDC) of Pakistan.-PR

Copyright Business Recorder, 2011

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Rs 20 billion for hydropower projects in KP allocated

Khyber Pakhtunkhwa Minister for Finance, Engineer Mohammad Hamayun Khan has said that the provincial government is giving top priority to hydropower projects and is going to launch work on two projects in Matalitan and Lawi soon. He said the provincial government has allocated a hefty amount of Rs 20 billion under the head of hydropower projects fund. Talking to Business Recorder, he said that unprecedented increase in the annual development programme of the province has been witnessed during the last three and half years. He said the worth of ADP, in the first budget, was Rs 28 billion, which has now reached Rs 85 billion with the support and co-operation of federal government. He was of the view that development schemes besides generating employment opportunities also helped in welfare of people. The provincial minister said that National Finance Commission Award was announced after a long period of 19 years with the consensus of federating units, which increased the share of Khyber Pakhtunkhwa from 14.7 percent in federal divisible pool to 16.4 percent. Furthermore, the payment of net profit on hydropower generation was a longstanding dispute between Khyber Pakhtunkhwa and Wapda and after the decision of the arbitration tribunal the latter filed petition in a civil court. However, he said that with the successful and peoples' friendly policy of the coalition governments at federal and provincial levels, the issue was resolved. He said that as down payment, the federal government has already paid an amount of Rs10 billion to the province while the remaining amount will be paid in annual equal instalments of Rs.25 billion. Hamayun said that the government has completed four years of the five-year constitutional term and will also complete the fifth year in office with the support of people. He said that the coalition government in the province is being run successfully and no discrimination is carried out in the provision of development funds to the legislators. He all members including those in opposition have been provided equal funds. He said that the party has demanded of the federal government for provision of more development funds to PPP legislators in the province to initiate maximum development schemes in the province. He said that the coalition governments in both federal and provincial levels are serving the people, saying the power policy introduced by PPP government in 1993-96 besides, attracting investment also increased power generation. But change in that policy by the government of then Prime Minister, Nawaz Sharif resulted in energy crisis in the country. He said that in next general elections they will participate on the basis of their performance of the government during the five-year term. The minister said that government has initiated measures for increasing the financial resources of the province. He said that the provincial government is working on the establishment of its own oil and gas company for further exploration in the sector. He pointed out that when they took-over the reigns of the provincial government, the total amount paid to the province under the head of royalty on oil and gas was Rs four billion, which has now jumped to Rs 16 billion. The provincial government, he said has already received first installment of Rs 25 billion for the last financial year. The amount for the current financial year, he said will be paid in installment in which the federal government has already paid an amount of Rs 10 billion. Regarding the dispute on net profit a head of the year 2005, he said preliminary negotiations between the federal and provincial governments have been held and from December 13, 2011, it will be held on daily basis and will continue till the resolution of the issue. In this connection, he said a Jirga headed by chief minister will call on the PM. He said that the provincial government has initiated several self-employment-generating schemes for the unemployed youth. He said that one of such scheme is Bacha Khpal Rozgar Scheme and the second is Hunarmand Rozgar Scheme. Similarly, he said that a free treatment scheme for the patients of Hepatitis has also been initiated under Benazir Health Programme while they have signed an agreement for provision of free treatment facility to the patients of cancer with a multinational pharmaceutical company, Novartis.

Copyright Business Recorder, 2011

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Dasu hydel project to produce 4320 megawatts power

