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News Headlines for the month of
FEBRUARY 2013

Primary energy consumption grows by almost 80pc in 15 years

KARACHI - Pakistan’s gas requirements are growing hastily, while the domestic gas production is not growing at the same pace. Primary energy consumption in Pakistan has grown by almost 80pc over the past 15 years, from 34 million tons oil equivalent (TOEs) in 1994/95 to 60 million TOEs in 2010/11 and has supported an average GDP growth rate in the country of about 4.5pc per annum. Consumer Rights Commission of Pakistan (CRCP) in collaboration with Citizens’ Voice Project hold policy dialogues on “Role of Government and Regulators in the Gas Sector of Pakistan” with parliamentarians, policy makers, regulators and civil society organisations here on Wednesday. CRCP recommended Effective Governance & Regulation for development of Gas Policy in dialogue. The present natural Gas crisis clearly indicates that overall governance of the gas sector needs improvement. The growing energy shortages have made life difficult for Pakistanis across the board. The quality of life of citizens has deteriorated. Dialogue reported that economic growth rates have been stunted, and industry and agriculture have suffered. The Government of Pakistan has not yet recognising magnitude of crisis and its effect on the people and the economy. Government has to take emergency measures to address, manage and reduce the impact of crisis. The reasons for present crisis in gas sector have both technical and governance aspects. The dialogues have given comprehensive insight into the current situation of transparency, public participation and accountability processes in gas sector of Pakistan. The intervention is likely to result in enhanced understanding of the sect oral issues for the stakeholders. Most important of all, it is expected to inform the policy makers and especially the public representatives about the governance situation of the sector and shall persuade them to take positive actions for sectoral improvement. In Pakistan, industrial and fertilizer sectors are getting gas on subsidised rates, while the CNG stations were being subjected to an exorbitantly high tariff regime, neglecting the general public’s interest. The gas consumers’ woes could not be resolved unless Pakistan had an autonomous regulator free of political interference. Besides, the problems could not be resolved without improving people’s access to information, putting in place a system of strict penalties on consumers involved in gas pilferage and non-payment of gas bills.

Copyright The Nation, 2013

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Chinese firms showing interest in energy sector: PCJCCI

The Chinese business corporations have shown their keen interest in establishing power plants in Pakistan. Founder President Pakistan China Joint Chamber of Commerce and Industry (PCJCCI) Shah Faisal Afridi stated this in a statement on Wednesday. He said that the horrifying energy crisis had painted havoc on the horizon of Pakistan's economy and PCJCCI was lodging an impressive campaign to attract Chinese investment companies towards energy sector in Pakistan. The acquisition of appropriate technology from China in the field of renewable energy and alternative sources of energy like solar, Nano technology, wind power and run of the river power plants is the priority agenda of the PCJCCI, he said adding that a match making process was being planned to materialise the investment. He was confident that a delegation comprising representatives of such corporations would soon be invited to Pakistan to review joint venture opportunities available in the field of energy. President PCJCCI further said that he along with his team was endeavouring to increase China's stake in region that will ultimately help flourish Pakistan. At this juncture, the crippling economy of Pakistan can only be bailed out through enhancing the quantum of foreign direct investment besides promoting the exportable surplus from Pakistan, he added and assured to perform key role in bringing Chinese investment in the country. Shah Faisal Afridi stressed the need for establishing harmony relationships with Chinese business community through arranging business to business meetings of both countries' business fraternity with an increased participation in trade fairs and exhibitions. Pakistan China joint Chamber will provide the facility of video conferencing to its members for developing easy access trade channel besides imparting working knowledge of Chinese language. He said that with the active participation of our Chinese counterparts, areas of business interest for both countries' business people are being aggressively worked out. While answering the question of media representative, he said that Pakistan China Joint Chamber would be having representation of both countries. He especially accentuated to take advantage of Chinese experience of creating Special Economic Zones as the most economic growth of China has been experienced through these zones. He applauded the government for promulgating Special Economic Zone Act, 2012.

Copyright Business Recorder, 2013

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Pakistan and EU envoy discuss cooperation to overcome energy crisis

The European Union (EU) has extended co-operation to Pakistan to overcome energy crisis by providing technical assistance as well as investing in Pakistan's oil and gas sector. Patricia Flor, EU Special Representative for Central Asia, in a meeting with Dr Asim Hussain, Advisor to the Prime Minister on Petroleum and Natural Resources, extended the co-operation, who called on him here on Tuesday. Dr Asim Hussain said that Pakistan had always welcomed the co-operation extended by EU in various sectors of the economy. The meeting was also attended by Abid Saeed, Secretary Petroleum and Syed Tauqir Hussain, Joint Secretary (I&JV) Ministry of Petroleum and Natural Resources. The Advisor stated that Pakistan needs to balance its energy mix, for which various projects and policy initiatives have been taken including policies on Shale Gas, LPG, LNG, Tight Gas, Flare Gas and Marginal Gases. He welcomed the interest of EU in helping out Pakistan in the Oil and Gas Exploration. Asim Hussain apprised the EU Ambassador about the ongoing projects of oil & gas sector in Pakistan and informed that the government is providing incentives to the companies intending to invest in Oil and Gas sector of Pakistan. The EU Ambassador was also requested for possible collaboration in the field of Petroleum education, particularly at the Institute of Science and Technology recently established by OGDCL under the direction of Advisor. Ambassador Patricia Flor said that EU was already providing assistance to Pakistan in various sectors of economic and social development. She thanked the Advisor for meeting him and assured that the EU would extend all possible help in the energy sector and transfer of technology.

Copyright Business Recorder, 2013

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Energy projects: Punjab government, ADB sign accord

A Memorandum of Understanding (MoU) was signed between Punjab government and Asian Development Bank, under public-private partnership, for promotion of co-operation in energy sector, at Model Town here on Wednesday. Under the MoU, collaboration would be made in energy-related projects for alternate water, coal and other energy sources. Secretary Energy signed the MoU on behalf of the Punjab government, while the representative of Asian Development Bank signed the document on behalf of the bank. The ceremony was attended by Punjab Chief Minister Muhammad Shahbaz Sharif, Special Assistant Zaeem Hussain Qadri, Chairman Planning and Development, Secretary Information and Country Director of Asian Development Bank Pakistan Resident Mission Warner Liepach and other representatives. Under the MoU, Punjab government and Asian Development Bank would identify various energy projects and, after making initial review, would extend co-operation to each other in this regard. In the first phase, Punjab government would not be liable to pay any fee, while, in the second phase, complete co-operation would be extended by Asian Development Bank, under transaction advisory service agreement, with regard to technical, financial, legal, commercial and other aspects of the project, besides preparing a financial structure of the project. In the third phase, a fund would be established, under a separate transaction advisory services agreement, and a fund manager would be appointed. Speaking at the occasion, Shahbaz Sharif said that national economy is greatly suffering because of energy crisis, and the country is faced with long hours of load shedding due to the gap between the demand and supply of electricity. He said Punjab government is taking steps with its own resources for generation of energy, without which progress is unachievable. He said co-operation of the Asian Development Bank in energy projects is a significant development, for which ADP would not receive any fee for initial estimation of the project. He said there were vast opportunities of generation of power from bigasse in the province while Punjab had large reserves of coals as well from which energy could be acquired. He said electricity can also be produced from biomass. He said an agreement for a 400-megawatt project at Cholistan has been struck with a German Company AEG. He said completion of energy-related projects expeditiously is the need of the hour to make Pakistan progressive and prosperous. He said, along with energy sector, co-operation with Asian Development Bank would also be made in infrastructure development and other sectors. The Chief Minister said Punjab government is speedily working on energy projects in the province.

