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News Headlines for the month of
FEBRUARY 2012

200 megawatts Thar coal-based Engro Power Plant: Rs 22.04 billion project to connect plant with NTDC's system

The government will launch 'Interconnection of Thar Coal-based 1200 MW Engro Power Plant with National Transmission & Despatch Company (NTDC) system' project at a cost of Rs 22.04 billion with the objective of providing consistent power supply to industrial, agricultural, commercial and domestic consumers. The cost includes Rs 14.845 billion Foreign Exchange Component (FEC) and Rs 7.19 local component. The project is likely to be financed by Japan International Co-operation Agency (JICA) or through Irish Credit Bureau (ICB) on buyer's credit basis and sponsored by the NTDC. The location of the project is District Matiari, Sindh and it is aimed at providing adequate facilities for reliable and stable transmission of electrical power, keeping in view the growing demand of domestic, commercial, industrial and agricultural customers of Discos. The project would disperse bulk power from 1200 MW Engro Power at Thar to up country by constructing 500kv D/C transmission lines, 250km long, from the power plant at Thar to Matiari with extension at existing 500kv grid station of Matiari. According to documents available with Business Recorder, Thar Coal Energy Board has been established to promote and facilitate the public and private sector coal industry. Thar coal deposits have been rapidly recognised as a major energy resource with the potential to transform the energy equations in the country. Therefore, initially the intent is to develop Thar coal mine for generation of electricity from two 1200 MW Power Plants - one by Engro in private sector and another in public sector by PEPCO. Ministry of Water and Power had decided in a meeting of Thar Coal Energy Board that NTDC would immediately prepare a work plan for providing the inter-connection arrangements for dispersal of power of these power plants. According to the document the NTDC has planned a transmission scheme for evacuation of power from 1200 MW Engro Power Plant with the following scope: considering that the proposed third 500kv Jamshoro Moro-R.Y. Khan Transmission Line and 850 MW Wind Power plant is constructed before its completion. A memorandum of understanding (MoU) between PEPCO and Sindh Engro Coal Mining Company (SECMC) for detailed feasibility study had been signed. Sindh Engro Coal Mining Company has carried out detailed feasibility study for coal mining for both power plants. The expected date of completion of the coal mining project is December 2015 while the two Thar coal-based power plants of 1200 MW each is 2015-16. According to official sources, High Voltage Direct Current (HVDC) transmission lines will be required for evacuation of additional generation at Thar in the year 2015-16 and onward as well as the power generated from the proposed power plant. They said that in case future generation at Thar does not mature during the next two years while AES imported coal power plant and 1000 MW import of power from Iran does mature then 525km single circuit AC transmission line from Matiari to R.Y Khan would be required in future for the dispersal of this power. According to the documents, load flow studies have been carried out which makes the following assumptions: ----- The gross and net output capacities for Engro coal power plant have been assumed as 1200 MW and 1134 MW, respectively. ----- AES imported coal plant with net capacity of 1134 MW in coastal area near Karachi and significant amount of wind power generation in Sindh province. ----- 1000 MW import of power from Iran. -300 MW load of Al-Tuwariqi Steel Mill fed through a 220kv DC line for NKI. Export of power from NTDC to KESC as 650MW etc.

Copyright Business Recorder, 2012

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Schneider Electric launches 2 new world-class switchgear products

Schneider Electric, the Global Specialist in Energy Management Monday launched two new world-class switchgear products ie, Blokset and Prisma iPM for the first time in Pakistan. Developed at their state-of-the-art plant located at Karachi, Schneider Electric becomes the first company in the country to manufacture the IEC 61439 compliant LV Switchgear, Mazhar Valjee, Managing Director, Schneider Electric Pakistan (Pvt) Ltd, said while addressing a function held in connection with the launching ceremony of the products. He added that launching of the two new 'energy-saving' products is a significant breakthrough after the successful transfer of technology by Schneider Electric to Pakistan to meet the challenges being faced here such as devastating fire accidents inside buildings, commercial markets and industrial locations. Mazhar Valjee said, "Schneider Electric envisions immense potential in the Pakistan market to grow and evolve in areas of energy and energy conservation. As a global leader, the company remains committed to offering our customers the most robust and innovative products to streamline and support the energy sector." He said "The new products offer a complete turnkey solution to revamp or build new plants and develop electrical architecture for safe and reliable operations; it assures peace of mind, enhances productivity and also provides protection against electrical hazards. Since the country is facing a daunting challenge of managing energy requirements, Schneider Electric Pakistan commits to providing world-class energy and power products, as well as reliable solutions to its valued customers." Valjee added Schneider Electric offers integrated solutions to make energy safe, reliable, efficient and productive for Infrastructure, Industry, Data Centers & Networks, Buildings and Residential markets. It may be noted that world energy consumption has risen 45% since 1980 and it is projected to be 70% higher by 2030. Schneider Electric helps organisations and residential complexes to achieve up to 30% energy savings using existing offerings and cutting-edge technologies.

Copyright Business Recorder, 2012

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Iran keen to help reduce energy shortages in Pakistan: 100 megawatts power project to be completed soon

Iran is seriously working to overcome the energy crisis of Pakistan, said Iranian Consulate General Mohamamd Hossain Bani Asadi on Saturday. He was talking to Faisalabad Chamber of Commerce and Industry (FCCI) office bearers and its business community, wherein a large number of exporters and industrialist were also present at the occasion. He said Iran wants to boost bilateral ties with Pakistan and our embassy will issue business visa on same day and one-year multiple visa may also be issued to the Pakistani Businessmen. He further added that Pakistan is a big producer of milk and meat in this regard meat and milk may also be exported to Iran. He also appreciated the textile industry of Faisalabad, which is contributing in economic development of Pakistan. He stressed to work jointly for the betterment of trade relations. Iran had laid the gas pipe line in very short time; Pakistan may initiate to develop the infrastructure for the import of gas. Iran is keen to minimise the energy shortage of Pakistan in this regard 100MW electricity project will complete in one and a half year and a 1000MW project from Zedan to Quetta is also under discussion, he added. The consulate is also arranging Iranian Products Exhibition at expo centre Lahore in third week of April. Earlier, in his welcome address, President FCCI Muzammil Sultan said that Faisalabad alone has been contributing about 40-50 per cent of the total textile exports of the country during the last many years. There is tremendous trade potential between the two countries. It is pertinent to mention that during the Pak-Iran President's meeting in Islamabad, rail and road links between the two countries, energy projects, the early realisation of the Iran-Pakistan gas pipeline, and other projects of regional connectivity were also discussed. Furthermore, expeditious implementation of the Iran-Pakistan gas pipelines project and the 1,000 MW electricity transmission line and 100 MW Gwadar Port power supply in order to meet the country's growing demand for energy and power. He further added that Iran is Pakistan's important trading partner but still there is a wider scope of co-operation to enhance our bilateral trade. Trade between the two countries is heavily tilted towards Iran and this can be gauged from the fact that in the last financial year the size of bilateral trade between the two sides was at Rs 1.491 billion, out of which exports from Iran stood at $1.233 billion. During question answer session, former vice president FCCI Engr. Sohail Bin Rashid, Chaudhry Asghar Ali and Chaudhry Jameel Ahmad, Chaudhry M. Boota, Rana Sikandar Azam, Abdul Sattar Alvi, Haji M. Abid, Malik Muhammad Arshad and Haji M. Basheer also highlighted issues before the Consulate. At the end of meeting Vice President, FCCI Rehan Naseem Bharara offered vote of thanks, whereby President FCCI Muzammil Sultan presented the FCCI Memento to the Consulate.