Dasu Hydropower Project, a low cost power plant, will contribute 4320 mw of electricity to the national grid and thus benefit the national economy with about Rs 191.7 billion. This was stated by a five-member team of Consultants of the project in a presentation to the office-bearers of Lahore Chamber of Commerce and Industry here on Saturday. The team was comprised of IIJIMA Motohiko, Project Manager/Team Leader, Dasu Hydropower Project, Hiroyasu Kitayama, Chief Material Specialist, Nippon Koei Co Ltd, Japan, Toshimitsu Tanaka, Nippon Koei Co Ltd, Japan, Muhammad Munir, Managing Partner Development and Management Consultants (DMC) and Ziaul Hassan, Deputy Project Manager. The team discussed a number of technical issues with LCCI Senior Vice President Kashif Younis Meher. After hearing the point of view of the visiting team, Kashif said that the Lahore Chamber of Commerce is ready to extend every help so that the work on the mega hydropower project of national importance could be started at the earliest. He urged the consultants to have regular meetings at the LCCI as it has 18,000 members belonging to all sorts of businesses and they would be ready to facilitate the consultants. When the visiting team discussed the issue regarding provision of Flyash (a residue of coal and used in construction of dams), Kashif said that the material could be made available in Pakistan and in this regard the LCCI would be doing the needful. Dasu hydropower project is sited 7 km upstream of Dasu village on Indus River, 74 km downstream of Diamer Basha Dam and 350 km from Islamabad. The Project is located in district Kohistan of Khyber-Pakthunkhwa. The government's reliance on thermal generation has contracted the hydel contribution in the total energy mix. The policy of generating more electricity through thermal power plants resulted in expensive generation that widened the gap between the cost of production and sale. It is pertinent to mention here that the Water and Power Development Authority (Wapda) had awarded contract to a joint venture, Dasu Hydropower Consultants, for preparation of a detailed engineering design and construction supervision of 4,320 megawatts Dasu hydropower project. The joint venture comprises two foreign and three local consulting companies including Nippon Koei of Japan, Dolsar Engineering of Turkey, Development and Management Consultants, National Development Consultants and Pakistan Engineering Services from Pakistan.

Copyright Business Recorder, 2011

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Thar Coal: KESC to generate 1,100MW electricity till March 2012

Karachi Electric Supply Company CEO, Tabish Gohar on Sunday said that KESC will increase its electricity generation capacity around 1,100 MW till March 2012 through Thar coal. Talking to a private news channel, he said that Bin Qasim power plant is being converted on coal from which 400MW cheap electricity will be generated for consumers in next two years. He elaborated that Abrash Capital has invested 30 million in KESC in three years and another amount of six million rupees is expected by next years. It enhanced at least 850MW power generation and by next march this figure will be increased to 1,000MW, he added. To a question, he said that coal generated electricity is cheaper than that of furnace oil, adding that it is Rs seven per unit while regular electricity price is Rs 16 per unit. He hoped that KESC will be generating 400mw electricity from coal in next two years. He disclosed that they have an agreement with British company for the Thar Coal project and, in this connection, 300MW cheaper electricity will be generated during the next two years. He said that KESC is to get 1,100 MW additional power in next three-four years to end power load-shedding.

Copyright Associated Press of Pakistan, 2011

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OGDCL’s exploration effective in fulfilling energy needs

ISLAMABAD: The Oil and Gas Development Company Limited (OGDCL) is effectively contributing to overcome energy shortage and the recent oil discovery in Khyber Pakhtunkhawa (KP) province would go a long way in this regard. The OGDCL Operator of Nashpa Exploration License, together with its Joint Venture partners Pakistan Petroleum 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, KP. 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, official source said. The structure of well was delineated, drilled and tested utilizing indigenous expertise. Nashpa Well No 02 was drilled down to the depth of 4340 metres 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. According to the source, the 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 programme. Meanwhile, the OGDCL’s net sales increased to Rs 44.686 billion compared to Rs 39.452 billion in the corresponding period last year. Net profit before taxation increased to Rs 31.098 billion compared to Rs 24.137 billion in the corresponding period last year. Net profit after taxation increased to Rs 21.915 billion compared to Rs 16.710 billion in the corresponding period of preceding year translating into an earnings per share of Rs 5.10 Operating profit margin and net profit margin were 64 and 49 percent respectively. Payable interim dividend of Rs 1.50 per share and average net realized price of crude oil sold was $ 82.78 per bbl as against $ 61.92 per bbl during corresponding period last year. Average net realized price for natural gas sold was Rs 218.32 per Mcf as against Rs 216.50 per Mcf during corresponding period last year. 376 L Kms of 2D and 191 Square Kms of 3D seismic acquisition completed. app

Daily Times - All Rights Reserved

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Solar power plant with South Korean help to be established at LUH

