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News Headlines for the month of
JULY 2014

IFC to invest $27.5m in LNG terminal project

ISLAMABAD: The International Finance Corporation (IFC) of the World Bank group will invest $27.5 million in the construction of a terminal at Port Qasim, thus enabling Pakistan to import liquefied natural gas (LNG), Dawn learnt on Saturday. According to details, the IFC’s investment in the $130m project will be $7.5m in the form of equity for 20 per cent shareholding, and a loan of $20m that will assist the project in securing long term debt financing from other foreign and local lenders. The financing is scheduled to be approved by the World Bank group in mid-September. IFC’s involvement in a greenfield project with an established local sponsor will exert a strong signalling effect to private investors, thereby encouraging greater private participation in future energy sector projects. The project will support development of critical energy infrastructure needed to address the country’s growing gas supply deficit, helping reduce its reliance on future imports of oil and thereby helping relieve an ongoing constraint in the country’s balance of payments. Moreover, it will support economic growth by enabling the import of natural gas as a feedstock for industrial use and electric power generation. The terminal, to be completed by early 2015, will be the first LNG import facility in Pakistan. The project involves use of a floating storage and regasification unit which will store the imported LNG and regasify it before transporting the gas through a 24km pipeline to the existing SSGC gas network near Port Qasim. The LNG branch jetty will be built near the existing chemicals import and handling terminal operated by another subsidiary of Engro Corp. The major portion of the pipeline will be built inside the port industry zone. Following a public tendering process in 2013, Engro Elengy Terminal (ETPL), a fully owned subsidiary of Engro Corporation, has signed a 15-year LNG service agreement with the Sui Southern Gas Company (SSGC). Published in Dawn, July 27th, 2014

Copyright Dawn, 2014

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Tapping hydrocarbons: Oil production hits record high at 98,000 bpd

Pakistan’s average oil production jumped 13% to 86,000 barrels per day (bpd) in fiscal year 2013-14 compared to a year earlier with petroleum exploration companies benefiting from higher price gains, a brokerage house said on Thursday. The oil output even reached an all-time high of 98,000 bpd by the end of June 2014, up 22% compared with 80,000 bpd pumped out in June 2013, said Vahaj Ahmed, an analyst at Topline Securities. “Average (gas) production during the year dropped 2% to 3,984 mmcfd (million cubic feet per day) versus 4,081 mmcfd. Hence, cumulative hydrocarbon production in Pakistan dropped by an average of 1% to 796,000 barrels of oil equivalent per day (boed),” he said in a report. Gas production was marginally up 2% to 3,904 mmcfd at the end of fiscal year 2013-14 versus 3,826 mmcfd at its start. Since net realised prices on oil sales were five times higher than that for gas, revenue growth from the increase in oil output outweighed the loss from the decline in gas production for the exploration and production companies, he said. With 26% growth in average oil production and 3% higher gas output, cumulative production of Pakistan Oilfields (POL) rose 9% to an average of 20,000 boed versus fiscal year 2012-13. It benefited mainly from additions in the Tal block, in which it enjoys a 21% working interest. Average oil production rose 63% to 17,000 bpd in the block, which contributes 20% of total oil produced in Pakistan. Production from three new fields – Mamikhel-2, Maramzai-2 and Makori East-3 – helped POL to offset the decline in Manzalai. On the other hand, Oil and Gas Development Company (OGDC) saw a 2% decline in its output, which was around 252,000 boed compared to 257,000 boed in previous year. Pakistan Petroleum Limited (PPL) recorded average production of 160,000 boed in fiscal year 2013-14, down 6%, the report said. Industry officials believe that Pakistan’s crude oil output is expected to increase to 130,000 bpd in one or two years, a sharp rise from the stagnant 66,000 bpd seen in the last few years. While there remains uncertainty over the exact size of oil reserves in the absence of any broad geological survey, Pakistan has estimated recoverable reserves at 27 million barrels. The petroleum industry generally believes Pakistan’s geology is gas-prone rather than having any substantial oil potential. The fact that companies have to drill deep wells to find hydrocarbon reserves adds credence to this argument. Higher oil production does not mean it will help the balance of trade substantially since the country spends a lot on importing petroleum products like diesel and furnace oil.

Copyright The Express Tribune, 2014

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Business dealing: JJVL to process LPG from three fields in Sindh

Jamshoro Joint Venture Limited (JJVL) will extract LPG from gas coming out of three petroleum fields in Sindh, Sui Southern Gas Company (SSGC) Managing Director Shoaib Warsi told The Express Tribune. SSGC had issued a tender inviting bids from parties interested in separating liquefied petroleum gas (LPG) from natural gas being pumped out of Kunnar-Pasakhi, Sinjhoro and Naimat Basal fields against a processing fee. The last date for submitting the bids is August 4 but the utility, which meets natural gas demand in Sindh and Balochistan, did not receive a positive response from anyone except JJVL. “We have signed a memorandum of understanding with JJVL (sponsors),” he said. “None of the other contenders could meet our specifications. Obviously, JJVL has an advantage since it already has a plant on ground.” The three fields currently produce 224 million cubic feet per day (mmcfd) of gas. SSGC will only pay the processing fee and will have exclusive rights over LPG unlike the previous arrangement with JJVL, he said. JJVL, a project of Lahore-based Associated Group, which is owned by Iqbal Z Ahmed, was also processing gas from the Badin field to extract LPG. But the project has been struck down by the Supreme Court and the two firms await a detailed judgement to decide its fate. “Under the latest tender deal, 100% of LPG is ours. We will only pay the processing fee,” Warsi said, hinting at the increase in the profit of SSGC. The amount for the processing fee remains unclear along with the effect it would have on the state-run utility’s bottom line. But he pointed out that gas supply from the Badin field has dropped to only 70 to 80 mmcfd against 220 mmcfd a couple of years ago. “We are fortunate in the sense that Sindh has all these other fields having a good composition of LPG and NGL (natural gas liquids).” JJVL in limbo The Associated Group was dealt a blow in December 2013 when the Supreme Court annulled its JJVL project citing irregularities in the way LPG extraction rights were awarded in the early 2000s. The company subsequently filed a review petition but lost that as well earlier this year. The plant built with an investment of $105 million extracted LPG components from the system of SSGC. It was the single largest producer of the fuel in the country. As per the court’s decision, SSGC has to start talks with JJVL to determine the acquisition price of the extraction plant so it can take it over. JJVL ended up in court after PML-N leader Khawaja Muhammad Asif, now the powerful Defence Minister, approached it. A court-appointed committee comprising an ex-government official M H Asif and renowned accountant Shabbar Zaidi has already valued the plant at Rs3.2 billion. JJVL says it is worth much more.