Copyright Business Recorder, 2013

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Punjab energy sector: USAID inaugurates internship programme

Director USAID Melissa Knight along with Daniel Vicent, Deputy Chief of USAID energy policy project visited the Muzaffargarh Thermal power station and inaugurated the energy sector internship programme for Punjab. Twenty university graduates including three women from under developed area of Punjab province started their internship at Muzaffargarh Thermal Power station and the National Transmission Despatch Centre (NTDC). The six-month internship programme, sponsored by USAID Energy Policy Project, seeks to impart practical exposure and learning opportunities to young graduates who also are contributing to improvements of Pakistan's power sector facilities. "The internship programme aims to enhance the capacity of the energy sector by providing fresh perspectives from bright, energetic young university graduates while the interns receive on the job and classroom training," said Melissa Knight, Director USAID office of Energy at the internship launching ceremony at Muzaffargarh Thermal Power station. "Through the programme, the interns will have the opportunity to apply their intellect and knowledge in a real working environment and gain experience which will help them transition to the professional world." Other speakers at the event including Sultan Zafar CEO Muzaffargarh Thermal Power station and Syed Saleem Akhtar, Chief Engineer NTDC, Imtiaz Waraich, Head of CEC BZU University and Daniel Vincent also spoke on the occasion. Ms Knight indicated her appreciation for the efforts of Muzaffargarh TPS and NTDC in designing and implementing the internship programme in collaboration with USAID Energy Policy Project. She also recognised the support extended by the BZU University in the recruitment process of the interns. She said that internship programme was launched in late 2012, which has already placed 60 interns at different public sector thermal power stations across Sindh and KPK .The interns were selected after a rigorous and transparent process of aptitude test and panel interviews. During the visit to the Thermal Power Station, the USAID energy office Director reviewed the pace of progress on rehabilitation and expressed her satisfaction observing that it was an important power generating facility of the country. The power plant is expected to be operational with full strength in June 2013 to supply electricity to consumers and will provide relief to them.

Copyright Business Recorder, 2013

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Pakistan formally becomes member of IRENA

President Asif Ali Zardari on Tuesday signed the Instrument of Ratification for Pakistan to become a member of the International Renewable Energy Agency (IRENA). Spokesperson to the President Senator Farhatullah Babar said that the IRENA that was founded on January 26, 2009 in Bonn, Germany, aimed to promote widespread and increased adoption and the sustainable use of all forms of renewable energy. To date 149 countries had signed the statute of IRENA while 76 had ratified it, he added. The Spokesperson said that recognising the advantages of this international forum, Pakistan took active part in the formative phase of IRENA and participated actively in the preparatory meetings that were held before this forum was formally established. He said that Pakistan signed the Statute of IRENA in June 2009 and became the 87th country to sign it. IRENA facilitates its members' access to all relevant renewable energy information, including technical data, economic data and resource potential data. It shares lessons learnt on international best practices, policy frameworks, capacity-building, financial mechanism, technology transfer and related energy efficiency measures.-PR

Copyright Business Recorder, 2013

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Ministries, departments and autonomous bodies: MoWP prepares energy efficiency, conservation plan

Ministry of Water and Power has prepared energy efficiency and conservation plan to conserve 15-20 percent through different measures in federal government ministries, attached departments and autonomous bodies. Official sources told Business Recorderthat Pakistan these days is facing acute shortage of electric energy (to the tune of thousands of megawatts) mainly due to supply chain problems. In the short run the best possible solution to this problem is conservation of energy in all sectors of the economy. On an average there is a potential of 15 percent to 20 percent savings through energy efficiency and conservation measures. The steps involved in the energy efficiency and energy conservation include change of energy wastage attitude, use of energy efficient lighting, Occupancy Sensors, heating ventilation and Air Conditioning (HVAC) products. In order to develop a culture of energy conservation and to encourage the general public to use energy efficient products, demonstration by federal government departments can play an important role. The sources said, to address similar problem, many developed and developing countries of the world either have adopted or under the process of adopting various "energy efficiency and energy conservation" measures in all sectors of economy. Among various other measures most of the countries have adopted various energy efficiency and conservation practices in the Government sector for demonstration purposes. According to sources, ENERCON has recently conducted a survey of various government buildings at Pakistan Secretariat in Islamabad where it has been established that it is common practice at all government offices that most of the persons have energy wastage attitude coupled with use of highly inefficient lighting, Heating Ventilation and Air Conditioning (HVAC) products. This is resulting not only in wastage of precious energy resources but a negative image of the government among general public is resulting in negative political fallout. Ministry of Water and Power maintains that an effective EE and EC demonstration at federal government offices will entail three major aspects ie control on energy wastage culture, support to local manufacturing of energy efficient products and mass awareness of public on purchase and use of energy efficient lighting, motion sensors and HVAC products thus leading towards saving considerable amount of energy (approximately 20 percent of the present consumption by government offices) and further replication of similar EC techniques and EE technologies by the provincial governments and private sector. The government will take measures to conserve energy in the country. All federal government offices, all ministries their attached departments, all semi government organisations and all autonomous bodies should be instructed to follow strict energy efficiency and energy conservation measures: (a) switch off building lights when not in use;(b) circulation of office orders on avoiding wastages of energy;(c) maximum usage of sun light during office hours;(d) no use of electric heaters by using warm clothes;(e) air conditioners to be used economically between 11 am to 2 pm by senior officials only;(f) avoid using milky light covers on lighting installations; (g) ban on use of incandescent bulbs and conventional fluorescent tube lights with electromagnetic ballasts;(h) removal of extra lights from the non occupancy areas; (i) ban on use of window air conditioners;(j) any official person to be designated as energy manager for monitoring and control purposes be given the task to reduce the energy consumptions in their respective offices;(k) in case multiple lights turn on with single power switch then adjustment of lights and circuits to ensure that one light could be turned on with single switch ;(l) use of occupancy sensors to control wastage of power in lights;(m) use good quality air conditioners having high energy efficiency ratio and service value; and (n) use of efficient lighting products like Compact Fluorescent Lamps (CFLs) with high power factor, Light Emitting Diodes (LEDs) and Surface Mounting Diodes (SMDs) etc.