With the assistance of Republic of Korea a 3.0 Mega Watt Solar Power Plant worth 20.0 million US dollars will be established at Liaquat University Hospital (LUH) Hyderabad this was expressed by H.E. Choong Joo Choi Ambassador of Republic of Korea during his visit to the Hyderabad Chamber of Commerce and Industry and his address to the business and industrial community of Hyderabad today. He further expressed that it was expected that during the next month President Zardari would visit Republic of Korea and a MoU would also be signed. He said he would also join him on this visit. He further said that with the visit of President Zardari the mutual understanding and friendly relationship would be further strengthened, and help in establishment of better trade relationship between our two countries. He added that he could see that in Hyderabad City there is a great potential for investment in agriculture and infrastructure sectors. He said that businessmen from Sindh may take part in Korean exhibitions and trade fairs, whereas, Korea would be happy to provide technical assistance and co-operation in this connection. He added that in his opinion the members of Hyderabad Chamber of Commerce and Industry are mainly related to small and medium enterprises. He assured that the Republic of Korea is co-operating in promotion of two-way trade between the two countries. He further assured that on the recommendation of Hyderabad Chamber of Commerce and Industry visa to business community of Hyderabad would be issued on priority. In reply to a question on barter trade system between two countries he replied that perhaps under international trade rules barter system of trade is no more practicable. He suggested that the business community from Hyderabad should come in contact for furtherance of trade. B H Sung, Director General Korean Business Centre, Karachi, said he would stay in Karachi for quite some time and further expressed that for the improvement of trade relationship between the two countries queries can be made to Korean Trade Development Centre. The Consul General of Republic of Korea HE In Ki Lee said that many Pakistani people are working in Korea and even some of them are staying there illegally. He also assured that visa to the business community from Hyderabad would be issued on the recommendation of Hyderabad Chamber of Commerce and Industry. Before that President HCCI Gohar Ullah welcoming the honourable guests said that Hyderabad is economic hub in this part of Pakistan. He further said that there are immense opportunities for the investment in oil, gas and power development sectors in Hyderabad. He further added that Korean investors are welcome to invest in Hyderabad as it is peaceful and ideal city for investment. He added that in Hyderabad and Kotri Industrial Estates, motorcycles, tractor and CNG rickshaw manufacturing and assembling plants are working, additionally textile, bed sheets and garments are prepared in Hyderabad. Further in agriculture sector rice, pulses, vegetables and fresh fruits are exported. In addition to that machine parts and tools are also prepared in cottage industry. Therefore, he was of the opinion that Hyderabad is ideally suitable for industrial trade. In this meeting Senior Vice-President Turab Ali Khoja, Vice-President Abdul Saleem Arain, Former President Haji Muhammad Yaqoob and other members including Saleem A. Shaikh, Maqsood Ahmed Khan, Syed Yawar Ali Shah, Muhammad Arif, Moazzam Ali, Nadeem Ahmed Siddiqui, Muhammad Akram Arain, Hafiz Naseeruddin, Muhammad Shakir Memon, Muhammad Shahid, Abdul Qayoom Nusrat, Haji Haroon and others were present.

Copyright Business Recorder, 2011

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Wapda gears up work: NJHP project to be completed by 2016