Copyright Business Recorder, 2012

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PAEC granted operating licence of Chashma NPPU-2

Pakistan Nuclear Regulatory Authority (PNRA) Chairman granted the operating licence to Pakistan Atomic Energy Commission (PAEC) Chairman for operation of Chashma Nuclear Power Plant Unit-2 (C-2), which is a 325MW nuclear power plant constructed at Chashma in District Mianwali. The licence was granted at a ceremony held at PNRA headquarters, Islamabad here on Saturday. The important prerequisites that preceded the grant of the operating license included provision of a construction license in March 2006, issuance of fuel load permit in December 2010 and provision of grid connection on March 15, last year. The ceremony was presided over by Dr Ashfaq Ahmad, senior advisor to Planning Commission of Pakistan, who is also former chairman PAEC and a pioneer of nuclear power programme in Pakistan. Jamshed Azim Hashmi, former chairman PNRA and Pervez Butt, former chairman PAEC were also present along with other distinguished guests. Chashma C-2 Plant has an improved design over its earlier version called C-1, which has been operating safely for the last 10 years with good safety and performance record. Its availability factor is above 95 percent, which is higher than other power plants in Pakistan. Furthermore, the operation of C-1 plant has no adverse effect on the environment. In the improved C-2 Plant, several design improvements have been made on the basic of national and international operating experience feedback. This plant has better immunity against severe accident situations including disasters such as the recent Fukushima accident. Through its regulatory review, assessment and inspections regime, PNRA has ensured safety during all phases including sitting, design, construction, installation and operation of the Plant. The Plant site is safe from natural as well as man-made hazards, as the design is robust and is based on proven technology. Furthermore, the construction, installation and commissioning is conducted as per international standards. It has also been ensured that the operation would not pose any additional radiation risk to environment and general public. PNRA sought the services of international experts during the process including those from the International Atomic Energy Agency (IAEA). The grant of operating license to C-2 Plant depicts that through its immaculate regulatory process, PNRA is fully satisfied about the safe operation of the Plant.-PR

Copyright Business Recorder, 2012

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Chaklala, Taxila, Mirpur: capacity of power grid stations enhanced

IESCO has enhanced the capacity of Chaklala, Taxila and Mirpur (AJK) grid stations by installing new power transformers. IESCO has installed 40 MVA new power transformer, replacing the existing one of 20/26 MVA in 132KV Chaklala Grid Station, while 20/26 MVA new power transformers were installed in 132KV Taxila and Mirpur grid stations. After the installation, consumers of the concerned areas would get smooth power supply and better voltage. The move will also help control overloading issues.-PR

Copyright Business Recorder, 2012

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US committed to assisting Pakistan in power sector: Melissa

Energy Office Director USAID Mission to Pakistan, Melissa Knight on Friday said that United States (US) is committed to assisting the government of Pakistan in improving the power distribution system in order to cope with the energy crisis. Speaking at a ceremony to send a group of senior human resources officials from Pakistani Power Distribution Companies (Discos) to Washington D.C and Baltimore, she said that US would assist public sector power distribution companies to improve their operations, and reduce lines losses. Ultimately, these steps would ensure smooth and reliable power supply to the consumers, she added. Knight said that energy is crucial for growing economy and creating job opportunities. She said that US government also supported Pakistan in construction of mega hydel projects including Tarbela and Mangla dams and Guddu Power Plant. She said that these Discos' human resources officials would travel to US from February 27 to March 2 and also visit US power utilities to gain experience. The exchange tour was organised by US government to strengthen human resources management at Discos, she added. During their exchange visit, Discos managers have an opportunity to observe operations at several well run power utilities. The programme will include presentation, site visits and round table discussion to address specific topics related to human resources management, training and change management at distribution companies. Speaking on the occasion, Deputy Secretary Ministry of Water and Power Aftab Nadeem said that the training would provide opportunities to Discos officials to learn more techniques. He said that it would be third group of Discos officials who would gain training from US. It is pertinent to mention here that during the first two tours, Discos managers traveled to Turkey and South Africa. In Turkey, Discos managers focused on the operations of commercial, financial and customer information system while in South Africa, they learned about engineering, planning and operation management. The 3-year USAID Power Distribution Programme was announced by Secretary of State Hillary Clinton in 2009, as one of the US efforts to support Pakistan's energy system. Through this programme, the US government provides assistance to Pakistan in its efforts to reform the power sector to mitigate the energy crisis.

Copyright Associated Press of Pakistan, 2012

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'60,000 megawatts electricity can be produced through coal'

Governor Punjab Latif Khosa said on Thursday that Pakistan can produce 60,000MW electricity through coal to meet its demand of next 100 years besides other resources including wind and solar. He passed these comments during his meeting with a delegation of Save Water, Save Pakistan Forum headed by Engr. Bashir A. Malik. The Governor appreciated the efforts of the Forum to resolve water and energy crisis in Pakistan. He assured the delegation of all possible measures to combat water and energy crisis. Engr. Bashir A.Malik said 70 percent electricity is from hydro-power world-wide, a cheapest source and 30 percent through other sources. While in Pakistan, he said, it is other way round, as less than 30 percent is produced through water and 70 percent from other resources. He said if five-dam plan of the government is not implemented by 2016 including Kalabagh Dam than Pakistani population will have to face severe food, water and energy shortage by 2025. He said construction of 200 small dams would not be able to produce equivalent to one large Kalabagh Dam.

Copyright Business Recorder, 2012

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FFCEL's wind energy project to begin trial production in June

FFC Energy Limited (FFCEL), a subsidiary of Fauji Fertilizer Company Ltd, is in its final stage of completing Pakistan's first 50-megawatt wind energy project at Jhampir, District Thatta of Sindh. The project will start its trial energy production from June 2012, which would be provided to national grid free of cost till the start of commercial operation in November this year. This was stated by Brigadier Tariq Izaz (Retd), Project Director Wind Power, during a visit of journalist's delegation to the project site on Thursday. Izaz was of the view that Pakistan had the potential of producing up to 346 GW of electricity through wind energy alone, provided the country's wind energy potential was fully utilised. Pakistan would be well ahead on the path of energy security and prosperity if utilisation of the indigenous energy resources was ensured. Giving details, he said the company acquired 1,283 acres of land for the project and had invested about US $135 million on the project. Currently the company was installing 33 wind turbines, he said adding that 60 percent work on the project had been completed He further said that seven wind turbines had already been installed and 25 towers were in different manufacturing stages at Bin Qasim. "Construction of 3-km access road, 18-km internal roads, culverts over SSGC gas line and temporary site facilities has been completed whereas construction of watch towers, substation, workshop, dormitory and crane pads is in progress," he informed. The Project Director said that the power purchaser, NTDC had also started work on construction of grid connection to the site and 10 out of 28 transmission towers had been erected. He informed that the FFCEL started work on the project in March 2007 after the land allocation by AEDB (Alternate Energy Development Board) and a license was obtained from Nepra. During the visit, experts pointed out that Pakistan was one of the few countries having rich renewable energy resources in all three avenues of wind, solar and hydel. "Each of the areas has a potential of above 60,000 MW and we are using a mere 11 percent of the hydel resource only." They regretted that many countries in the world had launched successful programmes for the development and exploitation of alternative and renewable energy resources, but Pakistan had so far failed to utilise its wind, hydel and solar resources.

Copyright Business Recorder, 2012

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KESC converting six units to coal-fired technology

The Karachi Electric Supply Company has embarked on a project first of its kind in Pakistan, with the aim to convert its 1,260 MW (210 MW x 6 units) Bin Qasim Power Plant into Coal-fired generation plant. This project will have a step-wise execution, the phase-one of which will see the conversion of 2 units, with a generating capacity of 420 MW. Replacing residual fuel oil (RFO)-based boilers with coal fired technology would help KESC in attaining fuel security by diversifying its existing fuel mix, better utilisation of existing fleet and, most importantly, aid in reducing cost of power generation, ultimately providing the consumers relief by lowering of the end-user tariff. The KESC is gearing itself to take the pioneering role for coal conversion in the country and is currently in the process of finalising its feasibility study through a reputed US based consultant, 'Knight Piesold', having extensive world-wide experience in coal based projects. The first phase of the feasibility study has been completed, demonstrating technical and economic viability of the project. The second phase of the feasibility study, which involves detailing of the engineering design work flow, is now underway. In the near future, KESC will also be approaching Nepra for relevant approvals, related to this project. To set the above in motion, the KESC has signed a $200 million, Joint Development Agreement (JDA) with 'Bright Eagle Enterprises' (BEE), a Hong Kong-based investment company, sponsored by Chinese and Korean investors. For the purpose of this project, Bright Eagle Enterprises has teamed up with leading energy companies from China, namely China Resources Power (a multi-billion dollars state owned power plant, owner and operator) and China National Technical Import and Export Corporation. Commenting at the signing ceremony, Ping Chen, Chairman of Bright Eagle Enterprises, also Chairman of Sun TV Hong Kong, and Tide-time, said: "We are delighted to work with KESC on its oil-to-coal conversion project, and remain committed to its successful completion. We applaud KESC management's innovative approach to reduce the cost and increase the availability of electricity to Karachi. 'Bright Eagle' is proud to be associated with this project which will help the people of Karachi." Marking the event, the CEO of KESC, Tabish Gauhar, said: "This ground-breaking initiative will set the course for the country's power sector that is heavily dependent on RFO. Conversion to coal is the only sustainable option, and KESC's lead in this area will set an example for others to emulate". -PR

