14TH INTERNATIONAL EXHIBITION FOR THE ENERGY INDUSTRY

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News Headlines for the month of
APRIL 2014

Operational by 2016: first wind power project to be installed at Jhumpir

The first wind power project having capacity of producing 650 megawatts of electricity is to be installed at Jhumpir Wind Corridor in district Thatta of the Sindh province. Reports said a consortium of Chinese banks and insurance companies have agreed to invest an amount of one billion dollars in the project. The project will be undertaken by NBT Wind Power Company as a joint venture by Norwegian and local partners. Officials sources informed Radio Pakistan that NBT Wind Power Company has already carried out all the preliminary studies like wind data, environmental protection report and technical studies while it is in process of obtaining tariff and generation license from National Electronic and Power Regulatory Authority. It is expected that the project would be made operational by 2016 and go a long way in meeting energy requirements of the country.

Copyright News Network International, 2014

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World Bank appraisal report on Dasu Hydropower project: work to be expedited with installation of 2160MW plant

Dasu Hydropower Project work will be expedited with the installation of 2,160MW hydropower plant, on the main Indus River, which can be expanded to 4,320MW in future This project, will be completed at the total Cost of US $4247.7 million, according to updated World Bank Project report, at appraisal stage. Dasu Hydropower Project's objective is to facilitate the expansion of hydro power in Pakistan. The Project would also improve access to socio-economic services for local communities, in the project area, and build WAPDA's capacity to prepare future hydropower projects. Project report revealed that the Project is a "high risk-high reward" operation aimed at providing low cost non-carbon renewable energy. The proposed Dasu Hydropower Project (DHP) is a run-of-river project, on the Indus River about 240 km upstream from the Tarbela Dam. It is about 8 km from Dasu town (capital of Kohistan District)) and 350 km from Islamabad. The total capacity of the project is 4,320MW.Due to the long gestation of the project and capital constraints it was proposed to develop the project in two stages, each stage further divided into two phases of 1,080MW each. Under the DHP Stage-I the two phases of 1,080 MW each would be developed simultaneously, bringing the first generating unit online as soon as possible. The first phase of Stage-I, costing $3,650 million, will cover the major infrastructure, site preparation, social and environmental safeguards for the whole project. The high upfront cost for Phase-1 is offset by high generation, which despite the front-loading of main infrastructure and other social and environmental management costs, will give good economic returns of more than 21percent, excluding environmental benefits. The generation of Phase I is over 8,000 GWH, as sufficient water flows are available in the river throughout the year to run a 1,080 MW hydropower plant. This allows for a very high plant factor of over 85 percent, which is extraordinary for a hydro project. The cost of Phase-II is quite low, about $600 million, this stage will increase the installed capacity to 2,160 MW and annual generation to about 12,225 GWH with a plant factor of over 65percent, which is still very high. The cost per unit would be even lower, increasing the ERR to 25percent. Commenting over the "Phased Financing for Phased Construction", WB report said that the proposed technical implementation of DHP-I through phased construction also lends itself to phased implementation of its financing. Financing large hydropower plants (HPPs) is a complex matter. High capital expenditure and long construction time are key challenges. As a consequence, many large HPPs in the world are financed in a sequenced manner, report maintains. Similarly DHP-I is also proposed to be financed in a sequenced manner, in line with the sequenced construction schedule, with a mix of concessional and commercial funding sources. The tentative financing plan consist of first IDA credit of $576.6 million, commercial financing for works of about $1,900 million and export credits for equipment and machinery $546 million, backed by IDA guarantees, WAPDA's and NTDC contribution of $600 million and $80 million respectively. Depending upon the availability of commercial financing and export credits additional IDA funding and guarantees may have to be provided in future. WB report pointed out that the proposed DHP-I is an important element of the government's strategy to enable Pakistan's energy sector to support long term economic growth. It is a strategic investment that enables a structural shift to a low cost, low carbon fuel mix that improves energy security; and reduces the cost of electricity generation ranging between 7 to 19 percent depending upon assumptions. The sector deficit may be reduced by injecting positive cash flow and saving foreign exchange for Pakistan by replacing imported fuel; and building the broader institutional capacity of WAPDA to harness the hydropower potential of the country in a sustainable manner, in particular the development of the Indus Cascade; and providing a financing and investment model that can be followed for other hydropower projects in Pakistan as well.

Copyright Business Recorder, 2014

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CDWP to discuss power projects next week

The Central Development Working Party (CDWP) of the Ministry of Planning, Development and Reforms would meet next week to discuss and recommend power projects, it is learnt. According to sources, the government is focusing on energy sector projects to overcome the current power shortfall. Minster for Planning, Development and Reforms Ahsan Iqbal would chair the CDWP meeting. The sources revealed that projects that would come under discussion include Sandoa Cross Hydro Power Project, Galetar Hydropower Project, Chanpfall Hydropower Project, Casa Transmission Line, Land Acquisition Project of Diamer Basha Dam and others. The Sandoa Cross Hydro Power Project will generate 1.75 MW electricity located in district Bhimber, Azad Jammu and Kashmir (AJK). The cost of the project is Rs 329.536 million including Rs 100 million Foreign Exchange Component (FEC) sponsored by Ministry of Kashmir Affairs and Gilgit-Baltistan. The source of funding of the project is special development package for AJK. The Galetar Hydropower Project of 1 MW has a cost of Rs 274.94 million including Rs 54 million Foreign Exchange Component. Ministry of Kashmir Affairs and Gilgit Baltistan would sponsor the project and the source of funding of the project is special development package for AJK. Chanpfall Hydropower Project with an output of 6.4 MW would be built at a cost of Rs 940 million. The PC1 for Land Acquisition Project for Diamer Bhasha Dam has been revised and the cost increased from Rs 60 billion to Rs 120 billion. Land acquisition for the project is in process. To accommodate the displaced people, three model villages, one each at Thak Das, Harpan Das and Kino Das with all basic amenities would be developed. These model villages will resettle 4,228 affected households.

Copyright Business Recorder, 2014

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Japan intends to provide $52 million soft loan for energy sector: envoy

The Government of Japan has expressed its intention to provide concessional loan of approximately $52 million to Pakistan for supporting Pakistan's energy sector reforms. Hiroshi Inomata, Ambassador of Japan conveyed this message during his recent call on Senator Ishaq Dar, Minister of Finance, Revenue, Economic Affairs, Statistics and Privatisation. This loan is planned to be co-financed by the Asian Development Bank and the World Bank, says a statement issued by the Embassy of Japan on Thursday. The Government of Japan and the Government of Pakistan will work together to prepare for signing a bilateral agreement on Japan's loan at an early stage. "Japan recognises that the energy sector reforms are a matter of critical urgency in Pakistan," stated Hiroshi Inomata. "We are pleased to work with the Government of Pakistan to tackle the power crisis in co-operation with other development partners," he remarked. The Asian Development Bank, the World Bank and Japan have worked with the Government of Pakistan to develop a reform programme and set agreed policy targets to manage tariff and subsidy, improve sector performance and open the market to private participation, besides improving accountability and transparency in the energy sector. This loan is provided to facilitate the Government of Pakistan to achieve these targets. It is expected that pursuing this programme will not only promote the energy sector reforms but also improve the government's fiscal situation and stimulate economic activities. Japan has been extending active support to the energy sector of Pakistan over the last three decades. For example, Japan financed thermal power stations in Bin Qasim and Jamshoro, and the Ghazi Barotha Hydropower Project. Japan has also supported the National Transmission and Dispatch Company to expand its grid systems by building 12 new grid stations, networking 1,487km-long transmission lines and upgrading training facilities. In power distribution, Japan has contributed a lion's share in electrification of over 6,000 villages.

Copyright Associated Press of Pakistan, 2014

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ADB approves $400 million loan to boost energy sector

The Asian Development Bank (ADB) has approved $400 million loan to help Pakistan carry out reforms for overcoming power shortages. An agreement in this regard was signed by Economic Affairs Division Secretary Nargis Sethi and the ADB''s Country Director for Pakistan Werner E Liepach here on Monday. Finance Minister Ishaq Dar and the ADB''s Governor witnessed the signing ceremony. The ADB has approved a soft and concessionary loan for Pakistan, which has the best terms and conditions with interest rate of even less than 2 percent annually," Ishaq Dar said. He said the ADB had also recently approved a loan of $900 for Jamshoro coal power project to produce cheaper electricity. Speaking on the occasion, Werner E Liepach said the loan would support key reforms in the energy sector to ensure uninterrupted supply of cheaper and dependable power to millions of industrial and private consumers, who were presently adversely affected by long power outages. "This important energy sector assistance will propel growth, boost businesses, and create jobs that are critical to reduce poverty in the country," said Liepach. In line with Pakistan''s National Power Policy approved in 2013, the sustainable energy sector reform programme targets robust policy, capacity development and institutional strengthening action to reduce crippling power shortages that according to estimates, are costing the country about 2 percent of its GDP growth every year. The ADB along with Japan and the World Bank have been working with the Pakistan government to formulate and implement a five-year plan targeting increased power supply, reduction of losses and boosting the efficiency of the power sector. The programme would support government''s plans to rationalise tariffs and eliminate subsidies by 2016, except for low income customers. "The reforms will improve transparency and accountability, which will also go a long way in leveraging stronger private sector led investments in the power sector," said Liepach. The full programme, set to complete by June 2018, spans a total of $1.2 billion investment by the ADB, and for the first sub-programme, co-financing is expected from Japan with $49 million and the World Bank with $600 million. The ADB is the lead development partner in Pakistan''s energy sector supporting a wide range of power sector development activities, including energy efficiency, transmission, distribution, cross-border natural gas pipelines, power generation, and renewable energy projects.