Water and Power Development Authority (Wapda) has geared up development work on the much-needed 969 MW Neelum Jhelum Hydropower Project (NJHP) to complete it by 2016. The project will generate 5 billion units of electricity per annum, price of which will be Rs 45 billion, which implies that the project will recover its entire cost just in seven years. Well informed sources told Business Recorder that the project cost has increased by 130 percent from Rs 90.93 billion to Rs 300 billion, due to different reasons besides criminal negligence of the Planning Division's former bosses. Only the rupee depreciation contributed Rs 40 billion to cost escalation, sources added. The sources said Wapda has completed cofferdam (temporary dam) meant to divert river Jhelum so that the main dam should get no water. The speed of development work can be gauged from the payment to contractors. Last year, Wapda paid Rs 300 million to the contractor in one month, now it is paying Rs 1 billion and hopefully next year, the payment will be around Rs 1.5 billion per month. The reason for increase in the cost is that the original approved PC-1 was based on 2001 price level. The contract awarded in 2007 and its prices were based on 2006 price level. The total tender price was Rs 90.93 billion against approved PC-1 cost of Rs 84.50 billion. The revised 2011 PC-1 is based on present price level. Total tender price for civil works was Rs 60.887 billion, which was based on project design of 1996/97. The increase in the cost as compared to the contract documents cost is mainly due to change in the design of earthfill dam to increase reservoir capacity, pass PMF without overtopping, eliminate peaking storage in tunnel and built composite concrete embankment dam to cope with fault movement. In addition there was increase in quantities in BoQs due to actual site conditions, which resulted in cost escalation. The justification for the variation in design is that the contract awarded in 2007 was based on the BoQs of the project design by M/s Norconsult carried out in 1996-97. After the award of the construction contract M/s NJC appointed by Wapda in August 2008 undertook the review of the tender design. Review identified many areas of concern requiring design changes which resulted in increased quantities, additional work items, thereby increasing the cost. The design changes were mainly due to higher seismic factor dictated by the earthquake of October 8, 2005, changes due to technical reasons, to bring the improvement in design parameters which were initially assumed and to take into account other state of the art aspects in the interest of the project. The major design changes which form the major part of the additional cost includes; increase in cross sectional area of headrace tunnel, lining of tunnels to eliminate head loss of about 100m, shallow Jhelum-river, crossing for natural draining of tunnel through powerhouse to avoid additional works required. For implementation of these changes various variation orders will have to be issued for which this provision has been made. As per contract, Wapda is required to provide uninterrupted power supply to the contractor at three locations. In approved PC-I an amount of Rs 140.41 million was allocated. Total power requirement at project site is 22.8 MW, whereas only 13.4 MW is available, which is also interrupted due to load shedding. In view of the prevailing conditions Wapda/BoD NJHPC has approved the procurement of three Nos. 4 MW capacity Wartsila diesel generators at the cost of US $20.49 million as well as O&M cost for five years @ Rs 15.82 per unit. The consumption of electricity will be deducted from the Contractor at Wapda unit rates. On the recommendation of PoE and Consultants, two Tunnel Boring Machines (TBM) are being deployed, as compared to drill and blast method being used, for excavation of most critical reach of 9.1 kms (now changed to 11.2 kms) of twin tunnels (total length 22.4 kms) as acceleration measure and to compensate the delays already occurred. It is estimated that the benefits from early operation of the project by approximately 18 months will be much more than the additional cost being occurred. Net estimated additional cost due to TBM is Rs 19.5 billion: Keeping in view the seismic concerns and for providing additional storage, design of steel gates of various components was changed which resulted in additional quantities of original BoQ of the contract. Design of electric equipment carried out in 1996/97 included in the approved PC-1was based on technology, which is outdated now. In the revised design the consultants have proposed state of the art equipment, which has resulted in increased cost. The amount increased from original BoQ rates because provision has been made for two spare runners for the Turbines of the powerhouse. Physical contingencies were generally taken as 3% as in the approved PC-1. However, for the revised PC-1, these are estimated as 5% to cater to unforeseen cost since the designs of some of the project components are not finalised yet, the sources continued. In revised PC-1, the original engineering & supervision cost has been taken @ 2.5%, which is same as in approved PC-1. However, additional expenses are being incurred for the revision of designs, engaging PoE and Wapda counterpart staff not covered in approved PC-1. In view of prevalent law and order situation, this provision is necessary to provide security to the expatriates and project infrastructure. In approved PC-1 (2002) no separate cost has been earmarked instead charged to civil work wherein Suzuki Khyber cars and Potohar Jeeps were provided. These vehicles were neither acceptable to the International Consultants nor these were reliable for the rugged terrain of the project area. Accordingly in the awarded construction contract provision was made for Rs 533 million for purchase 84 field vehicles including O&M through contractor. Under this item additional provision of Rs 750 million has been made to purchase/O&M of additional vehicles as replacement of existing vehicle plus additional required due to enhanced scope of work. The same percentage (2%) as was in original PC-I, has been used in the revised PC-I. However, the amount in this item has increased proportional to the increase in the cost. In revised PC-I land cost increased due to increase in cost of land since 2001. Cost for the item increased as compared to approved PC-I due to increased cost of E&M works and prevalent higher percentage of duties & taxes. In approved PC-1, F.E. Rate was 1$ = Rs 60 & there was no provision for escalation. In revised PC-1, the amount provided covers the actual additional cost due to variation in exchange rate up to June 30, 2011. In addition to the actual additional cost up to 2010-11, the provision has been kept to meet the enhanced cost of FEC for year 2011-12 and beyond on the prevailing rate of 1$ Rs 86.

