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News Headlines for the month of
OCTOBER 2012

Power generation machinery import up by 35 percent

Import of power generation machinery witnessed a surge of some 35 percent during the first quarter of fiscal year 2012-13 (FY13) over the same period of last fiscal year owing to power crisis in the country. Importers said that despite all efforts, the government and power generation companies seemed failed to resolve power crisis. Therefore, continuing power shortage forced the general public, industrialists and exporters to acquire their own power generation machinery. Presently, they said, industrialists are the major buyers of power generation machinery to produce their own electricity as the energy crisis is directly hurting the production and export of industries, resulting in huge losses and unemployment. Industrialists also want to free their industries of the ongoing energy crisis to avoid losses, they added. Importers said for last many years the government is claiming to end power crisis, however power shortage issue stays unresolved. According to Pakistan Bureau of Statistics (PBS) the import of power generation machinery rose to $254 million in first quarter of FY13 compared to $189 million in the corresponding period of FY12, depicting an increase of 34.50 percent or $65 million in three months. Month on month basis, the import bill of power generation machinery for September 2012 rose by 33 percent to $80.37 million as compared to $60.52 million in the same period of last fiscal year. Importers said bulk of power generation machines is being imported from China followed by US, Japan, UK, however China is the largest supplier of power generation machinery and contributing over 70 percent share in Pakistan''s generator import. Chinese generators are available in all specifications and are cheaper than the US, Japan and UK brands, therefore general public prefers Chinese generators. "We are expecting that import of power generation machinery may witness some rise in coming months owing to persistent long power outages across the country," importers said. Although, the country is facing severer power crisis with hours'' long loadshedding, Punjab is the most affected province, where domestic and commercial consumers are worst hit. Usually, Punjab''s different cities especially Faisalabad is seen in the grip of power riots, they said. The situation in Karachi - the economic hub of the country - is slightly better than Punjab but not satisfactory as people and industry also suffering from loadshedding. Therefore, Punjab is the main market for power generation machinery as compared to Karachi, which generators'' sale is slow. Since 2004-05 the country has been witnessing a massive surge in the demand and import of power generation machinery. It has spent over one billion dollars on the import of power generation machinery during the last fiscal year (2011-12).

Copyright Business Recorder, 2012

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Resolving energy crisis: new US envoy pledges to cooperate with Pakistan

The new US ambassador Richard Olson arrived in Islamabad on Saturday and will start his official duties after presenting his credentials to President Zardari as soon as possible. According to a statement issued by the US Embassy, Olson is extremely happy with his new assignment as ambassador to Pakistan. "I am excited to begin my work in Pakistan...I look forward to start working with Pakistanis from all sections of society to build a relationship based on mutual respect and common interests," it added. The new envoy has shown great interest in Pakistan as well as its people, saying he wanted to see Pakistan and meet its ''talented people.'' "I want to see as much of this beautiful country as possible and meet its talented people," says a US embassy statement released soon after Olson''s arrival. About fragile economic situation of the country, the new envoy has showed optimism about the potential Pakistan has for rapid growth, stressing the need for mopping up the opportunities by bolstering trade relations between the two countries along with meeting the burgeoning energy crisis. "There is tremendous potential in this country and I want to work with Pakistanis to increase economic opportunity, expand trade between the two countries, address the energy crisis, and improve the quality of education and health care for all," says the statement. PROFILE Ambassador Olson was sworn in by Secretary Clinton as ambassador to Pakistan on September 24, 2012. His previous assignment was as the coordinating director for development and economic affairs at the US Embassy in Kabul, Afghanistan from 2011 to 2012. Ambassador Olson served as US ambassador to United Arab Emirates from 2008 to 2011. He is a member of the senior foreign service, class of minister counselor. Olson joined the US Department of State in 1982. He has served in Mexico, Uganda, Tunisia, Saudi Arabia, Ethiopia, the United Arab Emirates, (where he served both in Abu Dhabi and Dubai), and in Najaf, Iraq. He was also Deputy Chief of Mission at the United States Mission to the North Atlantic Treaty Organization (Nato). His Washington assignments include: State Department Operations Center (twice), Nato Desk, the Office of Israel and Palestinian Affairs (twice, including as Director), and the Office of Iraqi Affairs, including as Director. He graduated from Brown University in 1981, receiving an A.B. in Law and Society (Honours) and History. Ambassador Olson has been awarded the Presidential Distinguished Service Award, the Secretary of State''s Award for Public Outreach, the State Department''s Superior Honour Award (three times), and the Secretary of Defence''s Exceptional Civilian Service Award (for his service in Iraq). Ambassador Olson is the father of two daughters. In his spare time, he enjoys cycling and hiking, says the statement.

Copyright Business Recorder, 2012

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Government enhancing capacity of existing power plants: Nargis Sethi

Secretary Water and Power Nargis Sethi has said that the government is working to increase the capacity of existing power plants. Talking to Pakistan Television (PTV), she said that the Ministry of Water and Power was trying to overcome the power shortfall and added that efforts were being made to enhance the power generation capacity. Replying to a question, she said that the WAPDA had disconnected the electricity connections for those institutions, which were not paying the bills. She said that the government had controlled the problem of loadshedding. She said that all resources were being utilised to create awareness among the people to save the energy. Replying to another question, the secretary said that a strict monitoring system was adopted to balance demand and supply in the energy sector. Nargis Sethi said that the ministry had given a slogan to people "to save the electricity, water, gas and made the life easy".

Copyright Associated Press of Pakistan, 2012

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ARL, Hyundai Engineering to sign contract

Attock Refinery Limited (ARL) and Hyundai Engineering Company Limited, Korea, have agreed to enter into a contract on Engineering, Procurement, Construction and Commissioning (EPCC) basis for the execution of ARL up-gradation project. The ARL project comprises Preflash Unit - to enhance refining capacity by 10,400bpd; Naphtha Isomerization Unit - to enhance production of Premium Motor Gasoline (PMG) by 20,000 tons per month; Diesel Hydrodesulphurization (DHDS) Unit - to reduce sulphur contents in High Speed Diesel and expansion of existing Captive Power Plant by 18MW, said an information sent to Karachi Stock Exchange (KSE) by ARL on Wednesday. The execution of DHDS Unit along with related expansion of Captive Power Plant is optional depending on ARL's sole decision subject to resolution of issues pertaining to incentives with the government of Pakistan, it added. Copyright Business Recorder, 2012 European agencies providing funds for Wapda projects October 26, 2012 RECORDER REPORT 0 Comments The two European development agencies namely AFD of France and KFW of Germany have been providing funds to the Pakistan Water and Power Development Authority (Wapda) for study and construction of four hydropower projects. These include the 35 (megawatt) MW-Harpo, the 122 MW-Keyal, the 40-MW Basho and the 32 MW-Trappi hydropower projects. A mission of the two development agencies jointly headed by AFD Country Director Nicolas Fornage and KFW Division Chief Engineer Patric Mehdi Shirzadi, on Thursday visited Wapda House to discuss financial, technical and environmental issues relating to the projects. The Wapda team was led by Chairman Raghib Shah during the meeting. Addressing the delegation, the Chairman said Wapda valued the support of international financial institutions and donor agencies - particularly the AFD and the KFW - for implementation of the projects in two vital sectors of water and power in Pakistan. Highlighting the significance of the foreign funding, he expressed the hope that the co-operation between the AFD, the KFW and the Wapda would further strengthen in the future projects as well. The Mission said their institutions had long standing relationship of mutual co-operation with Wapda, adding that they were considering fast implementation of the projects. In addition to other issues, scope of the four projects and institutional arrangement were also discussed in the meeting. Wapda Member (Power) Muhammad Qasim Khan, Secretary Muhammad Imtiaz Tajwar and the General Managers concerned also attended the meeting.

Copyright Business Recorder, 2012

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Energy woes: US says committed to helping Pakistan

The US on Wednesday said that it was committed to helping Pakistan overcome its acute energy crisis. Richard E. Hoagland, Charge d'' affaires, made these remarks in a letter on US-Pakistan energy co-operation while introducing a new electronic outreach service that will provide media with the latest developments in US-Pakistan co-operation. He said the first bulletin focuses on the US co-operation in energy and the efforts that are being made in this vital sector. Every day the United States and Pakistan are working together to alleviate Pakistan''s energy crisis, according to him. He said since the birth of Pakistan, the United States has been a committed partner of the nation. Today, that relationship has matured and expanded in many ways. "Our people have developed a deeper appreciation for one another and become more familiar through cultural and educational exchanges. Scientists from both our countries are collaborating on research and visiting each other''s institutions. We work side by side to improve health and education in Pakistan. We work together to develop Pakistan''s energy resources to power homes and businesses," he added. He said both the countries have deeper commercial and trade ties, and American and Pakistani entrepreneurs are meeting and sharing expertise and ideas. Many people are not aware that two-way trade between our countries now amounts to more than $5 billion annually, or the fact that Pakistan exports more products to the United States than to any other country in the world. "We consistently rank among the top sources of foreign investment to Pakistan. We want to see more because we believe that investment creates new jobs in Pakistan and expands the economy," he added. Over the years, the United States has maintained substantial civilian assistance programs in Pakistan. According to him, we know that a prosperous Pakistan is also good for the United States. According to him, upcoming bulletins will focus on other areas of US-Pakistani co-operation including education, economic development, and health. The projects highlighted in these bulletins are just some of the ways that the United States and Pakistan are working together to forge an enduring relationship.