Copyright The Express Tribune, 2014

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Innovative programme: PPL plans power plant with gas supply from its field

Pakistan Petroleum Limited (PPL), a state-owned oil and gas explorer, has framed a plan to venture into power production and set up a 50-megawatt plant that will run on gas being produced by the company in an exploration block in Sindh, officials say. PPL, with 50% working interest in Gambat South block in Sanghar district, Sindh, has discovered gas in Wafiq X-1 and Shahdad X-1 wells in the area. Both wells are going through a testing phase during which 30 to 60 million cubic feet of gas per day (mmcfd) is expected to be produced. In an effort to fast-track production of gas from the fields, the company sought allocation of 18 mmcfd from Wafiq X-1 for the 50MW power plant, said officials while talking to The Express Tribune. Giving a detailed plan of the project, PPL suggested that the power plant was in parallel to the setting up of gas processing facilities for sale of gas to distribution companies during the testing phase. According to officials, the establishment of the power project will require special purpose production equipment on operating lease and the electricity generated will be supplied to Shahdadpur grid, just about 10 km from the site of the well. PPL would be responsible for providing fuel-quality gas for the plant, they said. Following the testing phase, PPL may review the possibility of continuing power generation and setting up a permanent combined-cycle power plant keeping in view the potential of existing discoveries to produce up to 64 mmcfd of gas for four to six years. “Success of the project will encourage other exploration and production companies to follow suit and establish power plants,” an official remarked. With the assumption that PPL would get approval of power tariff in the range of 9 to 12 cents per unit from Nepra, the operating lease of power generation equipment is a more viable option that will lead to low-cost electricity production and early flow of earnings from discovered gas with fast payback of investment. While circular debt risks could be avoided by selling electricity to private purchasers like industrial zones, K-Electric and others, an arrangement through the National Transmission and Dispatch Company (NTDC) including advance payments via letters of credit could also be incorporated in the power purchase agreement in order to avert default, they said. Officials said the Ministry of Petroleum and Natural Resources would seek approval of the Economic Coordination Committee (ECC) to allow PPL to run its power plant on lease during the well testing phase and later consider the possibility of developing an independent power plant. Keeping in the current power outages, the ministry will also ask the ECC to allocate 18 mmcfd of gas for PPL’s power plant subject to approval of the Ministry of Water and Power.

Copyright The Express Tribune, 2014

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Iron ore exploration project: Punjab government, German companies sign accord

An agreement was signed between the Punjab government and a consortium of German companies under which the consortium will ensure a high standard of work on the project of iron ore exploration at Chiniot-Rajwa. Secretary Mines and Minerals Dr Arshad Mehmood and Managing Director of the German consortium, GEOS Dr Jurgen Hartsch signed the agreement. Punjab Chief Minister Shahbaz Sharif was the chief guest on the occasion. The Chief Minister welcomed the agreement signed between the Mineral Company of Punjab government and the consortium of German companies and said that it would help ensure a high standard of work of the iron ore exploration project. He said that Chiniot-Rajwa Iron Ore Project is of vital importance for Pakistan and the iron ore reserves in this area are no less valuable for Pakistan than oil and gold. He said the Punjab is rich in mineral wealth which can be utilised for strengthening national economy. He said that German technology is established in mining as well as other sectors. He said that co-operation with the consortium of German companies in coal mining sector should also be considered. German delegation said, "They are deeply impressed with the style of work of Chief Minister Shahbaz Sharif". Chairman Planning and Development, Secretary Information and other officials concerned were present on the occasion.

Copyright Business Recorder, 2014

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Duty-free import of solar panels hailed

Hailing the government's decision of allowing duty-free import of solar panels, the business community of South Punjab said that the move would not only help promote solar energy system in the country, but would also lower the prices of solar panels. Multan Chamber of Commerce & Industry's (MCCI) President Khawaja Muhammad Usman said that Customs duty and sales tax should not be charged at statutory rate on the import of some specific parts of solar panel. However, government should protect the interest of the local manufacturers of indigenous engineering industry, he added. The MCCI chief said that the FBR took timely action and directed the concerned Model Customs Collectorates that all the impugned consignments would be released against the written undertaking by the importers that they would also bring necessary clarification from the Engineering Development Board that the instant imported solar panels are not manufactured locally. Under the previous SRO.575(I)/2006, the condition of locally manufactured goods was not applicable on import of solar panels and allied equipment. However, this condition is now applicable in terms of Fifth Schedule of Customs Act, 1969 and Sixth Schedule of Sales Tax Act, 1990.The details are that machinery and equipment, for power generation through renewable sources of energy, have been imported and cleared duty and sales tax free. Consequently, no change of duty and tax structure was made on renewable energy equipment in the recently announced Finance Act, 2014.

Copyright Business Recorder, 2014

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Jhimpir, Gharo clusters: ECNEC approves WPPs worth Rs 11.27 billion

The Executive Committee of National Economic Council (ECNEC) has approved Rs 11.277 billion Wind Power Plants (WPPs) at Jhimpir & Gharo clusters. Source said it is anticipated that around 1,756 MW power from Wind Power Plants (WPPs) at Jhimpir & Gharo clusters will be available from 2016. The project envisages evacuation of power from wind power plants at Jhimpir & Gharo Wind Clusters through construction of 220 KV and 132 KV double circuit transmission lines along with associated 220 KV sub-stations at Jhimpir and Gharo and extension of 500/220 KV sub-station at Jamshoro. Phase-1 of the project envisages laying of 132 KV transmission line for interconnection of Wind Power Plants (WPP) to 132 KV sub-station at Jhimpir, laying of 132 KV double circuit transmission line from Jhimpir to Tando Mohammad Khan Road (total length of transmission line is 107 km). The phase-11 comprises: (i) the existing 132 KV Jhimpir collector sub-station will be upgraded to 220KV; (ii) construction of new 220 KV Gharo substation;(iii) extension of Jamshoro 500/ 220 KV substation;(iv) laying of 220 KV double circuit transmission line from Oharo to Jhimpir and TM Khan Road (145 km); (v) laying of 132 KV transmission line for interconnection of WPPs with 220 KV Gharo substation (85 1cm). An amount of Rs 5.047 billion has been allocated in the Public Sector Development Programme (PSDP) for 2014-15. Sector Issues: The ECNEC was informed that the project was considered by CDWP in its meeting held on 02-05-2014 and was recommended to ECNEC in principle subject to rationalisation of cost by a committee comprising Chief (Energy), Co-ordinator (Energy) PD&R, representatives of NTDC, Alternate Energy Development Board (AEDB), Sindh Government and Finance Division. In compliance with the CDWP decision, the committee held its meeting on 26-06-2014 and rationalised the cost from Rs 11.701 billion to Rs. 11.277 billion with Foreign Exchange Component (FEC) of Rs 5.281 billion. Minister for Planning, Development and Reforms has raised serious concern over the completion period of the project and wanted it to be completed within its stipulated timeframe of four years.

Copyright Business Recorder, 2014

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Renewable energy sector: trade among developing states growing rapidly

A study shows that renewable energy (RE) trade among developing countries is growing faster than global and North-South RE trade as developing countries, led by China, take advantage of decreasing manufacturing costs, increased investment, and the falling costs of renewable energy. Solar Photovoltaic (PV) capacity installed globally during 2013 was almost a quarter larger than in 2012, observed the Green Economy report, 'South-South Trade in Renewable Energy: A Trade Flow Analysis of Selected Environmental Goods', produced by the United Nations Environment Programme (UNEP). Whereas there was a further decline in growth in Europe, there was strong growth in China and several developing country markets. Developing countries collectively accounted for well above one-third of new capacity additions in 2013. The report identifies key growth markets for trade in environmental goods and services (EGS). It focuses on the renewable energy sector and maps the flow of trade of RE goods among developing countries. It also outlines how countries can accelerate more inclusive growth in South-South RE trade. The global market in low-carbon and energy-efficient technologies is projected to nearly triple between 2010 and 2020. The report highlights how these expanding markets are opening new economic opportunities for developing countries and provide a key means of better integrating economic, social and environmental dimensions of sustainable development. The job generation potential of RE is particularly high. Estimates suggest that by 2030, 20 million people could be employed in the renewable energy sector, either directly or indirectly. Job generation potential is most pronounced in manufacturing and services activities related to solar PV and wind-powered energy. While the report focuses primarily on RE markets, it also points out that small and dynamic emerging markets in water treatment equipment and water supply, valued at $50 billion globally, present developing economies with promising growth potential, and the opportunity to provide more than 700 million people with access to improved drinking water. The South-South trade in organic food and beverage, with a global market value of over $63 billion, is also identified as another growing market, where greater regional co-operation could help generate commercially-viable products for export to developed-country markets. The report calls for increased South-South trade co-operation, with a focus on more low-cost environmental goods, establishing favourable trade policies and agreements, and developing a skilled energy labour force, to increase significantly South-South trade in EGS, and accelerate the green economy transition. The study observed that challenge for policymakers is to unlock the potential for South-South trade, in particular intra-regional trade, in EGS. The report issues key findings across the board, looking at the role renewables can play in the transition to a green economy, trends in trade and the domination of solar power. The report made a number of recommendations that includes that for renewables to replace fossil fuels at a rate necessary to mitigate climate change, enabling policy environments should keep pace in both developed and developing countries. Countries can seek to improve South-South trade co-operation for the installation, innovation and dissemination of renewable energy technologies. Standards, mutual recognition and labelling initiatives, both globally and regionally, can facilitate South-South trade in environmental goods. Also, organic agriculture, water purification equipment and installation, certified timber goods, sustainable fisheries and eco-tourism all present opportunities for growth, which should be pursued. "Appropriate targets, incentives and flanking environmental and social policies can be put in place to help developing countries to take advantage of current favourable conditions for renewable energy generation," it added.