Copyright Business Recorder, 2011

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''China''s bank is willing to fund IP pipeline project''

Federal Minister for Petroleum and Natural Resources Dr Asim Hussain revealed on Thursday that Industrial Commercial Bank of China (ICBC) was willing to provide investment for Pak-Iran gas pipeline project. Talking to Aaj TV, the minister also said the on-going energy crisis in the country would be considerably eased after completion of this mega energy project. He clarified that no decision had been taken yet to suspend gas supply to CNG stations in January.

Copyright Business Recorder, 2011

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Oil and gas production begins from Nashpa II

Production of 5,000 barrels of oil per day has started from Nashpa II, being operated and developed by Oil & Gas Development Company (OGDC) in district Karak of Khyber Pukhtoonkhwa. According to information reaching stock market on Tuesday, gas production from the well is 13 mmcf per day. It is a joint venture between OGDC (56%), PPL (26 %) and Government Holdings (pvt) Ltd. It may be noted that OGDC had hit hydrocarbon reserves in its exploratory well Nashpa No 2, district Karak of NWFP two years ago. Nashpa II, will add 7 percent in OGDC's total oil production and 1 percent to its total gas production and 17 percent to PPL's total oil production.

Copyright Business Recorder, 2011

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Egyptian envoy assures support in energy sector

Federal Minister for Petroleum & Natural Resources Dr Asim Hussain has said that Pakistan has always welcomed the co-operation extended by Egypt in various sectors of the economy. Hindam assured that the Government of Egypt would extend all possible help in the energy sector and for sharing experiences of successful projects. Said Hindam, Ambassador of the Arab Republic of Egypt to Pakistan called on the minister, here on Tuesday. The minister appreciated the help provided by the Government of Egypt during floods this year. He reiterated the brotherly relations between the two countries and stated that Pakistan has always cherished the constructive role of Egypt in OIC. The minister apprised the Egyptian Ambassador about the on-going projects of the oil & gas sector in Pakistan. He emphasised the need to expand Pakistan - Egypt co-operation-PR

Copyright Business Recorder, 2011

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Attock Refinery wins UN award

Attock Refinery Limited has been awarded "Living the United Nations Global Compact Responsible Business Award 2011" in the Large National Category. Didier Boschung, Consul General of Switzerland in Pakistan, who was the chief guest on the occasion presented the award to ARL representative at an impressive ceremony held in Karachi, said a press release issued here on Tuesday. ARL has voluntarily adopted United Nations Global Compact Principles. The company promotes CSR as part of its core values to create the foundation for a more equitable, just, productive, competitive and knowledge-based environment. ARL activities in the domain are distinguished from others on account of innovative and sustainable nature of its CSR initiatives socially, economically and environmentally. ARL priority areas for CSR activities are health, education, women and youth development, environment and provision of potable water and poverty alleviation. "Living the Global Compact Responsible Business Award" recognises Pakistani enterprises that best integrate the 10 principles of UN Global Compact into their business philosophy and acknowledges organisations demonstrating adherence to these principles in action. UN Global Compact principles asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption.-PR

Copyright Business Recorder, 2011

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Kunnar Pasakhi pipeline project to be completed by year-end

Work on Kunnar Pasakhi gas pipeline is progressing around the clock and the project will be completed by the end of December 2011. Built at a total cost of Rs 1,491 million, the 24" dia, 35-km long Kunnar Pasakhi Pipeline will transmit 100 mmcfd gas to the SSGC system in the first phase, a press release issued here on Friday said. The project started in June 2009 and got a major boost on the intervention of Dr Asim Hussain, Federal Minister for Petroleum and Natural Resources who has taken a personal interest in expediting the project for bridging the mounting gap in demand and supply of natural gas. Had it not been for the Minister's support, the project would have been completed by June 2012. The OGDC-operated Kunnar Pasakhi Gas Field is located in Tando Jam, some 30 kms from Hyderabad City. Currently SSGC is receiving 1,100 million cubic feet per day (mmcfd) gas against the demand of 1,400 mmcfd. Besides 100 mmcfd gas from Kunnar Pasakhi, another 30 mmcfd would soon arrive from the Sinjhoro gas field followed by 15 mmcfd from Haseeb Field, 20 mmcfd from Rehman field and 15 mmcfd, each from Meher and Jhal Magsi fields. The commissioning of these crucial projects would further improve gas supply situation for SSGC and facilitate the Company in grappling with increased gas loads in winters.-PR

