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News Headlines for the month of
AUGUST 2012

IP gas line: Gazprom seeks major concessions

Leading Russian gas exploration Company Gazprom has informed Pakistan that it is ready to build and develop Iran-Pakistan Gas Pipeline (IP) project if Pakistan government exempts it from bidding process and Public Procurement Regulatory Authority (PPRA) rules, it is learnt. A senior official of the Petroleum Ministry told Business Recorder on Tuesday that Iran has also offered to lay gas pipeline in Pakistan in case no foreign company takes up the construction job. The official added that Gazprom has already submitted Expression of Interest (EoI) in response to Inter State Gas Company''s invitation in August last year. The official said, "During a recent meeting of co-ordination Committee of IP, Iran has also offered Pakistan that its gas companies are ready to lay gas pipeline in case no global company is going to construct it, as Iran has also offered Pakistan $500 million in this regard." The official stated that during the meeting both sides discussed technical issues related to the gas pipeline. National Engineering Services Pakistan (Nespak) has completed the design and route study of the project, which would be handed over to the Petroleum Ministry in September, the official added. According to another senior official of the ministry who is also privy to these developments informed Business Recorder that the work on gas pipeline would start by the end of this year. Pakistan will import 750 million cubic feet of gas daily for 25 years from Iran, according to the terms of the agreement. The pipeline will facilitate transfer of natural gas from Iran''s biggest gas field in South Pars to Pakistan through the south-western Balochistan. Sources said due to high cost of Iranian gas it will not be available for domestic consumers. Most of its supply will go to the industrial sector especially in power generation. The company has also shown keen interest in developing Pakistan''s energy sector and will help build power generating facilities and develop gas fields. Pakistan currently is facing severe gas and power shortage, while the government is managing the crises through gas and power load management plans as well as increasing the prices of utilities. Currently the government has declared two and half day per week suspension in supply of Compressed Natural Gas (CNG) in Punjab and two days in Sindh. The US has always publicly opposed the Iran gas pipeline, which, according to analysts, had been one of the main reasons for the project delay. Experts and government officials insist early completion of the crucial project would effectively deal with the existing energy shortage. The project would help generate around 4,500 megawatts of electricity, which is equivalent to peak load-shedding in Pakistan, according to experts.

Copyright Business Recorder, 2012

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India agrees to provide 200mmcfd LNG to Pakistan: Asim

India has agreed in principle to provide 200 million cubic feet per day (mmcfd) Liquefied Natural Gas to Pakistan through Wagah border for a period of 5 to 7 years. This was stated by Advisor to Prime Minister on Petroleum and Natural Resources Asim Hussain while talking to reporters here on Monday. Pakistan and India would hold a meeting in this connection in September to finalise the transport of LNG, he said adding that Indian government had assured Pakistan of supplying 200 mmcfd LNG via Wagah border. Asim said that the government was working on a plan to end gas loadshedding for the fertiliser sector and within one year the sector would get rid of the gas curtailment, as the government had allowed them to develop and utilise gas from closed fields. "The successful implementation of the plan would also rid the country of imports of urea as full utilisation of the country''s fertiliser plants would produce surplus commodity," he said. The country was also working on Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India gas pipelines, but completion of these projects would take time, he said and added that the Bangladeshi government had also shown interest in the TAPI gas project. To a question, Asim said he had time and again repeated that due to gas shortage and soaring prices of crude oil, the use of compressed natural gas would be phased out from the country gradually. "The government has been trying to begin import of LNG since long and in this regard it has extended a performance bank guarantee for the potential importers," he added. According to Petroleum Ministry officials, the LNG importers were expected to provide financial arrangements, agreements with LNG suppliers and end-buyers to complete the financial close by April-end 2012 but they failed to furnish the same. In October 2011, the Oil and Gas Regulatory Authority (Ogra) allocated pipeline capacity to the three LNG developers with a permission to use the pipeline network of the state-run gas distribution companies for transporting imported LNG to consumers. Ogra had allocated pipeline capacity of 500 mmcfd each to Global Energy and Engro and 400 mmcfd to Pakistan Gas Port. Global Energy made commitment to bring the first consignment of 500 mmcfd by the end of June 2012 followed by Engro in December 2012 and Gas Port in the first quarter of 2013. Gas distributors Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) were also directed to invest $1.2 to $1.4 billion to lay new pipelines and create extra room for LNG suppliers.

Copyright Business Recorder, 2012

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Afghan-Tajik Basin: PPL to participate in six exploration blocks' bidding

Pakistan Petroleum Limited (PPL) was among eight companies world-wide to pre-qualify for participation in bidding of six exploration blocks in the Afghan-Tajik Basin offered recently by the Afghanistan government. The Company's officials will be attending a bidder's conference later this month to sort out modalities involved in the process, a press release issued here on Friday said. The move was a part of PPL's strategy to secure international hydrocarbon reserves to meet the country's escalating energy requirements, it added. "We look forward to expanding our international exploration assets and will be carrying out due diligence to evaluate the blocks on offer," said MD and CEO, PPL Asim Murtaza Khan. The decision to participate in the bidding has the full support of the Ministry of Petroleum and Natural Resources. The PPL officials attending the conference will also have bilateral discussions on mutual business interest with other companies, particularly Turkish Petroleum Corporation, the conference host. However, the company's international efforts will clearly not compromise its fast-track domestic exploration programme. "There will be zero let-up on our domestic exploration programme which is top priority for us," Khan assured.-PR

Copyright Business Recorder, 2012

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IP pipeline to reach border by September 2013