Copyright Associated Press of Pakistan, 2014

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Uch-II Power Plant inaugurated: power shortages to be overcome in three years: Prime Minister

Prime Minister Muhammad Nawaz Sharif on Friday said the electricity shortages in the country would be overcome in three years. "The days of darkness are numbered and the future of Pakistan is bright," the Prime Minister said after inaugurating the 404 megawatt Uch-II Power Plant at Dera Murad Jamali that will contribute 990MW gross electricity to the national grid. The Uch-II Power Plant, the Independent Power Plant (IPP), has been constructed by GDF SUEZ, a French company, presently working in 70 countries. Addressing the gathering at the inauguration ceremony here, the Prime Minister termed democracy as self-regulated system of accountability and said democratic norms were flourishing in the country. He said the government aimed at ensuring economic and political independence of the people and vowed to eliminate Unemployment, Inflation, Illiteracy and sense of Insecurity from the country. "A Pakistan free from these evils is our goal," the Prime Minister said. The Prime Minister said Balochistan was neglected in the past, but the democratic government would take necessary steps to mitigate the sense of deprivation of people of the province. He said his government had planned a big development programme for Balochistan and its people. Nawaz Sharif announced that government would ensure provision of natural gas to each and every city of Balochistan within three years. He directed Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi to personally monitor this project and ensure its completion on time. He announced installation of two separate power lines from Uch-II Power Plant to Naseerabad and Sibbi divisions of Balochistan. The Prime Minister said the power project was significant mainly for two reasons; firstly, it would be based on an indigenous gas by substituting expensive liquid fuel, thus saving foreign exchange, and secondly it has been set up in Balochistan. He commended the contribution of GDF Suez for successful commissioning of the project which he said was a valuable addition to the national grid. He said GDF Suez had been a reliable energy partner for Pakistan for many years and was also playing its role in the socio-economic development of the province. He invited the French company to undertake more investment in Pakistan''s energy projects. Nawaz Sharif said the electricity shortfall in the system had very negative impact on the development of the country. He said new power projects were being constructed using conventional and renewable energy resources and technologies. He mentioned that the government''s steps in this regard including clearing of Rs 500 billion of circular debt and initiating the work on Neelum Jhelum project, Nandipur project and Guddu power project that will add 959MW, 425MW and 747MW to the national grid respectively. Besides, development of Thar Coal Project, Jhimpir project in Sindh and solar projects in Punjab are also prominent steps to overcome power shortage, he said. The Prime Minister lauded the services of Private Power and Infrastructure Board (PPIB) which under the supervision of Minister for Water and Power was facilitating the investors through one-window system. Chief Minister Dr Abdul Malik Baloch said the project would contribute to overcoming the energy shortage and invite further foreign investment in Balochistan. He said the project will not only help in curtailing the present power shortages, but also provide cheap electricity to the consumers and save precious foreign exchange in oil imports. Information Minister Pervez Rashid, Minister for Petroleum and Natural Resource Shahid Khaqan Abbasi and Minister of State Abid Sher Ali were also present.

Copyright Associated Press of Pakistan, 2014

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General Electric supplying gas turbines at Guddu power complex

General Electric supplied and installed two GE 9FA gas turbines and associated auxiliary equipment for the power plant inaugurated by Prime Minister Nawaz Sharif at the Guddu Thermal Power Complex. Located in Kashmore, Sindh, the complex had a capacity of 1,655 MW, and the new addition will take total production capacity to 2,402 MW. The additional 747 MW is enough electricity to power more than 700,000 homes annually. Harbin Electric International Company (HEI) signed a contract with GE for the supply and installation of the equipment in 2010. The turbines were shipped in 2011 and will operate on natural gas but can also run on high-speed diesel under emergency situations. Sarim Sheikh, President and CEO of GE Pakistan said: "The on-schedule operation of the new power plant underlines our commitment to support Pakistan to meet its growing demand for power, especially during summer. It will add to the reliability of power supply and improved quality of service, thus supporting the region's development. The new plant also creates new employment opportunities for skilled Pakistani professionals. We are thankful to HEI for their partnership in helping meet the country's energy needs. From installation to commissioning, GE will offer a breadth of services for the plant." Zhang Yang, Director Thermal Power Division at HEI, said: "The Guddu power plant is of strategic value to the region, as the power complex supplies electricity to several high-growth industries. The new plant will further strengthen the local economy by providing reliable power, and the use of natural gas, makes it more environmentally sustainable. GE's advanced technology will also enable us to strengthen our operational efficiency by generating more power from each molecule of natural gas." With combined cycle efficiency at greater than 58 percent, the GE 9FA gas turbines at the Guddu power plant are among the most efficient in the world and utilise advanced materials. They are a popular choice for combined cycle, cogeneration or simple power plants where flexible operation and high performance are key considerations. With low nitrous oxide and carbon monoxide emissions, the turbines are cleaner. According to estimates, power consumption in Pakistan is increasing at a rate of 8 per cent per annum. GE has signed a Memorandum of Understanding with the Government to develop Pakistan's energy resources to meet the projected demand of 54,000 megawatts by the year 2020. The company assists the country in achieving its goals by engaging in Pakistan's energy, transportation and water sectors.-PR

Copyright Associated Press of Pakistan, 2014

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Guddu Power Plant: Commissioning of additional units inaugurated

Prime Minister Nawaz Sharif on Monday inaugurated the commissioning of additional power units at the Guddu Thermal Power Plant, which will add an additional 747MW to the national grid at a cost of Rs 60 billion. Addressing a large gathering here after the inauguration of two gas turbines of 243MW each, the Prime Minister said a third unit will be operational in May, increasing the current capacity of Guddu Power Plant from 1655MW to 2402MW, equivalent to four billion units of electricity. He said the three units are part of the Combined Cycle Plant and would generate 747MW of electricity to cut down the demand-supply gap. He said the early completion of the project, seven months ahead of schedule, will lead to a saving of Rs 58.6 billion. He said the saving is almost equal to the amount spent on the project. He said he is pleased to see that the efforts of the government are bearing fruits and hoped that with sustained efforts the problem of load shedding will be finished soon, and industry and agriculture will flourish. The Prime Minister regretted that in the past the slow pace of work on the projects had hampered progress but hoped that the measures being adopted by the government will bring about a positive change. He said the people of Pakistan are facing long hours of load shedding for the past one decade and it has also seriously undermined country''s progress in all areas. However, he expressed the hope that with the initiative of the government things would change and an era of progress and development will usher in. In this regard he said the government through good governance is trying to enhance efficiency of existing power plants, speeding up work of ongoing projects, and planning for new projects under public-private partnership. PM Sharif also termed the project as part of the government''s efforts to meet the energy shortfall in the country and gave a detailed overview of the new projects that were underway across the country to make the country self sufficient. He said following government efforts additional 21,000MW electricity will be added to the national grid in next eight years. He was also appreciative of the Chinese assistance and its company Harbin Electric International Company for completing the work on the project, seven months ahead of the deadline. The PM also lauded the strong Pakistan-China ties and said he is proud of Pakistan''s friendship with China. He said the two countries are jointly working on several power projects and China has promised investment of billions of dollars in different projects in Pakistan. He was also appreciative of the Ministry of Water and Power, GENCO Holding Company and Central Power Generation Co Ltd for fast tracking the project. The Prime Minister, who earlier had a round of the Power Plant and unveiled the plaque, was also briefed about the salient features of the project. He said he and Chief Minister of Sindh Syed Qaim Ali Shah will soon jointly inaugurate the work on the new Lahore-Karachi motorway that will usher in an era of prosperity and development in the country. He mentioned that soon after coming into power, his government paid back the Rs 500 billion circular debt and incentives were given to Independent Power Producers. He said 6600MW electricity will also be generated at Gadani Power Park with assistance of local and foreign investors, while with the support of the Asian Development Bank a 1320MW coal-fired power plant is being set up at Jamshoro, besides feasibility was underway for similar coal plants at Lakhara, Port Qasim and Thar. He said work on 1410MW extension IV at Tarbela, Extension V at Tarbela for 1320MW and 4500MW at Diamir and Bhasa dams has also been initiated. He said the private sector is investing in power projects at Soki Kinari, Karot and Kohala, and all this will bring about 21,000MW power in next eight years. The event was also attended by Minister for Information Pervaiz Rashid, Minister for Water and Power Khawaja Asif and Minister of State for Water and Power Abid Sher Ali. The Prime Minister also announced three-month basic salary for the workers.

Copyright Associated Press of Pakistan, 2014

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Government plans desert solar power park to fight energy crisis

For years people have sweated and cursed through summer power cuts, but now the government plans to harness the sun's ferocious heat to help tackle the country's chronic energy crisis. In a corner of the Cholistan desert in Punjab province, power transmission lines, water pipes and a pristine new road cross 10,000 acres (4,000 hectares) of parched, sandy land. The provincial government has spent $5 million to put in place the infrastructure as it seeks to transform the desolate area into one of the world's largest solar power parks, capable one day of generating up to 1,000 megawatts of electricity. The desert park in Bahawalpur district is the latest scheme to tackle the rolling blackouts which have inflicted misery on people and strangled economic growth. Temperatures can reach 50 degrees Celsius (120 Fahrenheit) in the country's centre in June and July, sending demand for electricity soaring and leaving a shortfall of around 4,000 MW. "In phase one, a pilot project producing 100 MW of electricity will hopefully be completed by the end of this year," Imran Sikandar Baloch, head of the Bahawalpur district administration, told AFP. "After completion of the first 100 MW project, the government will invite investors to invest here for the 1,000 megawatts." - A 'river' of solar panels - Engineers and labourers are working in the desert under the scorching sun to complete the boundary wall, with authorities keen to begin generating solar electricity by November. "If you come here after one and a half years, you will see a river of (solar) panels, residential buildings and offices - it will be a new world," said site engineer Muhammad Sajid, gesturing to the desert. Besides solar, Pakistan is also trying to tap its unexploited coal reserves - which lie in another area of the same desert, in Sindh province. In January Prime Minister Nawaz Sharif inaugurated construction on a $1.6 billion coal plant in the town of Thar, in Sindh. Work has also begun on a pilot 660 megawatt coal-fired plant in Gadani, a small town on the Arabian Sea. Another 600 megawatt coal plant has also been given the go-ahead in the southern city of Jamshoro. But while coal may offer a short-term fix to the energy crisis, authorities are keen to move to cleaner electricity in the long run. "We need energy badly and we need clean energy, this is a sustainable solution for years to come," said Baluch. "Pakistan is a place where you have a lot of solar potential. In Bahawalpur, with very little rain and a lot of sunshine, it makes the project feasible and more economical," he said. - Clean energy - Baloch believes that the new solar park will make Pakistan a leader in that energy in the region. The initial pilot project is a government scheme but private investors are also taking an interest. Raja Waqar of Islamabad-based Safe Solar Power is among them. His company plans to invest $10 million to build a 10 MW project in the new park. "The government has allotted us land over here. Infrastructure - the transmission line and road are available here, that is why we are investing," Waqar told AFP. A million dollars per MW is a sizeable investment but Waqar said the company expected to reap returns on it over at least the next decade - and others were keen to get on board. "There are up to 20 companies who are investing in this park and their projects are in the pipeline," he said. "Some of them are working on 50 MW, some on 10 and others on 20." But not everyone is so upbeat about the project. Arshad Abbasi, an energy expert at Islamabad's Sustainable Development Policy Institute (SDPI), said the cost of generating solar power from this project may be uneconomical for the government. He also warned that buying in solar equipment from abroad made little economic sense. "Had the government decided to establish more hydro or thermal plants in the country it would have generated more employment, business and construction opportunities," he said. And farmers in the area who scrape a living herding cattle on the unforgiving land are worried about their future. "We don't know if this energy park is good, the power will come or not, we only want the government to spare our area and allow us to continue living here with our cattle," said Malik Jalal, a local villager.