Copyright Business Recorder, 2014

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Chinese business team meets Shahbaz

A high level delegation of a Chinese international company in energy sector, led by its President Guo Yu, met Punjab Chief Minister Shahbaz Sharif here on Friday. Matters regarding energy projects especially coal power plants were discussed in the meeting. Talking to the delegation, the Chief Minister said that Pakistan is facing energy crisis and measures are being taken expeditiously for overcoming this problem. He said that work has been started with the co-operation of China on the low-cost projects of power generation through coal and the government is implementing a comprehensive and massive programme for production of electricity from this source. Shahbaz Sharif said that government is fully encouraging foreign investment in energy sector and all out facilities are being provided to investors. Additional Chief Secretary Energy, Chairman Quaid-e-Azam Solar Park and other concerned officers were present on the occasion.

Copyright Business Recorder, 2014

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900 megawatts solar project to be set up at Quaid-e-Azam Park: Punjab government, Chinese firm sign MoU

A memorandum of understanding was signed between Punjab government and a prominent Chinese company Zonergy here on Wednesday. Punjab Chief Minister Shahbaz Sharif was the chief guest on the occasion. Under the agreement, Chinese company will set up a 900 megawatt solar project at Quaid-e-Azam Solar Park which will be completed within 21 months. Moreover, 500 megawatt solar energy project will be completed in 15 months and 400 megawatt solar project after next six months. Additional Chief Secretary Energy Jehanzeb Khan and President of Chinese Company Yu Yong signed the document. Speaking on the occasion, the Chief Minister welcomed the signing of the MoU with the Chinese company for solar energy project and said it would be implemented speedily, adding all out measures would be taken for executing the project within stipulated period. He said Pakistan was facing severe energy crisis and its resolution was necessary for promotion of industrial and trade activities as well as overcoming poverty and unemployment. Shahbaz said the government was taking expeditious measures for coping with the shortage of electricity and energy projects were being implemented without wasting any time, adding the agreement signed with Chinese company for solar power project would help in controlling loadshedding. He said that co-operation between Pakistan and China in energy and other sectors was increasing. President of Chinese Company Yu Yong said Chinese leadership respected Chief Minister Punjab Shahbaz Sharif as he was a man of his words, adding the company would make its best efforts for completing the project within a stipulated period. Chairman Quaid-e-Azam Solar Park Arif Saeed, Additional Chief Secretary Energy, Chief Executive Officer Quaid-e-Azam Solar Park and concerned officers were present on the occasion.

Copyright Business Recorder, 2014

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Reon Energy completes 125 kWp solar power project at Wah Nobel

Reon Energy Solutions has recently completed a 125 kWp solar power installation commissioned by Wah Nobel Group of Companies. The inauguration of the project was held on July 14, 2014. Members of the higher management of both companies and senior officials attended the ceremony. The successful completion of the project bears testament to Reon's capability as a world-class renewable energy solutions provider and also reiterates Wah Nobel as a leader in adopting new technologies of high quality, safety and reliability. Chairman POF & Wah Nobel Board, Lieutenant General Muhammad Ahsan Mahmood, applauded the completion of the project and said "I congratulate Wah Nobel and Reon Energy Solutions on the opening of this project and wish both firms good luck in their future plans." Shahid Pracha, Chairman of Dawood Lawrencepur Limited (DLL), Tenaga Generasi Limited and Reon Energy Solutions & Chief Executive of DH Corporation (Dawood Hercules Corp) appreciated POF's initiative of commissioning the solar project. He said that "Solar is a new technology for Pakistan and the POF following on its rich tradition of innovation leadership has been amongst the first to embrace it in a significant way. It takes courage of conviction and strategic foresight to be a pioneer; and we congratulate and salute you and your colleagues for taking this timely initiative." Syed Naseem Raza, Chief Executive, WAH Nobel Group was very enthusiastic in his appreciation of the successful installation of the solar energy project, he said "Installed and commissioned in a period of four months by Reon Energy Solutions, this plant is giving results that are even better than expected." He also admired the efforts of both the companies, "I congratulate the management and project team of Reon Energy Solutions on having completed this project as per defined standards and ahead of time." Inam ur Rahman, CEO, Reon Energy Solutions, regarded the project as a positive start towards acquiring energy self-sufficiency. He was optimistic about the future of renewable energy in Pakistan Completed ahead of schedule and within budget, this state-of-the art solution is expandable and is already providing electricity at rates competitive with the grid.-PR

Copyright Business Recorder, 2014

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Marine-linked infrastructure at Gadani power park: Construction plan approved by Ecnec

The Executive Committee of the National Economic Council (Ecnec) on Friday approved the construction of a marine-linked infrastructure for 6600 MW Pakistan Power Park at Gadani, Balochistan at a cost of Rs 146.60 billion. The meeting presided over by Finance Minister Ishaq Dar was told that the project envisages development of related infrastructure facilities at the Pakistan Power Park in Gadani to establish 10 imported Coal-Fired Power Generation plants based on supercritical, pulverised coal platform technology to generate 6600 MW electricity. Each power plant would have the capacity to generate 660 MW. The main scope of project includes marine works comprising two breakwaters each measuring 3.5 km and 1100m long jetties/ berths for receiving ships of sizes of 40,000 DWT to 210000 DWT, including a floating jetty for anchoring small boats/ tug boats, provision of cooling water facilities and other related infrastructure. The meeting was told that the project would be completed in 42 months. The Ecnec also considered and approved Greater Karachi Water Supply Scheme K-IV (Phase I)-260 MGD from the east bank of Keenjhar Lake in district Thatta to Karachi city with a cost of Rs 25.5 billion on 50/50 cost sharing basis by federal and Sindh governments as was directed by the Prime Minister. The project has been designed with a total capacity of 650 MGD (million gallons per day) to meet the water demand of 18.5 million inhabitants of Karachi City. The present water demand in Karachi is approximately1000 MGD, whereas the total existing supply is 650 MGD, resulting in a shortfall of 350 MGD. The project will be completed in 4 years. The Finance Minister said that the Prime Minister during his recent visit to Karachi announced this important project for citizens of Karachi and a joint mechanism will be evolved for the project implementation. He added that project should be supervised jointly by the Government of Pakistan and the Government of Sindh. The meeting was attended by Pervaiz Rashid, Minister for Information, Broadcasting and National Heritage, Sikandar Hayat Khan Bosan, Minister for National Food Security and Research, Zahid Hamid, Minister for Science and Technology, Mohammad Zubair, Chairman Privatisation Commission, Mian Mujtaba Shuja-ur-Rehman, Minister for Finance, Punjab, Syed Murad Ali Shah, Advisor to Chief Minister Sindh on Finance, Abdul Rahim Ziaratwal, Provincial Minister Balochistan, Abdul Hakeem Baloch, Minister of State (MOS) for Communications, Federal Secretaries and senior officials of federal and provincial governments.