Iran-Pakistan gas pipeline will touch the border by September 21 next year, Managing Director of National Iranian Gas Company (NIGC) Javad Oji said on Wednesday. Oji said that the 56-inch Iranshahr-Pakistan border Chabahar-Zahedan pipeline would completed 90 percent by March 19. He said that the pipeline would be completely operational by the end of next year. Islamabad has reiterated its determination to cooperate with Iran in energy sector and pursue Iran-Pakistan (IP) gas pipeline project. Recently, Pakistan''s Foreign Ministry spokesperson Moazzam Ahmad Khan said that Pakistan''s government was determined to complete the Iran-Pakistan gas pipeline project before 2014 and other energy projects and the US had nothing to do with them. The spokesperson dismissed reports that the United States planned to invest $280 million in Pakistan''s power sector in return for Islamabad''s commitment not to pursue the multi-billion-dollar deal with Iran. The Iran-Pakistan gas pipeline, projected to cost $1.2-1.5 billion, is aimed to export a daily amount of 21.5 million cubic meters of Iranian gas to Pakistan. Maximum daily gas transfer capacity of the 56-inch pipeline - which runs over 900 kilometers from Iran''s southern port city of Assalouyeh in Bushehr province to Iranshahr in Sistan-Baluchestan Province - is estimated to hit 110 million cubic meters. Iran has already built more than 900 kilometres of the pipeline on its soil.

Copyright News Network International, 2012

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Upcoming road-shows of TAPI gas project: petroleum ministry approaches PM for guidelines

The Ministry of Petroleum and Natural Resources approached the Prime Minister for policy guidelines on participation of Pakistan in upcoming road-shows in accordance with a condition of the Asian Development Bank to gauge market response on TAPI gas project. Last year based on Asian Development Bank''s (ADB) request to act as Transaction Advisor (TA) of the project, the governments of four project member countries (Pakistan, India, Afghanistan and Turkmenistan) already consented ADB to work as TA for the project on agreed TORs. The ADB has tentatively planned road-shows in major financial hubs such as Singapore, London, New York in September this year. Documents obtained by Business Recorder showed that Afghan-Turkmen GSPA was not finalised before the road-shows and Afghanistan acts as transit only country and ADB does not assume TA role and issue Mandate Letter before Road Shows. TAPI parties already agreed under the Gas Pipeline Framework Agreement (GPFA) signed in December 2010 that for project financing and Construction, a consortium of technically sound and financially capable companies shall be jointly formed. Further, TAPI parties shall appoint a TA to bring in the Lead Consortium Lead Financier and broadly for the marketing of the project and updating the prefeasibility of TAPI Project. The Parties agreed that clarity as regards the structure of the project, role of ADB and TAPI members, and way forward on the project needs to be achieved. In this regard, following CPs are required to be fulfilled. The ADB''s recent stance that it shall assume the role of TA after the road-shows as the exact TORs vis-à-vis investors'' expectations as regard to Rate of Return or potential role/participation in upstream (gas supply source) etc shall be clear after the road-shows is a concern for parties, particularly Pakistan and India who consider it a deviation from an earlier agreement. Pakistan''s concern, also shared by the Indian side, is that ADB should upfront commence work on transaction advisory as have already agreed by TAPI parties without any delay. The ADB should issue the TA Mandate Letters before the road-shows to all four countries for approval by their respect governments to commence work of TA. In 18th TWO, ADB agree to revert on the matter by August 25 this year after consultation with its authorities. Turkmen-Afghan bilateral GSPA is still under discussions and no consensus could be achieved so far despite number of bilateral rounds of discussions, recent being on 2nd and 3rd August 2012 on the sideline of the 18th TWO. Pakistan and Indian side maintained that TAPI project was conceived with a common understanding and particular roles to be performed by the participants. Accordingly, the respective governments deliberated and signed the political agreements which shaped up the features of the entire transaction. Any change in already agreed structure (Afghanistan as transit only country and not as off-taker of the gas) might not be viewed positively by potential investors and has its impacts. Pakistan and Indian side have recorded their concern that they will have to seek advice from their respective authorities on the participation in upcoming road-shows if the Turkrnen-Afghan GSPA is not finalised till the start of the road-shows and Afghanistan acts a transit only country in the project. Pakistan and Indian Parties will have to get the consent of their respective authorities by August 10, 2012 to participate in road-show if Afghanistan acts a transit only country. Afghanistan is to revert by August 15. In order to move forward on the project, 18th meeting of TAPI Technical Working Group (TWG) meeting was held in Ashgabat during 2nd 3rd August 2012 and TAPI parties agreed to conduct road-shows from 10th September, 20th September 2012. TAPI Parties also discussed list of invitees proposed by ADB. During the meeting ADB requested TAPI Parties to propose any addition in the list (Due to the confidentiality request by TAPI members the list shall be tendered during the meeting). The Indian and Turkmen Parties have agreed on the list of invitees, however Pakistan arid Afghanistan will review and inform the Parties by 24th August 2012 of any exclusion. Pakistan, Afghanistan and Indian during trilateral session 16th - 17th April 2012, Islamabad, three countries agreed on the transit fee rate. The three parties held meeting on August 2-3 this year and agreed that Parties shall resolve minor matters such as transit fee indexation mechanism and finalise the agreement before August 25 this year. On indexation mechanism, India proposed a US dollar based indexation as the transit fee rate has been agreed in US dollars whereas Afghanistan side proposed combination of Pakistan and Indian CPIs, however, are likely to agree on Indian proposal. Pakistan side also consider Indian proposal as pragmatic. ECC in its meeting held on April 12 approved the draft TAPI Gas Sale and Purchase Agreement (GSPA) for execution by inter State Gas Systems (Pvt) Ltd with Turkmenistan (Turkmengaz). It was also decided by the ECC that a meeting of the Steering Committee/Sub-Committee of the ECC on gas import (SC) to be attended by all members of ECC should be convened and a comprehensive presentation with regard to TAPI gas pipeline project should be made during the meeting. As directed by ECC, a detailed presentation was made to the SC in its 12th meeting held on May 4 this year on TAPI project covering gas price, gas price formula, major GSPA terms and way forward. The SC appreciated the significant progress made on the TAPI project and agreed that progress on the project shall be continued as per the agreed timelines/millstones including the signing of the GSPA and Transaction Advisory services. Further, in Pursuance of the decision of the ECC, Pakistan-Turkmenistan bilateral GSPA was signed on May 23 this year in Turkmenistan. On the same day, India also signed its bilateral GSPA with Turkmenistan. However, Afghan-Turkmenistan bilateral GSPA is under negotiation as of to-date.