Copyright Business Recorder, 2012

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US power company team meets President

A delegation of DACC Power Generation Company - a subsidiary of US-based DACC Global that provides alternative energy solutions internationally - called on President Asif Ali Zardari here on Wednesday. The delegation headed by Doug Melvin, President DACC Global, comprised Arnd Spinger, Joseph Steinfeldt, Mark Lohoff, Adnan Hameed, Zafar Ahmed and Nasir Waseem. Spokesperson to the President, Senator Farhatullah Babar, Chairman Intellectual Property Organisation of Pakistan, Hameedullah Jan Afridi, Secretary to President, Major Haroon Rashid (R), Secretary Water & Power, Nargis Sethi, CEO Alternative Energy Development Board, Arif Allauddin and other senior officials were also present during the meeting. Spokesperson to the President said while briefing about the meeting that DACC Solar Power Generation Company (DPGC) is pursuing development of a 50MW solar power project in Punjab, production of bio-fuel and installation of solar water pumps in the country. The President highlighted huge investment opportunities available in the country in the alternate energy sector and said that abundant sunshine and wind corridors offered great opportunities to the investors for harnessing this clean and efficient source of energy. The President said that energy shortage has been one of the major challenges being faced by the country at present. He said that the government was according highest priority to facilitating the investors undertaking business ventures in this sector. He said that the government was committed to promote the alternate means of energy production so as to reduce dependency on conventional modes and simultaneously to save the environment from further degradation due to burning of the fossil fuels. The President also recounted various incentives being offered to foreign investors in the energy sector. He said that Pakistan offered 17 percent Return on Investment (RoI) for renewable energy projects, which is one of the highest in the world. He said that Nepra was working on up-front tariff for solar power projects, which will further incentivize setting up of solar power plants in the country. The President also mentioned special control rooms in the Ministry of Water and Power and various offices of power distribution companies for monitoring and co-ordination purposes. He said that all efforts were being undertaken to avoid bureaucratic delays and to address the issues related to supply and distribution of power on spot basis. The President assured the company of all possible facilitation in its business ventures in Pakistan, hoping that the company will construct more solar projects in other parts of the country too, which will greatly help in meeting the energy demand of the country. The delegation expressed keen interest in further expanding their business in the country.-PR

Copyright Business Recorder, 2012

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SCCI chief invites Iranian businesspeople to invest in hydel energy

President, Sarhad Chamber of Commerce & Industry, (SCCI), Dr Mohammad Yousaf has invited the Iranian investors to invest in hydel energy and other potential sectors in Khyber Pakhtunkhwa to further boost up economic and trade relations between two brother Islamic countries. Dr Yousaf Sarwar stressed the need for taking proactive steps to curb cross border smuggling between Pakistan and Iran. He also proposed the trade linkages should be enhanced through exchange of local currencies of the both states. This, he stated while talking to Iranian Consul General, in Peshawar, Hassan Darveshvand here at Chamber House on Monday. On the occasion, SCCI Vice Presidents, Malik Iftikhar Ahmad Awan, Mohammad Anees Ashraf, executive body members Faiz Rasool, Nasir Khan, Musazai, and Ziaul Haq Sarhadi, Sabir Saraf, and Abidullah were present. Dr Mohammad Yousaf said the Pakistani business community is in great favour to bolstering mutual trade relations and linkages between two brother Islamic states. He stressed the need for enhancing current trade volume at US $10 million, which is currently about US $0.1million between Iran and Pakistan. He further asked for ensuring maximum facilities to business community of the both countries. He proposed that trade and economic relations should be enhanced by using of local currencies of the both brother Islamic states. "A joint venture would be initiated to promote investment by building linkages between business community of the Iran and Pakistan", he maintained. For this purpose, he said that there needs to exchange trade delegations of the two countries. The Iranian Consul General, in Peshawar Hassan Darvishvand while speaking on the occasion agreed with the proposals put by SCCI president, and informed that the leaders of the both Pakistan and Iran had in-principally decided to promote economic and trade relations through local currencies.

Copyright Business Recorder, 2012

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ADB BoDs discusses water, power projects

A seven-member delegation of the Asian Development Bank (ADB) Board of Directors (BoDs), headed by the Executive Director Maurin Sitorus, called on Pakistan Water and Power Development Authority (Wapda) Chairman Raghib Shah here at Wapda House. Members of the Asian Development Bank (ADB) discussed matters relating to the projects being implemented by Wapda in water and hydropower sectors. ADB Country Director Werner E Liepach and Wapda Member (Power) Muhammad Qasim Khan were also present on the occasion. About ongoing and future schemes, the Chairman said that Wapda, in view of increasing needs of electricity and water in the country, is working on over 20 large and medium-sized projects with cumulative power generation capacity of more than 20,000MW and water storage capacity of about 12 million acre feet (MAF). Wapda plans to add 6,000MW low-cost hydel electricity within next five years and another 14,000MW by the year 2020, he added. Shah said that in addition to utilising local financial resources, the investment and the assistance by various international financial institutions is also of immense importance in implementation of these projects.

Copyright Business Recorder, 2012

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KESC, Engro sign MoU to pursue projects of mutual interest

Karachi Electric Supply Company (KESC) signed a multi-faceted Memorandum of Understanding with Engro Corporation Ltd (Engro Corp) to cooperate on projects of mutual interest. The Memorandum of Understanding would cover four key initiatives; fertiliser off-take agreement from KESC's Bio-gas waste-to-energy power project for generation of 22MWs electricity; a 300-600MW coal project at Thar; import of LNG as alternate fuel for KESC's generation plants and supply of up to 65MWs electricity to Engro's Polymer and Chemicals unit at Bin Qasim. The Memorandum was signed by Tabish Gauhar, CEO of KESC, and Ali Ansari, President of Engro Corp, to mark the co-operation between the two private sector companies on four key initiatives. On this occasion, Tabish Gauhar, CEO KESC, said: "This multi-dimensional MoU is strategic in nature as both the private-sector companies are keen to work closely to address various issues confronting the energy sector. We are confident that together we would realise these key projects that are of significant importance for the national economy." Ali Ansari President of Engro Corp said: "This Memorandum will help deploy greater synergies across the two businesses and aid the growth process by leveraging competencies of both Engro and KESC in their respective domains. Together we hope to alleviate the grave issues in the energy sector that continue to affect the performance of companies and help create stronger value propositions for the industry and the economy." KESC is in the process of setting up a waste-to-energy power project that will produce approximately 22MWs of electricity. This bio-gas power plant will also have the potential to produce 100,000 tons of organic fertiliser every year. Under the terms of the MoU, Engro Fertiliser Ltd will explore the option of setting up an integrated fertiliser plant or entering into an off-take agreement for the organic fertiliser from this bio-gas plant. Another key initiative pursuant to this MoU will be the possibility of jointly working on a 300-600MW mine-mouth coal project at Thar, which will utilise the indigenous coal to be mined by Sindh Engro Coal Mining Company Limited holding the mining lease rights in Block-II of Thar. KESC in pursuing its strategy for fuel security will be working with Engro Vopak Terminal Ltd (EVTL) on the fast track innovative LNG project aimed at using the existing infrastructure at its terminal at Port Qasim to bring in intermittent supply of RLNG using a FSRU of Excelerate, USA as a trading vessel. In addition, it plans to work with Engro's subsidiary, Elengy Terminal Pakistan Ltd (ETPL), to obtain long-term terminal capacity in the 3 5mtpa floating LNG terminal at Khiprianwala, Port Qasim being developed by ETPL for delivery of first gas in 15 months after achieving financial close. Engro Polymer and Chemicals Limited (EPCL) will also be entering into negotiations with KESC for a supply of 65MWs, using high voltage (220 KV) transmission line from KESC to EPCL to fulfil its electricity requirement.-PR

Copyright Business Recorder, 2012

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Delegation leaves for Turkey

A 10-member delegation of the provincial government, led by provincial Minister for Planning and Development and Energy, Chaudhry Abdul Ghafoor, has left for Turkey on 8-day tour. Secretary Minerals Shahid Mahmood and Secretary Energy are also accompanying the minister. During his visit to Turkey, Provincial Minister for Energy Chaudhry Abdul Ghafoor will meet the representatives of various Turk companies for generating cheap energy and overcoming energy crisis.