Copyright Business Recorder, 2013

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Various power projects approved by PPIB Board

The newly-appointed Board of Directors of the Private Power and Infrastructure Board (PPIB) on Thursday approved a number of Public-Private Partnership (PPP) projects, necessary for meeting growing power demand. It was the first meeting of the new Board after receiving statutory status through an Act of the Parliament and overall 92nd meeting presided by the Minister for Water and Power, Ahmad Mukhtar. The minister said giving due importance to hydropower, the Board advised PPIB to go ahead with 665 MW Lower Palas Valley and 496 MW Lower Spat Gah Hydropower projects in PPP mode in Kohistan Valley with the co-operation and consultation of Khyber Pakhtunkhwa government. The Board also approved the extension of Letter of Support to 100 MW Gulpur Hydropower Project located on Poonch River/Gulpur, Azad Jammu and Kashmir and change in its shareholding structure along with extension in Letter of Interest to 548 MW Kaigah Hydropower Project located near Dasu, District Kohistan to accelerate development of these projects. In addition, PPIB was allowed to undertake 90 MW Neckeherdim-Paur and 58 MW Turtonas-Uzghor hydropower projects in Chitral region through private sector investment. The minister added that to facilitate local coal and wind power projects all efforts are being made including finalising upfront tariff for these projects which will be initiated with the proactive support of Nepra. Managing Director PPIB N A Zuberi briefed the Board on achievements of PPIB under the 1994 and 2002 power policies whereby PPIB has, so far, successfully implemented 28 private power projects of more than 8,500 MW which is almost one third of the total installed capacity of the country. The current portfolio of projects which are at various stages of processing comprises 21 hydro, coal, oil & gas-based power projects of more than 9,000 MW out of which 16 hydropower projects totalling 7,032 MW generation capacity are expected to be on line this year up to 2020. The minister stated that hydropower, bagasse and power from coal are on top priority and our government has been focusing on the same for quite some time. He added that some remarkable developments have been made in the hydropower sector during our tenure whereby 84 MW New Bong Hydropower Project on Jhelum River near Mangla Dam is due to be commissioned by next month and further more 147 MW Patrind Hydropower on Kunhar River near Muzaffarabad, construction has been started at a fast pace. The meeting was attended by the Secretary Planning Commission, Chief Secretary Azad Jammu & Kashmir, Chairman Wapda, Additional Secretary Finance, Secretary Energy Government of Sindh, Additional Secretary Energy Government of Balochistan, representatives from Ministry of Petroleum and Natural Resources, and Federal Board of Revenue. Private sector members from Punjab, Sindh, Khyber Pakhtunkhawa and Balochistan besides Directors of PPIB and other senior government officials were also present.

Copyright Business Recorder, 2013

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Using imported coal as fuel: ADB pledges $1.7 billion for two power plants

The Asian Development Bank (ADB) has agreed to extend $1.7 billion assistance for setting up two imported coal power projects, after Prime Minister Raja Pervez Ashraf reversed his decision taken in October last year to use just Thar coal as fuel for such power plants. This was decided at a meeting between the Minister for Water and Power, Ahmad Mukhtar and visiting Director-General, Central West Asia Department Klaus Gerhaeusser. "The ADB will provide $900 million assistance for setting up of a new 600-megawatt power plant on imported coal at Jamshoro (Sindh). The Bank would also provide financial assistance for conversion of the existing 800MW Jamshoro power plant on imported coal," says an official announcement. The bank had rejected the Prime Minister''s decision, saying that the Bank would not invest in projects using Thar coal because of its inferior quality. Physical work on Thar coal is almost non-existent. The Minister requested to quickly start the project. The Director-General of ADB did not make any commitment on Diamer-Bhasha multi-purpose project. According to an official statement, Director General said that the Bank is aware of the importance of Diamer Basha Dam (DBD) project for Pakistan and its construction would play a major role in easing the energy problem in Pakistan. The case for financing DBD project is under process and more talks would be held with Pakistani authorities on the financing of mega projects as technical team of the bank is due next week, he told the meeting, the official statement quoted the ADB officials as saying in the meeting. Ahmad Mukhtar thanked the banks'' team for providing financial assistance for coal power and other power plants. He said that Diamer Basha Dam is very important project to generate cheaper electricity and would provide a life line to the country''s economy. He asked the Asian Development Bank (ADB) to perform its role as lead financer to complete this mega project without any delay. The Minister said that the government attached a high priority for the construction of major water and power projects and intended to generate cheaper power using indigenous resources such as water, coal and wind. The Diamer-Bhasha dam would generate 4500MW besides having a live storage of 6.4 million acre-feet. He said that ADB had been major financier of water and power sector projects of generation, transmission and distribution. He stressed the need for early completion of the process for provision of funding for Diamer-Bhasha dam. He briefed the meeting on the current power situation and the steps being taken to make the sector more efficient. He also stated that recoveries are improving, line losses are being reduced, reforms are being implemented, energy conservation measures are being implemented and electricity theft is being dealt with iron hands. ADB delegation did not discuss any water project despite the fact that the Ministry of Water and Power had tabled projects worth $4-5 billion investment.

Copyright Business Recorder, 2013

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Dasu Hydropower Project: international experts discuss recommendations with Wapda, World Bank

The international panel of experts for Dasu Hydropower Project discussed their recommendations about the work done on the project so far during their visit to Wapda House on Monday. The meeting, presided over by Chairman Wapda, Syed Raghib Shah, was also attended by the senior representatives of the World Bank, the project consultants, Wapda members and other senior officers concerned. Addressing the meeting, chairman Wapda said that addition of a sizeable quantum of low-cost hydel electricity to the national grid is vital not only for mitigating power shortages in the country, but also decreasing dependence on costly imported fuel for electricity generation. For the purpose, he said, Wapda is simultaneously working on the prioritised 4500MW-Diamer Bhasha Dam Project and 4320MW-Dasu Hydropower Project in addition to a number of other under-construction projects. Besides initiating construction work on Diamer-Bhasha Dam as early as possible, Wapda also plans to undertake Dasu Hydropower Project in various stages, he added. While appreciating the recommendations made by the international panel of experts, the chairman said that their reports are valuable to strengthen technical, environmental and social aspects of the project. He said that the recommendations would be looked into as per best international practices. It is pertinent to mention that detailed engineering design of Dasu Hydropower Project will be finalised by March, this year. The World Bank senior representative expressed keen interest in the financing of project and said that the WB will send its appraisal mission for Dasu Project in March-April, this year. The Chairman thanked the World Bank for showing its interest to provide funds for Dasu Hydropower Project, adding that the World Bank has been a reliable partner for construction of various Wapda projects. It is worth mentioning that Dasu Hydropower Project is proposed to be constructed on River Indus, 7 kilometres upstream of Dasu village in Kohistan district of Khyber Pakhtunkhwa.

Copyright Business Recorder, 2013

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IP project: Country to get 750mmcfd gas Asim tells National Assembly

Under the Pak-Iran gas pipeline project, Pakistan would get 750 million cubic feet gas per day (mmcfd) from Iran and the quantity with addition of a provision in the contract could be increased to 1,000 mmcfd per day. "Iran has in principle agreed to provide a 250 million dollars fund and representatives from both the sides are currently engaged in negotiations for finalisation of terms of the agreement," Advisor to the Prime Minister on Petroleum and Natural Resources, Dr Asim Hussain, told the National Assembly on Friday. The Advisor also informed the House in written replies to some questions of the members that as a part of Bankable Feasibility of Pak-Iran Gas Pipeline Project completed in 2012 by Technical Consultant - ILF Beratende Ingenieure GmbH, the average gas supply shortfall was forecast as 2100 mmcfd in 2014-15, which was the year in which the gas flow was targeted under the IP project. The forecast figure showed that the supply of gas under the Project would fill less than 50 percent of the demand supply gap, he added. Dr Asim said that keeping in consideration the fast depleting natural gas reserve and increasing trend of natural gas demand, apart from IP Project, the government was also taking other measures, which included import of gas from Turkmenistan, import of LNG etc to fill the sharply widening demand supply gap. Answering to another question, Dr Asim said that during the reported period, total quantity of 11.32 million barrels of oil and 151.81 billion cubic feet of gas had been produced from the new wells discovered in the country.