Copyright Business Recorder, 2014

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Biomass-fired power projects: ECC to approve incentives today

Economic Co-ordination Committee (ECC) of the Cabinet which is scheduled to meet on Thursday (today) will approve fiscal incentives for biomass-fired power projects which are already given to Independent Power Producers (IPPs). The country, being an agriculture based country, produces large amounts of agriculture residues/biomass such as cotton stalks, rice hush, bagasse etc that can be utilised for generating electricity. The use of biomass for generation of power is globally considered as environmentally friendly and economically feasible. 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 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. These 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. Official documents titled "approval of draft Energy Purchase Agreement (EPA) and draft Implementation Agreement (IA) prepared for biomass based projects on IPP mode" available with Business Recorder reveal that the overall contractual framework of the approved standardised cost-plus project agreements has been maintained. The risk allocation matrix of the GoP has been maintained as per approved project agreements. The projects agreements so prepared have been cleared by the Ministry of Law and Justice. The ECC is also expected to be authorised to approve any project specific amendments in standardised security agreements during negotiations which do not increase GoP obligations or liabilities beyond the provision of the policy for development of renewable for power generation 2006. 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 operated 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 license. 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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Punjab government extending all-out cooperation to investors: minister

Punjab Finance Minister Mujtaba Shuja-ur-Rehman has said that the Punjab government is extending all-out co-operation to the investors for the promotion of industries and trade. While talking to the party workers here on Saturday, he said that the government is taking short-term and long-term measures in energy sector to minimise loadshedding and power plants are being set up in various parts of the province. He said Punjab government has created vast opportunities for traders and industrialists, especially to the foreign investors. The government has taken solid steps for the generation of electricity and loadshedding will be completely eliminated within four years when all units of the power plants, which are in pipelines, will become fully functional, he added. Shuja said that Punjab Excise and Taxation department earns 28 percent from property tax and 54 percent from motor vehicles tax, whereas it should be reversed and reason for low recovery of property tax is that survey of the property was conducted 14 years ago. He briefed the party workers that while expanding tax net and increasing tax, hardships of the common man are being kept in view and only affluent persons as well as rich sectors will be brought into tax net.

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Power generation machinery import up by six percent

Import of power generation machinery posted an increase of 6 percent during July-May FY14 over the same period of last fiscal year, mainly due to power crisis in the country. Importers said the country is facing a massive power shortage for last few years and the government has failed to resolve the power crisis. Continuing power shortage has compelled the general public, industrialists and exporters to acquire their own power generation plants/machinery to fulfil their requirements. "Presently, industrialists are major buyers/importers of power generation machinery to produce their own electricity as the energy crisis is directly hurting the industrial production and export, resulting in huge losses and unemployment," they added. According to Pakistan Bureau of Statistics (PBS) the import of power generating machinery rose to $956 million in July-May FY14 compared to $902 million in the corresponding period of FY13, depicting an increase of 6 percent or $54 million in first 11 months of FY14. Month-on-month basis, import bill of power generation machinery for May 2014 rose by 22 percent to $102 million as compared to $84 million in the same period of last fiscal year. Power generation machinery imports during May 2014 compared to April 2014 also posted an increase of 51 percent as some $65 million worth machinery was imported in April 2014. Importer said that bulk of power generating machines is being imported from China as its generators are available in all qualities and cheaper than other branded machines, therefore general public prefers Chinese generators. "We are expecting that import of power generating machinery may witness some raise in coming months owing to summer and persistent long power outages across the country," importers said. Since 2004-05, the country is witnessing a massive surge in the demand and import of power generation machinery. During FY13, the country's power generation machinery import stood at $977 million against $1 billion in FY12, depicting a decline of 6 percent.

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Completion of all energy projects to be ensured by 2017: chief minister Punjab

Punjab Chief Minister Shahbaz Sharif has said that completion of all ongoing energy projects will be ensured by 2017. He said that despite problems and complications, full co-operation of China in energy sector is highly appreciable. The Chief Minister said that if there is electricity in the country, agriculture will be promoted, wheel of industry and economy will be moved on and the people and country will become prosperous. He said that special attention is being paid to the implementation of energy projects in the country with full devotion and dedication. He expressed these views while addressing the meeting of special committee on energy constituted by Prime Minister. Meeting was presided over by Federal Minister for Planning Ahsan Iqbal on Saturday in Islamabad. Federal Minister for Defense, Water and Power Kh Muhammad Asif, Secretaries of Ministries of Water and Power, Railways and Provincial Energy Ministry and senior officials also attended the meeting. Shahbaz said that increase in the production of cheap hydropower is top priority of the government. He said that we have to jointly face the challenge of energy crisis and expressed the hope that we will overcome this problem. The CM said that reliance on thermal technology for generating electricity was the biggest mistake of the previous governments. He said that steps are being taken for resolving energy crisis at federal and provincial level under a multi-dimensional strategy which included implementation on energy generating projects through coal, solar and other alternative sources, eradication of electricity and gas theft and control over circular debts. The meeting also constituted a working group comprising Ministries of Water and Power, Railways and Planning with regard to logistic support for energy projects at Muzaffargarh, Rahim Yar Khan and Jhang. Federal Minister for Planning Ahsan Iqbal and Federal Minister for Defense, Water and Power Kh Muhammad Asif also addressed the meeting.

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KP to complete two medium capacity hydel projects this year

Khyber Pakhtunkhwa Minister for Energy and Power, Atif Khan has stressed boosting the pace of work on the ongoing energy projects and to make a plan to complete them within the stipulated time period. He expressed these views during a presentation of energy projects just given after the assumption of additional charge of ministry of energy & power. The meeting was attended by the secretary energy & power Sahibzada Saeed Ahmed, Chief Executive PEDO Engr. Bahadur Shah, Chief Executive KPOGCL Raziuddin, Chief Planning Officer Engr. Zainullah Shah, Engr. Farhat Mehmood, Engr. Zahid Sabri, Engr. Wajid Nawaz and others officers. Meanwhile, the secretary energy & power Sahibzada Saeed Ahmed gave a detailed presentation to the newly provincial minister regarding the pace of work of various ongoing projects of oil, gas, solar and hydel sectors. He expressed that the PTI chairman Imran Khan's vision of revolutionary change in every sector will come true when we work together with devotion. He stated that due to good governance two medium capacities of hydel projects will be completed at the end of this year. He stressed upon the responsible officers of energy sector in the province to boost up their pace of work for the early completion of ongoing projects in order to remove the country from prevailing energy crisis as soon as possible. He stated that they need a dedicated team in every sector in order to complete the vision of change of current provincial government. Due to excellent performance and well planning of the provincial government, various energy projects are going to be started having small, medium and large capacities in order to utilise the natural resources of oil & gas, hydel and solar so that to make the province as "energy hub" to produce cheap electricity for the people of this province. The provincial minister showed his satisfaction over the performance of the energy department and stated that Allah has blessed our province with abundant natural resources of oil & gas, solar and hydel generation to be utilised for removing of current energy crisis in the country.