Copyright Business Recorder, 2012

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Country likely to get power from Central Asia by 2016

Pakistan is likely to start getting supply of 1,000 MW electricity from Uzbekistan and Tajikistan through D.C transmission line by the year 2016 to help arrest the prevailing energy crisis. This was stated by Engineer Fazal Rabbi, Deputy Director, PMU, Peshawar Electricity Supply Company {Pesco) in his presentation on the concluding of the three-day workshop on power generation, transmission and distribution system with suggestions for improvement of system. The workshop was held under the auspices of Peoples' Empowerment and Consulting Enterprise (PEACE) with the assistance of USAID. He said that the transmission for the power supply will be about 7000 kilometre. He said that the company is making planning while taking into consideration future demand of energy and also updating its installations for the required capacity. He said that by the year 2020-21, Pesco will be required 3514 MW power for its consumers while national demand will reached to 31757 MW as compare to current demand of 18167 MW. He said that the company has a total of 90 grid stations in which 66 are of 132 KV. 11 KV feeders are 715 and 116 feeders are mixed with Tribal Electricity Supply Company (Tesco). The separation of mixed feeders could help maximum resolution of the problem of overloading on the Pesco transmission line. The company has a total of 54128 distribution transformers. He said that in summer power demand reached to 2600 MW while 1350 MW is supplied and winter the demand declines to 2000 MW and 1300 MW is supplied. He said that the feeding of TESCO grid stations through PESCO system causing overloading of the system. He said that consumption based recovery is only solution for bringing the company out of the losses. Engineer Fazal Rabbi said that after Nowshera, reclamation workshops will also be established in Peshawar and Bannu. Later, the participants of workshop constituted an advocacy forum comprising of civil society, engineers and journalists for preparation of recommendations for power sector policy. The forum headed by a chairman will work for enhancement of public participation in power system, will propose policy recommendations and sharing recommendations with technical experts, advocacy meeting with ministers. The objective of the workshop was to enhance public participation in power sector policy formulation and preparation of policy guidelines for the concerned federal and provincial government organisations. On the first-day of the workshop, Director Finance, Pesco, Anwar-ul-Haq Yusufzai gave detailed presentation on power distribution existing policies, challenges in their implementation and their resolutions. He also briefed the participants in details on the transmission line, distribution and future action plan for overcoming the present power crisis. On second day, Deputy Director, Planning and Facilitation, SHYDO, Engineer, Qayyum Zaman Khan highlighted the salient features of the hydropower power polices of 2001 and 2006 and incentives offered for attracting investors for the tapping the huge hydel potentials of Khyber Pakhtunkhwa. He unveiled the future plans of the organisation, particularly in the context of initiating new power projects in the province. He said that under the Hydro Development Plan 2011-2020, the organisation is going to start work on three projects with capacity of 56 MW. The projects will cost Rs 12 billion and will complete in three years. Similarly, he said that medium-term plan eight projects with generating capacity of 626 MW will be initiated. Some of the projects, he said will be carried under public-private partnership. He further said that eight projects to be initiated under plan will be completed in a period of five years. He said that 13 projects will be launched under long-term plans that will cost Rs 18 billion. He said that on completion these projects will earn huge revenue of Rs 54 billion per annum for the province.

Copyright Business Recorder, 2012

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'Foreign firms showing interest in renewable energy projects'

Local as well as foreign companies are keen to invest in domestic renewable alternative energy sector, which has a potential to generate around 143,000 megawatts of electricity, officials said on Sunday. A senior official of the Alternative Energy Development Board (AEDB) told Business Recorder on the sidelines of the second international exhibition and conference on Alternative Energy and Energy Efficiency arranged by Renewable and Alternative Energy Association of Pakistan (REAP). He said that the country had vast solar and wind energy resources and the government had embarked upon a project to attract foreign investment to help bridge the demand-supply gap by exploiting alternative energy sources. He further added that the government was expecting over $2.5 billion investment in the wind energy sector, besides wooing foreign investment in the solar energy sector. Sources said, at present as many as 11 wind projects with a cumulative capacity of 556MW were in advanced stages of completion and some of these would start supplying electricity by December this year. Others, they said, would be functional by 2013. An organiser of the exhibition said that last year, some 30 local companies participated in the exhibition, but this year, the number has increased to 85, of which 35 companies were foreign. He said that Japanese, Chinese and Korean companies had set up their stalls in the exhibition. Pakistan is currently developing wind power plants in Jhimpir, Gharo, Keti Bandar and Bin Qasim in Sindh. The government believes this would not only help reduce electricity shortage, but would also help ease the burden of oil imports that cost over $14 billion annually. The average wind speed in most parts of the world is between 6.2 and 6.9 meters per second (fair category). There are a few places that fall under 'good' category where the wind speed is between 7 and 7.3 m/s. However, the wind speed in the Sindh corridor was stronger than the above two categories as it stands in the 'excellent' category of 7.5 to 7.7 m/s. The official said that AEDB had approved the first phase of the New Park Energy, a 400MW wind project, near Port Qasim. With the help of China's Three Gorges Corporation, a 50MW wind energy plant would be installed at Jhimpir in Sindh by next year. A wind power pilot project has been made operational at Daman-i-Koh in Islamabad . As per break up, 340,000MW could be generated from wind, 2,900,000MW from Solar, 50,000MW from Hydel (large), 3,100MW from Hydro (Small), 1,800 MW from Bagass cogeneration, 500MW from waste while 550MW could be generated from geothermal power sources. A number of countries have successfully developed renewable energy sources from wind, solar, biomass, geothermal, ocean tides and bio fuels to minimise dependence on fossil fuels. According to a USAID report, Pakistan has a potential of producing 150,000MW of wind energy, of which only Sindh can produce 40,000MW. Keeping in view this rich potential, the government planned to achieve electric power of up to 2,500MW by the end of 2015 from wind energy. Former Prime Minister Yousuf Raza Gilani inaugurated the country's first-ever wind energy scheme 'Zorlu Energy Wind Power Project' with a generation capacity of 50MW in Jhimpir on April 2009. The project is nearly 60 percent complete and will start its trial production this year.

Copyright Business Recorder, 2012

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Pakistan can generate over 2000 megawatts power from biogas: UK expert says...

Pakistan blessed with huge energy resources has the capacity to generate over 2000 megawatts renewable energy from biogas. At least 120 to 160 megawatts could be generated from the available cattle farms and dung. This was said by Robert D Orr, Director Iqrow Agritee UK Limited and a foreign renewable energy expert, while addressing members of Pakistan Institute of International Affairs (PIIA) here at the institute's library on Saturday. The foreign expert believes that thousands of megawatts could also be generated through the waste currently being burnt and adding to pollution and other environmental hazards. A mixture of carbon dioxide and methane formed by the decay of organic waste matter and acts as a fuel is being used world-wide. Robert, who is already successfully running a biogas pilot project in Landhi area of Karachi, was of the view that small and medium sized biogas plants could be set up in various parts of the city where the cattle fields and manures are available. Besides, the waste and heat generated by the existing cement and sugar mills in the country could also be converted into energy with little investment and efforts. Biogas could be one of the best sources of cheaper and efficient fuel for energy after hydro system in Pakistan. According to Robert, there was no waste in the biogas system as its waste (liquid fertiliser) was also important source of fertiliser for agricultural sector. In reply to a query, Robert said thousands of tons civic wastes being pumped into the sea was also creating multiple issues related to both environment and fisheries sector. The only needs, he believes, were to have political will and reorganisation/use of available resources in the country. The event was also attended by Jonathan T Ward, Consul Economic and Commercial Affairs of USA in Karachi.

Copyright Business Recorder, 2012

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Hydel sector: Khyber Pakhtunkhwa offers incentives to investors

The provincial government of Khyber Pakhtunkhwa has offered maximum incentives for attracting foreign and local investors to tap huge hydel potential and get the rid the whole country of the current energy shortage. This was stated by Engineer, Qayyum Zaman Malik, Deputy Director Planning and Facilitation (SHYDO) while giving presentation on power generation policies, challenges and resolution here on the second-day of the three-day workshop for Khyber Pakhtunkhwa level advocacy forum. The workshop is being organised under the auspices of Peoples' Empowerment & Consulting Enterprise (PEACE) with the assistance of United States Assistance for International Development (USAID). Engineer Qayyum Zaman Malik while highlighting the objectives of the establishment of SHYDO said that KP has huge potential of hydropower potential, saying the organisation is making efforts for its utilisation through both public and private sectors, implementation of federal and provincial power generation related policies. Initially, he said the organisation was starting small hydel projects and provision of electricity to locals. About the incentives offered by the organisation for investors, he said it is being run by a Board of Directors with Chief Minister as Chairman. He said that beside secretaries of important departments, private sector has also been given representation on the body. He said that a separate directorate has been established, which is providing one-window facilities where applications are not only processed, rather necessary documents are also provided, agreements are signed and facilitation in land acquisition is also offered to investors. The SHYDO official said that after 2001 policy and the second the Hydel Power Policy of 2006 is enforced and efforts are being made and for improvement and making it more investor-friendly. Under Hydel Policy 2006, he said SHYDO offers solicited raw and unsolicited sites and sites with power potential up to 5 MW. He said that investment in hydel sector has high potential and very soon will become the largest revenue generating sector of the province. He said that different kinds of incentives have been guaranteed for investors. He said that for the evaluation of the proposals of private sector, an evaluation committee headed by the Managing Director processed proposals and procedure for the development of solicited and unsolicited sites has also been prepared. He said that a very transparent procedure has been prepared, saying that policies are aimed at protection of the interest of the people and the project is comprised of two kind of analysis that are comprising of financial and economic benefits. He said that the selection of investor is made on first come and first served basis, without any lengthy procedure and just registration and bank guarantee. He said that nominal fee structure is adopted that is merely Rs 500/kw/annum while the NoC is issued in the period of only one month of registration. The investor is required to complete the project in a period of three years and will have to pay the fee on starting of power generation. The investor will himself be responsible for the sale of his electricity. However, SHYDO can extend co-operation to him on his request.