Copyright Business Recorder, 2013

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Neelum-Jhelum Project: TBM starts tunnelling

In yet another significant development, state-of-the-art Tunnel Boring Machine (TBM) has successfully started its operation on the 969 MW-Neelum Jhelum Hydropower Project located in Azad Jammu and Kashmir, said Wapda sources. With this development, Pakistan has joined the club of those countries, which are using such high-tech machines for construction of the hydropower projects. On the recommendation of consultants, two German-manufactured tunnel boring machines have been imported through an international competitive bidding, at a cost of US $92 million - US $46 million each, to accelerate construction work on strategically important Neelum Jhelum Hydropower Project. The second tunnel boring machine has also been deployed at the project and is expected to be functional during the last week of the current month. The use of tunnel boring machines will reduce the construction period of the project by about 18 months, resulting in an estimated benefit of about Rs 60 billion. Neelum Jhelum Hydropower Project is a part of least-cost energy generation and water storage plan, being executed by WAPDA on priority basis.

Copyright Business Recorder, 2013

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Siemens to set up 132KV Grid at Aga Khan Hospital

Karachi Electric Supply Company (KESC) and Aga Khan Hospital and Medical College Foundation (AKHMCF) have signed contract agreements with Siemens Pakistan for establishment of a 132KV GIS Grid Station at AKHMCF premises, at a total cost of Rs 680.7 million. The Grid Station would be jointly shared by KESC and AKHMCF. At the contract signing, KESC was represented by Syed Arshad Masood Zahidi, Chief Generation and Transmission Officer, while AKHMCF was represented by Karim Nur Mohamed, Director General Planning and Development. The new Grid Station would allow reliable supply of electricity to AKHMCF, given the vital nature of its healthcare services to the patients, in addition to KESC consumers. It would also improve the system reliability and stability by enhancing KESC's installed capacity from 4,573 MVA to 4,653 MVA with the addition of three power transformers. The new grid station would also cater to the future needs of Aga Khan University and Hospital, where demand is expected to grow up to 16 megawatts by the year 2022. Furthermore, it would relieve the overloaded grids of Civic Centre, Baloch Colony and Gulshan Iqbal and also partially meet the requirement of future load growth in PECHS, Bhadurabad area, KDA scheme-I and adjoining areas. This is also a milestone affirming KESC's commitment to provide uninterrupted, stable and reliable power supply to its consumers.-PR

Copyright Business Recorder, 2013

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Punjab government approves energy sector scheme worth Rs 3,578 million

With an estimated cost of Rs 3578.000 million, the Punjab government has approved the scheme of energy sector for the construction of Marala Hydel Power Station, Sialkot under "Renewable Energy Development Sector Investment Programme." The approval was accorded in the 30th meeting of Provincial Development Working Party (PDWP) of current financial year 2012-13 presided over by the Punjab Planning and Development Board Chairman, Javaid Aslam. As many as 10 other development schemes of various sectors of the economy worth Rs 9324.387 million were also approved in the meeting. Secretary Planning & Development Punjab, Arif Anwar Baloch, members of the Planning & Development Board and other representatives of the relevant provincial departments attended the meeting. The approved development schemes included: Improvement / Rehabilitation of Wildlife Park Loi Bher, Rawalpindi (Phase-II) (Revised) at the cost of Rs 373.497 million, strengthening / Upgradation of DHQ Hospital Kasur from 197 to 300-Beds at the cost of Rs 200.000 million, construction of Judicial Complex at Lahore (Phase-II) (Revised) at the cost of Rs 800.640 million, strengthening of BMP / Baloch Levy in District D.G. Khan. (Revised) at the cost of Rs 201.036 million, Design of Remedial Measures for Dewal Landslide and Reconstruction of RMK Road at Dewal Landslide (2nd Revised) (PC-II) at the cost of Rs 26.522 million, Widening / Improvement of road from Bunga Hayat-Pakpattan-Arifwala from km No 460.23 to 514.50=54.27 km in District Pakpattan (Revised) at the cost of Rs 1287.454 million, Widening and Improvement of Sargodha Gujrat Road (Section Jhal Chakkian to Bhalwal) length 38.50 km, District Sargodha (4th Revised) at the cost of Rs 528.238 million, Renewable Energy Development Sector Investment Programme (Construction of Deg-Outfall Hydel Power Station District Sheikhupura) (2nd Revised) at the cost of Rs 1993.000 million, Renewable Energy Development Sector Investment Programme (Construction of Pakpattan Hydel Power Station District Pakpattan) (2nd Revised) at the cost of Rs 1319.000 million and Renewable Energy Development Sector Investment Programme (Construction of Chianwali Hydel Power Station District Gujranwala) (2nd Revised) at the cost of Rs 2595.000 million.

Copyright Business Recorder, 2013

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Conditional import of CNG cylinders, kits may be allowed

The government is likely to allow import of CNG cylinders and kits for which Letters of Credit (L/C) have already been opened or bank contracts concluded before December 31, 2011, sources close to the Prime Minister''s Adviser on Petroleum and Natural Resources told Business Recorder on Thursday. The sources said that the Ministry of Petroleum and Natural Resources submitted a summary on the subject to the ECC of the Cabinet on September 3 last year for consideration of the following proposals: (i) the import of cylinders/kits for which Letters of Credit (L/C) opened or bank agreement or bank contract (as per State Bank Regulations) concluded before December 31, 2011 may be allowed; (ii) for the purpose of developing export oriented business of CNG conversion kits, the import of parts/components of CNG may be allowed subject to the condition that these parts are not locally manufactured. The ECC, in its decision of September 4 last year, while considering the summary, directed that the matter should be re-submitted after adding statistical data. The ECC also directed that the summary should address concerns of the Italian firm manufacturing CNG cylinders and kits in Pakistan. The Federal Board of Revenue (FBR) has provided that statistical data with regard to uncleared consignments of CNG cylinders pending with Model Customs Collectorate and level of import of CNG kits and parts during the last three years are as follows: (i) from November 1, 2011 to September 12, 2012 parties (concerned) imported 17,778 CNG cylinders in 59 consignments. The value of these consignments was Rs 247.1 million; and (ii) from September 14, 2009 to September, 14, 2012, parties imported 527,724 cylinders in 1,221 consignments, valued at Rs 6.304 billion whereas 61,286 kits were imported in 43 consignments, valued at Rs 427 million. Between July 1, 2000 and June 30, 2012 various parties imported 22 consignments valued at Rs 29.44 million. The FBR stated that out of 59 pending consignments of CNG cylinders, 26 are those where importers furnished particulars of Bills of Lading (B/L) and purchase orders, but the bank concerned has verified the B/Ls but no verification report has been given regarding purchase orders. Accordingly, the dates for L/Cs, bank contract or bank agreements for the pending consignments of CNG cylinders are not available with FBR. The sources said, an Italian concern M/s Landi Renzo (LR) Pakistan is engaged in the manufacturing/assembly of CNG kits. The firm imports CNG cylinders and parts/components of cylinders and kits for the purpose. The firm has raised serious concerns on their future projects and investments in Pakistan in view of the ban on import of CNG cylinders and kits. The firm argues that Government should review its decision and consider the following: (i) permission for CNG conversion/installation of kits may be granted to OEMs (local vehicles manufacturing); (ii) allow CNG kits manufacturers to import parts and components to develop export business as well as to fulfil the warranty obligation and commitments for vehicles already on road; (iii) Ministry of Petroleum and Natural Resources maintains that allowing further conversions of CNG vehicles would keep on putting load on existing gap between demand and supply of gas, accordingly it has been recommended that the existing ban should continue to achieve the objective in accordance with the ECC decision of December 15, 2011.