Copyright Agence France-Presse, 2014

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Prime Minister to inaugurate two thermal power plants

Prime Minister Nawaz Sharif will inaugurate 747 MW Guddu and 404 MW Uch II thermal power plants on April 21 and 25, 2014 respectively, official sources told Business Recorder. A team of senior officials of Water and Power Ministry has already reached Guddu power plant to finalise the arrangements for plant''s inauguration. Ministry of Water and Power and its attached departments worked day and night to bring gas-fired Uch II 404 MW and 747 MW Guddu thermal power plants online to help ease power outages in summer. Joint Secretary Water and Power Ministry Aftab Ahmad Nadeem spent months to streamline the Guddu power plant and remove all faults. The sources revealed that recently an expert of General Electric (GE) from Egypt had arrived to remove the tripping fault. The sources said Managing Director Private Power and Infrastructure Board (PPIB), Noor-ul-Islam Zuberi, also actively worked on 404 MW Uch-II, near Dera Murad Jamali (Balochistan) to start commercial operations. The sources said testing of first unit of 263 MW of 747 MW combined cycle power plant at Guddu has commenced by E&P contractors. "We hope the first unit will start commercial operations during the first week of current month, whereas other two units will commence in April and May 2014," said an official on condition of anonymity. According to sources, initially the most modern plant will operate on simple cycle; however, work will continue side by side to convert it on a combined cycle. The government is also expecting that 425 MW Nandipur thermal power plant would also commence commercial operations in May 2014. This implies the government will be able to add more than 1500 MW electricity to the national grid before June 2014. Nandipur Power Project is an under-construction combined cycle thermal power plant located at Nandipur near Gujranwala. Being constructed by the China Dongfang Electric Corporation, the project is estimated to be completed by December 2014. Upon completion, the project will generate 425 MW of electricity. The estimated cost of the project is Rs 57.38 billion ($574 million).

Copyright Business Recorder, 2014

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Energy crisis: China extends commendable cooperation: Shahbaz

A high-level delegation of Energy Planning Working Group of China called on Punjab Chief Minister Shahbaz Sharif at Chief Minister's Office, here on Wednesday. The delegation, led by Administrator National Energy Administration Zhang Yuqing, included senior officials of National Energy Administration, coal department, research institutes, Exim Bank, China Development Bank and investment companies in energy sector. Provincial Ministers, Federal Secretary Water and Power, Chairman Planning and Development, Additional Chief Secretary Energy and officers concerned were present. The meeting agreed to make rapid progress on the projects of energy, transport and other sectors under Pak-China Economic Corridor. Welcoming the 34-member Chinese delegation of Energy Planning Working Group of China to Lahore, the Chief Minister said that the historic friendship between Pakistan and China has turned into useful economic contacts. He said the China has always stood by Pakistan in the hour of need and Pakistani nation is proud of its trustworthy friendship with China. Pak-China friendship is higher than Himalayas, deeper than oceans, stronger than steel and sweeter than honey. Shahbaz Sharif said the China has extended commendable co-operation for bringing Pakistan out of energy crisis. The shortage of electricity has caused irreparable damage to Pakistan's economy. He said the investment package of 32 billion dollars for Pakistan announced by China for seven years is a splendid gift for the people of Pakistan. Energy projects of 20 thousand megawatts will be started in the country including Punjab under the investment package. He said the Chinese government has also ensured plants, machinery as well as investment in energy projects in Pakistan. The power projects to be implemented with the co-operation of China will greatly help in overcoming energy crisis in the country He said the coal power plants of 10,000MW in Punjab and solar power plants of 1,000MW have been identified under this package. During his recent visit to China in the company of Prime Minister Muhammad Nawaz Sharif an agreement was finalised with a consortium of Chinese companies for establishing two coal power plants of 660MW at Sahiwal. He said the documents were also exchanged with the consortium of the Chinese companies during the visit. The foundation stone of two coal power plants of 660 megawatt will be laid in Sahiwal next month and Prime Minister Muhammad Nawaz Sharif will be the chief guest on this occasion. The Chief Minister said the first turbine of Nandipur Power Project will start generating 100MW electricity in May whereas the entire Nandipur Power Project would be completed during the current year. Shahbaz Sharif appointed Secretary Energy Jehanzeb Khan as the focal person of Punjab government regarding Pak-China energy projects and said that every moment is precious and energy projects have to be completed at the maximum speed. The leader of Chinese delegation Zhang Yuqing thanked Punjab Chief Minister Shahbaz Sharif for his hospitality and assured that all out co-operation will be extended for early implementation of projects in energy sector. He said the projects already identified would be completed expeditiously. He appreciated the proposal of Chief Minister Shahbaz Sharif regarding energy projects and appointed a focal person on behalf of Energy Planning Working Group of China for better co-ordination. The Chief Minister also hosted a luncheon in honour of the Chinese delegation.

Copyright Business Recorder, 2014

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Chinese investment to be ensured, come what may

Pakistan is likely to disregard PPRA rules to ensure $35 billion Chinese investment in energy sector projects within the next five years, well informed sources told Business Recorder. The source claimed this assurance has been given to Vice Administer of National Energy Administration (NEA) of China Zhang Yuning at a recent meeting of the first Energy Planning Working Group of China-Pakistan Economic Corridor held on April 15, 2014 in Islamabad. Official minutes signed by the two countries indicate that PPRA rules will be ignored to ensure Chinese investment. "China’s National Energy Vice Administer and Pakistan’s Ministry of Water and Power will discuss the possibility of entering into an inter-governmental agreement for fast track implementation of power and infrastructure projects," the minutes note. The projects which will start commercial operation by December 2017 are as follows: (i) 2x660 coal based power projects at Port Qasim on Built-Own-Operate (BOO) under IPP policy - commercial operation; (ii) Jetty + infrastructure at Power Park Gaddani-BOO; (iii) 10 X 660 MW coal-based power projects at Gaddani; 2x 660 MW(MoU Power China), 2x660 MW (MoU ANC/China Datang Corporation); 4x660(MoU China Gezhuoba); 2x660 MW (MoU CMEC); (iv) two transmission lines from Gaddani (600 kV HVDC Gaddani to Lahore and 600 Kv HVDC Gaddani to Faisalabad; (v) 3.5 MT/A coal mining project Thar Block-II SEMEC; (vi) Sino Sindh Resources 6.5 MT/A mining and 2x660 MW coal power projects; (vii) 2x600 MW coal-based power projects at Sahiwal; (viii) 2x600 MW coal-based power projects at Sheikhupura; (ix) 2x330 MW Thar power coal plant SECMC; (x)Solar Power Park at Bahawalpur; (xi) 100 MW Solar PV Power Project and ;(xii) 2793 MW( three) hydropower projects ie 720 MW Karot Hydropower Project( advanced implementation), 873 MW Suki Kinari hydro Power Project( advanced implementation) and 1,100 MW Kohala Hydropower Project( advanced implementation). Official sources told Business Recorder that $6 billion Chinese investment will be injected in months. Both sides have agreed that under the guidance of the Energy Planning Working Group, they will establish respective Energy Planning Expert Working Group (Expert Group) to take charge of the specific preparation work of energy planning and complete the energy planning report. On 19th February 2014, an initial list of prioritised/Early Harvest Projects was discussed and agreed during the 2nd meeting of the Joint Co-operation Committee of China-Pakistan Economic Corridor held in Beijing. On 14th-15th April 2014, the Pakistan side shared a list of relatively mature projects (for achieving financial close, construction start or commercial operations date for 2014-2017) which have gone through a technical planning phase and are near completion of the commercial planning in the next 2-3 months. The Chinese side agreed to review the technical and commercial planning of these projects within the next one month subject to availability of relevant information and documentation. The Ministry of Water and Power provided the Chinese EPWG with Pakistan''s economic and social development planning, energy development overall planning, power system and power grid planning as well as related technical codes, power load and power demand predictions, electric tariff system, coal industrial development planning, nuclear development planning, water energy, wind energy, solar energy and other renewable energy development and planning, and other basic documents. The Ministry of Water and Power will ensure that data collection and data sharing should continue through the whole planning period. May 2014: The Chinese Expert Group will provide a planning work outline (draft) and formulate planning outlines after soliciting views of the Pakistani Expert Group. JUNE 2014: It was agreed that the Expert Groups of both sides will meet in the first half of June 2014 in Beijing. The Chinese side will share its feedback of the review of projects during the Expert Group meeting and both sides will identify the possible fast track mode of implementation of the projects. August 2014: China''s Expert Group will first provide the energy planning report on the China-Pakistan Economic Corridor (2014-2020) (draft). The Pakistan Expert Group will provide the comments on the said report for incorporation within two weeks. October 2014: Expert Groups from both sides will complete initial planning report (2014-2020). November 2014: EPWG from both sides will review the planning report and then supplement and perfect the planning report according to review comments. December 2014: EPWG from both sides will submit it to their respective authorities for approval.

Copyright Business Recorder, 2014

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Pakistan, China agree to establish energy platform

Pakistan and China on Tuesday agreed to establish a joint Economic Corridor Energy Information platform, for which China would extend $6 million. After detailed formal deliberations during the first meeting of Energy Planning Working Group of China-Pakistan Economic Corridor (CPEC), Ministry of Water and Power, in an official announcement, stated that both parties discussed the organizational framework, basic concepts, main items, work programme and an enabling mechanism of the energy planning of CPEC. Ministry of Water and Power and China’s National Energy Administration agreed for a fast-track implementation of the 21690 MW power and related infrastructure projects under CPEC. It was agreed that both sides would jointly establish China-Pakistan Economic Corridor Energy Information Platform and provide timely, precise and complete data and information of the platform and also establish an Energy Planning Expert Group. China would provide $6 million for the operation of information platform, the statement added. The Ministry of Water and Power would ensure that data collection sharing would continue through the whole planning period from May 2014 to December 2014. It was agreed that 16 power projects including construction of transmission lines would be completed by 2017. It was also agreed that focus would be on the study of power source and grid distribution, tariff mechanism, coal development and transportation, push forward corridors, energy infrastructure and interconnection and inter working of power grids as well as establish a list of major co-operation projects.