Copyright Business Recorder, 2012

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UN plans solar energy for 33 million people in Africa, Asia

Low-cost solar panels and solar batteries will be provided to poor communities in 14 countries in Africa and Asia in the next four years, the UN Development Programme said Thursday. A total of 33 million people in the 14 countries will be able to make use of solar energy for commercial businesses and economic development, using the solar panels to be developed by a Mauritius-based company called ToughStuff, UNDP said. UNDP estimates use of solar energy would save 520 million dollars normally spent annually on the purchase of kerosene or biomass fuel in low-income villages in the 14 countries. The 10 African countries targeted for solar panel distribution are Burundi, Cte d'Ivoire, the Democratic Republic of the Congo, Ethiopia, Malawi, Mali, Mozambique, South Sudan, Zambia and Zimbabwe; and the four South Asian countries are Bangladesh, India, Pakistan and Nepal. UNDP said 1.4 billion people of the world's population of 7 billion have no access to electricity and use of biomass fuel in poor communities could cause cancer in an estimated 1.5 million people by 2030.

Copyright Deutsche Presse-Agentur, 2012

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Munda Dam project: WAPDA signs Rs 611.5 million accord

Water and Power Development Authority (Wapda) on Thursday signed an agreement worth rupees 611.5 million for preparation of detailed engineering design and tender documents of Munda Dam Multipurpose Project here in Governor's House. The joint venture, comprising Pakistani, Australian and Japanese firms has been assigned to complete the task in two years. Khyber Pakhtunkhwa Governor Barrister Masood Kausar, KPK Assembly Speaker Kiramtullah Khan Chagarmati, Fata parliamentarians, tribal elders, political elites and officials attended the signing ceremony. Briefing the participants on salient feature of Munda Dam project, it was stated that the Dam was proposed to be constructed on Swat River about five kilometres upstream of Munda Head works in Mohmand Agency. The project on completion would mitigate floods, develop irrigated agriculture and generate hydro power with installed capacity of 740MW to add around 2,407 million units of energy on annual basis to the total energy production. It was further stated that Munda Dam was a priority project in the wake of floods 2010 that played havoc in the country particularly Charsadda and Nowshera districts. After completion of detailed engineering design in two years, Munda Dam project will enter in construction phase, which is estimated to cost dollars 1,401 million and will be completed in seven years' period. The project will store 1.29 million acre feet of water and also 300 million cubic meter floods of River Swat, restricting accumulation of its peak flows with that of Rive Kabul. Annual benefits of the project have been calculated at Rs 20.2 billion. AFD of France has shown interest to provide financial assistance for design as well as construction phase of the project. Governor Khyber Pakhtunkhwa Barrister Masood Kausar, while addressing the ceremony, described the Munda Dam multipurpose project a significant headway towards Fata development, adding that it would open more avenues of progress and prosperity in Mohmand Agency in particular. He said it was the second mega project initiated in Fata in three-month period the first being the Kurram Tangi Dam. This, he added was a clear manifestation that peace had been restored in Fata where more such projects would be taken in hand shortly. He said the President and the Prime Minister had set very candid priorities with regard to Fata that included restoration of peace and initiation of a fast pace development process to benefit the common tribesmen. He said that Fata was no more a terrorist hideout rather now it was a peaceful area and the tribal people were as patriotic and peace loving as other Pakistanis. He said terrorism was imposed on the tribesmen that badly damaged the soft image of Fata but now the situation was improving. The Governor thanked the international community and friendly countries and organisations for their generous assistance in the Fata development and hoped that they would continue to play their role in this regard. The ceremony was also addressed by Wapda Chairman Shakil Durrani and representatives of the respective international firms. Copyright Business Recorder, 2012 Energy sector: Germany ready to provide all possible assistance: CG February 16, 2012 Dr Tilo Klinner, Consul General of Germany, said that Germany is ready to provide all possible assistance to Pakistan in energy sector in order to overcome its ongoing energy crisis. Speaking at Korangi Association of Trade and Industry (KATI) on Tuesday, the German Diplomat said that there are several options of alternative energy resources including wind-power, solar and thermal power and Germany is already providing some solutions to Pakistan's energy sector. He urged on image building of Pakistan especially Karachi in order to make it attractive for foreign investors. "Peaceful Karachi is very important and we can work together in this regard", Dr Klinner said adding that he is already doing public relation services for Pakistan especially Karachi. He agreed to the proposal of KATI's Chairman of Standing Committee on Diplomatic Affairs, Masood Naqi, that a group of prominent journalists should come to Pakistan and let them witness the peaceful environment of Pakistan. Dr Klinner also responding to the Chairman PRGMEA, Shahzad Salim to provide technical and vocational assistance to Pakistan's skill training institutes. He also assured to visit Pakistan Readymade Garments Technical Training Institute (PRGTTI). Regarding GSP Plus to Pakistan he said that it would be approved by EU members after the ratification by the WTO. While observing that Pak-German balance of trade in 2010-11 was tilted in favour of Pakistan, he acknowledged that German companies operating here are very contented with their investments. Convinced that "things are not as bleak as it seems," Dr Klinner said while maintaining that to attract foreign investments Pakistan needed stable and reliable political situation, assured his diplomatic post's support to undo the negative perception created by media about Pakistan via counter narrative. He pointed out the recent issue of Time Magazine's negative portray of Karachi. He, however, said that German investors are asking questions regarding payments to IPPs and circular debts, etc.: "You help us to make the decision makers understand." Dr Klinner invited Pakistani business community to a number of fairs and exhibitions being held in Germany.-PR

Copyright Business Recorder, 2012

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Energy sector: Germany ready to provide all possible assistance: CG

Dr Tilo Klinner, Consul General of Germany, said that Germany is ready to provide all possible assistance to Pakistan in energy sector in order to overcome its ongoing energy crisis. Speaking at Korangi Association of Trade and Industry (KATI) on Tuesday, the German Diplomat said that there are several options of alternative energy resources including wind-power, solar and thermal power and Germany is already providing some solutions to Pakistan's energy sector. He urged on image building of Pakistan especially Karachi in order to make it attractive for foreign investors. "Peaceful Karachi is very important and we can work together in this regard", Dr Klinner said adding that he is already doing public relation services for Pakistan especially Karachi. He agreed to the proposal of KATI's Chairman of Standing Committee on Diplomatic Affairs, Masood Naqi, that a group of prominent journalists should come to Pakistan and let them witness the peaceful environment of Pakistan. Dr Klinner also responding to the Chairman PRGMEA, Shahzad Salim to provide technical and vocational assistance to Pakistan's skill training institutes. He also assured to visit Pakistan Readymade Garments Technical Training Institute (PRGTTI). Regarding GSP Plus to Pakistan he said that it would be approved by EU members after the ratification by the WTO. While observing that Pak-German balance of trade in 2010-11 was tilted in favour of Pakistan, he acknowledged that German companies operating here are very contented with their investments. Convinced that "things are not as bleak as it seems," Dr Klinner said while maintaining that to attract foreign investments Pakistan needed stable and reliable political situation, assured his diplomatic post's support to undo the negative perception created by media about Pakistan via counter narrative. He pointed out the recent issue of Time Magazine's negative portray of Karachi. He, however, said that German investors are asking questions regarding payments to IPPs and circular debts, etc.: "You help us to make the decision makers understand." Dr Klinner invited Pakistani business community to a number of fairs and exhibitions being held in Germany.-PR

Copyright Business Recorder, 2012

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Hydel generation increases by 1,000 megawatts

Hydel generation increased by 1,000MW, which taking the total power generation to 9,000MW against 8,000MW last week. Sources said that the improvement in water releases has resulted the increase in power generation, it likely to increase further ahead. However, release of funds for purchase of furnace oil to thermal units is yet awaited, leaving the thermal units short of capacity. It may be noted that the federal government has been delaying release of funds to PSO for furnace oil since the end of canal desilting campaign. Prior to it, the Prime Minister had issued special instructions to the Ministry of Finance for release of funds to PSO for smooth supply of furnace to thermal units in the country. The thermal units are running below capacity due to short of fuel. A total of 6,000MW is being generated through thermal sources against a capacity of over 12,000MW. As a result, the system is yet facing acute shortage of about 3,500MW putting the industrial sector production into a compromising situation.