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Hecate Energy delegation meets chief minister Punjab

A delegation of an international company, Hecate Energy met Punjab Chief Minister Muhammad Shahbaz Sharif, here today. Matters regarding co-operation in energy sector especially solar energy projects were discussed in the meeting. Hecate Energy expressed interest in setting up solar energy projects. The Chief Minister said that energy crisis being faced by Pakistan has badly affected national economy as well as all sectors of life. He said that overcoming the problem of shortage of electricity is essential for continuity of industrial process. He said that Pakistan Muslim League-N government is working round the clock to resolve energy problem and special incentives and facilities are being offered to local and foreign investors in energy sector. He said that work is speedily in progress on Quaid-e-Azam Solar Park in Bahawalpur and Punjab government is setting up a 100-megawatt solar project at this park with its own resources. The Chief Minister said that investment by foreign investors in power sector will be welcomed. Special Assistant Azmul Haq, Additional Chief Secretary Energy, Chairman Quaid-e-Azam Solar Park and concerned officials were also present on the occasion.

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Hecate Energy delegation meets chief minister Punjab

A delegation of an international company, Hecate Energy met Punjab Chief Minister Muhammad Shahbaz Sharif, here today. Matters regarding co-operation in energy sector especially solar energy projects were discussed in the meeting. Hecate Energy expressed interest in setting up solar energy projects. The Chief Minister said that energy crisis being faced by Pakistan has badly affected national economy as well as all sectors of life. He said that overcoming the problem of shortage of electricity is essential for continuity of industrial process. He said that Pakistan Muslim League-N government is working round the clock to resolve energy problem and special incentives and facilities are being offered to local and foreign investors in energy sector. He said that work is speedily in progress on Quaid-e-Azam Solar Park in Bahawalpur and Punjab government is setting up a 100-megawatt solar project at this park with its own resources. The Chief Minister said that investment by foreign investors in power sector will be welcomed. Special Assistant Azmul Haq, Additional Chief Secretary Energy, Chairman Quaid-e-Azam Solar Park and concerned officials were also present on the occasion.

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PPIB approves processing of 4,250 megawatts coal-fired projects

Private Power & Infrastructure Board (PPIB) presided over by Minister for Water and Power, Khawaja Asif on Wednesday approved the processing of coal fired power projects totalling 4,250 MW. The PPIB is being headed by an Additional Secretary of Ministry of Water and Power, Sohail Akbar Shah as the real Managing Director of the organisation is behind bars while the PPIB''s Director Finance who cleared cheques of M/s Karkey is still employed by the organisation, said an official on condition of anonymity. The PPIB''s officials are dispirited after their boss was sent to jail by NAB in M/s Karkey''s case. According to an official statement, the PPIB has received a very encouraging response from the private sector with prominent local and international investors showing an interest in developing coal based power projects in the country at locations other than Gadani Power Park as well. These include HUBCO (660MW), Global Benefit Malaysia (660MW), Giga Energy (420MW), Yunus Brothers/Lucky Cement (660MW), Asiapak Hong Kong (2x660MW), Siddiqsons Group (330MW) and Asia Petroleum (200MW). These power plants are proposed at various locations that include Hub, Port Qasim, Karachi coastal area, Faisalabad, Gharo and Jamshoro. In addition to these, Sino Sindh Resources with China Power International as partner, and Thar Power Company, which is a joint venture of Engro Energy and the Government of Sindh have shown an interest in developing 2x600MW and 2x330MW power plants respectively at Thar. The Board today approved the processing of these projects after the completion of the required formalities. The minister assured that the government was committed to providing uninterrupted cheap power to the people of Pakistan and is working on all avenues to achieve its objective. The minister revealed that in order to evacuate power from the upcoming the IPPs the government is inviting private sector for the construction of transmission lines, and the policy in this regard is expected to be announced shortly. The board was also briefed that the PPIB is constantly monitoring early implementation of the hydropower projects included in the "early harvest projects" priority list of the China Pakistan Energy Corridor. These include 870MW Sukki Kinari hydropower project, 720MW Karothydropower project and 1100 MW Kohala hydropower project. Keeping in view the importance accorded to projects based on indigenous resources, Letter of Support was extended today for the 100MW GulpurHydropoer Project located at Poonch River near Kotli, Azad Kashmir. Under the Chairmanship of Khawaja Muhammad Asif, the meeting was attended by Nargis Sethi, Secretary Water & Power, Zafar Mahmood, Chairman WAPDA, Sohail Akbar Shah, Additional Secretary Ministry of Water & Power/Managing Director PPIB, Azra Mujtaba, Additional Secretary Ministry of Finance, representatives of Ministry of Petroleum & Natural Resources, Federal Board of Revenue, Punjab, Sindh & Khyber Pakhtunkhwa provinces, AJ&K, Gilgit-Baltistan and FATA, private sector member, besides Executives Directors and Directors of PPIB and other senior government officials.

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SE4ALL forum Buksh Foundation represents country

Buksh Foundation, in its pursuit of provision of energy solutions to impoverished communities of Pakistan, represented the Country at the UN Foundation-1stSustainable Energy for All (SE4ALL) forum, an initiative to mobilise action from all sectors of society to realise sustainable energy for all by 2030. Fiza Farhan participated on behalf of Buksh Foundation at the Summit. The forum invited practitioners from all over the world striving to make energy accessible to all throughout the world. UN Foundation-SE4ALL has three goals: access, efficiency and renewable energy to create an impact at the global level and also to recognise that access to modern affordable energy services in developing countries was essential for the achievement of internationally agreed development goals. Fiza Farhan, CEO-Buksh Foundation, while representing Pakistan at the forum "stressed the importance of the Network in working with private sector foundations to leverage more public financing for energy access, adding that understanding market dynamics and giving investors what they need buys a solution. She further talked about how Renewable energy is becoming increasingly cost competitive therefore, the key to catalyse investment is through the provision of innovative and sustainable models attracting all diversified national and international donors." At the forum many panellists highlighted activities at the local level, such as the provision of finance to local entrepreneurs and rural areas, and small-scale, decentralised energy projects, while also emphasising the importance of multi-stakeholder processes and private sector engagement in the provision of energy to energy impoverished communities. Some of the most popular themes were the importance of empowering women, and the linkages between energy access and health, water, food production, and transport. By becoming a part of the Sustainable Energy for All Practitioner Network, Buksh Foundation aims to represent Pakistan's energy sector and also highlights the energy problems of Pakistan at the international level and the need to bring the private and public sectors on the table for discussions in order to resolve the energy issues.-PR

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Pak seeks Russian LNG and investment in oil, gas sectors

Islamabad has asked Russia to invest in oil and gas sector and supply LNG to Pakistan. Pakistan has extended this offer to Russia in World Petroleum Conference held in Moscow this month . “This will be the Olympics of international oil and gas companies and we utilized this opportunity to introduce Pakistan as a destination for investment in oil and gas sector,” Advisor to Ministry of Petroleum and Natural Resources, Zahid Muazzafar said while talking to Pakistan Observer. He led Pakistan delegation in the conference. Russian President Vladimir Vladimirovich Putin inaugurated the World Petroleum Congress. In this mega event, about 180 world class companies dealing with oil and gas sector participated, Zahid Muazzafar said. “ The meeting with the top functionaries of Russian Gazprom was fruitful and in the meeting we asked them to come to Pakistan and invest in oil and gas exploration even in shape of joint ventures with OGDCL and PPL. We told that that the Nawaz government has given 42 block to domestic and foreign companies for oil and gas exploration and production activities. In the meeting Russian authorities agreed to Pakistan’s proposal and to this effect they announced to send a technical delegation.” “We apprised the Russians about our petroleum policy which is quite attractive and wellhead price hovers in the range of $6-8 per MMBTU and Pakistan is not only rich with conventional oil and gas reservoirs, but also has mammoth potential of tight and shale gas reserves.” He said that he told Russian counterpart that in Pakistan success rate of oil and gas drilling is very high which is at 1:3 ratio. On top of that we also offered Russia to export LNG to Pakistan and in this regard authorities in Moscow showed keen interest and promised to make a feasible proposal for this purpose. “We have sensititsed them that Pakistan is in dire need of energy and is currently in talks with Qatar for import of LNG and at that same time Pakistan government wants to get the LNG from open market for which the LNG will be imported through tendering process. Pakistan needs 2.5 billion cubic feet gas per day through LNG mode to cater to its future energy needs.” Moreover, Pakistan’s delegation also held meeting with top officials of many international companies which participated in the conference and we pitched out petroleum policy before them and told them that Pakistan is investment destination and has attractive incentives for investors in oil and gas sector. “We got tremendous response from the global companies and in the days to come Pakistan will formally start receiving the response hoping to get huge investment in oil and gas sector.”