Copyright Business Recorder, 2014

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Prime Minister makes a pitch for investment in energy sector: Pakistan, South Korea hold talks

Pakistan on Monday called for preparing a Country Partnership Strategy with the Republic of Korea for the next three years, mainly in fields of trade and investment. Prime Minister Muhammad Nawaz Sharif heading a delegation-level meeting with the Prime Minister of Republic of Korea, Chung Hong-won at the PM House here, said Pakistan and Korea needed to mutually exploit their trade potential. -- Need for Country Partnership Strategy underscored Prime Minister Sharif proposed a comprehensive Free Trade Agreement (FTA) with the Republic of Korea for enhanced co-operation in trade and investment. He said Pakistan offers huge opportunities to the Korean business companies in energy generation including hydel, wind, solar, biomass and coal generation. He said the Lahore-Islamabad Motorway bears testimony to the mutually beneficial co-operation between the two countries and Pakistan wants to replicate and enhance such co-operation in other fields. He said Pakistan would appreciate if Korean companies participate in initiatives such as Gaddani Power Park and Quaid-e-Azam Solar Park. He said the construction of off-shore and on-shore Liquefied Natural Gas (LNG) terminals also offered investment opportunities to Korean companies and Pakistan would welcome and facilitate Korean capital and technology in these sectors. Prime Minister Sharif said the Free Economic Zone along the China-Pak economic Corridor also offered investment opportunities to Korean investors. In this Economic Zone, Korean Small and Medium Enterprises (SMEs) can establish joint ventures in manufacturing sector to cater for a large and growing domestic market as well as, Korean and regional markets, he added. Sharif invited the Korean financial institutions to start their operations in Pakistan, adding that opening of a branch of Korean bank in Pakistan would boost business between the two countries. The co-operation in science and technology, bio-engineering, information technology, and exchange of human resources and other areas of common interest with Korea were also discussed. Prime Minister Sharif thanked the Korean government for looking after 900 Pakistani students and expressed the hope for increasing further scholarships being offered to Pakistani students. He stressed interaction and co-operation between the private sectors and regular interaction between respective Boards of Investment, and Chambers of Commerce and Industry. Discussing the economic prospects, Nawaz Sharif said it was heartening to note that trade between the two countries had reached US $1.6 billion in 2012. Prime Minister Sharif said Pakistan was happy to witness the progress and development of the Republic of Korea and to learn from the Korean experience. He appreciated the Joint Business Forum organised by KOTRA (Korea Trade Investment Promotion Agency) and Board of Investment, Pakistan, on the sidelines of this visit and expressed hope that as an outcome of the Business Forum, the Korean companies would be engaged in the energy, infrastructure development, railways and telecommunication sectors. Prime Minister of the Republic of Korea Chung Hong-won thanked Prime Minister Nawaz Sharif, government and people of Pakistan for extending warm welcome during his visit. He said that Pakistan and Korea should expand their trade, economy and energy sectors and enhance bilateral relations by increasing personnel exchanges in the private sector. Dr Song Jong-hwan Korean, Ambassador to Pakistan, Cho Taeyul vice Minister for Foreign Affairs, vice Minister for Trade and Energy Han Jinhyun from the Korean side and Minister for Commerce Engineer Khurram Dastagir, Minister for Planning Ahsan Iqbal, Advisor to PM on National Security Sartaj Aziz, Special Assistant to PM Syed Tariq Fatemi from the Pakistani side attended the delegation-level meeting. Views were also exchanged on regional and international issues. Before the delegation-level talks, the two Prime Ministers held one-to-one meeting. Prime Minister Sharif welcomed the Korean Prime Minister and said that "We are very happy to host you as the first-ever Korean Prime Minister to visit Pakistan since the establishment of our diplomatic relations 31 years ago." He mentioned his recent meeting with the Korean Prime Minister this month on the sidelines of Boao Forum for Asia in China. He said that the traditional cordial relationship between Pakistan and the Republic of Korea needs to be transformed into a substantive partnership in trade, investment, energy and infrastructure. Later, Prime Minister Sharif hosted lunch in honour of the visiting Korean Prime Minister and his delegation.

Copyright Associated Press of Pakistan, 2014

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4250MW power to be added to national grid by June: Abid

Minister of State for Water and Power Abid Sher Ali has said 4250MW electricity will be added to national grid by June this year that would limit loadshedding hours to maximum 6 to 8 hours at the peak of demand in the summer season. He was addressing a public gathering after inaugurating Dipalpur Grid Station Up-gradation Project on Sunday. He said China has agreed to invest over 30 billion dollars in Pakistan's energy sector. The Minister announced that the farmers would be provided electricity on cheaper rates of about Rs 10 per unit. According to Wapda sources about 2,000 megawatts electricity would be added to national grid with the completion of Guddu Thermal, Nandipur and Dera Murad Jamali power projects bringing down the power shortfall to 4,000 megawatts during summer. The government has directed Wapda to complete these power ventures on time, which include 747MW Guddu Thermal power project, 425-525MW Nandipur power project at Gujranwala and 410MW power project at Dera Murad Jamali. A few hundred megawatts power is also expected to be added to the national grid by Independent Power Producers (IPPs) on pay and take policy with revised rates of 16 rupees per unit instead of 22 rupees per unit.

Copyright Business Recorder, 2014

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Bagasse-fired power projects: Ministry decides to give fiscal benefits

The Ministry of Water and Power (MoWP) has reportedly decided to give biomass and bagasse-fired power projects fiscal benefits that are available to independent power producers (IPPs), well-informed sources told Business Recorder. Pakistan, an agriculture-based country, produces large amounts of agriculture residues/biomass such as cotton stalks, rice, husk and bagasse that can be utilised for generating electricity. The use of biomass for generation of power is globally considered as environment friendly and economically feasible. Well-informed sources told Business Recorder,the Alternative Energy Development Board (AEDB) has sought powers to alter the Energy Purchase Agreement and Implementation Agreement. The GoP Policy for Development of Renewable Energy for Power Generation 2006 provides standard security agreements for grid-connected renewable energy. These draft standardised security agreements comprise of the Implementation Agreement and the Energy Purchase Agreement which provide a legal and contractual framework for the design, financing, engineering, procurement, construction, commissioning, operation and maintenance of power projects based on biomass energy. The project agreements are structured on the ECC approved security agreement for thermal power projects and standardised approved security agreements for projects falling under Framework of Power Co-Generation 2013 (Bagasse/Biomass) as the base template. The overall contractual framework of the approved agreements has been maintained. Some tariff structure based specific modifications in the approved agreements have been made in compliance with Nepra''s tariff determination for biomass based IPP projects and in consultation with National Transmission and Despatch Company (NTDC)/ Central Power Purchasing Agency (CPPA). The risk allocation matrix of the GoP has been maintained as per the approved agreements. These project agreements so prepared have been vetted and cleared by AEDB''s legal counsel. The Water and Power Ministry has submitted following recommendations to the ECC: (i) standardised security agreements for biomass based power generation projects on IPP mode; and (ii) AEDB be authorised to approve any project specific amendments in standardised security agreements for biomass-based power generation projects on IPP mode during negotiations subject to provision of legal opinion in order not to increase GoP obligations or liabilities beyond the provisions of the policy for development of renewable energy for power generation 2006. Sugar mills are currently using bagasse - a renewable fuel produced as a by-product in the sugar manufacturing process - inefficiently in low-pressure 23 bars based power systems, whereas other countries have abandoned low pressure boilers and switched to high-pressure boilers (minimum 60 bars) in cogeneration power systems. Resultantly, sugar mills in Pakistan were unable to produce meaningful surplus electricity for export to the national grid. The sources said sugar mills in the country generally operate during the winter from November through April. Pakistan''s power generation capacity is at the lowest during these months due to water and gas shortages. Additional power generation through a local renewable biomass fuel will not only help the country reduce its chronic power shortages during this critical period but also save precious foreign exchange spent on import of furnace oil. Furthermore, efficient use of a biomass fuel like bagasse is environment- friendly and would help mitigate greenhouse gas emissions from the country''s power sector. The combined crushing capacity of various sugar mills in the country is more than 590,000 tons per day. Pakistan crushed 48,249,000 tons of sugar cane during the last crushing season (2011-12), which yielded over 15 million tons of bagasse assuming 32 percent fiber on cane. The amount of bagasse produced by sugar mills has the potential to generate over 2,000 MW. The draft co-gen policy is as follows: 1- The company shall, under the provisions of policy of power generation projects 2002, approach PPIB for facilitation in setting up of the co-generation power projects based on bagasse/biomass and coal as fuel using high pressure boilers (minimum 60 bars). 2- The policy shall be applicable to all co-generation power projects irrespective of capacity based on bagasse/biomass and coal as fuel, intended to be contracted to the power purchase which is a federal entity, eg, NTDC/CPPA, Discos. 3- All fiscal and financial incentives available to the IPPs under Power Policy 2002 including applicable fee and any subsequent amendments/concessions till the date hereof shall be applicable to co-generation power projects under this policy. 4- Except as otherwise stated, the provisions of policy of power generation projects 2002, as amended from time to time will be followed. 5- Power utilised by the respective sugar mills for self-consumption shall not be charged to the power purchaser. It will be mandatory for the power purchaser to dispatch the hourly declared available capacity by the co-generation power projects during crushing season, failing which the power purchaser shall be liable for liquidated damages equivalent to the energy payment for the relevant hour in addition to the hourly capacity payment. 6- The co-generation projects will be developed on a priority basis and there will be no requirement for prequalification, Letter of Intent (LoI) and feasibility study. The company will be issued Letter of Support (LoS) by PPIB after tariff has been determined and approved by Nepra. 7- The company will be required to submit grid interconnection studies and initial environment examination reports to relevant agencies/departments. Upfront tariff for bagasse/biomass/coal based co-generation projects shall be determined by Nepra in accordance with the Nepra rules and regulations. 8- The company shall have the option to opt for upfront tariff or approach Nepra for a specific determination. A firm Engineering, Procurement and Construction (EPC) contract will not be required in case of an upfront tariff. 9- The company shall approach Nepra for issuance of generation licence. Standardised Implementation Agreement (IA) and Power Purchase Agreement (PPA) will be developed by PPIB in consultation with the stakeholders and approved by the competent authority within 45 days of issuance of the policy for co-generation projects. 10- The power produced by co-generation power projects will be purchased by NTDC/CPPA or Disco concerned at tariff approved by Nepra. The PPA will be effective for 25-30 years. The cost of interconnection, grid station upgrades, etc, for power evacuation from outgoing bus bar of co-generation power projects shall be the responsibility of the power purchaser. 11- Bagasse/biomass and imported/local coal will be consumed as per requirement of the plant without any limitation of inter-changeability. 12- It will be the responsibility of the company to make all other arrangements like financing, purchase of land, procurement of machinery and fuel, etc.