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Bidding for shale gas exploration: foreign firms allowed to take part

The Federal Cabinet on Wednesday gave approval for granting licences to foreign companies through open bidding for exploring shale gas. Information Minister Qamar Zaman Kaira told media persons at a briefing after the Cabinet meeting that discoveries of shale gas would help overcome the gas shortages. The Minister maintained that the country was estimated to have shale gas reserves of around 51 trillion cubic metres, sufficient to meet the country''s requirements for a "long time". The Petroleum Ministry, he said, had been directed to finalise a policy for the exploration of shale gas. The Cabinet accorded approval to the Futures Trading Bill of 2013. The bill will provide comprehensive framework encompassing all regulatory requirements with regard to the futures markets. The Cabinet also approved the Draft Securities and Exchange Commission of Pakistan (Amendment) Bill, 2013. Kaira said that the Cabinet meeting, which was presided over by the Prime Minister, offered Fateha for the victims of the recent Quetta incident and expressed the resolve that all necessary steps would be taken to apprehend the perpetrators. The Minister said that Cabinet also discussed in detail the policy guidelines under Section 21 of the Ogra Ordinance 2002 and approved various changes in the law, enabling gas companies to overcome financial problems. A committee was also formed under Law Minister Farooq H Naek to hold a meeting with Ogra officials and take measures to help facilitate gas companies in this regard. Kaira said that the Hajj Policy 2012-12 was also approved by the Cabinet and Minister for Religious Affairs Syed Khurshid Shah would give a detailed briefing about salient feature of the policy on Thursday (today). The Minister said that the Cabinet meeting also approved the expansion of the Karachi-Hyderabad Highway into a Motorway through a single tender. The Cabinet decided to grant the project''s contract to the Frontier Works Organisation and release of Rs 1 billion. The Cabinet reviewed status of implementation of cabinet decisions pertaining to IT & Telecommunications and Inter Provincial Co-ordination Divisions. The Cabinet also gave approval to start negotiations for a reciprocal agreement between Pakistan and Sri Lanka and an MoU between the Financial Monitoring Unit (FMU), Pakistan and Financial Intelligence Unit (FlU), Sri Lanka. The approval of the same agreement and MoU was granted between Pakistan and Seychelles and between Pakistan and Turkey. The Cabinet also gave approval to initiate negotiations for a reciprocal agreement between Pakistan and Indonesia and MoU between the FMU Pakistan and the Financial Transaction Reports and Analysis Centre of Indonesia. Approval for signing of MoU between EV-K2-CNR, Italian autonomous and non-profit organisation and Global Change Impact Studies Centre (GCISC) on Climate Change and Adaptation Measures was also granted by the Cabinet. The Cabinet ratified the framework agreement for grant aid between Pakistan and the Republic of Korea. The agreement aims at institutionalising the development co-operation relating to grant assistance between the two countries. About the recent massacre of Hazara community, the Minister said that whole nation was saddened over the incident and the government had launched an operation against the proscribed organisation. He said all demands of the Hazara community had been accepted but it would be the government''s decision where the army should be deployed. He said that the consultations with opposition leaders would be held at an appropriate time about the caretaker set up and the election would take place within 60 days after the expiry of the tenure of the government. In reply to a question about the nomination of Hafeez Shaikh as caretaker Prime Minister, Kaira said that leader of the opposition in the National Assembly Chaudhary Nisar Ali Khan had abundantly made clear his view about Hafeez Shaikh. He added that caretaker Prime Minister would not be selected as per wishes of the government or Pakistan People''s Party (PPP). The candidate would be finalised by the Parliamentary Committee or Election Commission of Pakistan if leaders of the House and opposition failed to reach an agreement on proposed names. "We will follow the Constitution for the caretaker set up," he said. The final report of Water Sector Task Force established by the Friends of Democratic Pakistan (FODP) in 2010 was also submitted to the cabinet. The report aimed at developing a mechanism for dealing with water issues in Pakistan.

Copyright Business Recorder, 2013

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Offshore oil, gas reservoirs: UEP to begin 3-D seismic survey

The United Energy Pakistan (UEP) Limited, which has got No Objection Certificate, is to start 3-D seismic survey to explore offshore oil and gas reservoirs in Pakistani sea. According to sources in Petroleum Ministry, the government has allowed United Energy to initiate offshore survey in three blocks and to start the activity. A ship with relevant equipment has reached Karachi port. Sources said the government has notified Petroleum (Exploration and Production) Policy 2012 which offers a maximum price of $6.5 per million British Thermal Units (mmbtu) for onshore and a maximum of $9 per mmbtu for offshore oil and gas discoveries. In offshore, 14 exploration licenses have been awarded for oil and gas. Efforts were being made to enhance exploration activities in all the areas of Pakistan by improving law and order situation while providing conducive environment to local as well as foreign E&P companies. Basin study had already been carried out to correlate entire data of different basins, which would help identify new play types. Efforts were being made on more exploration in deeper prospects and under explored geological frontiers to add new oil and gas reservoirs. In addition, 'Shale Gas, Marginal and Stranded Gas and Flare Gas Guidelines 2012' were being prepared to exploit the hydrocarbon potential to alleviate shortage of energy being faced by the country. The petroleum policy also offers lucrative incentives to investors in exploration of oil and gas sectors of Pakistan. The Economic Co-ordination Committee (ECC) had approved Low British Thermal Unit Gas Pricing Policy, 2012 wherein additional incentives to the investors have been given to develop Low BTU fields as soon as possible.