Copyright Business Recorder, 2012

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Punjab-China bio-gas institute to be set up

Punjab Chief Minister Muhammad Shahbaz Sharif said that serious energy crisis being faced by Pakistan had caused irreparable loss to the national economy. He stressed the need for taking steps on emergent basis for overcoming shortage of electricity, adding Punjab government was working on the projects of generating energy through alternate sources. The Chief Minister said that solid steps had been taken for promotion of bio-gas technology. He disclosed that Punjab China Bio-Gas Institute would be set up with the co-operation of Chinese company BIOMAK, which would be completely autonomous and an agreement would be made with BIOMAK Company for this purpose. While constituting a steering committee headed by Chairman Planning and Development, the Chief Minister directed that this committee should settle all matters with regard to setting up of institute, co-operation in bio-gas technology and making an agreement with Chinese company. He was talking to a delegation led by Ren Xiaobin of Chinese Company BIOMAK here on Saturday. Matters relating to co-operation in bio technology and setting up of bio-gas institute were discussed during the meeting. Provincial Minister for Agriculture Malik Ahmad Ali Aulakh, Members Provincial Assembly Rana Afzal Khan, Chaudhry Asad Ullah, Chairman Planning and Development, Secretaries of Finance, Energy and Agriculture Departments, Vice Chancellor of Agriculture University Faisalabad and experts were present on the occasion.

Copyright Business Recorder, 2012

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Turkish company completes initial work on LNG ''GasPak'' project

Global Energy Infrastructure Limited (GEI) Turkey has completed initial work to construct $350- 450 million integrated LNG ''GasPak'' project for Pakistan. Sources said that a meeting was held between Ahmed Caliskan, Chairman GEI and Chairman Board of Investment to discuss various aspects of the project. Sources said the company has completed its pre-construction activities which include securing $350 million financing for the project; arranging insurance cover for construction and operational phases; completing pre-construction works and awarding EPC contract; securing LNG supplies from producers around the globe and securing regulatory approval from various government departments. GasPak project comprises construction of an LNG Terminal at Port Qasim Karachi; interconnection pipeline up to SSGC designated gas collection point and the supply of re-gasified LNG (RLNG) to Pakistan. Project sponsors have set up two Special Purpose Vehicles (SPVs) for this project, Global Energy Infrastructure Limited (GEI) Turkey and GEI Pakistan (Pvt) Limited (GEIP), respectively. Total cost of the project would be between $350-450 million. These funds would become part of the Foreign Direct Investment in Pakistan. The company has also arranged bridge financing from two private equity groups in Turkey, covering the complete cost of the project. This ensured that the company has access to funds at all times during the construction phase, as mentioned by the GEI head. However, due to the group''s extensive experience in the energy sector around the world, the company, in a short span of time, has made swift progress towards commencing construction and operations of the terminal. To date, almost $20 million have been spent.

Copyright Business Recorder, 2012

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SSGC, SNGPL may import LNG through joint venture

Public gas utilities - Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited - are likely to import Liquefied Natural Gas (LNG) as a joint venture, it is learnt. This was the crux of a high level meeting of the committee on LNG infrastructure projects constituted by the Prime Minister and presided over by Dr Asim Hussain, Prime Minister''s Advisor on Petroleum and Natural Resources. The meeting was also attended by Ahmed Mukhtar Minister for Water and Power, Secretary Finance, Secretary Water and Power, Secretary Petroleum and industry representatives. Asim Hussain said the country needs to enhance gas supply to various sectors and in this regard government is pursuing LNG import. The committee members proposed that SNGPL and SSGC should establish a joint venture company with major shareholdings of the federal government to undertake the infrastructure development for the LNG import. Moreover, it was also recommended that the import initiatives already undertaken by SSGC are to run parallel to infrastructure development so that LNG could be imported as early as possible. Last year, SSGC and SNGPL were directed to invest $1.2 to $1.4 billion to lay new pipelines and create extra room for LNG suppliers. At present, SSGC has the capacity to transport 500 million cubic feet of LNG per day. The committee members were briefed on the LNG import project and the previous decisions of the ECC. Detailed discussions were held on the framework for import of LNG including fast-track imports and the long-term import components. Committee members unanimously agreed that LNG import is necessary keeping in view the current energy crisis. The textile industry stakeholders have asked the government to cater to the energy shortfall of the sector during winter to manage LNG import on Public-Private Partnership (PPP) model by constructing an LNG terminal without seeking any sovereign guarantee from the government. Recently, the government of Qatar has authorised the US energy giant ConocoPhillips to negotiate LNG deal with Pakistan. All Pakistan Textile Mills Association (Aptma) has asked the government to utilise revenue collected through Gas Development Infrastructure Cess (GIDC) on the import of LNG or any other project that could cater to the industry''s energy needs. The government has imposed Rs 100 GIDC per British Thermal Unit (BTU) on the industry expected to generate up to Rs 24 billion per annum. Ogra has already allocated pipeline capacity to the three LNG developers in October 2011 to use the pipeline network of state-run gas distribution companies for bringing imported LNG to consumers. As per Ogra capacity allocation, Global Energy and Engro each has been allocated to import 500 Million Cubic Feet (mmcfd) per day LNG while Pakistan Gas Port has been allocated 400 mmcfd. These LNG importers were expected to provide financial arrangements, agreements with LNG suppliers and end-buyers to complete the financial close by April-end 2012 but they failed to furnish it. Recently, the government has extended performance guarantee for LNG importers.