Copyright Business Recorder, 2011

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Thar coal reserves: successful experiment to produce gas

Nuclear scientist Dr Samar Mubarik Mand and his team have successfully experimented to produce gas from coal reserves present in Thar desert. Talking to Aaj News on Wednesday, he said the production of gas from coal is a ray of hope in the current situation of energy crisis, which will change the economic condition of our country. He said this will be the biggest project of the world in producing gas through coal and initially we will generate 100 MW of electricity. He said we burnt coal at 450-ft underground by UCG technology in Islamkot on 11th December. He said we have successfully carried out the experiment of emitting gas by flaming it this month. Dr Samar disclosed that the life of reserves will last for 500 years. He said Thar coal is the third biggest coal reserve but unfortunately it has not been utilised. He said producing electricity is not the issue but the real issue is production of cheap electricity in abundance. He said the government is not providing enough funds which is the biggest hurdle in the development of the project. He said federal government does not seem interested but Sindh government has to take a step forward. He demanded Rs 9 billion for further extension of the project and to buy power generators. He said Thar coal Block 5 has the capacity to generate 10,000 MW of electricity and 100 million barrel of diesel annually for the next 30 years. He said Pakistan is rich in minerals and there are more than $500 million reserves of gold and copper in Rekodick and Sandak only. He said it is shameful to stop the construction of Kalabagh Dam and disclosed that technically Basha Dam is not feasible. He said that trouble could rise during the installation of its transmission lines, which will cause the loss of energy.

Copyright News Network International, 2011

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POL hits oil, gas in TAL Block

Pakistan Oilfields Ltd (POL) has discovered hydrocarbons in TAL Block in its development well Manzalai-9, which is being drilled and completed in Khyber Pakhtunkhawa Province of Pakistan. According to POL communiqué here on Tuesday, the well has tested 580 barrel per day of oil and 23.3 mmcf gas per day during at 32/64" fixed choke size at flowing wellhead pressure of 4000 psi in during drill stem test (DST) at Lockhart and Lumshiwal formations. Samanasuk formation has tested 716 barrel per day of oil and 6.72 mmcf gas per day during at 32/64" fixed choke size at flowing wellhead pressure of 1658 psi. A DST is a procedure for isolating and testing the surrounding geological formation through the drill stem.

Copyright Associated Press of Pakistan, 2011

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Gas supply and purchase agreement with Turkmenistan: terms and conditions finalised, National Assembly told