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NCPL signs LoI for setting up 660 megawatts coal-based power plant

Nishat Chunian Power Limited (NCPL) has signed a Letter of Interest (LoI) issued by Punjab Power Development Board for setting up of 660 MW coal-based power project at Jhang, Punjab. Tanveer Khalid, CFO NCPL, said that the construction of the project was expected to start in the mid of next year. Total cost of the project is around Rs 100 billion out of which Nishat group is going to be a partner of 20 percent, he added. NCPL has sent information to Karachi Stock Exchange that the NCPL owned by Nishat Group is the main sponsor of the consortium, which includes Nishat Chunian Limited, DG Khan Cement Company Limited and Adamjee Insurance Company Limited. However, feasibility study will be carried out to take decision for the proposed power project. NCPL is a public limited company, subsidiary of Nishat Chunian Ltd (NCL) incorporated in February 2007. The Company was established as a power generation project having gross capacity of 200 MW and net capacity of 196 MW under a 25-year 'take or pay' agreement with National Transmission & Dispatch Company Limited (NTDCL). The project has been commissioned under 2002 Power Policy of government of Pakistan and has been granted a generation license by the National Electric Power Regulatory Authority (Nepra) in September 2007. The company started its commercial operations on July 21, 2010. The plant is combined cycle with 11 reciprocating engines and a heat recovery steam turbine provided by WÄRTSILÄ. Net output of the project is 195.722 MWh. The primary fuel of the plant is Residual Furnace Oil (RFO). The plant site is located at 66 Km Multan Road, Lahore. Turnover for the FY 2013 is recorded at $254 million while the Net profit recorded is $27.66 million. NCPL is an active member of Independent Power Producers Advisory Council (IPPAC) and is listed on Karachi Stock Exchange and Lahore Stock Exchange. Commenting about the coal-based plant, Usman Zahir, head of research at BMA Capital, said that coal-base power plants are beneficial for the country given the lower cost of generation. Coal-based power costs about Rs 8 per unit while FO- based generation costs about Rs 18 per unit. The government has also adjusted the Tariff for capacity payments during construction which will result in significant interest in coal-based generation, he mentioned.

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Small coal power plants to be set up in Punjab: Shahbaz

Punjab Chief Minister Muhammad Shahbaz Sharif has said that the Punjab government has also decided to set up small coal power plants for generating energy. He said that these power plants would be set up near industrial load centres and the process of identifying sites has been completed for establishing small coal power plants in the province. He was presiding over a high level meeting here on Sunday which discussed in detail various proposals with regard to setting up small coal power plants in the province. Addressing the meeting, Muhammad Shahbaz Sharif said that the elimination of energy crisis was vital for keeping the wheel of industries moving on, overcoming problems of unemployment and poverty. He said that ridding the people of loadshedding and bringing the country out of darkness was our mission. The Chief Minister said that the government was implementing energy projects without wasting time and all possible steps were being taken for controlling energy crisis at the earliest. He disclosed that planning has been made for setting up small coal power plants near load centres in seven big cities of Punjab including Lahore. Shahbaz Sharif said that besides Lahore, small power plants of 55x2 megawatt running through coal would be set up in Sheikhupura, Faisalabad, Gujranwala, Sialkot, Gujrat and Multan. He said that the process of identifying sites for establishing four small coal power plants of 55x2 megawatt in Lahore had been completed. The Chief Minister said that small coal power plants were being set up in Sundar Industrial Estate Lahore and M-3 Industrial Estate Faisalabad. He said that due to this step of the Punjab government, 1100 megawatt electricity would be generated in next 20 months. He directed all institutions concerned to carry out work for speedy implementation of small coal power plants and ensure best co-ordination so that these projects could be furthered without any delay. Shahbaz Sharif directed that coal yards would have to be constructed for storing the coal for these projects in Punjab and concerned officials should take immediate steps in this regard. Additional Chief Secretary Energy Jehanzeb Khan gave a detailed briefing with regard to small coal power plants. Chief Secretary, Senior Member Board of Revenue, Chairman Quaid-e-Azam Solar Park and concerned officials attended the meeting.

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TAPI gas pipeline: operational accord inked

Turkmenistan, Afghanistan, Pakistan and India (TAPI) on Friday signed an operational agreement on an ambition gas pipeline project, a private TV channel reported. The 700 kilometers Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline will carry gas from the natural resource-rich former Soviet state to an energy-starved South Asia. While supporting the gas supply project, Washington has hailed it as an ideal scheme to tackle energy shortages in Pakistan. The US has been opposed to the Iran-Pakistan gas pipeline because of a nuclear stand-off with Tehran. Pakistan and India would each receive about 42 percent of the gas and Afghanistan the remainder. The pipeline will deliver up to 33 billion cubic metres of gas annually. On July 10, ministers of petroleum from the four countries attended the 18th meeting of the TAPI Steering Committee in Turkmenistan. The pipeline that starts from Dawlatabad area of Turkmenistan and crosses Farah, Herat, Kandahar and Helmand provinces of Afghanistan and reaches India through Pakistan. It is a vital project for Afghanistan, which will receive $450 million annually under the agreement. It will also generate employment for thousands of youth. Around 6,000 Afghan security forces will be deployed to safeguard the pipeline. There were recently apprehensions that Afghan security forces are ill-equipped to maintain security of pipeline after the withdrawal of international forces from Afghanistan in 2014. However, Sediq Seddiqi, Spokesman for Ministry of Interior Affairs (MoIA), rubbished such fears. The Afghan security forces, he says, are fully motivated and ready to provide security cover for all major economic projects, including TAPI project.