Copyright Business Recorder, 2012

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Three CNG terminals to be set up: Punjab government, Argentine company sign agreement

Government of Punjab and CNG Galileo S.A. Argentina have signed an agreement worth one million dollar to install three CNG terminals for public transport in Lahore. To brief the media regarding the project, a press conference was held in the Embassy of the Argentine in Islamabad on Thursday. H.E. Rodolfo Martin Saravia, Ambassador of the Argentine Republic to Pakistan arranged a presentation at the Embassy to introduce GNC Galileo S.A. Argentina's state-of-the-art Virtual Pipeline Technology to demonstrate the concern and the commitment of the Government of Argentina to help the people and Government of Pakistan to overcome current energy shortages. The Ambassador stated that in response to the Government of Pakistan's initiative to monetize unutilised gas to reduce energy load shedding in the country, GNC Galileo S.A. Argentina, a world leader in compressed natural gas (CNG) technologies, with the active support and encouragement of the Government of Argentina through its Embassy in Islamabad, proposes to introduce its state-of-the-art Virtual Pipeline technology to transport natural gas (NG) by road from source to end customer (which could be industry, household or commercial outlets) less expensive than any other alternate fuel. Galileo's technology presents a safe and efficient, end to end solution including well-head compression, processing, storage, transportation and dispensing. The technology is experimented in over 20 projects commissioned in 12 countries world-wide (the latest project being in Sabah, Malaysia). Galileo's Virtual Pipeline(r) is certified by Bureau Veritas, which is the world-wide leader in ISO audit. Virtual Pipeline(r) delivers Natural Gas (NG) by storing it in specially designed & manufactured, impact resistant and fireproof containers, which maintain the required pressure and temperature. The containers are then transported by prime movers from source to industrial, commercial and domestic customers. The technology is so safe that it allows NG to be transported through residential areas and busy markets. Not only that, Virtual Pipeline's flexibility allows suppliers to shift deliveries between customers whenever needed. Pakistan has been facing an unprecedented energy crisis for the past several years. The situation is worsening day by day and is severely impacting our economy. There is a shortfall of about 8 GW in the country's power generation capacity. Natural gas is being used in Pakistan by households, manufacturing & power industry and the transport sector. Currently, there is a deficit of up to 2 BCF in NG supply. With such massive reliance on the fuel at a time when oil & derived products have become very expensive, Pakistan must ensure that it efficiently brings every single molecule of NG to the end-customer. The conventional solution (ie underground pipeline-based transmission infrastructure) is extremely investment intensive. It restricts both the utilisation of smaller NG fields and delivery NG to remote or low demand-density markets. Virtual Pipeline(r) caters for such situations and, thus, provides a perfect option that is profitable, safe & efficient. All it needs is the proper incentives for implementation.

Copyright Business Recorder, 2012

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LPG equipment: up to 10 percent cut in duties approved by ECC

The Economic Co-ordination Committee (ECC) of the Cabinet has approved reduction in duties on LPG equipment up to 10 percent to promote LNG as an alternative fuel to natural gas in the country. The ECC meeting presided over by the Finance Minister Dr Abdul Hafeez Sheikh decided to reduce the duty on LPG pumps, control panel, LPG dispensers, and LPG vehicles conversion kits to 10 percent. An official said that the ECC rejected a proposal of lifting ban on CNG cylinders and CNG conversion kits after the proposal was opposed by the Minister of Petroleum and Natural Resources. Sources said that duty on LPG pumps has been reduced from 20 percent to 10 percent, control panel from 25 percent to 10 percent, LPG vehicles from 35 percent to 10 percent whereas duty on LPG dispensers is already below 10 percent. The committee decided that duty on LPG equipment below 10 percent would remain unchanged. However, sales tax and withholding tax would remain intact on the import of LPG equipment. Ministry of Petroleum in a summary on allocation of gas to fertiliser plants from alternate sources stated that all existing gas producing fields have already been allocated either directly to consumers in some cases or to gas utility companies in most of the cases, hence it would not be possible to allocate gas from such gas fields. However, upcoming gas from existing fields and/or new discoveries may be dedicated for fertiliser sector especially the four fertilisers presently on SNGPL system. The Ministry further stated that fertiliser plants would be allowed to directly negotiate gas supply arrangements with the gas producers. The ECC gave in principle approval for the summary provided that concept of supply of gas to power sector as first priority should not be affected. Ministry of Petroleum would submit a comprehensive plan for allocation of 256 MMCFD gas to fertiliser plants to the ECC. The ECC deliberated in details on a summary moved by Ministry of Commerce regarding protection to the Motor Cycle Industry and constituted a committee comprising Deputy Chairman Planning Commission (DCPC), Chairman BoI, Secretary Commerce and Secretary Industries. The committee would give a detailed presentation on trends, production types of motorcycles, importers, and manufactures, rate of returns, technology type, tariff regime, barriers to new entrants and barriers to competitors in the motor cycle industry of the country. The committee in the presentation would also cover viewpoint of new entrants, their requirements, optimal protection as well as view point of existing manufacturers. Secretary Commerce presented a general tariff reduction plan for motor cycle industry and new entrant''s policy highlighting rate of duties on different equipments in the light of recommendation of the sub-committee constituted by the previous ECC meetings. On a summary moved by the Ministry of Petroleum, the ECC approved allocation of 20MMCFD gas to Nooriabad power plant on the request of Sindh government from 50 percent share of Sui Southern Gas Company Limited (SSGCL). Secretary Petroleum submitted a summary to the ECC for allocation of gas to SSGC and SNGPL on equal sharing basis of 50:50 from new sources of Jhal Magsi South field (Kotra Block), Tando Allah Yar and Dars field and Nur & Bagla & Jakhro field that contained a total production of 112 MMCFD. The Ministry also proposed that out of 50 percent share of SSGC, 20 MMCFD gas would be placed for 100MW power plant at Nooriabad Industrial Estate which was approved by the ECC. The meeting decided that further allocation of gas will be finalised after due consultation with different stake holders.