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60 new oil/gas concession blocks: bidding to be opened on March 10

The government is to open bidding of 60 new oil/gas concession blocks on March 10, 2013, it is learnt. According to sources privy to the development, the government in October invited bids for allocations of new oil and gas exploratory blocks, but due to fewer bids in December 2012 it extended the date for the submission of bids for oil and gas Exploration and Production Companies (E&P) to March 10 to get working licence for the oil and gas blocks in accordance with new petroleum policy. He said that the government also offered 60 new concession blocks for bidding after the promulgation of Petroleum Policy, 2012, adding that the policy is one of the best in the world since it offers a level playing field for E & P companies. The policy offers price up to a maximum of $6.5 per MMBTU for onshore and up to $9 per MMBTU for offshore oil and gas discoveries. "The government received fewer-than-expected bids, hence the date for submission of bids was extended," the official added. The government offered 60 oil and gas blocks for exploration in October in a bid to boost upstream activity in the country, which has slowed in recent years due to low well-head gas prices offered by the government and the impact of circular debt issue in the country''s oil and gas sector. Pakistan''s current domestic gas demand exceeds its production capacity of 4.3 Billion Cubic Feet per Day (BCFD) by 1.2-1.4 bcfd, which increases to 2 bcfd in winter. If ample gas is not discovered within 3-4 years, the shortfall is projected to increase to 2.5-3 bcfd. Sources said that Petroleum Ministry awarded 41 exploration licences to the investors from 2008 to 2012 with the purpose to expedite the exploration process. Around 750 mmcfd gas would be added to the system within the next 12 to 18 months, which would take total local gas production to 5 bcfd, he further revealed. The official said that Pakistan has significant gas reservoirs, however, he added that law and order situation in Khyber-Paktunkhwa and Balochistan provinces, which are oil/gas rich regions, has halted exploration and production activities. During 2011-12, a total of 10 discoveries were made, which included: (i) Mulaki-1 producing 13.34 Million Cubic Feet (MMCFD) and 71.09 barrels of crude oil; (ii) Halini-1 producing 630.90 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 energy mix in Pakistan was the largest in the world with 51 percent of the total energy gas mix, he said. The government is also working on Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline projects to meet the growing energy demand in the country and import of Liquefied Natural Gas (LNG).

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IP gas project to be completed in 15 months: Asim

Pakistan and Iran are all set to ink the final agreement on the construction of Iran-Pakistan gas pipeline project toady (Friday). Dr Asim Hussain, Prime Minister''s Advisor on Petroleum and Natural Resources stated this here on Thursday while briefing a parliamentary panel, adding that the project would be completed in 15 months. He was briefing the National Assembly Standing Committee on Petroleum and Natural Resources with Engineer Tariq Khattak in the chair. He said an agreement between Pakistani public sector firm Inter State Gas Company (ISGC) and Iranian firm Tadbir Energy is to be signed on Friday for the construction of Pakistan''s portion measuring 781 kms of Iran-Pakistan (IP) gas pipeline, which would bring 750 Million Cubic Feet per day (mmcfd) gas to Pakistan. Under the agreement, Iranian firm for the construction of said pipeline would be bound to initiate Engineering, Procurement and Commissioning (EPC). Tadbir Energy faces no sanctions from any foreign government. It is controlled by the Imam Khomeini Foundation, one of Iran''s largest charitable groups. Iran has offered Pakistan extending a $500 million loan because both countries have already signed an inter-governmental co-operation agreement. Dr Asim said that Petroleum Ministry has identified 163 cases of gas theft and forwarded them to Oil and gas Regulatory Authority (Ogra) for final action, but so far the regulatory body has not taken appropriate action in this regard. During the meeting Dr Asim strongly criticised the role of Ogra saying that as a regulatory body it has failed to deliver...especially it has totally ignored the gas theft cases. Dr Asim said the Ogra is neither taking action against gas thieves nor allowing gas companies to charge the amount from gas consumers. He said due to wrong action of Ogra that is not allowing gas utility companies to charge losses from the consumer, gas companies would default in June and after June this year SNGPL and SSGCL would not exist. Briefing the committee, Ahmed Saeed Khan, Chairman Ogra said across the globe regulators are being strengthened by the governments, but in our country situation is totally different. He said the Ogra is not ready to pass on all the burden of Unaccounted for Gas (UfG) to gas consumers, adding that the gas utilities should reduce their UfG level as per fixed level of 4.5 percent. "We have asked gas companies to reduce UfG losses and also requested the Petroleum Ministry to provide details of gas theft cases to the authority and as a regulator we are bound to take action as per law instead of individual wishful desires," he added. While contradicting his own statement, Dr Asim said gas utilities are facing serious financial crisis and if the Ogra did not allow them UfG at 7 percent they would default, he said Sui Northern Gas Company Limited (SNGPL) has announced a bonus for its employees. He added that to pay a bonus to employees the SNGPL is to borrow an amount of Rs 9 billion from the federal government. Legislators asked Chairman Ogra to allow those 69 CNG stations to operate that applied for relocation as they have invested huge amount in their business. Standing committee said that earlier Ogra issued NOC to these stations but later withdrawn them, which is not fair. The committee said the matter is in court, therefore, court should decide the issue. The standing committee directed the ministry to take stern action against those who issued wrong NOC to CNG stations and the matter should be investigated thoroughly. The committee also recommended the SNGPL to expedite work on development schemes launched by members of the National Assembly. During the meeting of the standing committee, Rana Afzal presented the report of his sub-committee pertaining to Rs 49,683 million (euro 702,302) loss due to procurement of defective man portable drill on which the standing committee recommended strict action against the responsible persons.

Copyright Business Recorder, 2013

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Sinjhoro Gas Field begins production

The Sinjhoro Gas Field of OGDCL has started production of 12 mmcfd gas to SSGCL and 1,100 BBLS of condensate, says a pres release issued here on Thursday. Sinjhoro field is located in District Sanghar Sindh, about 65 km north-east of Hyderabad City. The project is a joint venture of OGDCL, OPL and GHPL having shares of 62.5 percent, 15 percent and 22.5 percent respectively. The OGDCL has completed gas gathering facilities in shortest possible time. Almost all of the project work is done in-house by engineers. OGDCL has shifted unutilised Dhodak Plant including LPG Plant and made procurement of other necessary materials on fast track basis. Dr Asim Hussain, Advisor to Prime Minister on Petroleum & Natural Resources will inaugurate the project to provide supply of gas to SSGCL, as the projects have started under instructions of the Advisor who took special interest for its early completion and emphasised for early production of hydrocarbons. Dr Asim Hussain appreciated the OGDCL management for undertaking the project, utilising only in-house professionals and resources. Using in-house resources the project was completed in 16 months by OGDCL. This was a challenging project for OGDCL as the soil condition of Sinjhoro was extremely difficult due to high water levels on and around the location. The situation became further complex due to floods in August 2011. Dr Asim Hussain also instructed OGDCL Board to review the pay package of OGDCL officers to retain and attract high quality professionals, adding the professionals should be evaluated on market based pay packages so that their performance can be optimised on competitive basis that would ultimately result in accelerated pace of development work of new finds to meet the energy requirements of the country.-PR

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Larijani hopes Pakistan will go ahead with IP gas pipeline project