Copyright Business Recorder, 2014

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PPIB inks IA with SK Hydro for 870MW project

The Private Power and Infrastructure Board (PPIB) on Friday signed Implementation Agreement (IA) with SK Hydro (Pvt) Limited for development of 870 MW Suki Kinari hydropower project, at a cost of $1.8 billion, to be established in district Mansehra, Khyber Pakhtunkhwa. The signing ceremony was witnessed by Federal Minister for Water and Power, Khawaja Muhammad Asif, Additional Secretary In-charge Water and Power, Saifullah Chattha, senior officers of PPIB and others. MD, PPIB, N A Zuberi and CEO of SK Hydro, Haseeb Khan, signed the IA on behalf of their respective authorities. Addressing on the occasion and talking to media, Federal Minister for Water and Power, Khawaja Asif said the government is taking all possible steps to generate cheaper electricity from indigenous resources such as coal, wind, solar and hydel. He said Dasu project with a production capacity of 4,300 MW is being executed in the public sector and funding for the project has also been arranged. The World Bank is likely to approve $4.5 billion for the project in its meeting scheduled for May 29. To a question regarding objection by Afghanistan, it was informed that Afghanistan has withdrawn its objections as the project is located on the river, which is 100 percent in Pakistani territory. The groundbreaking ceremony of Suki Kinari project will be held on May 15, 2014 by Prime Minister Nawaz Sharif, he added. To another question about setting up of two power projects in the public sector, he said the response of investors is very encouraging in Gadani and now the government is considering establishment of all 10 projects of 660 MW each by the private sector. Asif said China is keen to set up 20,000 MW power projects in Pakistan and after completion of all the projects, there will be no load-shedding in the country. He said due to policies of the government and encouraging response by the international community for Pakistan in the bond market, the government would not face funding difficulties for construction of Bhasha, Bunji and Thakot projects. The Suki Kinari project will be completed in 2020 and inject 3,081 million clean, reliable and affordable units of electricity each year into the national grid and will be of great help in meeting future electricity requirements. Further, the government of Khyber Pakhtunkhwa will earn approximately Rs 470 million per annum on account of water use charges, and after 30 years of project operation it will be transferred to the government of Khyber Pakhtunkhwa free of cost.

Copyright Business Recorder, 2014

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Prime Minister to launch various power projects next month: Abid

Minister of State for Water and Power Abid Sher Ali said on Tuesday that Prime Minister Nawaz Sharif will inaugurate various power projects next month to provide cheap electricity to the people. Addressing the inaugural ceremony of a grid station in Dobian, Swabi district, he said the PML-N government has shown such remarkable performance in a short span of 10 months, which was not exhibited by others even in the long period of 10 years. He said the production of 750MW electricity will start from Gaddu Power Plant within a period of 10 months. He said the problem of power load-shedding was ignored by previous governments while the present government under the leadership of Prime Minister Nawaz Sharif has written a new history through taking revolutionary steps for the resolution of the problem. Abid Sher Ali said the government was fulfilling all its commitments made with the people. He said for changing the outdated electricity system, bringing improvement in transmission and abolition of load-shedding, the prime minister has launched new power projects across the country. For the purpose, he said the government has also signed an energy sector agreement of $30 billion with China. Similarly, he said the Prime Minister has released an amount of Rs 25 billion for the energy sector in the country. The minister of state said that 800MW electricity would be produced from gas which will be provided to the people on cheap rates. He said that 402MW electricity would be produced from other plants, including Gaddu Power Plant. Abid Sher Ali said that the completion of new power projects will soon resolve the issue of load-shedding in the country. He said the government was determined to remove difference between the poor and the rich, adding the poor consuming less electricity will bear less-expenses and no cruelty or excesses will be tolerated with them. He said Prime Minister Nawaz Sharif will inaugurate different power projects next month to provide cheap electricity to the people.

Copyright Business Recorder, 2014

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Hydropower project: Wapda may award contract to Chinese company

Water and Power Development Authority (Wapda) is likely to award civil works contract for 122 MW Keyal Khwar hydropower project to Sinohydro Group, well informed sources told Business Recorder. KfW and EIB are said to be providing financing of 97 million and 100 million euros, respectively, for the implementation of this project. Wapda Chairman Syed Raghab Abbas at a recent meeting of the Senate Standing Committee on Water and Power, headed by Zahid Khan, clarified that Wapda has awarded the contract to Sinohydro Group while the World Bank barred Sinohydro Corporation, which is a different entity. This correspondent visited the website of Sinohydro Corporation which gave its address as follows: No 22 Che Gongzhuang West Road, Haidian District, Beijing, China 100048. A glance on Sinohydro Group reveals the same address ie No 22 Che Gongzhuang West Road, Haidian District, Beijing, China 100048 (http://eng.sinohydro.com). In addition, with respect to Sinohydro-Al Hajvairy consortium, Hajvairy Group has no experience of any dam or water management project (www.hajvairygroup.com), and therefore their involvement raises many questions. When the issue of Synohydro came under discussion in the Senate Standing Committee on Water and Power, the Minister of State for Water and Power, Abid Sher Ali and Chairman Wapda, Syed Raghab Abbas Shah stated that if the World Bank which suspended the firm has awarded Tarbela IV to the group, then the GoP should not be worried. Official documents reveal that on January 24, 2014, Synohydro Group Limited and Hajvairy Associates (Pvt) Limited, in a letter to General Manager (Hydro) Planning, Wapda confirmed that M/s Synohydro Corporation Limited was temporarily suspended by the World Bank, and is a subsidiary of Synohydro Group Limited, a leading company of Synohydro-Hajvairy (JV). "We hereby confirm and undertake that neither M/s Sinohydro Corporation Limited nor any of their personnel involved in the case of investigation by the World Bank will be engaged in the execution of Keyal Khwar Hydropower project to M/s Sinohydro-Hajwairy," said the authorised representatives of Sinohydro Group Limited and Hajvairy Associates in that letter. However, Chairman Wapda, in a letter to Secretary Water and Power written on March 7, 2014 stated that only M/s Sinohydro-Hajvairy JV has submitted a bid for the contract. He added that PC-1 (revised) with a rationalised cost amounting to Rs 35046.221 million with FEC of Rs 1421.936 million submitted to the Ministry of Water and Power forwarded to Planning Division is under consideration for approval of the competent forum. Documents further disclose that General Manager (Hydro) Planning Shoaib Iqbal wrote a letter to Principal Project Officer (PPO) of KfW (Frankfurt Germany) Sven Grantz, saying that it is a matter of serious concern for Wapda''s top management that the implementation of the project is being delayed due to one reason or another. He strongly emphasised that an NOC for the award of contract KKHPP-02(civil works) may be issued without further any delay According to a retired Wapda official "the international rules were clear and even if the corporation was a subsidiary of the group, as admitted, the latter could not escape responsibility as the parent organisation for acts of omission and commission of its subsidiaries". He said both the entities could not be separated as Wapda was trying to do, wondering why the Authority''s Chairman was ignoring such alleged violation pointed out by their own system. Under PPRA Rules, any organisation blacklisted by the World Bank is considered blacklisted and unable to work in Pakistan.

Copyright Business Recorder, 2014

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Marala power project to be functional in November

The Marala Hydro Power project will be operational in mid November this year and development work on this project had been further accelerated for its timely completion. The Punjab government has initiated Head Marala Hydro Power project with the financial assistance of Asian Development Bank (ADB) for generating 7.64MW electricity costing Rs 3049.74 million. Official sources told Business Recorder, here on Sunday the work on project was initiated in December 2012 with the assistance of Asian Development Bank (ADB). Sources said the efforts were being made for completing spillways before April 15 this year and pace of development work on spillways had further been expedited for its timely completion. Similarly, the pace of construction work of power house had also been accelerated while the construction of two dams on Upper Chenab canal had already been completed. Sources said that Kaplan type turbines of 4X2 would be installed for generating 7.64MW electricity. The experts of Chinese firm SINOTEC-SHAPE JV are supervising the development work of the project. The power project will produce 7.64MW electricity, sources added.

Copyright Business Recorder, 2014

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Two hydropower projects: traders hail signing of CFAs with France

Business community of Southern Punjab have hailed a Credit Facility Agreements (CFAs) singed between Pakistan and France for establishment of two hydropower projects Mohmand/Munda Hydropower project and Harpo hydropower project-with a total capacity of 785MW in Pakistan. President of Multan Chamber of Commerce and Industry Khawaja Muhammad Usman said that French Ambassador to Pakistan Philippe Thiébaud had assured the local business community that he would do his utmost for the cheaper electricity for Pakistan and France fulfilled commitment of Tokyo Conference in April 2009 (Euros 300 million in the energy and water sectors-currently, committed at 93 percent, ie, Euros280 million).The projects would address the current national energy crisis and emerge as a major contributor, he said. The Phase-I of the project being financed by the French Development Agency (AFD) will enable the government to complete a detailed engineering design, preparatory work and financial closure for construction of the project. The AFD is also supporting development of renewable energies in order to improve power supply in Pakistan. At present, three projects are being developed: Jabban Hydropower project (22-MW run-of-river hydroelectric power plant near Dargai, Khyber Pakhtunkhwa at a cost of Euros 26.5 million; Jaggran-II Hydropower projects (48 MW run-of-river hydroelectric power plant on Jaggran River, Neelum Valley, Azad Jammu and Kashmir, at a cost of Euros 68 million); and Hydropower Training Institute (HPTI) at Mangla with a grant of Euros 2.5 million, to establish the centre of excellence for hydropower in Pakistan.

Copyright Business Recorder, 2014

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Shandong Ruyi Group visits Fesco headquarters

A delegation of Shandong Ruyi Group headed by Vice President Madam Jane Liu visited the Faisalabad Electric Supply Company (Fesco) headquarters. Faiq Javed BOD director, CE Operation Akhtar Ali Randhawa, CCO Rashid Aslam, CE T&G Haroon Rashid, Finance Director Iqbal Ghori and Director Human Resources welcomed the foreign guests. Khurshid Alam CEO FESCO briefed the delegation about administrative set-up, its aim and objective and future plan. He said Fesco is the best distribution company (Disco) of Pepco with minimum line losses and excellent recoveries. He said distribution network of Fesco has been upgraded and expanded to cater to the future needs of its major load centres. He said efficient management played a major role in reducing unscheduled load shedding. He also explained technical skill and expertise of its work force that is successfully maintaining the distribution network sprawling over 8 districts of Faisalabad and Sargodha divisions. Madam Jane Liu showed keen interest in the successful story of FESCO and said her group is investing in textile as well as power generation. The objective of her tour is to explore the new avenue of investment in this country. Later, CEO Fesco Khurshid Alam presented a memento of Fesco to Madam Jane Liu.