Copyright Business Recorder, 2012

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'Beijing Hope willing to invest in solar energy'

Project Manager, Beijing Hope Solar Power Co Ltd, Rowen expressed his Company's willingness to invest in solar power energy sector in Pakistan. Speaking at a meeting with Karachi Chamber of Commerce and Industry (KCCI), he said that he discussed the issue of investment in solar power sector with various government organizations including Lyari Development Authority. He said that this Company has specialising in design, manufacturing, selling solar products and installing solar projects. He said that the Company already working in 40 different countries of the world on solar power units. He said that the product line is solar cell module, solar cells, solar power system and solar application products. President KCCI, Mohammad Haroon Agar, said that Pakistan is an energy hungry country and there is potential enough to invest in solar energy sector. He said Pakistan has set a target to add 5 percent, approximately 10,000MW, electricity through renewable energy by the year 2030. He said that Pakistan being on the Sun Belt is highly suitable for the generation of electricity through solar. He said that with huge availability of lights Sindh holds a great potential for extensive exploitation of solar energy for not only agriculture but also extensive use of environmental friendly alternative energy for household. He said that there is a great possibility if Beijing Hope installs its plant in Karachi or elsewhere in Sindh both government of Sindh and private sector will cooperate with it especially to look into the chance of joint venture.

Copyright Business Recorder, 2012

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Punjab government approves over Rs 4.44 billion energy sector scheme

The Punjab Government approved a scheme of energy sector with an estimated cost of Rs 4.442.924 million for "Chief Minister''s Ujaala Programme" on Wednesday. Three other development schemes of various sectors of the economy were also approved worth Rs 2936.847 million in the 14th meeting of Provincial Development working Party of current financial year 2012-13 presided over by the Punjab Planning and Development Board Chairman, Javaid Aslam. Secretary Planning and Development Punjab Arif Anwar Baloch, members of the Planning and Development Board and other senior representatives of the relevant Provincial Departments also participated in the meeting. The approved development schemes included: Preservation and Restoration of Shahdara Complex of Monuments (Revised) at the cost of Rs 461.837 million, Punjab Youth Internship Programme (Revised) at the cost of Rs 1507.234 million and Comprehensive TB Control Programme in Punjab (2012-2015) at the cost of Rs 967.776 million.

Copyright Business Recorder, 2012

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Conversion to coal looks imminent: government takes decision on existing, new power plants

The government of Pakistan (GoP) has decided to convert all the existing and new power plants to the specifications of Thar Coal versus earlier plan of converting these to imported coal. In a historic decision, the government has decided that a coal off-take agreement would be signed between Generation Company (Genco) and Sindh Engro Coal Mining Company (SECMC). This decision is in line with the MoU signed between Pakistan Electric Power Company (Pepco) and SECMC, whereby it was agreed that after the approval of the feasibility report, Pepco would sign Coal Supply Agreement with SECMC. Pakistan''s existing power generation mix with 40 percent reliance on imported furnace oil is not sustainable as reflected in country''s inability to utilise 100 percent of its power generation capacity due to lack of funds for furnace oil purchase. Development of power plants on imported coal will merely shift reliance from one imported energy source to another with inherent international pricing risks. Our furnace oil based energy tariff has gone up from 1.8 cents in mid-90s to 15 cents. Against this, we rejected Shenua''s offer of Thar coal based fuel energy component at Usc 2.7/KWh in mid-90s which would have increased only to USc 3.6/Kwh now. Thar has an enormous energy potential. SECMC''s Thar Block-2, which is only one percent of the entire Thar coal reserves, can produce 4000MW for next 50 years. Total foreign exchange savings for 4000MW of Thar coal based power plants are estimated at more than US $50bn for life of the project. SECMC has completed the feasibility study on Thar coal project, confirming the technical, commercial and environmental viability of the project. All the required government approvals have been obtained and the mining work is likely to start later this year, subject to the coal off-take agreement between Genco and SECMC. Government of Sindh is also diligently working on the completion of infrastructural set-up, which is in line with the development of the mine. SECMC''s mining project, which will cost US $1.3 billion, is expected to take less than four years for completion. Failing which, the company will be liable to pay the liquidated damages. The timeline of mining project matches well with Genco''s power project development at Jamshoro. GENCO is planning to convert its Jamshoro''s oil-based power plants and establish new power plants at the same site. This conversion will not only yield a cheaper power tariff, but will also improve the efficiency of the existing plants and will become a model for the other Genco and Independent Power Producers (IPPs). After Jamshoro, Genco will convert its Muzaffargarh units to coal-based power plants. As per GOP decision, Thar coal will be utilised for new power plant as well as the conversions. To cover any timing mismatch, imported coal will be utilised until the indigenous Thar Coal is available for the said conversions. This coal off-take agreement will be yet another feather in the present government''s cap, which is eager to resolve the energy crisis with long-term solution. This decision will unlock the potential of Thar and will enable the GOP to meet the country''s power requirements as well as to produce a number of other chemicals including petroleum products and urea. This visionary decision by GoP will realise the dream of Mohtarma Benazir Bhutto and will enable the government to save billions of dollars from oil imports and will spend the same on the development of the industrial sector and for the well-being of the people of Pakistan.-PR

Copyright Business Recorder, 2012

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Italian Chamber to set up offices in Pakistan by year-end By Our Correspondent

LAHORE: The Italian Chamber of Commerce will start working in Pakistan by the end of this year and initially it will set up its office in Karachi while other chapters will be established later in cities like Lahore, Italy’s Ambassador to Pakistan Adriano Chiodi Cianfarani has announced. Speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Monday, the ambassador said the Italian Chamber offices were being set up in Pakistan to promote trade and economic activities between the two countries. He pointed out that a number of leading Italian oil and energy companies were operating in Pakistan and more would soon be putting their money here. “Italy would like to cooperate with Pakistan in renewable energy, especially solar energy, as it has been cooperating with other countries in this field,” he stressed. Underlining the need for frequent exchange of trade delegations for promotion of trade and investment, Cianfarani said a big Italian trade delegation would soon visit Pakistan to have first-hand knowledge about available opportunities. Italy, a major export market of Pakistan in Europe, comes third in terms of trade with Pakistan. Germany and the UK hold the first and second positions whereas France is at fourth. Average bilateral trade between Pakistan and Italy stood around $1.2 billion from 2009-2011 and has been in favour of Pakistan for the last two years. In 2011, Pakistan’s exports to Italy accounted for 3.1% of total exports, standing at $777 million. Italy has supported Pakistan’s bid for a free trade agreement with the European Union. It is because of such support that from January 2014, Pakistan will begin drawing benefits of Generalised System of Preferences-plus status. Speaking on the occasion, LCCI President Farooq Iftikhar invited Italian investment in the energy sector, describing it as one of the most lucrative areas for foreign investors. “Pakistan is in dire need of foreign investment in the energy sector, which will give rich dividends,” he said. Iftikhar highlighted the export potential of Pakistan’s quality fashion garments particularly those made of finest leather, sports goods, etc. Likewise, Pakistan can supply organic as well as inorganic fresh fruits and vegetables. He suggested that both sides should aim to double trade figures by 2015 with the help of efforts from the public and private sectors. In this regard, the two countries should work together to organise catalogue exhibitions, exchange trade information and organise visits of trade delegations on a reciprocal basis.

Published in The Express Tribune, 2012

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Solar energy project: Punjab government, German firm sign MoU

A Memorandum of Understanding (MoU) on Solar Energy Project was signed between Punjab government and Germany's Solar Power Project Development Firm in Berlin, according to which the German firm would work on a mega project for generation of solar energy in Punjab. This was revealed in a information of DGPR received here on Saturday. In this regard, the representatives of Germany's Solar Power Firm, accompanied by a high-level delegation, would pay a visit to the Punjab province in November to launch a solar energy project. A large business delegation from Germany accompanied by the representatives of German Solar Power Firm, would also visit Punjab in November, which would include representatives of well-known energy companies of Germany, and other high-ranking officials. Terming the signing of MoU for establishment of solar energy project in collaboration with the German Company in Punjab, as a highly welcome step, Punjab Chief Minister Muhammad Shahbaz Sharif said that vast opportunities of investment in the solar energy sector exist in Pakistan, especially in Punjab. He called upon German companies to assist Pakistan in finding new and sustainable methods for acquiring energy and said that the German technology is unprecedented in the field of solar energy, throughout the world. Muhammad Shahbaz Sharif said that Punjab government would extend maximum possible facilities and incentives to the German companies, as meeting the challenge of energy crisis in an effective manner is the top most priority of the Punjab government. Extending invitation to the German energy companies for making investment in the energy sector of Pakistan, especially Punjab, Chief Minister Muhammad Shahbaz Sharif said that large opportunities of electricity generation through coal, hydel and thermal exist in Punjab. He said, although we have more than five hundred million tons of coal reserves, yet Pakistan's industrial and agricultural production, along with its economy, is getting severely affected due to the energy crisis. The Chief Minister pointed out that the country badly needs energy and Punjab government desires the German companies to make investment in the solar sector, to meet our energy requirements.