The government on Monday informed National Assembly that terms and conditions for gas supply and purchase agreement between Pakistan and Turkmenistan have been finalised, which is expected to be signed this month subject to approval by respective authorities. This was stated by Parliamentary Secretary for Petroleum and Natural Resources Tariq Khattak during question hour, saying that governments of four participating countries in TAPI project ie Turkmenistan, Afghanistan, Pakistan and India have signed the political agreements-Inter-Governmental Agreement-IGA and Gas Pipeline framework Agreement-GPFA on December 11, 2010 for implementation of the project. Further the commercial entities from Turkmenistan (Turkmen Gas) and Pakistan (Inter-State Gas System Ltd- ISGS) have already singed the Heads of Agreement-HOA for Gas Sales and Purchase Agreement-GSPA, he added. The House was told that the terms and conditions of bilaterally GSPA between ISGS and Turkmen Gas have been finalised and planned to be signed by the end of this month subject to the approval by the respective authorities. The Minister also told the House that preparatory work on Pakistan-Iran gas pipeline project has been completed and the actual work would begin on Pakistani side for lying of the pipeline after completion of the tendering process. He said the Iranian gas would be inducted into the system of the Sui Southern Gas Pipeline Limited at Nawabshah where it would be utilised for power generation. He said the Iranian gas will generate 40,000 MW electricity, which will help in eradicating power load-shedding. To a supplementary question, he said that the price of CNG has been increased six times since January 2008, whereas price of petrol and kerosene increased by 21 times each and that of diesel by 24 times during this period on account of increase in international prices. Minister for Law, Justice and Parliamentary Affairs Maula Bakhsh Chandio told the House that there was no proposal under consideration of the Election Commission of Pakistan (ECP) to constitute new constituencies, but an exercise was underway for minor changes in the existing limits of the constituencies to make them compatible with new electoral rolls. He said that the ECP has set up a committee to undertake the word relating to re-description of existing constituencies of the National and Provincial Assemblies, the report of which is expected to be submitted in a month. To a supplementary he said the new voters lists were expected to be finalised in March next year. Minister for Science and Technology Mir Changez Khan Jamali told the House that a water disinfection tablet with trademark of "Mahfooz Pani" has been developed having capability of disinfecting 20 litres of drinking water with one tablet. A packing of 30 tablets would cost 75 rupee and efficacy of the tablet has been tested by relevant organisations. He said Pakistan Council of Scientific and Industrial Research has invented 253 technologies and process in various industrial disciplines, of which 135 have been commercialised while 118 were under process for the purpose. He said the Pakistan Council of Renewable Energies Technologies has installed more than 550 micro hydel power plants with total generation capacity of nine megawatts electrifying eighty thousand households. It has also installed 155 small wind turbines with a total capacity of 100 KW in Sindh and Balochistan, electrifying more than 1550 hourse, he said, adding that 300 hundred solar PV systems have also been installed to electrify 500 houses, mosques and schools besides 4000 biogas plants. The Minister said Pakistan Science Foundation has developed some process and technologies at lab scale and further research is required for their commercialisation. These include green tea processing; design, fabrication and installation of photovoltaic system and solar dryer for apricot, he added.

Copyright Business Recorder, 2011

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Enhancing operating role: smaller E&P companies will be allowed to join consortia

The government would allow smaller local oil and gas Exploration and Production (E&P) companies to join consortia of other E&P companies as non-operator to gain the necessary experience, so as to expand capacity to take on operating role in future, it is learnt. Sources in the Ministry of Petroleum and Natural Resources told Business Recorder on Monday that at present majority of the small Pakistani E&P companies do not have requisite operating experience in the petroleum sector. "All such companies would be required to either enter into an agreement with an internationally renowned E&P/services company acceptable to Directorate General of Petroleum Concessions (DGPC) or a high calibre technical and management team with proven track record of overseeing and managing operations in the international petroleum industry," they added. The officials maintained that all companies having joined consortia of companies in a concession and have gained at least three years experience, as a non-operator will be eligible to become operator subject to demonstration of technical and financial capability. Each company interested in acquiring petroleum right will be required to furnish the details as to the nature of and the principal place of business of the company, the authorised, subscribed and paid-up capital of the company, the names and nationality of the directors thereof and the names and holdings of the principal shareholders. In addition, every company other than the existing operator of a license/lease should also furnish evidence as to his financial and technical qualifications and as to his ability to conduct the activities under the relevant petroleum right in accordance with the good oilfield practices. They said in the upcoming Petroleum Policy 2011 all local and foreign companies presently operating in Pakistan would be eligible to acquire petroleum rights. Foreign companies not operating in Pakistan but having operated concessions in other geographical areas of the world will also be eligible to acquire petroleum right subject to demonstration of technical and financial capability.

Copyright Business Recorder, 2011

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Iran may extend domestic pipeline into Pakistan

It is probable that Iran would extend its domestic Iran Gas Trunkline 7 (IGAT-7) pipeline into Pakistan, avoiding the creation of a new, parallel pipeline, according to an analysis carried by Eurasia Review. "A controversial pipeline proposal is the $7.4-billion Iran-Pakistan-India (IPI) line which would transport Iranian natural gas south to the Asian subcontinent," said the analysis. It argued that with a proposed 1,700 miles and a 5.4 Bcf/d capacity, the pipeline has been stalled in the past due in part to disputes over the cost of the shipments. "Iran and Pakistan have finalised gas sales and purchase agreements, but without India's participation in the negotiations," according to it.

Copyright Business Recorder, 2011

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