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Kohlu-Dera Bugti area of Balochistan: E&P companies restart activities

Following an effective methodology adopted by the government, exploration and production (E&P) companies have restarted oil and gas exploration activities in the militancy-infested Kohlu-Dera Bugti area of Balochistan. The government has of late adopted an effective strategy to tap Pakistan’s biggest gas reserves of about 22 Trillion Cubic Feet (TCF) in the Kohlu-Dera Bugti area of Balochistan, which have the potential commercial value of $110 billion and realistic value of $77 billion and will last for 100 years. "We are currently making a strategy for initiating gas exploration in district Kohlu and other potential areas with huge oil and gas reserves after a long wait for easing of the tension and armed resistance of the followers of Nawab Akbar Khan Bugti following his killing in a military operation on August 26, 2006," a senior government official told Business Recorder here on Thursday. The new chief of Mari tribe Nawab Changez Khan Mari, Mir Jam Kamal Khan, State Minister for Petroleum and Natural Resources, and PML-N Balochistan chapter chief Sardar Sanaullah Zehri have played an effective role in normalizing the situation, which has enabled the E&P companies like state-run OGDCL, Mari Petroleum Limited and Pakistan Petroleum Limited (PPL) to restart operations in the region," the official added. "The US-based Occidental Petroleum Corporation prepared a seismic report of Kohlu district costing $20 million in 1992-93 and confided to the then government that the area has the potential gas reserves of 22 trillion cubic feet, which is enough for the next 100 years. But tension between Nawab Akber Bugti and the then regime had led to the stoppage of the initiation of exploration activities. Out of the 22 TFC, the official said, 15 TFC gas reserves are easily recoverable. Kohlu district is located some 20 kilometers from Sui, where gas reserves of eight TFC were discovered some 50 years back. Pakistan has so far utilized only five TFC of gas reserves of the Sui gas field in 50 years while five TFC gas reserves are yet to be utilized. In the past, the government failed to launch exploration activities in Kohlu, Dera Bugti and Barkhan areas of the Balochistan because of the armed resistance by the followers of Nawab Bugti. The government has awarded an exploration license to the Oil and Gas Company Limited (OGDCL) on December 29, 2004 of Block No 2968-3 of Kohlu covering an area of 2459.11 sq km, located in Kohlu and Dera Bugti agencies, district Barkhan of Balochistan. The block falls in the prospective Zone-II, Kohlu. This is a joint venture of the OGDCL and MGCL with working interest shares: OGDCL: 60 percent (Operator) and MGCL: 40 percent. OGDCL had constructed an 80-kilometer long road which connected Kup -a far-flung area of Kohlu- with the main highway to start the exploration activities in the area, official said and added that Prime Minister Nawaz Sharif is personally monitoring the situation and has directed the OGDCL and other companies to materialise these projects as early as possible. For the exploration activities, the government has not only engaged local politicians and tribal leaders but has also started a number of health, education, socio-economic projects for welfare of the locals.

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LEPCL to set up 660 megawatts coal-fired power project

Lucky Electric Power Company Limited (LEPCL), a newly-formed entity of Lucky Cement, will set up 660MW coal-fired power project in Karachi with an investment of Rs 20 billion. Pursuant to the requirement of Section 15-D of the Securities and Exchange Ordinance 1959 and sub clause xx of listing Regulation No 35 of the Listing Regulation of the Stock Exchanges, the Board of Directors of Lucky Cement Limited has resolved to recommend to its shareholders to invest in setting up a 660MW Coal Power Project in Karachi through its subsidiary M/s Lucky Holding Limited (LHL) in which the Company holds 75 percent shares and has further recommended the same to be considered for the approval of the shareholding in the forthcoming Annual General Meeting of the company, which is likely to be held in September 2014, says a notification of Karachi Stock Exchange (KSE) on Tuesday. The Board has recommended for the approval of the shareholders, an equity investment of approximately Rs 20 billion equals to $200 million approximately for the above referred project to be set up by a newly-formed entity by the name of Lucky Electric Power Company Limited (LEPCL). LEPCL will be a wholly-owned subsidiary of LHL and a 75 percent indirect subsidiary of the Company. The power project will be set up with an estimated cost of 41.08 billion and financed in the debt/equity ratio of 75:25. The company will be the main sponsor of LEPCL, investing an amount of approximately Rs 20 billion and holding 75 percent equity stake. The company has also consented to the Private Power and Infrastructure Board (PPIB) to continue to hold at least 20 percent indirect stake in the project from the date of the Letter of Support (LOS) to the 6th anniversary of the commercial operation date of the project. The implementation of the power project is subject to all necessary regulatory and required consents.

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200mmcfd LNG: Indian team due by mid-August to seal deal

A high-level Indian delegation is expected to visit Pakistan mid-August to finalise a deal on sale of 200 Million Cubic Feet per Day (mmcfd) of Liquefied Natural Gas (LNG), officials said. According to Petroleum Ministry sources, all the modalities other than settling on the price of the commodity have been finalised between the two countries. Talks were held in March and April 2014 in New Delhi during which it was decided that the next round of talks would be in Islamabad and Pakistan is set to host officials from the state owned GAIL (India) Limited, the largest state-owned natural gas processing and distribution company in India, in the second week of August. It is hoped that the dispute on price would be resolved between India and Pakistan and import of LNG from India can then begin within 9 months via Wagha Borde "Both the sides discussed term sheets, commodity prices, building of infrastructure and other necessary actions required to import LNG from India," the Petroleum Ministry official stated. "Pakistan initially wanted to import 200 mmcfd of LNG however no agreement has been reached on price. India is importing LNG at $13 and 14 per Million British Thermal Units (mmbtu), and has offered Pakistan 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 that India exempts it from taxes to bring down the cost, they maintained. If India agrees to provide LNG to Pakistan at around $17 per mmbtu it will be a win-win situation for the two countries as India will earn a significant profit and Pakistan will get the commodity at lower prices relative to current international LNG prices, which at present hover in the range $16-17 per mmbtu and after including shipping and other expenditures will cost end consumers around $19 per mmbtu. India has proposed to lay a 110 kms pipeline from Jalandhar to the Wagha border via Amritsar to supply natural gas to Pakistan. The 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.

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Shell in terminal expansion deal to boost LNG fuel for transport

Shell is the launching customer of new, dedicated liquefied natural gas (LNG) for transport infrastructure, announced on Wednesday by the Gas Access To Europe (Gate) terminal. The Gate terminal is a joint venture of Gasunie, Vopak and OMV at the port of Rotterdam in the Netherlands. Shell has committed to buy capacity from the Gate terminal, which has enabled this investment in the terminal expansion. The new LNG for transport infrastructure, called a 'break bulk' terminal, includes the construction of a new jetty. The new jetty will increase availability of LNG as a transport fuel for vessels in north-west Europe. Maarten Wetselaar, Shell's Executive Vice President, Integrated Gas, said: "We are pleased to have reached this agreement. The collaboration between Gasunie, Vopak, the port of Rotterdam, and Shell will provide security of supply of LNG for marine and road transport customers in north-west Europe, through dedicated and scalable infrastructure. LNG is a viable option for fuelling cleaner and more sustainable transport. We believe LNG will form a bigger part of the transport fuel mix in the future, and this project demonstrates our confidence in LNG as a fuel option." Rotterdam is a key location for global shipping, port and bunkering operations, giving the Gate terminal an advantaged position to serve customers in the marine and road sector. The new, dedicated break bulk terminal is expected to be operational in Q4 2016. It will be positioned alongside the central Gate terminal, where LNG currently arrives via large carriers from around the world. When operational, the new break bulk terminal will receive gas in its liquid form from the central terminal by pipeline, and break it down into smaller quantities for distribution. Previously, all the LNG arriving in to the port was re-gasified for the power and industrial sector, and also re-exported. To serve marine customers in the port of Rotterdam, Shell intends to charter a specialised LNG bunker vessel to facilitate ship to ship transfer operations, and also deliver LNG to secondary distribution terminals outside the port area.-PR

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Oil, gas sector: Khyber Pakhtunkhwa government approves Rs 7.5 billion investments

The Khyber Pakhtunkhwa government has approved investments of Rs 7.5 billion for the development of oil and gas sector of the province. The decision was approved during the meeting held under the chairmanship of Chief Secretary KP, Amjad Ali khan. The meeting was also attended by the Secretary Energy and Power, Sahibzada Saeed Ahmed, Secretary Finance, Badshah Bukhari, MD Bank of Khyber and other concerned officials. During the meeting it was decided that at primary stage investments of 7.5 billion rupees will be made in Karak and Kohat districts. These investments will be made through Khyber Pakhtunkhwa Oil and Gas Company Limited (KPOGCL) which will not only increase provincial revenue but also employment opportunities in the province. During the meeting, Secretary Energy and Power, Sahibzada Saeed Ahmed has termed this decision historical move towards the development of economic activities in the province. He further said the natural resources of oil & gas located in Karak and Kohad districts will be developed through this investment. The oil & gas production and exploration through the investment of private sector will proved as landmark in boosting the economic position of the province.