Terming Iran-Pakistan gas pipeline project as strategic venture in the region, Speaker of Shura-e-Islami [parliament] of Islamic Republic of Iran, Dr Ali Larijani, expressed optimism that government of Pakistan had the will to go ahead with the $1.5 billion pipeline project without budging to the pressure of United States. Addressing a news conference here on Tuesday, Larijani said that Iran was a country rich in oil and gas resource, adding that the capacity of the Islamic Republic can be put at the disposal of the other Muslim nations for their benefit. With this spirit, he said, Iran is now supplying gas to Turkey. "This is a strategic project in the region and it will be of great privilege for Pakistan to receive Iranian gas," he said, adding that the section of the project on Iranian territory has almost been completed but work on Pakistan's side is still needed to be done. "We have opened the credit line for Pakistan so that it can help Pakistan build the pipeline on its side, which is the assistance that we could give to the dear people of Pakistan to meet their energy requirement," Larijani said while responding to a question whether Iran will provide $500 million to finance the project. About the US pressure, he said that the people and government of Pakistan were wise enough not to accept any foreign pressure and had the will to go ahead on the project. "My impression is that it is the will and resolve of the government of Pakistan to go ahead with the gas pipeline project so that it can help the people of Pakistan. But one point must be considered that we are now beyond the age of unilateralism...We should not really consider the absolute power of the US," he added. Last year, US Secretary of State Hillary Clinton told the House Appropriations Subcommittee on Foreign Operations in Washington that "America has made it clear to Pakistan that if it goes ahead with the proposed IP pipeline project, it could face consequences as underlined in the Iran Sanctions Act." Asked whether Iran has any objection on handing over Gwadar port to China, Larijani said that it was the government of Pakistan to decide about its internal affairs. "People of Pakistan are very dear and close to the people of Iran and we believe it is for the government and people of Pakistan to make their own (sovereign) decisions," he added. To another question whether Iran still thinks that Pakistan's territory is being used against it, the speaker of Iranian parliament said that he did not believe Pakistan would allow its territory to be used against Iran. "We do trust the government of Pakistan," he added. Asked whether there was any connection between Iran and North Korea on nuclear issue‚ he said that Iran had access to nuclear knowledge and technology and it didn't need any co-operation from countries like North Korea. Commenting on nuclear test conducted by North Korea, he said that Iran was against nuclear weapons and their tests, as we believe that it disturbs the peace and tranquilly of the human society. But, he added, that the real country to blame is the US for continuously developing the nuclear bombs and engaged in proliferation, which is the real problem. About threats of American or Israeli attack on Iranian nuclear installations‚ Larijani said that no saner element can think about such a dangerous proposition. Replying to another question, he said there should be no military interference in Syria, Bahrain and Libya. "We believe that it is for the people of the concerned countries to decide about their future and that should not be through foreign intervention," he added. He further said that Iran was ready for negotiation on its controversial nuclear programme but accused the US of creating hurdles in the talks. He also rejected the impression that Iran is threat to the regional countries, saying it was really surprising as Iran has a great deal of respect for all the countries of the region - not only for the Muslim but for the non-Muslims countries as well. "How can Iran be a threat to the regional countries?, he asked, adding that Iran did not attack any country of the region in the past but it was attacked by Saddam regime backed by the US and the regional powers. To another question, he said Shiites and Sunnis were brethren and will remain so for ever. "Enemies are sowing seeds of discord among Muslims despite the fact that we believe in one God‚ one Prophet (PBUH) and one Book," he said and urged all the Muslim countries to demonstrate unity. To another question he also lambasted the US and Nato for destruction in Afghanistan for more than 10 years and also accused the Nato of drug trafficking from Afghanistan via Kabul and Kandahar airports to Ireland and rest of the world.

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Oil/gas producing areas of Sindh: National Assembly body asks E&P companies to increase welfare budget

The sub-committee of National Assembly's Standing Committee on Petroleum and Natural Resources has directed the Exploration and Production (E&P) companies working in oil/gas sector to increase their development/welfare budget for the oil/gas producing areas of Sindh. The meeting of the sub-committee was held here on Monday with Nawab Ali Wassan in the chair to examine development projects initiated in Sindh for the welfare of locals in the past and to make recommendations for future to help locals as well as international companies management in case they face any obstacles in their operations in that particular area. The meeting was told that the Oil and Gas Development Company Limited (OGDCL) had spent over Rs 700 million on the development of social sector in Sindh since 2005 on account of Corporate Social Responsibility (CSR). Naeem Malik, Additional Secretary Ministry of Petroleum and Natural Resources, apprised the committee that as per rules and regulations, the public as well as private exploration and production companies working in the oil/gas sector were bound to spend certain percentage of their profit on development work in areas where they were working. He added that the public sector E&P companies could not expand their welfare expenditures until government changes its set rules and regulations. However, if the companies are allowed to work freely then situation would be different, he maintained. He requested the body to take up the issue in Economic Co-ordination Committee of the Cabinet (ECC) and remove hurdles to make companies independent in their work. The panel directed OGDCL's management to initiate independent development schemes in Sindh to avoid duplication of funds, saying that it has been routine of administration of the schools or hospitals to request organisations to contribute while getting funds from the government. Officials of OGDCL told members of the committee that the company had disbursed more than Rs 320 million for infrastructure development in various areas of Sindh since 2005. They said that Rs 100 million had been spent to establish a disaster relief centre in Mirpur Mathelo while Rs 465 million were spent on setting up a technical training centre. They also said that for 2012-13, Rs 7 million had been earmarked to provide free medical facilities to people in Tando Adam, Bobi Kunar, Qadirpur and other areas, adding that Rs 880 million would be utilised on gas supply projects to different areas. The committee showed resentment over gas companies for insufficient work in Sindh, saying that Sindh was producing 57 percent of gas while developmental work in major areas of the province was not satisfactory and these areas were still without health and education facilities. The committee proposed the exploration companies to initiate a scheme to provide residential facilities to the poor and needy people of Sindh.

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Punjab governor inaugurates gas project

Punjab Governor Makhdoom Ahmad Mehmood has stressed upon the elected representatives to serve the people of their respective constituencies with missionary zeal and devotion for bringing radical changes in every sphere of life. He said that it was a moral obligation of the elected representatives to address the problems and difficulties confronted by the people and pay special attention to timely completion of development projects in their respective constituencies. He was addressing a public meeting at Dhallaywali village on Sunday after inaugurating a Sui gas project worth Rs1,065.375 million. The governor said that it was heartening to note that record development projects pertaining welfare of the people had been completed in NA-111 by Dr Firdous Ashiq Awan. Speaking on the occasion, NA Deputy Speaker Faisal Karim Kundi said that Pakistan was a peaceful country and was making adequate efforts for developing cordial relations with its neighbouring countries. Federal Minister for National Regulation and Services Dr Firdous Ashiq Awan and others also spoke on the occasion.