Copyright Business Recorder, 2012

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Jabban Hydropower Project to be completed by March: Wapda

Construction work on the 22MW-Jabban Hydropower Project has been expedited and the project is likely to be completed in March 2013. The Pakistan Water and Power Development Authority (WAPDA) Chairman Raghib Shah stated this during his visit to the project being constructed in the Malakand Division of Khyber Pakhtunkhwa Province. WAPDA Member (Power) Muhammad Qasim Khan and other officers concerned were also present during the visit. Speaking on the occasion, the Chairman said that early completion of the hydropower projects is vital to mitigate electricity shortfall in the country. He said that WAPDA is implementing a two-pronged strategy on priority basis for optimum utilisation of the indigenous hydropower resources in view of the growing demand of electricity in the country. Under the strategy, WAPDA is not only constructing a number of large and medium-sized hydropower projects, but also rehabilitating and upgrading its aged hydel power stations. Jabban Hydropower Project is a component of the two-pronged strategy, he further said. Earlier, the Chairman had a detailed round of the project area and witnessed the accelerated work at the site. Expressing satisfaction over pace of work, he directed the project authorities to further gear up their efforts for completion of the project as per schedule. The Chairman was briefed that the Jabban Hydropower Project would contribute 122 million units of low-cost hydel electricity annually to the national grid. It is pertinent to mention that the French Development Agency AFD is providing 25 million Euros to help complete the Jabban Hydropower Project. It may be mentioned that the Jabban Hydel Station was established in 1937 with a generation capacity of 9.6 MW. It was the biggest hydropower station when Pakistan came into existence in 1947. In 1952, its generation capacity was elevated to 19.6 MW with the addition of two turbines of 5 MW each. During the early days of Pakistan when there were not any of the hydel stations like the Warsak, Mangla and Tarbela, the Jabban Hydropower Station played a pivotal role in the development of the newly-born country. After a significant contribution towards the socio-economic uplift of the remote areas for about seven decades, the power station was badly damaged in a fire incident. Thereafter, WAPDA decided to undertake complete rehabilitation instead of its repair. Under the rehabilitation work, four units of 5.5 MW each are being installed to elevate its generation capacity to 22 MW.

Copyright Business Recorder, 2012

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Neelum-Jhelum hydropower project: Pakistan in talks with China for $1.7 billion financing

Pakistan is negotiating with China for securing $1.7 billion financing for six projects, including 969-megawatt Neelum-Jhelum hydropower project. Documents obtained by this correspondent showed that the Draft Buyer Credit Loan Agreement for Neelum-Jhelum hydropower project worth $448 million was received by Pakistan from Eximbank China. The agreement was vetted by the Law and Justice Division and concurred by the Ministry of Finance, Federal Board of Revenue (FBR) and the Ministry of Water and Power. The matter of signing of loan is pending clearance from Ministry of Commerce Peoples'' Republic of China. The loan agreement was discussed with Chinese Economic and Commercial Consular on September 24 this year who has linked the matter with the issue of Safe City Islamabad Project. At present a review petition on the Safe City project is pending with the Supreme Court and the outcome is still awaited. Another project titled ''Small and Medium Dams'' worth $440 million is under negotiations between Pakistan and China. Loan applications for concessional Buyer''s credit facilities to finance the project that includes Darwat Dam, Sindh, NaiGaj, Sindh and Naulong, Balochistan dams worth $75 million, $228 million and $137 million respectively have already been forwarded to China Eximbank for consideration. The documents show that the loan application to finance the projects titled ''Reconstruction of 61-kilometre-long Nawabshah-Sang Road Project, Sindh and ''Procurement of Machinery for Irrigation Infrastructure Project'' worth $20 million and $15 million respectively have been forwarded to China Eximbank for approval. In order to receive financing for Jaglot-Skardu Road project worth $454 million and Raikot-Sazin Section of the Karakoram Highway worth $282 million in the form of a soft-term loan facility, the Economic Affairs Division (EAD) has forwarded the request to China Eximbank. The approval for financing of these two projects is still awaited.

Copyright Business Recorder, 2012

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Mukhtar announces setting up of two coal cities near Thar

Minister for Water and Power, Ahmad Mukhtar on Tuesday announced establishing two coal cities dependent on imported and local coal near Thar generating 2500MW each and spread over 3,000 acres. Mukhtar made this announcement at the licence award ceremony for Heavy Mechanical Complex 3 (HMC-3) as nuclear safety class-1 equipment manufacturer, by the Pakistan Nuclear Regulatory Authority (PNRA). "I am planning to set up two coal cities, and this idea is yet to be discussed with the President and the Prime Minister, but I hope both will approve my plan," he added. This project is expected to be discussed at a high level meeting on Wednesday (today) to be presided over by Prime Minister Raja Pervez Ashraf. He maintained that coal-fired generation is the only thing that can save Pakistan. Mukhtar also discussed the issue of circular debt which has choked the energy sector, saying if the government could get rid of circular debt, 25 percent of Pakistan''s problems would be resolved. The minister did not talk about nuclear energy and when a journalist asked why he opted to discuss coal energy at a function arranged in connection with nuclear energy, he replied that he knew nothing about nuclear energy, and could not speak on nuclear energy in presence of the country''s top scientists. Later, talking to reporters, Mukhtar did not comment on Thar coal gasification project initiated by Samar Mubarakmand, saying he did not know if this project would be a success. He also denied he accompanied Prime Minister Raja Pervez Ashraf during his recent visit to Thar wherein the Premier witnessed coal gasification project. "I was not with the Prime Minister..... there are other ministers who were accompanying the Prime Minister," he said. Earlier, Dr Amjad Pervez, Chairman PAEC said that with the grant of licence to HMC-3 as nuclear safety class-1 equipment manufacturer Pakistan has entered a new phase of nuclear equipment manufacturing. He maintained that Pakistan is now in a position to establish nuclear equipment manufacturing industry out of PAEC and for this purpose both the public and private sector can take advantage of its expertise. Chairman PAEC applauded the minister for clearing the payments of nuclear power plants, adding that all nuclear power plants are operating at full capacity. He said Karachi nuclear power plant is still in operation despite the fact that it is now 40 years old whereas its actual life was 30 years. Answering a question, he said that Chashma-3 and Chashma-4 will be completed by 2016, adding that PAEC will achieve the target of 8800 MW nuclear power by 2030. Replying to another question, he said that PAEC has not yet planned to set up Chashma-5 and Chashma-6, but indicated that these projects would be around 500 MW each. Chairman, PNRA, Engineer Anwar Habib said that before the grant of nuclear safety class-1 equipment, HMC was manufacturing low class equipment. He appreciated the performance of HMC in getting this licence, saying that licencing is a step forward by the PAEC towards indigenization of nuclear program. "For such a program, the government support is essential which I hope will continue," Habib maintained. He, however, said the prime responsibility for public and staff''s safety from harmful substances is PNRAs which has established a regulatory framework with the assistance of China Nuclear Regulatory Authority. "We applaud China Nuclear Regulatory Authority in developing a framework for PNRA and licencing to HNC-3," he added. Earlier, Waqar Butt, Member Engineering, gave a brief history of HMC and the process of obtaining a licence, adding that Pakistan has entered the list of those countries which are manufacturing nuclear equipment of international standards. He said Pakistan started indigenization process in 70s when restrictions were imposed on Kanupp.

Copyright Business Recorder, 2012

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Government mulling replacing energy savers with CFLs

After failing to improve governance in the power sector through improved management, the government is planning to eliminate conventional tungsten bulbs known as incandescent bulbs (IBs)- energy savers, on the pattern of India, China, USA as well as a number of European states, well informed sources told Business Recorder. The sources said advantages of replacement from IBs to Compact Fluorescent Lamps (CFLs)CFL also include saving of $400 million annually in addition to about two million tons of reduction in Carbon Dioxide emission. For this purpose, the government will extend subsidy on import and local production of energy savers across the country, the sources said adding partnership with international and local companies will be encouraged by the government. "Yes, we are proposing to the highest economic decision- making forum to approve our plan regarding replacement of IBs with Compact Fluorescent Lamps (CFLs)," the sources added. CFLs contain mercury, which is poisonous for human health even in small amounts, and is considered a concern for landfills and waste incinerators where the mercury from lamps may be released and contribute to air and water pollution. The project has been jointly funded by ADB and AFD of France to the tune of $40 million and $25 million respectively. The loan has been extended to GoP which will bear the cost of CFLs. According to the plan, the government will distribute 30 million CFLs amongst consumers, approximately two for each consumer as replacement of IBs. Pakistan produced 90 million IBs in 2011-12 indicating a decreasing trend from 110 million during 2009-10. In addition, 20 million IBs were imported from China in 2011-12. Pepco had claimed that the project will help save subsidy extended to lifeline consumers estimated at $60 million per year. The project will yield Clean Development Mechanism (CDM) revenues of about $12.6 million by 2012 and another $20 million by 2018. The project will also help reduce consumers'''' bills by Rs 300 per bulb per annum. The electricity saved can be sold to higher tariff consumers generating additional revenues of approx $29 million per year for discos.