Copyright Business Recorder, 2012

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Joint exploration of hydropower: Pakistan, Qatar may sign two MoUs

Pakistan and Qatar are likely to sign two Memoranda of Understanding (MoUs) according to which the two countries will jointly explore development of hydropower, identification of sources of financing, exploration of investment opportunities in energy sector, rehabilitation of existing hydropower plants and construction of National Highway and Motorway infrastructure, official sources told Business Recorder. These MoUs, sources said, will be inked during the visit of Prime Minister Yousaf Raza Gilani, scheduled for February 6-8. They said that a draft of MoU has been prepared which will be signed between the Ministry of Water and Power and Ministry of Energy, Qatar. The objective of this MoU is to strengthen bilateral relations bet.een the two countries, which will accelerate the process of providing energy access and sustainable power and water sector development co-operation for the benefit of both countries. The Ministry of Energy of Qatar and Pakistan's Ministry of Water and Power will cooperate in accordance with the MoU, subject to the relevant laws of each country, to jointly explore different avenues of co-operation. The MoU will take effect on the date of its signing and will remain in force for a period of three years, unless earlier terminated or extended by mutual consent of the two countries. Sources said that Ministry of Water and Power has examined the MoU and supports its signing as it pertains to hydropower development through joint research, transfer of technologies and capacity building. However, for procurement or construction of projects and in order to ensure transparency, relevant rules, instructions, international competitive bidding (ICB) and PPRA Rules shall be followed. The MoU was referred to Law Division for vetting on January 30, 2012. Since the MoU will be signed during the Prime Minister's visit to Qatar in the first week of February, the Ministry of Law and Justice should give its opinion in the Cabinet meeting. Sources said that to create fiscal space to fund important projects of highways and motorways another MoU is likely to be signed with Qatar on provision of financial assistance through Qatar Development Fund (QDF). Prime Minister, sources said, is also expected to discuss Afghanistan situation with his Qatari counterpart, in addition to situation in Arab countries. Last month, Director General Inter Services Intelligence(ISI), Lieutenant General Shuja Pasha (retired) visited Qatar to discuss matters relating to Afghanistan after which the United States of America (USA) allowed Afghanistan-based Taliban to open their offices in Qatar, aimed at facilitating talks between Afghan government, USA , Pakistan and other stakeholders. Foreign Minister Hina Rabbani Khar visited Kabul last week where she held meetings with her counterpart and Afghan President Hamid Karzai and discussed different options for peaceful resolution of Afghanistan dispute.

Copyright Business Recorder, 2012

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Advance metering system, reduction of network losses: Rs 30.4 billion NGE Project to be launched

The government would launch "Natural Gas Efficiency Project (NGEP)" worth Rs 30.4 billion (Rs 19.66 billion loan from World Bank, Rs 4.95 billion from local bank and Rs 5.79 billion from internal funds) for installing modern technology to detect and curb gas theft through advance metering system and reduction of network losses due to underground and overhead leakages. According to documents available with the Business Recorder, the project would improve distribution network and efficiency of Sui Southern gas Company Limited (SSGCL) in terms of reduction in Unaccounted for Gas (UFG). The project is expected to cost Rs 30.4 billion including interest capitalisation of Rs 1.2 billion and revenue cost element of Rs 6.1 billion during implementation period of five years. The Project financing is assumed to be 80 per cent through World Bank and local bank borrowing while 20 per cent from the Company's internal transfer of fund expect for the segment like training. The World Bank Loan is relent @ 11.80 per cent on outstanding balance by the Government of Pakistan (GoP) and repayable in 15 years with grace period of 5 years. While the local loan is assumed to be repayable in 5 years including 2 years grace period with mark-up at KIBOR plus 150 Basis Points. The project will result in saving of precious national resource with the reduction of Unaccounted for Gas (UFG), the gas so available will be provided to power and industrial sectors which will in turn result in reduction of power load shedding and increase economic activity. The project will be for five years while Result Based Monitoring has been recommended by the Planning Commission as yardstick to monitor the Project. With the passage of time, the Company is facing huge problems including deteriorated pipelines, malfunctioning, tampered-with-meters, gas leakage due to higher than required pressure and gas theft etc that with the existing resources and capabilities has become extremely challenging to bring the losses down to an acceptable level. According to document, during the five years plan period UFG reduction programme to be used in the form of replacement of deteriorated pipelines, underground leakage survey and rectification, cathodic protection upgrade, installation of pressure management system and advanced metering infrastructure leading to smart meters and improvement of surveillance at industrial customer meter station/gas connection point etc. Distribution network rehabilitation is comprising Sales Metering Stations (SMS), Customer Metering Stations (CMS) Cathodic Protection set-up, valve assemblies, regulators and pressure relief valves etc. Advance metering system will replace old meters that are inaccurate and prone to tampering. Surveillance equipment will also be procured to monitor gas theft at metering stations. About 270 turbine meters will be procured for large industrial customers and about 12,500 ultrasonic meters for industrial and commercial customers. Data acquisition and monitoring systems as well as meter provers will also be procured. For the measurement system improvement, auto adjusts turbine meters for industrial customers and ultrasonic meter for commercial customers would be installed. After installing new system, the facility to dial customer meter station atomically at pre-determined time and download Electronic Volume Corrector data. The system would also scrutinise low pressure and genuine complaints can be passed to measurement maintenance team. The suspected customers can continuously be monitored from SSGC control room. The length of distribution network is of 39,253km (Karchi 14,786km interior Sindh 17,626km and Balochistan 6,841 km). Similarly, an additional 18,700km network, comprising critical segments where deteriorating is high, will be surveyed. For completion of the Project, Rs 16.23 billion would be spent on rehabilitation of distribution system, Rs 999.5 million for underground leak rectification, Rs 3.63 billion for metering equipment, Rs 2.74 billion for cathodic protection, Rs 1.89 billion for segmentation and pressure management, Rs 659.35 million for vehical and equipment, Rs 3.25 billion for overhead leak rectification, Rs 467.6 million for appliances efficiency pilot project and Rs 553.1 million for technical assistance.

Copyright Business Recorder, 2012

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Energy projects: Pakistan, Qatar agree to form JIC

Pakistan and Qatar have agreed to form a Joint Investment Company (JIC) to co-operate in the fields of hydropower and offshore as well as onshore oil/gas exploration and production. The decisions took place here on Thursday during the second session of Pak-Qatar Joint Ministerial Commission jointly chaired by Dr Asim Hussain, Special Assistant to Prime Minister on Petroleum and Natural Resources and Dr Mohammad Bin Saleh Al-Sada, Minister of Energy and Industry of the Government of Qatar. Pakistan invited Qatar to invest in the following sectors: Development of hydropower sector in Pakistan, petroleum exploration and production activities in Pakistan and Pakistan's Offshore Oil exploration. The Qatari team also agreed in principle with Pakistani proposal to establish a Joint Investment Company and requested for a draft agreement on JIC. Pakistan also requested Qatar to support its cause for Free Trade Agreement (FTA) with the Gulf Co-operation Council (GCC) and Qatar assured Pakistan that it would consider Pakistan's request during the third round of Pak-GCC, FTA. Both sides decided to activate Joint Business Council (JBC) established during the visit of Prime Minister and expressed the confidence that activation of JBC would help promote interaction between business communities of the two countries. Qatari investors were invited to invest in the following sectors: Development of hydropower sector in Pakistan, Oil and Petroleum sector of Pakistan, Petroleum Exploration and Production activities in Pakistan and Pakistan's offshore oil exploration. Qatar team assured Pakistan to process these proposals with the relevant sectors. Both sides agreed on formulation of a Joint working group to determine the labour and manpower requirements of Qatar. Furthermore, Qatar also agreed with Pakistani request to get services of Pakistani construction companies/workers to carryout various projects relating to FIFA World Cup in 2022. Both sides also agreed to further enhance co-operation in the areas of health, science & technology and culture between the two countries. Both the delegations acknowledged deep historical, cultural and political relations between the two countries and expressed the hope that the current momentum in translating excellent political relations into commercial and economic interaction would further cement bilateral relations.