Copyright Business Recorder, 2012

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Ban on CNG kits/cylinders may go: government may allow duty-free import of LPG kits

The federal government is likely to allow duty-free import of Liquefied Petroleum Gas (LPG) kits besides lifting ban on import of Compressed Natural Gas (CNG) kits and cylinders due to pressure from the Japanese government, sources in the Commerce Ministry told Business Recorder. The sources said ban on CNG kits is causing problems for the Japanese investors in Pakistan which are being addressed. At a recent meeting, Pakistani officials informed the Japanese business delegation that a ban has been imposed on the recommendation of Ministry of Petroleum and Natural Resources due to prevailing gas shortage in the country. "The concerns of Japanese investors will be addressed in the summary prepared by the Ministry of Commerce and supported by the Ministry of Industries," the sources added. Currently, Indus Motors Pakistan, the subsidiary of Toyota Motors is producing Toyota Corollas with engine capacities of 1800 cc as well as 1300 cc in larger numbers as compared to the Indian Toyota plant which is producing only 1800 cc models. Pak Suzuki is also exerting pressure on government to lift the ban on CNG kits. An Italian company also used its influence through the Italian embassy for this purpose. The sources said Commerce Ministry has also proposed import of LPG kits without any duty so that CNG fitted cars can be converted to LPG fuel. Duty free import of LGP kits, sources, said is being opposed by the Federal Board of Revenue (FBR) and other line Ministries, which argue that any such decision will have an adverse impact on revenue collection.

Copyright Business Recorder, 2012

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Dr Asim welcomes Chinese interest in oil, gas sector

Dr Asim Hussain, Advisor to the Prime Minister on Petroleum and Natural Resources, has welcomed the interest shown by Chinese companies working in the oil and gas sector inside Pakistan and has expressed confidence that co-operation between the two countries would yield positive and tangible result. He said this while meeting Li Zaisheng, Vice President of Sinopec International Petroleum Service Corporation of China, who called on the Advisor here on Tuesday. Advisor to the PM on Petroleum and Natural Resources informed the delegation that Pakistan's approach towards meeting energy requirements was of urgent nature and completion of mega gas projects including Tapi and IP was priority. Moreover, the government is also working on establishment of LPG stations across the country and import of LNG for the power sector. Dr Asim Hussain invited Sinopec to invest in other energy projects and assured that the Government of Pakistan would extend full facilitation to the Chinese Company. The Sinopec delegation apprised the Advisor regarding successful spudding of Oil and Gas Development Company Ltd (OGDCL) RAJA - I well, that was contracted to Sinopec.-PR

Copyright Business Recorder, 2012

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Germany to hold moot on renewable energy

Germany has announced to hold conference on Pakistan's renewable energy potential in Munich on September 11, 2012. This was disclosed by German ambassador to Pakistan Dr Cyrill Nunn at a meeting with Federal Minister for Water and Power, Ahmed Mukhtar on Thursday. Mukhtar briefed German ambassador on the current energy situation, steps being taken to overcome the energy crisis and future plan of action to produce cheaper electricity from hydel, coal, wind and solar resources. Minister said that existing thermal plants of 4200MW will be converted to import coal from furnace oil to produce cheaper energy and the process will be completed in 16 months. He said that 250MW wind projects also under construction and start generation shortly. Ambassador thanked the minister and said that German companies are already working in the power sector of Pakistan and number of others keen to invest in the renewable energy projects. He further said that conference on renewable energy in Pakistan will be attended by German companies, businessmen and investors from both the countries to explore potential and other related matters of mutual co-operation in this regard. He said that the conference will help to set a roadmap to develop renewable energy sector in Pakistan with German co-operation. Ambassador also informed the minister that the consulate offices of Germany located in Islamabad and Karachi are being electrified with solar energy as a model and will be completed in next six months. He invited the minister to grace the occasion.

Copyright Business Recorder, 2012

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Work on 17 hydel projects under way: 20,000 megawatts of power expected

Water and Power Development Authority (Wapda) is implementing on priority a least-cost energy generation plan to help reduce electricity shortfall and increase the ratio of low-cost hydel electricity in the national grid. Under the plan, 17 large projects were under construction or at detailed engineering stage, which would generate more than 20,000 megawatts (MW) of electricity and store about 12 million acre feet (MAF) of water, official sources told APP here Wednesday. Emphasising the importance of hydropower to meet the electricity needs in the country, they said the hydropower was the cheapest electricity generated through indigenous resource of water. The average tariff for hydel electricity is Rs 1.54 per unit as compared to the overall electricity tariff of about Rs 9 per unit, they said. The sources said that seven projects with cumulative capacity of more than 1500 MW were under construction. Out of these, five projects of about 400 MW would be completed in the current year, while the 969 MW-Neelum-Jhelum and the 106 MW-Golen Gol hydropower projects were progressing at a good pace. In addition, the 4500 MW Diamer Basha Dam with gross storage capacity of 8.1 MAF and the 84 MW-Kurram Tangi Dam with water storage capacity of 1.2 MAF have also been initiated.