Copyright Business Recorder, 2014

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Export of 500 megawatts power: decision subject to clearance by India’s Cabinet

India has agreed to export 500 MW electricity to Pakistan provided Indian cabinet clears this commercial deal, official sources told Business Recorder. "We have discussed all the pros and cons of the electricity deal with the Indian authorities. Some of the issues are yet to be resolved to finalise the agreement. Four groups have been formed to finalise technical, commercial, tariff and implementation issues," the sources added. The four groups comprising engineers of NTDC and PGCIL are working together to finalise the following matters on an urgent basis: (i) addressing System compatibility issues and deciding on voltage level and best nodes on both sides of interconnection; (ii) engineering and design of interconnection; (iii) working out bill of quantities and drawings for bidding; (iv) since PGCIL has sufficient experience and expertise in Engineering and Construction of D.C. networks PGCIL will extensively share the expertise and literature with NTDC counterparts for successfully completing the project; and (v) PGCIL will construct the part of interconnection falling in the Indian territory and NTDC will construct the part of interconnection falling in the territory of Pakistan. The project components on each side will be financed by the respective governments. A couple of days ago, Commerce Minister Engineer Khurram Dastgir told media in Lahore that an electricity purchase agreement has been signed with India. However, his claim has been negated by officials in the Ministry of Water and Power. "No final agreement is reached with India on electricity so far. India has just given an indication in principle that it is ready to sell 500 MW," the sources added. Power sector experts of Pakistan and India have discussed different options of interconnection between Pakistan and India at the following locations: (i) Batapur at Lahore; (ii) Ghazi road Lahore at 132 KV; (iii) Ghazi road Lahore at 220 KV; (iv) Sarfaraz Nagar at 132 KV; (v) Sarfaraz Nagar at 220 KV; and (vi) Kasur at 132 KV. "We have discussed issues like frequency synchronisation, quantity of power flowing through the system, and issues of short circuiting, distance/fault in one area having an impact on other areas," the sources continued. The issue of installation of DC to AC converter system at the interconnection point is one of the key hurdles in finalisation of deal, said an official on condition of anonymity. India has proposed Power Trading Company (PTC) of India as trading agent of NTDC as it has vast experience of power import/export and is a Public Sector Company. The World Bank had conducted a pre-feasibility study in this regard which will set the stage for the required detailed studies. The recommendations amongst others made in the pre-feasibility study are as under: (i) a detailed feasibility study of the interconnection options should be conducted to establish tradable electricity volumes between the two countries based on configuration and design of the interconnection arrangements and on a detailed analysis of power systems in India and Pakistan; (ii) based on the interconnection point, infrastructure cost estimates and power flows, a detailed economic and financial analysis should be carried out to establish a tariff regime and a sensitivity analysis for full cost recovery; (iii) a final ranking exercise of available options should be completed; (iv) Pakistan and India must hold open discussions on trade arrangements, import/export tariffs, and the resolution of technical, regulatory and national policy issues. The consultants recommend that the power purchase price be decided by market dynamics; (v) private sector involvement should be promoted in the development of interconnection and electricity trading facilitated; (vi) instead of sourcing power under a fixed volume contract, sourcing variable power according to the supply availability of the demand load profile can reduce costs significantly; and (vii) minimum standards will need to be established on balancing and settlement process, payment security mechanisms and grid codes as energy trade expands.

Copyright Business Recorder, 2014

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Suki Kanari Hydro Power to build 870 megawatts power project in Mansehra: agreement signed

The administration of Hazara division and management of Suki Kanari Hydro Power Project, Mansehra have signed an agreement for acquisition of 4418 kanals of land to construct 870MW power production project in Mansehra district near Kaghan. The agreement was finalised and signed in a meeting held on Monday with Commissioner Hazara division, Abid Ali Khan in the chair. The Commissioner, Hazara division and Executive Director of Suki Kanari Hydro Power Project, Mian Shahabullah Kakakhel signed the agreement on behalf of KP government and the project authorities respectively. The Deputy Commissioner, Mansehra and other concerned officers were also present. The meeting discussed the arrangements of the land acquisition and taken various decisions to remove impediments in early initiation of the project. These decisions were formally incorporated in to the agreement, which states that the KP government will make 4418 kanals of land available for the project through the acquisition process. It was further agreed that necessary measures would also be taken to transfer about 1200 kanals of the reserved forests land in addition to another 30 kanals of state land. The Commissioner Hazara on this occasion assured that all concerned departments including district administration, Mansehra would extend their full co-operation and support for smooth execution of the project.

Copyright Independent News Pakistan, 2014

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Iran ready to finance gas pipeline project

MULTAN-Consulate General of Iran in Pakistan Muhammad Hossain Bani Asadi disclosed on Tuesday that Iran was ready to finance the gas pipeline project in Pakistan as the talks between both sides were underway to reach an agreement. Addressing members of the Multan Chamber of Commerce and Industry (MCCI), he added that the project had not been shelved and it existed to-date. “We have fulfilled our commitment by laying 1,000 km long pipeline up to the border, Now it is Pakistan’s turn to lay pipeline on its side to accomplish the project,” he noted. He expressed interest in a proposal to form a joint business council and ink a memorandum of understanding between the chambers of Iran and Pakistan. He was of the opinion that the scope of cooperation existed in all sectors including energy, trade and business. He said that the discussions held between the Pakistani and Iranian leaders on bilateral energy projects were significant in view of Pakistan’s growing energy needs. He disclosed that some of the joint ventures in energy sector included the 1,000MW Taftan-Quetta power transmission line and the Gwadar Power Supply Project. He said that both the countries could enter into a currency swap agreement by encouraging trade in local currencies. He added that there also existed a scope for introducing preferential tariff and free trade arrangements, and removing the tariff and non-tariff barriers between the two countries, which can further enhance bilateral trade and investment. He said that Pakistan’s agreement with Iran on export of wheat and rice could become a good example for launching of barter trade on large scale. Referring to terrorism issue, he said that the terrorists were equally dangerous for Pakistan and Iran and both countries would have to eliminate them. He claimed that Iran’s borders were safe and thus Iran did not deploy armed force on Pak-Iran border spread over 1,000 km. Earlier, in his welcome address MCCI President Khawaja Muhammad Usman said that Iran should relax its visa processing system for Pakistani business community subject to the recommendations of Chambers to enhance the trade and strengthen economic ties with each other. He said that Iran was doing “Currency Swap agreement” with India and it should also do so with Pakistan. He said that Multan is a city of saints and it produces 96 per cent cotton of Punjab,47 % wheat,23 % sugarcane,44 % milk,62 % sheep.

Copyright The Nation, 2014

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District to emerge as real 'Hub of Power': mining activity at Thar coal project begins after two decades

After a long wait of almost two decades, since discovery of Thar Coal deposits - seventh largest coal reserves in 1991 by Geological Survey of Pakistan (GSP) and the United State Agency for International Development, mining activity for overburden removal at Thar has been initiated. Sindh Engro Coal Mining Company (SECMC - joint venture between Government of Sindh & Engro incorporated in 2008) has initiated works for 113 million cubic meter overburden removal in Thar Block-II. Thar has estimated lignite reserves of 175 billion tons, equivalent to the total oil reserves of Saudi Arabia and Iran combined and can be used to produce 100,000MW for 200 years. SECMC plans to set up a mine of 3.8Mt/a (660MW equivalent) in 3.5 years which will be expanded in phases to 21.5Mt/a (4000MW equivalent). At optimum capacity of 4000MW, power tariff will be as low as USc 6/kWh matched by no other fuel. This major breakthrough has only been made possible through the instrumental support provided at all forums by Government of Pakistan, Government of Sindh, Engro and other investors. On January 31, 2014, Prime Minister Nawaz Sharif along with former President Asif Zardari performed ground-breaking for this mega project where SECMC pledged to start the project by mid of 2014. Political leadership of Pakistan has declared it the "most important project" for power sector of Pakistan. A number of local industrial groups and investors have joined hands with SECMC to make this project a reality and drive Pakistan on-track towards energy self-reliance. Development of indigenous Thar Coal Reserves offers a fortune turning proposition for Pakistan, which will not only address the severe power shortage crisis in medium to long-term but also bring energy security to the country. Pakistan is suffering from over-dependence on imported fuel for power generation, which has effectively paralyzed the entire economy; Thar Coal Project will guarantee self-reliance on energy. Furthermore, it will also help provide immense socio-economic benefits for the poor people of Thar as the project will catalyse the creation of social assets - medical facilities, educational institutions, infrastructural development and job opportunities. Thar truly is the most viable power generation option for Pakistan and with SECMC's unwavering commitment towards its development; it is bound to become the real "Hub of Power" in Pakistan.-PR

Copyright Business Recorder, 2014

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OGDCL, MOL Pakistan and PARCO sign MoU

Oil & Gas Development Company Limited (OGDCL), MOL Pakistan, and PARCO have signed a Memorandum of Understanding (MOU) for the construction of a crude decanting facility at Mahmood Kot Refinery (MCR), PARCO, Multan. This would enable both the companies to directly supply their local crude production from the fields mainly located in Khyber Pakhtunkhwa (KPK) to PARCO in Multan directly, instead of transporting the same initially to Karachi and thereafter pumping it back to PARCO through pipeline from Karachi to Multan. The project, with an estimated cost of around Rs 343 million, is jointly and equally financed by the three companies. MD, MOL was of the view that this project would not only result in tremendous savings in the transportation cost of the crude from fields to refinery but would also go a long way in developing the much needed infrastructure for handling and effective disposal of indigenous crude oil production of the country. He hoped that this project will be a success story for MOL Pakistan and OGDCL for upcoming days. OGDCL's MD, has said that the project carries huge importance for both the companies in equal measure, as it would enable them to directly supply their local crude production from Khyber Pakhtunkhwa to Multan. This project will be beneficial in terms of time and finance also. "Now we will focus more on completing this project in given time to enjoy the outcomes," he said.-PR

Copyright Business Recorder, 2014

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Import of 400mmcfd of LNG to help save $1 billion annually