Copyright Business Recorder, 2012

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Private oil, gas companies:' government intends to provide a friendly investment environment'

Dr Asim Hussain, Special Assistant to the Prime Minister for Petroleum and Natural Resources has said that the government intends to provide a professional and friendly investment environment to private oil and Gas companies. He said this while chairing a meeting of the Exploration and Production (E&P) Companies on Wednesday, which was attended by Adam Thomson British High Commissioner in Pakistan on special invitation. Muhammad Ejaz Chaudhry Secretary Petroleum and Natural Resources, senior officers of the Ministry of Petroleum and Natural Resources, Ministry of Finance and Federal Board of Revenue (FBR) also attended the meeting. Representatives of Tullow Pakistan (Developments) Ltd, Shell Pakistan Ltd, BP Pakistan Exploration and Production Inc and Premier Oil presented the issues pertaining to Gas Development Surcharge and taxation. Dr Asim Hussain reiterated that the Ministry of Petroleum and Natural Resources would facilitate the E&P companies in every respect and a follow up with FBR and Finance Division would be ensured. It was informed that Tax rates have been rationalised in the Petroleum (Exploration and Production) Policy 2012.-PR

Copyright Business Recorder, 2012

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Imported LNG to help generate 2500 megawatts of power: Prime Minister inaugurates LPG plant

Prime Minister Syed Yousuf Raza Gilani Saturday said Pakistan would import 500 million cubic feet of LNG per day from Qatar, which would be provided to power houses to generate 2500 megawatt of electricity in the country. Speaking at the inaugural ceremony of SSGC LPG plant located at Port Qasim Industrial Area here on Saturday, the Prime Minister said during his recent visit to Qatar, Pakistan concluded a Memorandum of Understanding (MoU) with the government of Qatar for the import of 500 million cubic feet of LNG per day. Sindh Governor Dr Ishratul Ebad Khan, Chief Minister Syed Qaim Ali Shah, Federal Minister for Ports and Shipping Babar Khan Ghori, provincial ministers and high officials of SSGC, Port Qasim and other public sector entities were also present on this occasion. Gilani said the country was facing acute energy shortages for the last many years. The growing gap between demand and supply had hampered the socio-economic development of the country. However, he said, the energy crisis that the nation faced today was in fact the result of neglect by successive governments. An integrated and coherent 'power vision' should have been worked out by keeping the future energy demands in view. Ironically, he added, due focus was not given to this sector, which served as a lifeline to the engine of economy. He said the present government had undertaken some key mega projects to meet energy demands in the country. These projects include Diamir Bhasha dam, Thar Coal power project, Tapi project, and CASA-1000 in addition to dozens of small and medium-sized dams across the country. He reiterated that Pakistan was also committed to Iran-Pakistan gas pipeline project, which would help the country overcome its energy problems to a large extent. Not only would the implementation of these mega projects enhance overall energy supplies and provide energy diversity, it would also lead to a greater energy security. Gilani said that despite economic constraints imposed by natural disasters, energy deficits, global recession and the war on terrorism, macroeconomic fundamentals of Pakistan's economy were showing positive signs. Given the size and diversity of country's economy, its total energy requirements were expected to grow substantially during the next decade. It is in this context that achieving self-sufficiency is a key factor to keep the engine of economy running as well as meeting the future demands of the economic growth, according to him. He noted that Pakistan had been meeting 53 percent of its total energy requirements through indigenous oil and gas production, whereas other indigenous resources further helped the country meet 19 percent of its energy needs. The remaining 27 percent of the energy needs were currently being met through imports. The energy imports were likely to increase as domestic gas production and supply presently failed to meet the demand of domestic users, the industrial sector and power generation. He pointed out that due to their all-pervasive use by these sectors, the country's gas reserves might be insufficient to meet the rising demand and deplete fast. Such a situation would force the country to resort to importing large volumes of gas at international prices to feed the domestic market if local production was not enhanced in relation to demand. He said the escalating energy import bill would put the economy under stress and hamper country's economic revival. The government was alive to the dramatic changes that had taken place in the price and cost environment of the international oil and gas industry. The fluctuating nature of crude oil prices in the international market had posed serious challenges to global economies. Hence, reliance on imports could not be a feasible long-term solution, he added. The PM said the situation called for adopting a creative approach to respond to emergent energy challenge as well as work out a comprehensive strategy on a sustainable basis. He said the National Petroleum Exploration and Production Policy 2012 had been approved and the policy recognised the operating challenges and key considerations that faced Pakistan's oil exploration and development industry. It signified the government's commitment to providing fiscal and regulatory incentives to E&P companies, which would provide an impetus to them to speed up their exploration and development programmes with a view to maximising domestic oil and gas production in coming years. According to him, the core policy objectives of the National Petroleum Exploration and Production Policy 2012 are to accelerate Exploration & Production activities in Pakistan with the purpose to achieve optimum self-sufficiency in energy by increasing oil and gas production; to promote direct foreign investment in the country's energy sector by increasing competitiveness of its terms of investment; to encourage the Pakistani oil and gas companies to get fully involved in the investment opportunities and to promote increased E&P activity in the onshore frontier areas by providing globally competitive incentives. He said the salient features of this policy were indigenous production and decreased reliance on imported energy in a phased manner. It is in this background that recourse to LNG and LPG was critical to bridge the gap between demand and supply and ease pressure on local production. Due to its attractive geo-strategic location and immense natural resources, Pakistan has the potential to become the regional hub of economic activity. "However, what we need to make it happen is the continuity of policies and political will to stay the course," he said, adding that the present government was committed to making Pakistan a self-sufficient in energy production. "It gives me immense pleasure to inaugurate the SSGC-LPG Plant in Karachi today. At the outset, I would like to congratulate the management of SSGC and the Ministry of Petroleum & Natural Resources on this occasion," he said. Gilani also said the commissioning of this SSGC-LPG plant demonstrates the democratic government's commitment to meeting the acute energy needs of the country on a fast-track basis. The establishment of SSGC-LPG Terminal at Bin Qasim would greatly facilitate the handling of energy imports in the shortest possible timeframe. "This is the first ever fully integrated LPG plant constructed in the country," he said. Speaking on this occasion, Special Advisor to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain said Pakistan would need to import a large amount of its energy requirements over the next 20 years. He said a liberalised and deregulated Liquefied Petroleum Gas (LPG) sector would result in the standardisation of this market through free availability of this vital, clean and plentiful fuel, as opposed to the desire by the cartel to maintain the LPG market as a place where they could continue to make "super profits". He was of the view that the local production was expected to remain flat over the foreseeable future, while imports were expected to rise substantially to over 1.8 million MT by 2020 to cater for the increased demand for LPG, which had been growing at 8 percent annually. He said the LPG was a perfect fuel for domestic consumption due to its transportable and clean nature, thereby reducing indoor pollution and acting as a bridge fuel for consumers to graduate from biomass and kerosene to LPG and then to natural gas and electricity. He said it was important for gas companies to enter the market to supply LPG in cylinders in those areas where natural gas supplies were not available. "The displaced gas would become available for critical users of this fuel, specially the power sector," he added. Managing Director, SSGC Azeem Iqbal Siddiqui said the purpose of SSGC entering the LPG business was to supply LPG in bulk by importing large quantum of LPG and purchasing locally produced LPG from state and private producers and then selling it to all LPG marketing companies on a weighted average pricing model through auctioning the product on a month to month basis. "This will actually stop the quota culture, reduce overall prices and cartelization, increase availability and market completion," he said adding the benefit of this large supply of LPG would result in the demise of the black marketing LPG. Imports can only come through an import facility, hence the reason to purchase the Progas assets, he said. Eh said the SSGC-LPG terminal was critical to the country to be able to land energy imports in shortest possible time frame. It is the first fully integrated LPG plant ever constructed in Pakistan, according to him. There are five LPG storage tanks with a total capacity of 6,500 metric tons. The annual through-put capacity is two million metric tons of LPG, which is the largest in the country. The bottling facility is fully automatic and requires minimum staff to operate having 24 filling head LPG cylinders with a capacity of handling 7,000 metric tons per shift of LPG per month.