Copyright Business Recorder, 2012

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Petroleum Policy-2012: 50 blocks on offer under bidding route

The government is offering for bidding 50 blocks for exploration and production of oil and gas under the newly-approved Petroleum Policy-2012, a senior Petroleum Ministry official said on Saturday. According to the official, out of these 50 blocks, four would be given to four different countries under government-to-government agreements. The government, he said, in its Petroleum Policy-2012 had increased the rates of gas for exploration and production companies to $6 per Million British Thermal Units (mmbtu) from $4.2 per mmbtu in 2009. Because of the attractive rates, the companies, which had stopped exploration and production activities in various blocks, had now started working again and positive results are on the cards. This will significantly reduce gas shortage in the country in next one and a half years, he said. Under the new policy, ENI, an international exploration and production company, has discovered huge gas reserve of 300-400 Billion Cubic Feet per Day (bcfd). He said the country has gas reserves of 23 Trillion Cubic Feet per Day (tcfd) and according to international estimates, Pakistan has 51 trillion cubic feet of shale gas reserves for which the policy was chalked out. He also disclosed that the country has 28 TCF reserves of low BTU gas and 20 TCF of tight gas reserves. "We will be able to recover low BTU gas from Zin Block in Balochistan by next year and that will be injected into the power sector to produce electricity." Pakistan''s entire economy is heavily dependent on natural gas as feedstock for industries such as fertiliser, fibre and plastics. It is important to pursue shale gas field’s development under reasonably tight environmental regulations to minimise risks to the ground water. Under the Petroleum Policy-2012, Exploration and Production (E&P) companies are being offered 40-50 percent higher prices for the extracted gas compared to $4.26/mmbtu announced in Exploration and Production Policy 2009. Companies, which succeeded in recovering gas from tight fields within two years, would get 50 percent increase over the 2009 price and, if it takes more time, they will get only 40 percent raise. As an additional incentive, the lease for the fields will now be for 40 years, instead of 30 in the 2009 policy." Under the policy in zone-III onshore well-head gas price for E&P companies is $6 per mmbtu, for Zone-II $6.3 per mmbtu and for zone-I $6.6 per mmbtu. Furthermore, the gas price for Offshore Shallow Zone will be $7 per mmbtu, $8 per mmbtu for Offshore Deep Zone and $9 per mmbtu for Offshore Ultra Deep Zone.

Copyright Business Recorder, 2012

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ARL, Hyundai Engineering to sign contract

Attock Refinery Limited (ARL) and Hyundai Engineering Company Limited, Korea, have agreed to enter into a contract on Engineering, Procurement, Construction and Commissioning (EPCC) basis for the execution of ARL up-gradation project. The ARL project comprises Preflash Unit - to enhance refining capacity by 10,400bpd; Naphtha Isomerization Unit - to enhance production of Premium Motor Gasoline (PMG) by 20,000 tons per month; Diesel Hydrodesulphurization (DHDS) Unit - to reduce sulphur contents in High Speed Diesel and expansion of existing Captive Power Plant by 18MW, said an information sent to Karachi Stock Exchange (KSE) by ARL on Wednesday. The execution of DHDS Unit along with related expansion of Captive Power Plant is optional depending on ARL's sole decision subject to resolution of issues pertaining to incentives with the government of Pakistan, it added.

Copyright Business Recorder, 2012

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38 new gas reservoirs discovered in four years: official

Oil and gas Exploration and Production (E&P) companies drilled 102 wells during the past four years and discovered 38 reservoirs, raising the natural gas production from 3.98 Billion Cubic Feet (BCFD) per day to 4.25 BCFD. A senior official of the Petroleum Ministry said on Friday that the Ministry awarded 41 exploration licences between 2008 and 2012. The official said that the government was likely to offer 60 blocks for bidding under the new Petroleum Policy to expedite the exploration and production of oil and gas. Around 750 Mmcfd gas would be added to the system within the next 12 to 18 months, which would increase the local gas production to 5 Bcfd, he maintained. The official said that search for oil and gas had been halted in Khyber-Paktunkhwa and Balochistan because of adverse security situation. During 2011-12, he said, a total 10 discoveries were made which included: (i) Mulaki-1 producing 13.34 Million Cubic Feet (MMCFD) per day and 71.09 barrels of crude oil; (ii) Halini-1 producing 630.9 barrels of crude oil, (iii) Gharo-1 producing 0.03 MMCFD gas and 296.97 barrels of crude oil, (iv) Mohano producing 0.05 MMCFD gas and 128.53 barrels of crude oil, (v) Pir Apan-1 19.9 MMCFD gas and 432.9 barrels of crude oil, (vi) Piaro Deep-I 11.85 MMCFD gas and 111.37 barrels of crude oil and (vii) Nupur Deep-1 producing 3.09 MMCFD gas. According to the official, the share of gas in Pakistan's energy mix was 51 percent, the largest in the world. The government, he said, was also working on importing gas, including Iran-Pakistan (IP) gas pipeline and Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline projects to meet the growing energy demand in the country. "Work on the Iran-Pakistan gas pipeline project is at a fairly advanced stage. Under the project, Pakistan will build nearly 800-kilometre-long pipeline from Iran-Pakistan border to Nawabshah. The venture has entered into the implementation phase and work on front end engineering and design, feasibility and detailed route survey has already been completed, 2012," the official maintained. According to him, the government will soon invite bids for construction of the pipeline to complete the project within its timeframe. Similarly, Tapi gas pipeline project is being undertaken, which would cost around $7.6 billion. All stakeholders have achieved consensus on a number of issues and accordingly signed three agreements in December 2010. First gas flow is expected in 2016 and Pakistan will get 1.325BCFD of gas - almost double of Iran-Pakistan project. During last four years, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) provided 1.4 million new gas connections to domestic, commercial and industrial consumers.

Copyright Business Recorder, 2012

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Pakistan ready to import fuel from India if price is ''right''

Petroleum Minister Asim Hussain on Tuesday said the country was willing to import diesel and jet fuel from rival India if the price is "right". The statement by visiting Pakistan petroleum minister was the latest sign of warming ties between the nuclear-armed neighbours who have fought three wars since independence from Britain in 1947. "If the right prices are given, we have no problems importing (diesel and jet fuel)," Hussain said on the sidelines of a petrochemical conference in the Indian capital, according to the Press Trust of India news agency.

Copyright Agence France-Presse, 2012

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Pakistan invites Iran to invest in gas pipeline

TEHRAN (NNI): The government of Pakistan has invited Iran to take part in the construction of the Pakistani side of a multi-billion-dollar gas pipeline project that is due to take Iran's rich gas reserves to the energy-hungry Pakistan. The offer was raised during a meeting between Tehran's Ambassador to Islamabad Ali Raza Haqiqian and Pakistan's Petroleum Advisor Asim Hussain. According to the officials of the Inter-State Gas System Company present in the meeting, Iran has been asked to help in the construction of the pipeline from the Iranian border, Fars news agency reported Saturday. The construction of the Pakistani segment of the pipeline is expected to start by December. The government is expected to issue tenders for the construction phase of the gas pipeline in the coming week. The Pakistani government had reiterated its resolve to push ahead with the $1.5 billion Iran-Pakistan) gas pipeline project. Addressing a seminar on 'Pakistan's Potential in Oil and Gas Sector', organized by the Petroleum Institute of Pakistan (PIP), Inter-State Gas Systems (ISGS) Managing Director Mubeen Sulat said that Pakistan and Iran had made a "lot of progress" on the project. "Iran has completed almost 90% work on the gas pipeline and we have completed a detailed engineering survey and a bankable feasibility study for the gas import project, which has entered the implementation stage," he said. Pakistan will import 750 million cubic feet of gas per day (mmcfd) under the IP pipeline project, with the first flow scheduled for December 2014. The 2700-kilometer long pipeline was to supply gas for Pakistan and India which are suffering a lack of energy sources, but India has evaded talks. Last year Iran and Pakistan declared they would finalize the agreement bilaterally if India continued to be absent in the meetings. According to the project proposal, the pipeline will begin from Iran's Assalouyeh Energy Zone in the south and stretch over 1,100 km through Iran. In Pakistan, it will pass through Baluchistan and Sindh but officials now say the route may be changed if China agrees to the project.

Copyright The Frontier Post,2012

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Agreement on petroleum exploration in Thatta

Islamabad—The government on Friday awarded an exploration licence to a joint venture for seismic survey and drilling of two exploration wells in district Thatta, Sindh province. The exploration licence was executed over block No. 2467-14 (Jati) falling in Zone-Ill with Kirthar Pakistan B.V. (KPBV) (Operator) and Pakistan Petroleum Limited (PPL) holding 75% and 25% working interests respectively, covering an area of 2465.33 sq. kms located in district Thatta, Sindh province, according to a press release issued by the Ministry of Petroleum and Natural Resources here. The joint venture has committed to undertake 330 work units in the Licence area amounting to US $ 3.3 million during the Phase-l (first 3 years) of the initial term of the Licence. The work programme includes 500 line kms 2D seismic survey and drilling of two exploration wells. KPBV is a wholly owned subsidiary of Kuwait Foreign Petroleum Exploration Company (KUFPEC), existing under the laws of The Netherlands. KUFPEC is active in Africa, Middle East, Far East, Australia and South East Asia regions. The company has been active in Pakistan since the mid of 1980 and currently holding working interests in Qadirpur, Zamzama, Kadanwari, Bhit and Bhadra, Sukhpur and Zarghun blocks. The Minister has also emphasized that since execution of new Exploration Licences of Petroleum Concession Agreements forms an integral part of the Government’s drive to attract investment in oil and gas sector, therefore, maximum number of exploration licences may be executed with the multinational as well as public sector.