Copyright Associated Press of Pakistan, 2012

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Shahbaz urges Turkish companies to invest in energy and theme park projects

Punjab Chief Minister, Muhammad Shahbaz Sharif has invited the Turkish companies to invest in energy and theme park projects in the province. He extended the invitation during a meeting with a delegation of Turkish company OZPAK, led by Mohibi, here on Thursday. Member National Assembly Khawaja Muhammad Asif, Member Provincial Assembly Mehr Ishtiaq, LTC Chairman Khawaja Ahmad Hasaan, Lahore Solid Waste Management Managing Director, LTC Chief Executive Officer, Regional Director of Pak-Turk Foundation Saadi Yildarir and concerned officials were present on the occasion. While talking to the Turkish delegation, the CM said there are vast opportunities of investment in energy sector and the Punjab government is offering special incentives and facilities to foreign entrepreneurs. He also said Turkish companies are investing in various sectors in Punjab and benefiting from the highly favourable atmosphere for investment and business existing in the province. "The Turkish investors have made billions of rupees investment during last few years. Pakistan and Turkey have longstanding relations and the two countries are bound together in strong ties of mutual respect, love and friendship. The growing trade co-operation between Turkey and Pakistan is in the interest of the people of both the countries," he added. The Turk delegation expressed its interest in the projects of energy and theme park. They informed the Chief Minister that the modern system of cleanliness in Lahore is being further extended and the second and third phase of this system is being started. It was further informed that the forth phase of the project will also be initiated within one month. The Chief Minister welcomed the launching of the second and the third phases of modern sanitation system in Lahore by OZPAK.

Copyright Business Recorder, 2012

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South Korean firm to construct 300 megawatts power plant in Quetta

A three-member Korean delegation led by Dr Choi Moon-sok, the CEO of Concentrix (CX) Solar, on Tuesday called on MOS/Chairman Board of Investment (BoI) Saleem H Mandviwalla, for solar energy projects in Pakistan. The company is interested in putting up a project of solar energy in Quetta. In this regard, they are already in negotiation with the Balochistan government and they would be signing an MoU for the construction of 300MW power plant project in Quetta. The delegation informed the MOS/Chairman that their technology was the latest and it was best suited to Pakistani conditions. They are interested to install a power plant project of up to 300MW of solar energy in Quetta, and they would be signing an MoU with the Balochistan government for that matter. The Balochistan government has already offered them a piece of land of 1,500 acres approximately near the airport. As the first step, they would install 50MW, and then they would gradually complete it up to 300MW in the form of six complexes/sub units. The BoI Chairman welcomed them to start the project and encouraged them to come up with various other proposals to invest in the energy sector of Pakistan. He informed the delegation that the Prime Minister was very keen to improve the energy sector, given the current prevailing energy crisis in the country. The company also intends to sign an MoU with the BoI, which is under process. Later in the evening, the Mandviwalla along with the delegation called on PM Raja Pervez Ashraf, where the company representatives apprised the PM about their planned power plant project in Quetta, suggesting various proposals, like the conversion of the diesel generated pumps to solar energy for irrigation purposes. The PM appreciated their investment plans and ensured the full support and co-operation of the government in those projects.-PR

Copyright Business Recorder, 2012

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PM inaugurates installation of TBMs at Neelum-Jhelum power project

Prime Minister Raja Pervez Ashraf formally inaugurated the two tunnel boring machines (TBMS) Monday, following their successful installation at one of the sites of the 969 MW-Neelum Jhelum Hydropower Project near Thotha Majoi in Azad Jammu & Kashmir (AJK). The project is being completed with chinese and other international companies. He was accompanied by Prime Minister AJK Chaudhry Abdul Majid, federal ministers Qamar Zaman Kaira, Hafeez Sheikh, Mian Manzoor Ahmad Wattoo, Chaudhry Ahmed Mukhtar and chairman Wapda Shakeel Durani. With deployment of the two German-manufactured state-of-the-art gigantic TBMs, Pakistan has joined the club of those countries that are using these high-tech machines in execution of their water and hydropower sector projects. These two TBMs were procured at a cost of about Rs. 19.5 billion. This cost also included the expenditure incurred on their shipment to and installation at the site. Chief Executive Officer of Neelum Jehlum Hyro Power project Lt. Gen. Muhammad Zubair said the cost of these two machine will be recovered in three years. He said these machines will be used for other such projects in future. He said that completion of this project will reduce three hours of loadshedding. He said the project has been facing shortage of funds for the last two months due to delay in delivery of funds from finance ministry. He said about 40 percent of work has been completed. He said these machines are able to make one km every month. Once the Neelum Jhelum Hydropower Project is complete, these TBMs with the required modifications, could also be used for construction of the other water and hydropower projects that involve tunneling in their implementation. The deployment of TBMs, will reduce the construction period by about 18 months. This will result in an estimated benefit of Rs. 67 billion. It is pertinent to mention that Neelum Jhelum Hydropower Project is being executed on priority to induct low-cost hydel electricity in the National Grid, and to establish priority water rights over the Neelum and Jhelum rivers, as India is also constructing Kishan Ganga Project upstream of Neelum Jhelum Hydropower Project. The Neelum Jhelum Hydropower Project is scheduled to be completed in 2016. On completion, the project will contribute about 5.15 billion units of low-cost electricity per annul to the National Grid. Annual benefits of the project have been calculated about Rs.45 billion, while the project will pay back its cost in about seven years.