Copyright Business Recorder, 2012

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Coal gasification plant: PBIT to assist GCC in nomination of foreign partners

Punjab Board of Investment & Trade (PBIT) will assist Gujranwala Chamber of Commerce (GCC) in nomination of foreign technology partners for a coal gasification plant. The GCC will also nominate a consortium of companies for the plant. The nominated consortium of companies works together with the proposed technology partners and shall work to develop on-site coal gasification solutions for industrial units. This was announced during a visit of senior officials from PBIT to GCC where members of the GCC expressed concerns over the worsening energy crisis. On the occasion, President of GCC, Malik Zaheer thanked the Vice Chairman PBIT Dr Miftah Ismail and his team comprising Dr Sajid Yosufani, Dr Habib Gillani, Waqas bin Najeeb and Moazzam Husain for visiting GCC for initiating a series of important interactions between both the organisation for developing business climate in Punjab and supporting trade from this region. PBIT team also shared investment opportunities in agro processing, dairy, poultry and meat processing sectors with the members of GCC and assured to support and facilitate the investors. Replying to a question, Additional Commissioner Gujranwala said that CM's GT Road Beautification Project is underway and a number of play grounds are also being developed in Gujranwala. Members of GCC suggested an up gradation of manufacturing through engineering development for which PBIT offered its assistance. Gujranwala division is an important economic zone of Pakistan, which contains 60 per cent of Pakistan's overall SME's and contributes 30 per cent to Pakistan's total exports. Member National Assembly Bashir Virik, Additional Secretary Livestock, and DG Gujranwala Development Authority were also present at the occasion.

Copyright Business Recorder, 2012

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Iraq offers oil on deferred payment: talks soon, says Dr Asim

The government is going to start negotiations with Iraq for import of petroleum products on deferred payment. Dr Asim Hussain Prime Minister's Special Advisor for Ministry of Petroleum and Natural Resources, while addressing a press conference here on Wednesday said that the Iraqi government has offered crude oil on deferred payments. "A high level Pakistani delegation would soon visit Iraq to settle the modalities in this connection," Asim added. The minister said that within next 6 months, an additional 800 Million Cubic Feet per Day (mmcfd) gas would be brought into in the system through local reservoirs, but the country would still face serious gas shortage next year. Giving the reasons behind upcoming gas crisis, the advisor said that Sui Southern Gas Company Limited (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) are going to provide thousands of new gas connections to the domestic sector on the recommendations of the parliamentarians. He said provision of new gas connections on political pressure and use of natural gas by the transporters are major causes behind gas crisis. The advisor stressed the need for not giving new gas connections on political pressure, saying that if the trend continued both the gas utilities would cease to work. Consumers are paying the cost of new gas pipeline projects, which should be shared by gas utility companies too, Asim said. He added that Council for Common Interests (CCI) has given formal approval to the new Petroleum Exploration and Production Policy 2012, according to which minimum wellhead gas price would be $6 per Million British Thermal Unit (mmbtu) and maximum would be $8 per mmbtu. He said the new petroleum policy focuses on brining more foreign as well as local investment in the country. Under the policy, the government has provided a number of incentives to the gas exploration and production companies, so that Pakistan's dependency on imported fuel could reduce, Dr Asim maintained. The ministry of petroleum in collaboration with SSGC and SNGPL has successfully brought down Unaccounted For Gas (UFG) to 11 percent from 14 percent, which within next 6 months would be brought down to single digit, he said. Gas production from Kunnar-Pasaki gasfield would be enhanced to 125 mmcfd from existing 100 mmcfd along with 135 tons per day production of Liquefied Petroleum Gas (LPG) by the end of next week. Petroleum ministry is working on drafting first-ever refining policy in the country. After the finalisation of refining policy, Pakistan's dependence on imported refined fuel would further decline, which would save millions of dollars for the country. Pakistan is also going to negotiate with Algeria import of Liquefied Natural Gas (LNG) and recently Qatar has also agreed with Pakistan to provide 500 mmcfd of LNG, which would be available in June 2013. Answering questions regarding dealing with the energy crisis, Dr Asim said that Pakistan needs to work on a reliable energy mix plan, saying that massive use of natural gas in CNG and domestic sector is waste of the reservoirs. Even in countries like Qatar having third largest global gas reservoirs natural gas is not being used by the domestic sector, he said, adding that people of Pakistan should shift from natural gas to LPG. The government is going to allocate four construction licenses for LNG each with a capacity of 200 mmcfd, he added.

Copyright Business Recorder, 2012

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Pakistan and Russia agree to promote bilateral relations especially in trade and energy

MOSCOW: Pakistan and Russia Wednesday agreed to promote and enhance the bilateral relations in diverse fields including trade, energy and people to people to contacts. Addressing a joint press along with her Russian counterpart, the Foreign Minister Hina Rabbani Khar said there has been a scope for cooperation between the two countries in different areas and all the aspects for improving cooperation have been discussed during the meeting of the two foreign ministers. Foreign Minister Khar is visiting Russian Federation at the invitation of her Russian counterpart Sergey Viktorovich Lavrov from February 7-10. She held in-depth talks with her Russian counterpart on expanding and diversifying Pakistan-Russia relations. The two foreign ministers exchanged views on regional and global issues of mutual interest besides increasing cooperation in energy, infrastructure development, agriculture, science and technology. Replying to a question on Afghanistan, Hina Rabbani Khar said Pakistan has clear policy on that it will extend full help and cooperation to any Afghan-led, Afghan-owned and Afghan-driven peace initiative as it is the only long lasting solution to the problem. She said Pakistan has repeatedly said that there should be political solution to Afghan problem for durable pace in the region. The minister said TAPI and KASA 1000 energy projects were also discussed during the meeting. She said Pakistan also got very encourage response from Russia for more investment in the most important project of Pakistan Steel Mills. She said both the countries also agreed to enhance parliamentary interaction besides increasing cooperation at the level of foreign ministries of the two countries. Hina said it has also been agreed that there would be more interaction between the chambers of commerce and industries of two countries to improve tarde activities. The minister said the Russian investors have also shown interest to invest in different energy projects like Thar Coal. Regarding cooperation in energy sector, she said, "we are looking forward for the energy group to be meeting within the first half of this year. Talking about the regional level of cooperation, she said Shanghai Cooperation Organization (SCO), is exceptionally important forum with in the region face and counter the regional challenges. She said Pakistan has been actively participating in the deliberations of SCO and seeking its permanent membership and thanked the Russian Federation extending its support on this issue. Khar said next quadrilateral summit being held in Pakistan was also discussed during the meeting with her Russian counterpart and added "Pakistan is looking forward to host this summit". She said she had extended invitation to the Russian leadership on behalf of President Asif Ali Zardari for this quadrilateral summit. She said the visit of President Asif Ali Zardari and Prime Minister Syed Yusuf Raza Gilani to Russian Federation and their meetings with the Russian leaders have also improved the bilateral ties and it also indicated that Pakistan gives importance to its relations with Russia. Addressing the joint press conference the Russian Foreign Minister Sergey Lavrov said both the countries also agreed to cooperate in fighting terrorism and drug crimes. He said, "We have a good future in implementation of major transnational energy projects at the border between the Central Asian and South Asian regions." Lavrov said, "In our international cooperation we pay special attention to the issues of terrorism and drug crimes." He said soon, federal service representative of Russia on control of drug substances will start working in Islamabad. On the issue of promotion of trade relations, Lavrov said the Pakistani side received Russia's draft of a joint action plan in trade and investments. "We discussed cooperation in the framework of the SCO, the Dushanbe quartet and the UN Security Council, as Pakistan is the Security Council's permanent member for 2012-2013," Lavrov said. He said, "We share approaches to major international problems, principles, on the basis of which it is necessary to settle emerging problems." (APP)