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IP gas pipeline: Contract to be awarded to Iranian Tadbir Energy on Monday

After the cabinet’s go-ahead to the construction of the Iran-Pakistan (IP) gas pipeline project, setting aside pressure from the US, Pakistan and Iran look set to finally ink an agreement for the award of contract to a private Iranian firm which will lay Pakistan’s portion of the IP pipeline. The cabinet, in a recent meeting, has okayed a waiver of the Public Procurement Regulatory Authority (PPRA) rules in order to award the contract directly to the Iranian firm. The agreement will be signed in Islamabad on Monday (tomorrow). “After Russia and China backed out of the project due to US pressure, Pakistan has decided to avail Iran’s offer for financing and constructing Pakistan’s portion of the pipeline,” a senior government official said. Pakistani public sector firm Interstate Gas Systems and private Iranian firm Tadbir Energy will sign the contract. Iran has designated a ‘clean’ private company to sign a direct contract under the Iran-Pakistan gas supply project, for which Tehran is also extending a $500 million loan. Tadbir Energy faces no sanctions from any foreign government. It is controlled by the Imam Khomeini Foundation, one of Iran’s largest charitable groups. “Pakistan and Iran have already signed an inter-governmental cooperation agreement. The Iranian firm is now formally being awarded the contract,” sources said, adding that the Iranian firm will undertake all engineering procurement construction work for the first segment starting from the Iran-Pakistan border for around $250 million. Tadbir will also undertake the second segment of the project, and will increase the financing facility by allocating up to $250 million to the project, subject to discussions regarding its involvement in the distribution of gas in Pakistan later on. It has also agreed to provide and assist in arranging $250 million as supplier credit and any additional financing for the second segment. The Iranian firm will act as the lead contractor along with the nominated local subcontractor(s). The total cost of the project is expected to come to around $1.5 billion. Iran will provide $500 million, while the remaining amount was supposed to be generated through the Gas Infrastructure Development Cess (GIDC). However, the Islamabad High Court recently declared the levy of this cess illegal, and directed the government to reimburse amounts collected to gas consumers. “Therefore, the government may face some problems in generating the remaining funds,” sources said. As US sanctions have put problematic hurdles in the way of making payments to Iranian firms, the two sides have drawn up a plan to finance the gas pipeline on Pakistan’s side without Islamabad transferring funds to Tehran. “Pakistan will not pay any money to the company; instead, the Iranian government will pay $500 million directly to the firm for the construction of the pipeline,” a source said. The project envisages gas inflows of 750 million cubic feet per day by the end of December 2014, which will be consumed by power plants to generate around 4,000 megawatts of electricity. The IP pipeline engineering and project management consultant, who was appointed in April 2011, has completed work on a bankable feasibility study, interim front-end engineering design, and a route reconnaissance survey.

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IP gas pipeline: FPCCI hails government's decision

Tariq Sayeed, Chairman Pak-Iran Business Council and former President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has hailed the Government of Pakistan for its decision to materialise Iran- Pakistan Gas Pipeline project stating it as a land mark achievement. Sayeed who is also Vice President of the Confederation of Asia Pacific Chambers of Commerce & Industry said that approval of $1.5 billion by Cabinet for construction of 785 Km gas pipeline is a bold decision, which will transform the project into reality, which was dreamed in 1950s. He felicitated the Parliamentarians of the ruling and the coalition parties for exhibiting their greater will, which will add respect to the country as a sovereign state. "No individual or any foreign country is above the sovereignty of Pakistan" said Sayeed and added that the business community stands by the current Governments on all issues, which are in the best interest of the country and the common men. Sayeed added that every country has the right to take decision in the larger interest of its economic growth and the functioning of IP Gas pipeline will ensure supply of 750 million cubic feet of natural gas per day and help bridge energy gap, required to keep industrial and commercial wheel of the country into perpetual motion. Tariq Sayeed also a former President of SAARC Chamber of Commerce & Industry was of the opinion that Iran-Pakistan Gas Pipeline was an important step forward and its successful operation will inspire the leadership of South Asia to implement another propose project Turkmenistan, Afghanistan, Pakistan and India (TAPI) Gas pipeline, subsequently benefiting to the entire region of South Asia.-PR

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IP gas project to serve Country's national interest: LCCI

The Lahore Chamber of Commerce and Industry (LCCI) on Thursday appreciated the federal cabinet for giving go-ahead to Iran-Pakistan gas pipeline and hoped that the ministerial committee constituted to explore funding avenues for the project would proceed expeditiously. The LCCI office-bearers; President Farooq Iftikhar, Senior Vice President Irfan Iqbal Sheikh and Vice President Mian Abuzar Shad in a statement said that the Lahore Chamber of Commerce and Industry had already been pressing the government hard for procuring the required energy resource from whatever source suits to it to relieve the country of the mounting shortages of gas. They said that the LCCI was convinced that the Iranian source is the most feasible, financially as well as from the point of view of proximity and succumbing to any pressure would further worsen the already crippling power crisis. They appreciated the federal cabinet for its decision to complete the project at the earliest through mutual co-operation instead of relying on foreign aid. The LCCI office-bearers said that at present a number of industrial units had stopped their operations for lack of power, let alone any new ones to come on line. The other sectors of the economy like agriculture are not immune from its impact. The economy, already in the doldrums, threatens to come crashing down. They said that the Iran-Pakistan gas pipeline would serve Pakistan's national interests and would go a long way in mitigating the energy issues. They said that an early completion of this mega project of national importance would be a great favour to the business community as its very survival is at stake at the moment. They said that an acute energy shortage in the province of Punjab, in particular, had not only jacked up the graph on unemployment but it had also dented the investment scenario beyond repair. The LCCI office-bearers said that the availability of energy would also help government achieve economic targets set for the year 2013. The $7.5 billion Iran-Pakistan gas pipeline agreement was signed in Tehran on May 23, 2009, to transfer gas from Iran to Pakistan. According to the deal, Iran will initially transfer 30 million cubic meters of gas per day to Pakistan, but will eventually increase the transfer to 60 million cubic meters per day. The pipeline will be supplied from the South Pars field. The initial capacity of the pipeline will be 22 billion cubic meters (bcm) of natural gas per annum, which is expected to be raised later to 55 bcm.

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Steps for Gwadar, IP gas projects lauded

The Pakistan Economy Watch (PEW) on Thursday said some recent steps taken by the government including ratification of Iran pipeline agreement by the Federal Cabinet and handing over Gwadar port to a Chinese firm are highly promising. These steps will go a long way in reviving economy which is in tailspin since some time leaving millions jobless and threatening growth, said Dr. Murtaza Mughal, President PEW. He said that Chinese cooperation in the pipeline project will make it a reality in less than expected time which will be a great service to the country and people of Pakistan reeling under energy crisis. Mughal lauded the patience of Tehran as the project was delayed for long due to uncalled for US pressure on Islamabad to dump the venture essential for our survival. Allowing transfer of concession agreement for Gwadar Port from the Port of Singapore Authority to the China Overseas Port Holding will attract further investment, provide opportunities to people of Balochistan and bring Islamabad and Beijing closer which are already like a family, he said. He noted that announcement of long-awaited three-year Strategic Trade Policy Framework in which an export target of $95 billion has been set backed by steps to support the plan will help improve confidence in the business community. The government should ensure that the recent Trade Policy does not meet the fate of trade policy framework for 2009-12 which failed due to want of funds. The plan of the Ministry of Water and Power to generate 3,000MW electricity from sugarcane bagasse on fast track basis is equally encouraging, he observed. He demanded that all the necessary amendments in the existing policies should be ensured in time to attract investments to make plan of using 10 million tonnes of bagasse for power generation a reality as soon as possible. Lauding the US assistance for water and power projects and her cooperation for optimum use of hydropower resources, Murtaza Mughal said that US should stop opposing Iran gas pipeline project otherwise anti-US feeling will run high among masses braving energy crisis.

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