Published in Associated Press Of Pakistan

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Govt to attract investment in energy sector: PM

A three-member Korean delegation led by Dr. Choi Moon-Sok, Chief Executive Officer of Concentrix Solar, Korea called on Prime Minister Raja Pervez Ashraf here at the Prime Minister House on Tuesday evening.Dr. Choi Moon-Sok informed the Prime Minister that his company which is a subsidiary of German company is interested to make investment in the energy sector and has plans to construct a 300 MW solar energy plant near Quetta, Balochistan.The Prime Minister said that Pakistan assigns high importance to the development of renewable energy sources in the face of acute energy shortage in the country.The Prime Minister welcomed investment in energy sector and said the government would encourage generation of electricity by exploiting the solar energy, as it has great potential in the country where sun light is available in abundance.He said if electricity can be produced through solar energy at affordable rates, it can be utilized to meet domestic demand as well as our agriculture needs.

Published in Associated Press Of Pakistan

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Wind power: The whir of turbines to come

The government has allotted a total of around 39,000 acres to all the projects, the biggest of which involves NBT Wind Energy Pakistan. Without incentives from the government, alternative energy in Pakistan has been costly and hence elusive. But all of this might change soon with wind power – about 30 projects are in progress and have the potential to add 1,800 megawatts (MW) to the national grid. Around half of them are expected to be completed by next June. A total of around 39,000 acres have been allotted to all the projects, the biggest of which involves NBT Wind Energy Pakistan, a Norway-based company, and Malakoff, a company based in Malaysia. They have been allotted around 908 acres by the Sindh government and their wind turbines will be spread over 12,000 acres. The expected completion date of the project, which is being touted as the largest wind farm in Asia, is December 2013. It costs $1.2 million per MW, and since it has the potential to generate 500MW, the total comes out to $600 million. Two other projects, which will add 50MW to the grid by next year, belong to the Pakistan Army through the Fauji Fertilizer Company. Previous wind mapping projects have concluded that 3 per cent of Pakistan’s land area is ‘Class 4+’, which means that it is excellent for utility scale applications of wind power. If all of this space is used, an additional 132,000 MW can be generated. The UNDP as well as National Renewable Energy Laboratory have also identified wind corridors spanning up to 180 kilometers in Pakistan. For wind power projects, the government has set a rate of return of 17 per cent for investors, with a tariff of 14.6 cents per kilowatt-hour. The head of the Sindh Board of Investment, Zubair Motiwalla, thinks this is a generous offer. “Around 30 investors, including one of the biggest energy companies in the world, have already expressed their interest,” he said at his office in the Finance and Trade Centre. “There is a five-year payback period, and then you can start adjusting the price.” He added that the National Transmission and Dispatch Company’s (NTDC) grids need to be upgraded. It can take four to five years for transmission lines to be laid, but Motiwalla says that they are already available and NTDC has already given access to them. However, wind energy is an intermittent power source dependent entirely on the whims of Mother Nature. It cannot be switched on or off the way gas, oil, or hydropower can be, and unlike solar power, energy storage is not an option with wind power. Therefore NTDC will need to compensate for any sudden losses in power to the grid. When asked if the national grid is in shape to compensate for power losses, Motiwalla said, “That is not a headache for us or our investors – it is a problem for the NTDC to worry about.” He also feels that renewable energy will be able to tackle the circular debt issue plaguing the Sui Southern Gas Company, Karachi Electric Supply Company and the other utility services. Many projects that were started in previous years never got off the ground. The director of administration at the Sindh Board of Investment, Zubair Channa, explains that this was because they were never given incentives or guarantees. “But now, if the projects that are expected to be completed by next June don’t get finished on time, the project’s guarantees, which are $300,000 per MW, will be forfeited.” Channa warned that people shouldn’t erroneously assume that if these projects start running, another 1,800MW will be added to the grid. He said that even during a good wind season, the average production capacity usually falls by around 40 to 50 per cent and in October through December, the wind drops so drastically that it can barely produce anything. But Channa said that Pakistan is fortunate to have the best winds in the summer, which coincides with the peak demand for electricity. The best wind corridors out of those identified in southern Pakistan stretch from Hyderabad to Gharo, the coastal areas south of Karachi and the hills and ridges between Karachi and Hyderabad. But one obstacle that may come in the way of wind power is traditional energy providers, who may view renewable energy as a threat. “There will always be opposition [to renewable energy] and oil lobbies are out there. We can feel them coming but the odds are being overcome,” said Motiwalla.

Published in The Express Tribune

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USAID energy project provides technical support to ministry of water

The United States Agency for International Development's (USAID) Energy Policy Project is providing technical and institutional support to the Ministry of Water and Power in alleviating the energy crisis and enhancing the power generation in the country. USAID Energy Policy Project's senior energy expert Salahuddin Rifai seconded to the Ministry of Water Power for providing advisory services to NTDC/NPCC and strengthening the activities of NPCC has been appointed as the convenor of the newly constituted Energy Management Committee (EMC). The Energy Management Committee/ Load Management Committee has been constituted under the directive of the Prime Minister to streamline load management, eliminate unscheduled load shedding and ensure equitable load shedding in the country. The assistance being provided to the Ministry of Water and Power is part of the US Government's commitment to support the Government of Pakistan in increasing power generation, improving energy transmission, strengthening fuel supply infrastructure and supporting energy policy reform and governance. The USAID Energy Policy Project is a multiyear effort to increase power generation, decrease losses and increase cost recovery by investing in selected energy infrastructure projects and facilitating Government of Pakistan reform efforts with technical assistance and new technology. Currently USAID Energy Policy Project is providing advice and support to energy sector reform and governance to various GOP entities, namely, Ministry of Water and Power, Ministry of Finance, Planning Commission and Ministry of Petroleum and Natural Resources.-PR