Copyright Pakistan Observer, 2012

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Khyber Pakhtunkhwa Oil & Gas Company to be established within months: Hoti

Chief Minister Khyber Pakhtunkhwa, Ameer Haider Khan Hoti, has said that provincial Oil and Gas Company will be established within two months to utilise the oil and gas resources for progress and prosperity of the province. Addressing the oath taking ceremony of Traders Association of Takhtbai here at Chief Minister's House, he said that the establishment of Khyber Pakhtunkhwa Oil and Gas Company and oil refinery was essential for taking benefit from the natural resources. President, Traders Alliance, Khyber Pakhtunkhwa, Sharaft Ali Mubarik, President Takhtbhai Traders Association, Haji Maazullah Khan, ANP Provincial Vice President Engr. Abbas Khan, District President Farooq Akram Khan and members of Takhtbahi business community were also present. The chief minister revealed that serious efforts for establishing oil refinery were underway so that the province could produce refined oil. The chief minister said that the province received only Rs 2 billion in 2008 as royalty under the head of oil and gas as there was no check on the production at that time, however, due to the efforts of the government, the province received Rs 16 billion last year in this connection. He said that the future of Khyber Pakhtunkhwa was linked to the utilisation of its oil, gas and hydel power generation potentials. He said that the present government has undertaken sincere efforts in this regard. He said that the future governments needed to continue these projects. The chief minister said that the government was following uniform development in the province from the day one. He said that the Annual Development Programme of Khyber Pakhtunkhwa was a bit more than Rs 30 billion in 2008, while the volume of current year ADP stood at Rs 94 billion. He said that provincial autonomy, NFC Award and 18th, 19th Amendments not only benefit Khyber Pakhtunkhwa rather these had also strengthen the other provinces. He termed stronger provinces essential for stable Pakistan. He said that government has taken steps for permanent solution to energy crisis and load shedding and decided to take advantage of hydel power production opportunities in the province. He said that provincial Action Plan has been devised and implemented due to which 2100 MW power will be generated through 24 different projects. He said that it will earn revenues worth billion for the province. He said that oil and gas reservoirs in southern districts will be utilised for economic self-sufficiency and prosperity of the people.

Copyright Business Recorder, 2012

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IHS, SSGC to sign agreement regarding gas terminals

KARACHI: IHS, a global information company having expertise in energy, economics and supply chain management, is all set to make its presence felt in Pakistan, an official said on Thursday. The company is in talks with a gas utility company for consultancy regarding receiving and distribution terminals for liquefied petroleum gas (LPG) and liquefied natural gas (LNG) to be formed in Pakistan, he said. Humayun Qureshi, chairman of the Marketing International Services, local partner of IHS, said that they were about to close a consultancy agreement with the Sui Southern Gas Company (SSGC) for setting up LNG and LPG terminals. Qureshi said that they are also working with Engro on consulting services for coal mining and usage. Besides, various industry leaders and government departments have sought proposals from IHS so that this important aspect of the country’s energy requirement could move forward fast. There would be an acute shortage of natural gas in the upcoming winter; therefore, the government is planning to import LNG and LPG on fast-track basis, he said. IHS has organised web-conferences with the world’s leading specialists to kick start the process, he said. The government is going to invite bids for building two large plants and retrofit another to handle imports of liquefied natural gas, he said, adding that the government has already approved the first-ever LNG import but it does not yet have the ability to handle the imports it plans to begin next year. The gas imports are intended to help ease the problem. The contracts would involve building two terminals to re-gasify LNG. Pakistan wants the new terminals to have a capacity of 400 million cubic feet per day (mmcfd) each, he said. Anthony Few and Julian Lambert, vice president and director for the EMEA Region for IHS, recently presented the vast portfolio of services for executives from the energy sector. IHS also presented some of their world famous brands Lioyd’s Register, CERA, Intermat and the vast database on the energy sector. IHS also provides business intelligence and forecasting other sectors of the global economy, including the maritime and aerospace sectors, he said. MISL represents IHS in Pakistan, which is already an established name in the country’s oil and gas and aerospace sectors and represents other Fortune 500 companies such as General Electrics, Crane and SPX among others.

Copyright The News, 2012

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Exploring shale, other gases

ISLAMABAD, Oct 8: To tap all available gas reserves, the government is working on policies for exploration of shale gas, and some other gases, including marginal, flared and stranded. This was stated by Dr Asim Hussain, advisor to the Prime Minister on Petroleum and Natural Resources while presiding over a seminar titled “Pakistan’s Potential in Oil and Gas Sector,” organised by the Petroleum Institute of Pakistan (PIP) here on Monday. He said that the government had already notified polices related to tight gas and low BTU gas but results of this venture would be visible in the coming years, as both these areas require specialized technical expertise to explore such gas reserves. However, regarding margin and standard gas fields, Dr Asim said that the policy to harness gas from this area would be finalised soon. The margin fields have limited and small gas reserves that are not economically viable for large E&P companies. “This policy would also help encourage smaller companies, possibly the local ones, to enter the upstream sector,” the advisor said. Highlighting, the petroleum policy 2012, the advisor said that due to higher incentives being offered in the policy around 750 mmcfd gas is likely to be added in the system by June 2013, that is an increase of 20 per cent in the existing flow. He also called upon the exploration and production companies operating in Pakistan to support the PIP and to help develop it into a think-tank for policy initiatives for the oil and gas sector. Dr Asim Hussain said that Pakistan offers great potential in the oil and gas sector and the government was introducing new policies to meet the rising energy demand. The participants were informed that oil and gas sector offers huge potential for investment in Pakistan, due to rising demand. It was stated that the country imported oil to the tune of $15 billion which constituted around 36 per cent of the overall import bill of the country, while value of gas produced in the country is worth $4.3 billion and oil $2.4 billion. The seminar was informed that 1.6 million consumers have been given gas connections at a cost of Rs10.41 billion in the past four years, while 879km of transmission lines and 39,707km of distribution and service lines were added to gas network with an investment of Rs61.164 billion in the era of the incumbent government. In his concluding remarks, PIP Chairman Asim Murtaza stated that the PIP would conduct a series of seminars in the next couple of months on topics of “Shale Gas potential in Pakistan”, “Fast Tracking LNG Imports” and “LPG Outlook in Pakistan.”

Copyright Dawn, 2012

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Govt asked to form company for LNG Company

LAHORE, Oct 8: The textile industry on Monday called for immediate implementation of a government decision to import 200mmcfd liquefied natural gas (LNG) on fast track basis by a special purpose vehicle (SPV) a joint venture of the Sui Southern Gas Company Limited, the Sui Northern Gas Pipeline Limited and any interested private investor(s) to bridge looming shortages in the fast approaching winter. The Economic Coordination Committee (ECC) last week decided to import 1bcfd of LNG per day through two long-term projects of 400mmcfd each to be completed in over 30 months and a short-term project of 200mmcfd by SVP through fast track process to be completed in 12 to 18 months. Gohar Ejaz of All Pakistan Textile Mills Association (Aptma) told Dawn on Monday that the industry wanted immediate implementation of the short-term project. “The government should immediately create the joint venture company (of SSGCL and SNGPL) to import LNG by SVP. Private sector is ready to buy 26 per cent of the total equity of the company. But its management should be in the hands of the industry representatives,” he said. He said the immediate formation of the joint venture company was important to start work on the creation of infrastructure for import of LNG as well as to locate availability of the special ship equipped with liquid gas storage and its re-gasification. “We have already wasted a lot of time. Further delays in the implementation of the project will only result in industrial closures and job and export losses, something the country can hardly afford at the moment,” he said. In answer to a question, Gohar said the industry was focusing more on the completion of the short-term SVP project because the two long-term projects integrated projects in the private sector required a lot more time for implementation, which the economy could hardly afford. “Besides, the long-term projects involve several other issues. As opposed to the SVP project to be completed by the funds (Rs30bn) raised from gas infrastructure development cess (GIDC) on the industrial consumers, the private sponsors of the long-term projects of 800mmcfd could take more than three years to actually implement them because of the involvement of banks for raising funds for the creation of LNG terminals, demands of LNG suppliers for long-term supply contracts and sovereign guarantees, etc. On the other hand, we do not have a funds issue for the SVP project. The SSGCL also has a terminal where only facilities for offloading LNG from the ship into the gas company’s system are to be created. So we think the SVP project can be implemented without the hassles that the other two long-term LNG import projects could face. Additionally, the joint venture company can keep building the capacity of the SSGCL terminal for increasing quantity of imported LNG,” he said. Gohar further asked the government to also enter into a government-to-government agreement with India for laying a 50km pipeline from Bathinda to Lahore for import of 200mmcfd gas from there. India’s has already extended the offer for the same, he said. He said this could help add 200mmcfd gas to the SNGPL system in the next 90 days, before shortages peak on rising domestic demand during winter.