Copyright Associated Press of Pakistan, 2012

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Thar Coalfield: Block IV allocated to China''s Three Gorges Corporation

On the recommendations of the Evaluation Committee Sindh Coal and Energy department, Thar Coal and Energy Board (TCEB) has approved the allocation of Block IV of Thar Coalfield to China's Three Gorges Corporation which will develop open pit mine of 20 million ton per year and mine mouth power plant of 3000MW in two phases. This was stated by Zubair Motiwala, Chairman Sindh Board of Investment (SBI), while briefing the TCEB during its 14th meeting held at Chief Minister House here on Saturday. The meeting was held under the chairmanship of Sindh Chief Minister Syed Qaim Ali Shah. While, Syed Naveed Qamar Federal Minister for Water and Power, Syed Murad Ali Shah Provincial Minister for Finance, M. Zubair Motiwala SBI Chairman, Imtiaz Hussain Qazi Secretary Water & Power, Raja Muhammad Abbas Chief Secretary Sindh, Rubina Saadat Qaimkhani MNA and others. Motiwala briefed the meting about the process of third International Competitive Bidding and said that four companies China Three Gorges Corporation, Thar Coal & Power Consortia, Tae Ryun Co Ltd and Australasian Continental Energy Pvt Ltd had submitted proposals for coal mining and power generation projects in Thar. Besides these companies, a US-based Consortium Thar Pak also submitted proposal to develop coal-based projects in Thar, he added. He said that on the recommendations of the Evaluation Committee Sindh Coal and Energy department, TCEB has approved the allocation of Block IV of Thar Coalfield to China's Three Gorges Corporation which will develop open pit mine of 20 million ton per year and mine mouth power plant of 3000MW in two phases. In the first phase by 2016, they will develop 10 million ton per year mine and power plant of 1500MW. He further briefed the forum about proposed projects of all companies and their technical/financial strength. On the occasion, Shahrukh Khan, Chief Executive Officer of Oracle Coalfields UK presented its detailed Feasibility Study for Coal Mining and Power Generation Project at Block VI of Thar Coalfield. Oracle Coalfields, UK is investing dollars 610 million for a coal mine of five million ton per year capacity. Oracle has also signed a memorandum of understanding with KESC to develop initially a 300MW mine-mouth power plant with plan to develop up to 1100MW at the Block VI site. Initial coal production is expected in 2014 with mine development to be started by end of 2012. Chief Minister Syed Qaim Ali Shah welcomed the participants of the meeting and said government was fully committed for development of Thar Coal which had the potential of turning the country's economy around. Thar coal resources could be used for power generation, chemical production and other uses and had the potential of providing energy security to the country, he added. Officials of Coal and Energy Development department briefed the forum that Sindh government was financing and executing development of infrastructure projects like roads, water supply, waste water disposal, airport and Reverse Osmosis Plants for potable water for local people and project developers on fast track basis. He also informed that for lying of transmission line from Thar to Matiari, NTDC has completed the PC-I at the cost of Rs 20 billion with detailed technical designs and submitted to the Planning Commission. He urged federal government to arrange funding for this critical project either from PSDP or from international lenders like Asian Development Bank, China Development Bank or Japan International Co-operation Agency. Syed Naveed Qamar, Federal Minister for Water and Power, assured the forum that the project of transmission line would be expedited. Imtiaz Qazi, Secretary Water & Power gave update on the project financing through Pak-China Joint Energy Working Group and informed that the next meeting would be held in March. Dr Samar Mubarakmand, Chairman Underground Coal Gasification Project briefed the TCEB that the progress of its R&D Project of Underground Coal Gasification at Block V of Thar Coalfield and informed that the Syngas of 130 Btu was being producing from Thar which might be used for power generation and also can be used as town gas. The Board decided that international Expression of Interest should be called by Private Power Infrastructure Board and Thar Coal and Energy Board to attract private sector for installing UCG-based Power Plant and for other possible uses of Syngas.

Copyright Business Recorder, 2012

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Kunnar Pasaki field starts LPG production

The Oil and Gas Development Company (OGDCL) has started Liquefied Petroleum Gas (LPG) production from Kunnar Pasaki gas field, as 120 ton is being produced per day, which will go up to 350 tons per day within a year. According to ODGCL officials, Kunnar Pasaki gas field has the potential to produce 350 ton LPG and 286 Million Cubic Feet gas per day (MMCFD). The field has become partially operational with production of 100 MMCFD gas. The production from the Kunnar Pasaki would help reduce Pakistan's dependency on imported LPG. Since 2006 local LPG production has declined from 1,800 ton to 1,100 tons per day, due to below capacity functioning of refiners, which has hard hit by the circular debt. Resultantly, LPG has become the most expensive fuel in the country, which is currently being sold at Rs 160-190 per kg across the country. The LPG marketing companies and distributors have congratulated OGDCL on commencing production of 120 MT of LPG per day from its Kunnar Pasaki Field. Spokesperson LPG marketing companies Belal Jabbar said that it was the first significant LPG production in the past seven years, which, he said, is a great achievement. "Faced with a lackluster demand due to uncompetitive high prices, marketing companies have started to scale down their sale rates. Demand pattern is also shifting with change in weather and resumption of gas supplies to industries and household consumers," Belal added. He said that local LPG production, which was previously meeting 80 percent of the total need, would now cater up to 90 percent demand. "There have been zero imports so far this month and we, therefore, request the Federal Government to seriously reconsider withdrawing the Petroleum Levy," he demanded. The additional LPG will add 12 percent, boosting local production, which has been on the decline. The new production will replace costlier imports resultantly saving precious foreign exchange. LPG prices hit a record high earlier this month due to the imposition of Petroleum Levy and an all time high Saudi Aramco Contract price with which local prices are indexed. The Petroleum Levy was enforced to equate the price of local production with imports in a bid to improve supplies of the latter. Belal denied that the reduction in price had anything to do with a strike call given by one main LPG distributor association. The timing of the additional production is expected to create further pressure on prices and LPG producers are likely to reduce prices in the coming days.

Copyright Business Recorder, 2012

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Renewable energy investors eyeing Asia beyond China, India

Global renewable energy investors are increasingly looking to Southeast and South Asia, lured by investment incentives rolled out by governments in the region amid a bleak outlook for clean energy investment in Europe and the United States. China and India remain the major destinations in Asia for renewable energy investors, but there are signs of emerging investment interest in smaller Asian countries, from Thailand to Pakistan and Malaysia to Vietnam. Governments in Southeast and South Asia are refining targets for renewable energy expansion, extending subsidies and dangling tax breaks at a time when developed markets, particularly Europe and the United States, are rolling back subsidies. "We see an unprecedented number of companies, even those that previously weren't interested in the region, entering Thailand and Malaysia, seeking investment opportunities in clean energy," said Edgare Kerkwijk, managing director at Singapore-based investment firm Asia Green Capital. In spite of challenges long associated with investment in Southeast and South Asia, including regulatory uncertainties and underdeveloped infrastructure, renewable projects in some countries have attracted substantial investment from US and European companies and even international funds.