Copyright Business Recorder, 2012

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Energy sector: $280 million US assistance released

The US Congress has released 280 million dollars as new US assistance to support Pakistan''s energy sector, said US Embassy here on Friday. The funds will support improvement of Mangla Dam and infrastructure support and due diligence work of the Kurram Tangi Dam project. The US efforts to fund large-scale infrastructure are expected to add 900 megawatts to the national grid by 2013, enough energy to provide power to two million households and businesses. "This is the latest example of the US long-term and enduring support for Pakistan''s energy sector and for the people of Pakistan", said US Embassy spokesman Mark Stroh, adding that "relieving Pakistan''s energy crisis is the top priority of our civilian assistance programme." The release of the fund is followed by singing of a recent memorandum of understanding (MoU) between Pakistan and US to facilitate the Nato supplies opened after seven-month blockade in the wake of Salala incident. The spokesman said that US approach consisted of high-impact projects aimed at increasing Pakistan''s energy resources and helping power sector institutions more effectively to meet the country''s energy needs. "Our institutional support ranges from improving the governance of the power sector to strengthening the performance of Pakistan''s power distribution companies", the spokesman said, adding, "we are helping develop new policies to rationalise pricing, reduce subsidies, increase revenues, and improve the distribution of energy resources." Besides, he said US also worked with private sector entities and civil society organisations to enhance their role in decision-making and advocacy. Giving a break-up of on-going projects supported by the US, he said Gomal Zam Dam would generate 17.4 megawatts of hydroelectric power and was enough to supply electricity to 30,000 households - and irrigate almost 200,000 acres of land worked by 30,000 farmers. The Satpara Dam, which will provide 17.7 megawatts of power to the local grid, is enough to supply electricity to 30,000 households - and mitigate flooding, provide water for irrigation, and serve as a significant source of drinking water. The Muzaffargarh Power Station will increase the generation capacity of the power station by 475 megawatts and supply electricity to about 680,000 households. The Jamshoro Power Station project would enable the station to restore at least 150 megawatts of power generation capacity and supply electricity to about 215,000 households, and the Tarbela Dam modernisation project would add 128 megawatts to power generation capacity, he added.

Copyright Business Recorder, 2012

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Islamabad, Delhi discuss electricity trade, HVDC link

Pakistan and India on Thursday held parleys on electricity trade and connection points between the two countries. A six-member Indian expert group headed by Joint Secretary (Transmission), Ministry of Power, India represented his country in the second meeting. The Pakistan expert group was led by Joint Secretary (Power), Ministry of Water and Power, Government of Pakistan. Both sides discussed in detail the proposals for electricity trade and setting up of HVDC link to transfer 500 MW. The lines will emanate from grid station in India to grid station in Pakistan. Further discussion with NTDCL will be held in Lahore on Friday (today). The delegation also called on Secretary Ministry of Water and Power. To further discuss the possibilities/matters of proposed trade, both sides decided to hold the next round of discussions in New Delhi in October 2012.

Copyright Business Recorder, 2012

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Power Distribution Programme: USAID begins installation of LT capacitors at IESCO

The United States Agency for International Development (USAID)'s Power Distribution Progra-mme, in co-operation with the Islamabad Electric Supply Company (IESCO), has started installation of Low Tension (LT) capacitors on irrigation tube-wells in IESCO's Chakwal Circle. Currently the project is assisting the Faisalabad Electric Supply Company (FESCO), Multan Electric Power Company (MEPCO) and IESCO in the installation of capacitors. The USAID's installations of over 700 LT capacitors in MEPCO have already resulted in an estimated 3 Megawatt (MW) reduction in demand, improved voltage and availability of surplus electricity for tube-wells. Chakwal Circle has over 620 irrigation tube-wells that consume more than 6.4 MW electricity. The USAID capacitors installation project will result in the release of 15 percent of consumption, saving approximately 1 MW electricity for IESCO. The USAID Power Distribution Programme has also identified other circles in IESCO where these capacitors will be installed. This assistance to DISCOs is provided as part of the US commitment to support the Government of Pakistan in reforming the energy sector and addressing the problems of the DISCOs. USAID implements these assistance programmes, which also support the capacity building of DISCOs' staff and Board of Directors, installations of equipment to improve the power factor, institutional development, gender, communications and outreach and energy efficiency. "Installation of over 7,000 capacitors on irrigation tube-wells will reduce the power demand on the feeders, improve voltage and reduce technical losses of IESCO," said Dick Dumford, Chief Technical Advisor of USAID's Power Distribution Programme. "The USAID Power Distribution Programme shall continue to assist DISCOs to bring improvements to their systems so the people of Pakistan get more electricity. Our plan is to replicate capacitors' installation at other DISCOs which will further improve the power factor and reduce losses." USAID Power Distribution Programme is a four and a half year, USAID-funded programme aimed at working jointly with government-owned DISCOs in Pakistan to improve their performance in terms of a reduction in losses, and improvement in both revenues and customer services, to bring them to the level of well-run utilities in other progressive countries. Through this programme, the United States government provides assistance and support to the government of Pakistan in its efforts to reform the power sector to end the current energy crisis.

Copyright Business Recorder, 2012

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