The import of 400 mmcfd of Liquefied Natural Gas (LNG) would help save up to $1 billion annually for the country, well-placed officials in the Petroleum Ministry told Business Recorder. Global power generation efficiency average from gas is almost 45 percent which is 10 percent more than the 35 percent efficiency level of oil-based power plants, hence "if we replace oil with proposed 400 mmcfd of LNG per annum, it will give a cost advantage of nearly $1 billion per year over fuel oils including diesel and furnace oil," officials added. An official privy to developments in the proposed import of LNG supports a medium term LNG import contract instead of a long-term contract (with Qatar or any other LNG supplier) given that prices are high at present and are likely to come down in three to four years. Keeping in view international developments in the energy sector, especially the developments in shale oil/gas and completion of local hydel power projects within next three to five years, the government at present should support short-term or medium term LNG deals with an exporting country, he said. "During the past 8 years LNG prices in the international market rose manifold, had we begun importing LNG in 2008 or 2009 when prices were between $12 to $13 per mmbtu, we could have saved billions of dollars for the country; at present prices are hovering around $16 to $17 per mmbtu and any agreement today would be that much more costly," the official stated. The government is trying to bring the first shipment of imported LNG by the end of November 2014, but if the differences between local stakeholders are not resolved, this target is not likely to be met, the official said. "Instead of transporting imported LNG to other parts of the country, the government should install a power generation plant at Port Qasim, Karachi where LNG is planned to be stored. This will also help reduce financial burden on the government as supplying imported LNG to power plant situated far from the LNG terminal would require construction of additional pipelines. The government is supplying about 650 MW of power to Karachi from national grid and the installation of LNG based power plants in Karachi would enable the government to divert this 650MW to other regions," the official added. Given chronic shortages of electricity in Pakistan, any incremental supply of electricity will improve Pakistan's capacity to increase economic activity and importantly will reduce the quantity of diesel used in standby power generation. "We must not forget that the cost of diesel is currently around $30/mmbtu, therefore since LNG will reduce the quantity of diesel used for electricity production, the importation of LNG will significantly reduce Pakistan's cost of electricity production," he added. The import price of HSFO was $648/MT to $675/MT for March 2014 (at the prevailing FX spot rate and after downward adjustment to account for 17 percent GST). Converting $648/MT HSFO (the lower of the aforementioned numbers) to an energy based price gives $16.05/mmbtu which in turn yields a power price of $157/MWh. On the other hand, LNG at $17.00/mmbtu yields a power price of $129/MWh due to the low wasted energy. Fuel oil would have to be priced at $13.22/mmbtu, or $533/MT, to achieve the same result. Thus the speculated Qatari LNG price yields an effective $3.78/mmbtu saving, as compared to fuel oil. However, Pakistan has idle gas-based power generation capacity whilst still experiencing regular power outages. The LNG import programme will facilitate running of these under-utilised plants in conjunction with fuel oil plants in an effort to alleviate the outages. This is not about replacing fuel oil generation but adding to the overall electricity output. The claim that LNG would soon be available at $10/mmbtu and Pakistan could import this LNG is not going to happen in next five years, the official added. Moreover, LNG prices are likely to come down when the US starts exporting the commodity to countries with which it has Free Trade Agreements (FTAs) and unfortunately so far the US has not inked any FTA with Pakistan. Government of Pakistan last year had requested the US authorities to supply LNG but no progress has been made in this regard. Though there are numerous exporting nations around the globe (17 currently), only a handful are within economic shipping distance of Pakistan and of those, only Qatar has LNG available to sell. The reserves of Oman, Yemen and the UAE are all sold out. The vast majority of global LNG has already been sold out on long-term contracts. There are future volumes expected from Australia and the US but these can do little to satisfy Pakistan's immediate need for gas.

Copyright Business Recorder, 2014

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Investment in Pakistan: Li urged to persuade Chinese

Prime Minister Nawaz Sharif urged Premier Li Keqiang to encourage Chinese companies to invest in Pakistan, especially in energy and infrastructure. Prime Minister Nawaz Sharif, who is in China to attend the Boao Forum for Asia (BFA) 2014 held a bilateral meeting with his Chinese counterpart on the sidelines of the BFA. Both the leaders also discussed bilateral, regional and global issues. Congratulating Premier Li Keqiang and Chinese leadership on the successful holding of the 14th BFA, Prime Minister Nawaz Sharif highlighted that the Boao event was a demonstration of China''s willingness to assist and guide the developing countries in their pursuit of harmonious growth and shared prosperity. Describing Pakistan''s friendship with China as an exemplary inter-state relationship, the Prime Minister stressed that Pakistan attaches the highest priority to its relations with China. Reviewing the whole range of bilateral relations, the two leaders focused on enhancing connectivity between China and Pakistan and agreed that expanding economic and trade cooperation, promoting economic integration, fostering economic development of the two countries would not only benefit China and Pakistan but also transform the whole region. Chinese Premier Li Keqiang appreciated Sharif''s participation at the Boao Forum and reiterated the high priority attached by China to its relationship with Pakistan. He expressed the commitment towards deepening strategic co-operative partnership with Pakistan. Premier Keqiang thanked Pakistan for its consistent and strong support on issues relating to China''s core interests including the fight against terrorism, extremism and separatism. He said that China would continue to strongly support Pakistan''s sovereignty, independence and territorial integrity. He acknowledged sacrifices rendered by Pakistan in fighting terrorism and extremism and assured China''s full support against these menaces. The Chinese Premier, terming the China-Pakistan Economic Corridor (CPEC) as a common vision of the leadership of the two countries, expressed satisfaction on the progress made in the Corridor Project. He hoped that the Corridor would soon start to take a practical shape and yield tangible benefits, within the time-frame agreed upon between the two countries. In this regard, he urged the relevant authorities to continue their efforts to achieve concrete results. The two leaders reiterated the resolve to translate the high level of mutual trust and cooperation in political sphere of their bilateral relations into practical project-oriented cooperation for shared prosperity of the two countries. Prime Minister Nawaz Sharif was accompanied by Chief Minister Punjab Shahbaz Sharif and Special Assistant to the Prime Minister on Foreign Affairs Syed Tariq Fatemi.

Copyright Associated Press of Pakistan, 2014

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Formal import of LNG to begin in 2015: Dastgir

Federal Minister for Commerce Khurram Dastgir has said that formal import of Liquefied Natural Gas (LNG) will start in 2015 as work to develop required infrastructure is in full swing. While speaking at the Lahore Chamber of Commerce and Industry on Thursday, the Federal Minister said that the import of LNG would help supplement government efforts to mitigate gas shortage in the country. Citing the examples of China, Malaysia, Indonesia and India, the Federal Minister said the progress and prosperity would remain a dream without liberalising the trade regime therefore strenuous efforts were being made to liberalise trade regime of the country. Khurram Dastgir said that serious efforts were being done to overcome the challenges of extremism and energy shortage. He said that only because of these two issues the country could not get its due place in the international marketplace. He said the mistakes committed during 1994 to 2013 on the economic front were being rectified through a collective approach and a collective wisdom. The Minister said that work to generate electricity through coal was in advance stage as it was only way to get rid of costly thermal electricity. He said that the country energy mix would be reversed to ensure relief to the masses. Speaking on the occasion, the LCCI President Sohail Lashari appreciated the government for giving required focus toward the economic issues. He said that the business community would continue to supplement government efforts aimed at progress and prosperity. He urged the minister to direct the Trade Development Authority of Pakistan to collaborate with the Chambers of Commerce and Industry before finalising its foreign delegations and exhibition in foreign destinations. He also called foe early establishment of regional offices of Director General Trade Organisations to facilitate the private sector. He said the low level of foreign direct investment, inflationary pressures, high mark-up rate, foreign and domestic debts, capital flight, budgetary deficit, trade imbalance, high cost of business, circular debt, low tax-to-GDP ratio are few of the issues, we are facing as a nation. The LCCI President said that these factors do cause inconvenience to government in making both ends meet but it is the business community which has to bear the toll in the form of tight fiscal and monetary policies which hardly allow businesses to grow at will. He said that the real worry is that the structure of our imports dominated by oil and consumer goods is not capable of supporting long-term economic growth capacity. He said the government's overall approach to trade development should be based on trade facilitation. We have been proposing that export development fund must be spent in this connection but no major breakthrough has been made so far. He said that we need greater diversification in the structure and direction of our trade. Producing far few goods for far few markets is not going to strength the economy of Pakistan. The LCCI President said that our focus should be on greater value addition and entry into new markets like Africa, South America and the Islamic world. He called for well-thought out trade policy with both short-term and long-term targets. We have to utilize all available options to give maximum projection to Pakistani goods in international markets in best possible manner. Lashari suggested that TDAP should actively organise trade fairs and exhibitions in such markets which are not fully exploited. For this purpose, some strategic reorientation in the functioning of Trade Development Authority and in the disbursement of Export Development Fund is essential. He said that Export Development Fund should be made more aligned with the overall objectives of Strategic Trade Policy Framework. Special focus should be placed on export-oriented firms that are predominantly small and medium enterprises. He said that it is also essential to revamp the disbursement of EDF for research and development activities of innovative growth firms and for performance oriented trade associations. He stressed the need to consistently expand the country's market access. Pakistan should actively enter into Free Trade Agreements and Preferential Trade Agreements with countries where it has a clear and mutual comparative competitive advantage. He proposed the creation of country-level and regional FTA/PTA Advisory Councils involving the representatives of private sector and officials of the Ministry of Commerce for exploring all avenues to benefit from such agreements. He said that Lahore is set to become a major cross-road trading and business city in South Asia in the wake of growing trade liberalisation in the region and between Pakistan and India. He said that it is about time that we seriously improve our trade readiness especially involving the trade related infrastructure at Wagha Border which is critical for achieving the ambition of greater trade between Pakistan and India as well as in the region. LCCI former presidents Bashir A Buksh, Iftikhar Ali Malik, Mian Anjum Nisar, Shahid Hassan Sheikh Muhammad Ali Mian and Irfan Qaiser Sheikh also spoke on the occasion.