Copyright Dawn, 2012

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OMV, partners sign deal on Latif gas field

Austrian oil and gas giant OMV announced Friday that it had signed a deal with joint venture partners ENI of Italy and Pakistan's PPL to develop the Latif gas field in the southern Pakistani province of Sindh. "On October 4, 2012, OMV and its joint venture partners signed the development and production lease deed for Latif gas field," the Austrian company said in a statement. The development work is to include the drilling of new wells and the construction of a new pipeline to carry the gas to an OMV-operated plant 50 kilometres (31 miles) away. The project is to cost an estimated 107 million euros ($140 million), OMV said. It added that it hoped to begin production in late 2013 and achieve a "net production of 5,700 barrels of oil equivalent per day" by 2014.

Copyright Agence France-Presse, 2012

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OMV team calls on Zardari

A delegation of OMV, an Austrian oil and gas company, headed by Jaap Huijskes, the CEO of the industrial conglomerate, called on President Asif Ali Zardari at Bilawal House on Thursday evening. Jaap Huijskes was accompanied by Erwin Kroll, Senior Vice-President for Middle Eastern Region, Peter Seitinger, General Manager of OMV Pakistan and Austrian Ambassador Axel Wech. Dr Asim Hussain, Adviser to the Prime Minister on Petroleum and Natural Resources, Special Secretary to th President Major (Retd) Haroon Rashid and Secretary Ministry of Petroleum and Natural Resources Dr Waqar Masood Khan and other senior officials were also present during the meeting. Jaap Huijskes, while briefing the President about his company's business ventures in Pakistan since 1990 in oil and gas exploration, evinced keen interest in extending the firm's operations in Pakistan. The President, while welcoming their interest, urged them for increasing the quantum of investments in the country and to take advantage of investor-friendly E&P policies announced by the government. He appreciated OMV for being a major foreign gas producer in the country. The President said that as an energy-deficient country endowed with vast untapped oil and gas resources, Pakistan offered great opportunities to entrepreneurs and investors. He said the investment was secure and legislative protection had been given to investment to enhance comfort of businessmen. The President said that last month he had signed into law a bill that sought to ensure the continuity of incentives to entrepreneurs. The President also invited OMV to consider entering into joint ventures with public sector organisation such as OGDCL and PPL. The delegation thanked the President for the facilitation and support extended to the company by the government in its business ventures.-PR

Copyright Business Recorder, 2012

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Purchase of bulk gas: government negotiating with American LNG supplier

To deal with the looming gas shortfall during upcoming winter the government is negotiating with an American Liquefied Natural Gas (LNG) supplier for purchase of bulk gas, a senior petroleum ministry official told Business Recorder. According to the official, through this plan the government may purchase a gas field in any of the top gas producing countries. "We are looking for up to 3 billion Cubic Feet Per Day (BCFD) gas so that uninterrupted gas could be supplied to all segments of economy", he maintained. About high prices of imported gas, he said that the consumers have to choose to have uninterrupted gas supply or face gas shortage. "The government is making all efforts to resolve gas crisis and we are not in a position to continue subsidies on natural gas", he added. In other parts of the world gas is not as cheap as in Pakistan, he said and added Qatar was the third largest gas producing country but it was not providing pipeline gas to domestic consumers. He said that the Ministry has finalised a plan according to which Compressed Natural Gas (CNG) stations would be phased out, saying that in Pakistan even Prado and other luxury vehicles were using CNG. "If a person can buy a Rs 10 million vehicle he should run it on petrol instead of CNG", the official said. However, he added that government would continue to supply CNG to vehicles up to 1000 horsepower and Public Service Vehicles (PSV). Regarding other imported gas projects, including Iran-Pakistan (IP) gas pipeline project and Turkmenistan-Afghanistan-Pakistan-India (TAPI), he said that IP has entered an advance stage while General Sales Purchase Agreement (GSPA) of TAPI has also been concluded but these projects would take time, especially TAPI. During upcoming winter there will be serious gas shortage in the country, he added. "The negotiation with India on import of Liquefied Natural Gas has also reached an advanced stage, hopefully during this winter we will start importing 200 Million Cubic Feet per Day (MMCFD) in the shape of LNG from India" the official maintained. According to Petroleum Ministry officials at present Pakistan is facing a gas shortage of 1.5 to 2 Billion Cubic Feet (BCF) which during upcoming winter would reach 3 BCF. To cope with the energy crisis the government wants to complete LNG project by the end of 2012 and for this purpose government has engaged public sector gas utilities SNGPL and SSGC to build required infrastructure, the official concluded.

Copyright Business Recorder, 2012

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PPL focused on fast-track exploration activities: MD

Pakistan Petroleum Limited (PPL) is focused on fast-track exploration and development activities to bring new discoveries on stream through extended well testing and early production facilities, arrest production decline in mature fields by deploying latest technology, installing booster compression facilities and enlarge portfolio of producing assets through local and international acquisitions. This was stated by PPL Managing Director and CEO Asim Murtaza Khan while speaking at the PPL's 61st annual general meeting held at a hotel here on Friday. He also highlighted significant milestones achieved by the company during the fiscal year FY12. Key among these were the production increase from PPL-operated assets, a first in the company's recent history, enabled in part by effectively curtailing the decline rate of Sui Gas Field from five to three percent, significant progress in exploration activities in blocks acquired in 2009 and capturing business expansion opportunities on the international front. He said the gas production from Kandhkot filed had increased to the highest level of 210mmcfd however the biggest challenge for the company was how to maintain all the production. "The buyer (Wapda) is taking only 100mmcfd and the remaining gas is not being used despite the fact that there is acute shortage of power in the country. Definitely, it is a loss not only for the company but also for the country, he added. "We have written a letter to inform the government about the situation and it is expected the matter would be resolved", he said. He pointed out that PPL had adopted fast track production strategy and taken various initiatives to increase production. "Currently the PPL's share in the total gas production in the country is over 24 percent while the company's share in total oil production is around nine percent." He said PPL had successfully won an Exploratory Block in Iraq which lied 110 km north east of Baghdad. The operational works including de-mining followed by seismic surveys and simultaneous geological and geophysical studies would commence shortly. "It is historic achievement not only for PPL but for the country", he said. He said PPL participated in bidding for corporate acquisition of MND Exploration and Production Limited, a wholly owned subsidiary of KKCG SE, incorporated in UK. He pointed out that post acquisition, PPL would be holding a 100 percent owned subsidiary incorporated in UK with partner-operating working interests in five producing and exploration assets based in Pakistan and Yemen. He said the horizontal well Sui-93 (M), using first ever Under-balanced Drilling technology in the country, was successfully drilled and commissioned during the year, adding the company's drilling target for the current fiscal year was four wells. He pointed out that gas reserves in Sui field were depleting at an average of five percent, however the declining trend had successfully been reduced by two percent to three percent. He pointed out that the seismic surveys had been completed in all the fields acquired in the last petroleum policy in 2009-10, and drilling process was expected to be started by the end of this year. The work continued in those gas fields despite floods, he added. Replying to a question, he said the company was bearing an additional cost on security in Balochistan that was around 20 percent of its total operational expenditure in the province. On another question, he said the government's decision to issue Rs 82 billion bonds to reduce circular debt was mainly to bailout oil marketing companies especially PSO. He pointed out that PPL was facing same situation and its receivables were at the same level despite issuance of Rs 82 billion bonds. However, he hinted that improvement in the financial position of oil marketing companies especially PSO would benefit the entire sector. He was expecting a separate bail out package for gas sector in the country. He pointed out that PPL had invested over Rs 800 million in Balochistan under its corporate social responsibility account, adding the PPL had constructed a 50-bed hospital and a water supply pipeline project in the province under CSR programme. PPL Chairman Hidayatullah Pirzada added that the company had provided job opportunities to over 1,800 local people in Dera Bugti. "The PPL has provided 10 qualified doctors and their salaries are being paid by the company. PPL offers 55 scholarships to the local students in various top colleges and schools." The PPL held 61st Annual General Meeting (AGM) on Friday, and approved the financial statements together with the auditor's report for the financial year ended June 30. It further approved payment of final cash dividend of 65 percent on ordinary share capital and issue of bonus shares in proportion of one ordinary share for every four ordinary shares held by members. This is in addition to an interim cash dividend of 50 percent already paid to the shareholders, bringing total distribution for the financial year 2011-12 to 115 percent cash dividend and 25 percent bonus shares. In major highlights in FY12, the company's sales revenue increased by 23 percent to reach Rs 96.2 billion. The company's profit before taxation increased to Rs 64.5 billion representing 33 percent growth over last year while profit after tax of Rs 40.9 billion for the FY12 was all time high up 30 percent from the previous year's profit. The company's earning per share has increased by 30 percent to Rs 31.13 in this period. In the development of discoveries, the company's first gas from Extended Well Testing from Makori East discovery in Tal Block was achieved in June 2012. The exploratory well Tolanj-1 was successfully tested and completed as gas producer. The discovery is planned to put on EWT for which different options are being evaluated.

Copyright Business Recorder, 2012

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