Copyright Reuters, 2012

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Pakistan committed to gas pipeline: Zardari tells Iranian VP

President Asif Ali Zardari Tuesday said Pakistan is committed to early implementation of Iran-Pakistan gas pipeline project in order to meet the ever growing demand of energy in the country. He said the government was also pursuing a trade liberalisation policy across the border and proposed for elimination of tariff and non tariff barriers between Pakistan and Iran to further boost trade ties and realise the true business and trade potential on both the countries. The President said the recent agreement between the two countries to work towards expanding Pakistan-Iran Preferential Trade Agreement (PTA) to include additional items from both sides and making it an agenda item for the next meeting of the trade committee was a welcome move to enhance trade links between the two countries. This was stated by President Zardari during his meeting with the visiting Iranian Vice President Ali Seedlou, here at Aiwan-e-Sadr. He said that enhancing bilateral co-operation particularly in energy, security, communication and infrastructure would help the two countries to overcome the challenges in the way of realisation of full existing potential of their equation and to realise the goal of raising the bilateral trade to $5 billion which he said was doable. Those who were present during the meeting included among others Federal Minister for Commerce Makhdoom Amin Fahim, Advisor to Prime Minister on Finance Dr Abdul Hafeez Sheikh, Minister for Interior Senator A Rehman Malik, Senator Babar Awan, Secretary General to the President M Salman Faruqui, federal secretaries Foreign Affairs, Petroleum and Economic Affairs division and other senior officials. Iranian vice President was accompanied by senior Foreign Office officials. The Iranian ambassador in Pakistan Alireza Haghighian was also present. The President said that both countries were poised to play important role in the promotion of intra-regional and inter-regional connectivity, which was the key to the socio-economic development of the people of the region. He said resource constraints can be overcome by joining hands and enhancing co-operation in all the areas particularly trade, energy, horticulture, livestock, communication, infrastructure development and engineering sector. About co-operation in banking sector, the President said the establishment of Joint Working Group and the proposed visit of a delegation of Iranian bankers to meet Pakistani counterparts would give impetus to the co-operation in the banking sector besides facilitating bilateral trade. The President said facilitating export of meat and Kinno from Pakistan would help the two countries enhance mutual trade. He said that opening of a new border crossing at Gabd-Reemdan will connect southern parts of Balochistan and Karachi with Chah Bahar and Bandar Abbas through the Coastal Highway. He said Pakistan was ready to grant multiple entry visas to the businessmen from Iran on reciprocal basis. Discussing implementation of mutually agreed projects, the President said besides expeditious implementation of Iran-Pakistan gas pipeline project, Pakistan also wanted to carry forward the proposed projects of 1000MW Taftan-Quetta Power Transmission line and the 100MW Gwadar power supply. The Iranian Vice President said Iran had already laid gas pipeline on its side of border and was ready for realisation of the most important energy project of Iran-Pakistan gas pipeline. President Zardari said destinies of regional countries were interlinked and they must work closely to overcome the challenges facing them. Militancy and extremism remains one of the biggest and common threats that endanger regional as well as global peace, he said. Extremism and militancy needed to be tackled collectively, the President remarked. He said it was high time that the regional countries work together and extricate people from the threat posed by extremists and militant mindset. The President thanked the Iranian government for pledging $100 million assistance for the rehabilitation of flood affected victims in Pakistan. He said, "We look forward to welcome President Ahmadinejad for the 3rd Pakistan-Iran-Afghanistan Trilateral Summit" and expressed the hope that the forthcoming Summit would prove to be an important milestone towards their journey toward finding peace, stability and Afghan-led conciliation process. Ali Seedlou thanked the President for meeting and while expressing gratitude for Pak hospitality said that Iran was equally eager for materialisation of all mutual projects and to partner with Pakistan to overcome existing challenges faced by the two countries and the region. He said Pakistan was an important neighbour for Iran and assured continued support and assistance of the government in all fields.

Copyright Associated Press of Pakistan, 2012

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Qatar agrees to supply 3.5 million tons of LNG: two accords, four MoUs inked

Qatar has agreed to supply 3.5 million tons of Liquefied Natural Gas (LNG) and the first shipment is expected to arrive in the country within a year. This was stated by Dr Asim Hussain, Federal Minister for Petroleum and Natural Resources, while talking to Business Recorder from Doha. He is accompanying Prime Minister Syed Yousuf Raza Gilani, who is on a three-day official visit to Qatar. "We have signed an Memorandum of Understanding (MoU) with Qatar for import of 3.5 million tons of LNG, which would materialise in a year's time," Dr Asim said. APP adds: Pakistan and Qatar signed agreements to collaborate in multiple areas mainly import of LNG from the Gulf state and co-operation between the two governments on security. Prime Minister Syed Yousuf Raza Gilani and his Qatari counterpart Sheikh Hamad bin Jassim bin Jabor Al Thani witnessed the signing ceremony of two agreements and four memoranda of understanding (MoUs) as the representatives of Pakistan and Qatar's respective ministries inked the documents, at the Amiri Diwan here. Minister for Petroleum and Natural Resources Dr Asim Hussain and Qatar's minister for energy Dr Muhammad bin Saleh Al Saada signed the MoU on import of LNG. Pakistan is interested in importing 500 million cubic feet per day of LNG from Qatar that produces 77 million tonnes per annum of LNG. The imported LNG will be initially provided to the powerhouses in the country to generate 2,500 mega watt of electricity. The Qatar's minister for energy is visiting Pakistan this month to hold talks with the respective ministers to evolve the mechanism of undertaking investment in various sectors which according to the Qatari Prime Minister could go up to $5 billion. The MoU on security co-operation between the interior ministries of Pakistan and Qatar was signed by Foreign Minister Hina Rabbani Khar and Qatar's minister of state for Interior. Both also inked an agreement on co-operation in legal field between the two governments. The agreement in the field of Auqaf and Islamic Affairs was signed by Minister for Professional and Technical Training Riaz Pirzada. The two countries signed an MoU between Pakistan's Ministry of Water and Power and Qatar's Ministry of Energy for co-operation in hydropower development. Chairman Water and Power Development Authority (Wapda) Shakil Durrani and Qatar's energy minister Muhammad Al Saleh Al Saada signed the document. A bilateral agreement was signed on Mutual Administrative Assistance for the Proper Application of Customs Law and Repression, Investigation and Enforcement of Customs Offences between the governments of Pakistan and Qatar. Pakistan's ambassador to Qatar Muhammad Sarfraz Ahmed Khanzada signed the document. Both also signed an MoU to cooperate in the field of organising exhibitions between the two countries.

Copyright Business Recorder, 2012

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IP gas line to be financed via public-private partnership

The Iran-Pakistan (IP) gas pipeline project would be financed through public-private partnership (PPP) with a debt equity ratio of 70:30 percent with the government estimating that 100 km pipeline construction, from Iran border to Gwadar, would cost $150 to $200 million, it is learnt. Sources said that Finance Advisor would arrange private equity and debt financing for the project with the equity mix of 40:40:20 percent, representing public sector enterprises (PSEs), private investment, and IPO, respectively. On January, 4, the Economic Co-ordination Committee (ECC) of the Cabinet approved $200 million sovereign guarantee for the project and appointment of Financial Advisor consisting of a consortium of Industrial and Commercial Bank of China (ICBC) and Habib Bank (HBL) and Ernest Young Ford Rhodes Sidaat Hyder (EYFRS). The investment equity of PSEs would be $50-75 million for first 100 km and bridge financing of $100-125 million would be managed either from the local or international sources, which would be backed by the Ministry of Finance guarantee. The government would also raise revenue from imposition of gas infrastructure development cess for repayment of interest/mark-up due on bridge financing. Sources said that public-private partnership (PPP) structure would entail setting up of a 'Special Purpose Vehicle PipeCo', which would be responsible for financing, construction, and operation of the IP gas pipeline and earn gas transportation fee guaranteed from the government. However, the Inter-State Gas System (ISGS) would remain owner and manager of the gas pipeline project and investor in PipeCo would be offered sovereign bond yield plus 6 percent rate of return their equity. On the issue of equity commitment by PSEs, Secretary Finance Dr Waqar Masood reportedly said that in case the PSEs are not able to invest, the government would arrange investment through other means, or investors. The Pakistan Petroleum Limited (PPL), Pak Arab Refinery Limited (Parco), Employees Old-age Benefit Institution (EOBI) Government Holding Private Limited (GHPL), Oil and Gas Development Company Limited (OGDC) and National Bank of Pakistan (NBP) were authorised to inject equity in the project through ISGS. The NBP and OGDC have reportedly expressed concern that their participation in the project might hurt their presence and operation in the international market in case of UN, US and EU sanctions on Iran. The EOBI said it would require a nod from the Ministry of Finance for making investment in the project, and Parco's major concern was circular debt issue. The meeting decided to continue exploring the possibilities for PSEs' investment in the project by removing bottlenecks.

Copyright Business Recorder, 2012

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