Copyright Business Recorder, 2014

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US shale gas - too little, too late

Now, even with the US signing trade agreements with non-FTA countries, Pakistan still has no choice but to turn to other countries for LNG import - at least in the short run, says Mohammad Raziuddin, energy expert and chief executive officer of the Khyber Pakhtunkhwa Oil and Gas Company Limited. US Shale Gas might be a reality but it's not available for Pakistan in near to mid future. We should not count on US Shale Gas as we don't even have a free trade agreement with U.S nor are we are in geographical proximity to import it from thousands of miles away. The Jordan Cove Energy Project in Coos Bay, Oregon, became the first West Coast and seventh US LNG export project approved to export LNG to countries that do not have free-trade agreements with the US, stated the US Department of Energy. DOE approved exports of the LNG equivalent of 800,000 Mcf/d (22.66 million cubic meters per day) of gas for 20 years from Jordan Cove. It is also the first Greenfield project to approve for non-FTA exports. Previous approvals have gone to import terminals that are adding liquefaction and export facilities. The nod to Jordan Cove marks a total of 9.27 billion cubic feet per day of gas as LNG exports from the US. If all the projects were built, the total would be close to the amount of current exports by Qatar, now the world's largest LNG exporter. The approval of Jordan Cove leaves 24 other US export projects in DOE's queue for approval to export to countries without free-trade agreements with the US. It had been reported in the media that in the absence of a free trade agreement with the United States, Pakistan cannot strike a liquefied natural gas (LNG) import deal with the US, leaving Pakistan with no option but to import LNG from other countries, namely Qatar, to lessen the country's energy crisis. The IP gas pipeline will take approximately four years to complete after FID which itself is in doldrums. The project is estimated to cost $7.5 billion and its financing is a huge challenge. The hydel expansions (at Tarbela) are expected to cost $840 million are not expected to be completed before mid to late 2018 complete in 2018 and will then generate 1410MW. Similarly, the nuclear expansion project at Karachi Nuclear Power Plant (Kanupp) II is to be completed in 2019 ($4.8 billion and 1,100MW). This means Pakistan has no solution to the ongoing problem at least for the next four years except for LNG import which could come in as early as end of 2014. Adding to this, there are a number of pending US export projects with approvals pending to various countries. Pakistan has not yet even applied for an LNG deal with the US and even when it does, it will take many years before it manifests and US LNG makes it way to Pakistan, says Raziuddin. US shale gas is unlikely to be as cheap as indicated given the shipping distance and potential upside in Henry Hub. LNG import contracts are not based on fixed prices but pegged prices - in this case to Henry Hub. When Henry Hub remains low then it is possible to import LNG at mentioned amounts but what about when prices rise like they have in the past in winter months or when natural disasters take place. When Henry Hub prices increase to $11-13, there is hardly a difference between this and oil pegged prices. Additionally, it will take 25 days (three-and-a-half weeks) for US LNG to reach Pakistan which will obviously increase transport costs. Pakistan needs one ship to arrive weekly at its ports which means that for every ship that comes, seven more vessels will be at sea (coming and going) meaning that transportation costs will be very high and add on to the cost of the LNG. Pakistan is in talks with QatarGas as while there are a few countries which are exporting LNG, Qatar has the regional monopoly in LNG and is the largest producer globally. Additionally, the fact that it only takes three days for LNG shipments to come in from Qatar means that Pakistan can get gas relatively quicker with lesser transport charges compared to Japan, China and India. Whilst there are numerous exporting nations around the globe (17 currently), only a handful are within economic shipping distance of Pakistan. Oman, Yemen and the UAE are all sold out and UAE is a net importer now.

Copyright Business Recorder, 2014

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LNG import talks with India make headway: next round in Islamabad

Pakistan and India have decided to continue talks on the possibility of the former importing 200 mmcfd of Liquefied Natural Gas from the latter, officials said. Officials of both the countries recently held talks in New Delhi and the next round of talks is expected in a couple of weeks in Islamabad as the officials from GAIL (India) Limited - the largest state-owned natural gas processing and distribution company are expected to visit Pakistan. Talks in New Delhi were positive and on the basis of success in Delhi round of talks, both the countries have decided to go ahead and further developments are expected. Sources in the Ministry of Petroleum and Natural Resources told Business Recorder on Friday that recently a high-level Pakistani delegation headed by Mobin Solut, Managing Director (MD) Inter-State Gas System (ISGS) visited India to hold talks on the LNG import from India. "Both sides discussed the term-sheet, commodity prices, building of infrastructure and other necessary things related to LNG supply from India to Pakistan via Wagha area of Lahore," the Petroleum Ministry official said. "Pakistan initially wanted to import 200 mmcfd of LNG, however, pricing and other commercial negotiations are currently going on and there is a difference between the two sides on the price of the commodity. India is importing LNG in the range of $13 and $14 per mmbtu and has offered Pakistan LNG at $21 per mmbtu after including customs or import duty, pipeline transportation charges and local taxes," the official added. Although Pakistan currently does not have an LNG import facility, it is willing to buy LNG from GAIL provided India exempts it from taxes to bring down the cost, they maintained. If India is providing LNG to Pakistan at $17 per mmbtu, it will be a win-win situation for both the countries as India will earn significant profit and Pakistan will get the commodity at lower prices as compared to current international LNG prices, which at present hovers in the range $17 per mmbtu in open market and after including shipping and other expenditure it costs end consumers around $19 per mmbtu. India has proposed to lay a 110-km pipeline from Jalandhar to the Wagha border via Amritsar to supply natural gas to Pakistan. LNG will be imported via ports in Gujarat and will be moved through GAIL''s existing pipeline network till Jalandhar. The proposed line will ensure the transfer of gas from Jalandhar to Wagha.

Copyright Business Recorder, 2014

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OGDCL discovers gas from Maru East Well-1

Oil & Gas Development Company Limited (OGDCL) made gas discovery from Maru East Well-1, which is located in district Ghotki, Sindh Province. The joint venture of Guddu block - comprising OGDCL as operator having 70 percent stakes, IPR Transoil Corporation having 11.5 percent stakes, Spud Energy Ptv Ltd with 13.5 percent and Government Holding Pvt Limited with five percent stakes - discovered gas from its exploratory well, Maru East-1. The Structure of Maru East Well was delineated drilled and tested using OGDCL's in-house expertise. The well was drilled to the depth of 770 meters, targeting to test the hydrocarbon potential of Pirkoh Limestone, whereby reserves of hydrocarbon have been found at Maru East Well No 01. The Zone has tested 2.10 million cubic feet per day of gas and flow rates are expected to enhance after acid stimulation treatment.

Copyright Business Recorder, 2014

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Energy, other sectors: government to seek cooperation from Russia

Pakistan is to seek co-operation from Russia in different sectors despite sanctions recently imposed by the USA and the European Union (EU) on Moscow, well informed sources told Business Recorder. The sources said a delegation of Russian State Corporation "Rostech" is expected to visit Pakistan to discuss collaboration in Pakistan Steel Mills (PSM) and energy project at Gaddani Energy Park. The sources said, 'Rostech' has indicated that the visit of their delegation to discuss financial matters of PSM is premature as the matter is in the purview of Ministries of Finance of the two countries. However, their delegation may visit Pakistan to discuss power/infrastructure projects of Gaddani Energy Park. However, analysts argue that in the absence of a 'framework agreement' and settlement of the outstanding claims/financial obligations issue, Russians are not ready to formally offer a state credit for Pakistan Steel Mills. According to sources, Pakistan embassy in Moscow will encourage a visit to Pakistan to discuss energy projects and collaboration with PSM even in the absence of a framework agreement. As regards the outstanding issue of claims/debts, the Finance Secretary has invited a Russian delegation to visit Pakistan. The sources said, Rostech has also offered "Smart City Security System" to Pakistan. They are ready to visit Pakistan to discuss this system with Interior Ministry. In this regard, the Pakistan embassy has suggested that a combined Russian delegation of Rostech (which is the umbrella state corporation), including Tyazhpromexport, may visit Pakistan to discuss: (i) energy projects in Pakistan including Muzaffargarh and Gaddani; (ii) Smart City Security System; and (iii) PSM. Pakistan embassy has requested the Ministry of Foreign Affairs to arrange meetings of the Riostech delegation with the officials of Ministry of Interior, Ministry of Industries & Production, Ministry of Water and Power and Privatisation Commission and Board of Investment. M/s Rostech has also requested for a courtesy call on the Prime Minister preferably in the second week of next month.

Copyright Business Recorder, 2014

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TAPI gas pipeline project: two US firms interested in becoming lead financer

Two leading US-based companies have shown an interest in becoming lead financer of 1,680 kilometers Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, a Petroleum Ministry official said. The official of the Petroleum Ministry associated with the Iran-Pakistan (IP) and TAPI gas pipeline projects told Business Recorder here on Thursday that ExxonMobil and Chevron were among the companies interested in becoming the lead financer of TAPI, which would cost $8 to $9 billions. All the stakeholders Pakistan, Afghanistan, Turkmenistan and India on December 21 signed Transmission Advisory Service Agreement (TASA) on TAPI gas pipeline project in Ashgabat. "Inking of the TASA was one of the major steps toward construction of much needed gas pipeline project, work on which once started would take at least three years to be completed," the official added. Talking about the IP gas pipeline project, he said that to deal with the energy demand and supply situation, the IP would initially bring 750 Million Cubic Feet per Day (MMCFD) of gas at an estimated cost of $13 per MMBTU in the country that could be extended to 1 Billion Cubic Feet per Day (BCFD), which was also essential for Pakistan. "As far as the prices of IP and TAPI are concerned, they are almost same. The TAPI gas price is around $12 per MMBTU, while the IP gas price is $13 per MMBTU, while the current local wellhead gas price as per Petroleum Policy 2012 is in the range of $5.5 to $6 per MMBTU. There is a dire need to rationalise the commodity prices for all the sections of economy as due to high efficiency of the natural gas its prices should go up by at least 50 per cent," he said. The sources said that four participating countries inked the agreement, which would pave the way for the construction of the 1,680km-long TAPI gas pipeline to bring 3.2 Billion Cubic Feet per Day (BCFD) natural gas to the country from Turkmenistan. Participating countries have appointed the Asian Development Bank (ADB) as transaction advisor to find a technically and financially sound company that could form a consortium to generate the finances for the TAPI gas pipeline that will cover an area of over 1,600 kilometres. The Economic Co-ordination Committee (ECC) of the Cabinet has already approved the ADB as a service advisor for the TAPI gas pipeline following in the footprints of other countries, which had earlier given nod to the ADB to act as the advisor. Under TASA, the ADB will be charging a fee of $50,000 per month from the four countries meaning that every country will give over $12,000 per month. The gas line will provide 500 MMCFD gas to Afghanistan and 1.325 BCFD gas each to Pakistan and India. Afghanistan was earlier interested in the transit fee only, but later it signed the GSPA with Turkmenistan on July 2012 for 500 MMCFD gas. The consortium leader will pay $30 million to the Transaction Adviser on the date when the consortium leader assumes the responsibility. The gas will be imported from Yolotan-Osman gas field in Turkmenistan through TAPI gas pipeline of 56 inches. The present cost of the imported gas from Turkmenistan hovers around $13 per MMBTU in Pakistan. To a question, he said that Turkmenistan-Afghanistan and Turkmenistan-India bilateral Gas Sales and Purchase Agreement (GSPA) were signed on May 23, 2012 followed by Turkmenistan-Afghanistan GSPA which was finally signed on July 9, 2013. The Gas Pipeline Framework Agreement (GPFA) was signed on December 11, 2010. the TAPI parties agreed to form a Special Purpose Vehicle (SPV) as TAPI Ltd with four designated gas companies from the TAPI countries and proceeded with this vehicle to undertake certain pre-project activities, including the selection of the consortium leader.

Copyright Business Recorder, 2014

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