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Gwadar Port: government mulling constructing LNG terminal

The government is considering constructing a Liquefied Natural Gas (LNG) terminal at Gwadar Port in a bid to enhance the capacity for the storage of LNG in the country with the objective of replacing imports of the more expensive Furnace Oil (FO), it is learnt. According to sources privy to the developments, there is no possibility of the completion of Iran-Pakistan (IP) or Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects in the foreseeable future, while local gas reserves are gradually depleting. As a result Pakistan would be compelled to enhance dependence on the imported FO to produce power. However, the government has opted to enhance reliance on the relatively cheaper LNG. For this purpose, top government officials have decided to build a LNG terminal at Gwadar Port, for which modalities are being finalised and would soon be announced. If the government constructs an LNG terminal in Gwadar with a total capacity of 1 BCFD of LNG it would cost $1 billion. According to an assessment by the Ministry of Petroleum, domestic gas production will drop from the current 4.2 Billion Cubic Feet per Day (BCFD) to 2.5 BCFD in 2019-20, unless exploration activities bear fruit. At present, total gas shortfall is 1.88 BCFD, which would jump to 4.8 BCFD in 2019-20. To bridge the increasing gas demand/supply gap, the economic managers have planned to import up to 2 BCFD of LNG, 750 MMCFD of natural gas from Iran and 1.365 BCFD from Turkmenistan. It also wants to enhance supplies from domestic sources to meet energy needs in future, for which this year the government has awarded 50 Petroleum and Concession blocks to local as well as international oil/gas exploration and production companies. The government has allowed Elengy Terminal Pakistan Limited (ETPL) to start the construction of Liquefied Natural Gas (LNG) terminal at Port Qasim Karachi which would initially handle around 200Million Cubic Feet per Day (MMCFD) of LNG and has total capacity to handle 600 MMCFD of LNG. According to a senior government official, Pakistan is going to begin talks with Qatar to finalise plans to import 3.5 million tons of LNG per year. According to the government officials, Pakistan is also considering importing up to 200 MMCFD of LNG from India via Wagah border, but India is offering a high price of $22 per MMBTU which compares unfavourably to the international price of around $17 per MMBTU. Pakistan has offered $18.5 to $19 per MMBTU to India which is importing the commodity at $14 per MMBTU. "The decision would enable the government to save around Rs 60 billion per annum in oil imports and alleviate the energy crisis. In addition, it would have a positive impact on a circular debt and is expected to reduce the weighted average electricity tariff by at least 10%, if LNG were to replace HFO and HSD in existing power generation units," officials added. Elengy was awarded a 15-year contract, which comes with servicing fees of $0.66 per MMBTU. According to the agreement, Elengy has 11 months following approval to build the terminal, the official said. In the second, the phase of construction, the complex would double its capacity to 400 MMCFD. Pakistan and Qatar signed a Memorandum of Understanding (MoU) for LNG imports in February 2012, but progress was slow due to disagreements over the gas price. "In the past 8 years LNG prices in the international market have increased manifold, had we begun to import of 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.

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Areas around oil and gas facilities: OGDCL takes effective steps for development

Oil and Gas Development Company Limited (OGDCL) is making solid measures for development and prosperity of the areas around its oil and gas facilities in district Kohat, especially Naspha. In joint efforts with the MOL, the OGDCL is constructing a four-KM road from Indus Highway to Naspha with a total cost of 37 million as per agreement with the locals, says an official source. The project cost is being borne by OGDCL and the MOL with 77 percent and 23 percent respectively, reflecting seriousness of the two companies for providing facilities to local people around their oil and gas fields in Kohat district. The road-facility would help the two companies a great deal to transport its petroleum products besides it is a good addition to the existing roads network in the area for the local people to travel with comfort and ease. The Exploration and Production company-OGDCL has also signed an agreement with the locals to initiate water schemes for surrounding villages of the Naspha field and the case in this regard has been approved and conveyed to the DCO Karak for executing the project. The official said follow up letters had been issued and the OGDCL and MOL complete the project at cost of 160.214 million with share of 77 percent and 23 percent, respectively. The OGDCL will construct a social welfare dispensary near Naspha Plant and process was under way to acquire land for the facility which costs Rs 5 million. Similarly, the OGDCL also planned to construct two rooms with varandah of the Government Primary School Alwargi Banda on the proposal of FM (Naspha) with Rs 1.125 million. The OGDCL constructed rooms and toilets at cost of over Rs 1 million in Madrassa Dare-Argam near Naspha on demand of local MNA in 2009-10, besides construction of class rooms and provision of four computers to Govt High Secondary School Chanda Khurram at cost of 0.580 million in 2012-13. The company also spent Rs 3.556 million on water supply schemes including construction of four water storage tanks at Village Faqiri Banda and installation of 25 water pressure pumps at Naspha. On health-care facilities, the company spent Rs 2.533 million on holding free eye camps and provision of surgical equipments for social welfare dispensary, while Rs 1.011 million was spent on miscellanies work in areas of Naspha.

Copyright Associated Press of Pakistan, 2014

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Import of CNG cylinders & kits: ECC may mull removing ban

A meeting of the Economic Co-ordination Committee (ECC) of the Cabinet scheduled for Saturday is likely to consider a Petroleum Ministry proposal on the removal of ban on import of CNG cylinders and conversion kit, it was learnt. The Ministry of Petroleum's proposal to remove ban imposed by the previous government on the import of CNG kits is inexplicable especially when the country is grappling with serious gas crisis, the official sources quipped. The sources said that the Ministry of Petroleum had proposed to the ECC that original equipment manufacturers might be allowed to import CNG cylinders, kits and parts for conversion of vehicles at their manufacturing/assembling facility. The ministry had also cited Oil and Gas Regulatory Authority (Ogra) letters wherein it was pointed out that the ban on the import of CNG cylinders/conversion kits was leading to the installation of smuggled and unapproved cylinders in vehicles especially in public transport vehicles, which was hazardous to public life and safety. They added that Ogra wanted the government to revisit its policy on ban on the import of CNG cylinders and conversion kits. The ECC would also consider a proposal of Cabinet Division on the issuance of NOCs for new CNG stations by Ogra despite the ban by the government. An official said that the issue of CNG stations was submitted to the ECC in April 2014, which after detailed discussion, referred the matter to the Law Ministry for its opinion on the issuance of provisional NOCs and subsequent conversion into commercial licenses of CNG stations by Oil and Gas Regulatory Authority (Ogra). The ECC would also consider a proposal of the Ministry of Kashmir Affairs and Gilgit Baltistan Division on relaxation in repayment policy of the government for foreign funded projects of Gilgit Baltistan. The Ministry of Industries and Production has also submitted a summary to the ECC for consideration and approval of a decrease in the price of imported urea as one time dispensation as a special case. Sources told Business Recorder that the ECC meeting chaired by Finance Minister Ishaq Dar would also consider a proposal of the Ministry of Commerce for the export of sugar and removal of ban on the import of live animals from Bovine Spongiform Encephalopathy infected countries. An official said that six proposals had already been distributed to the division concerned by the Cabinet Division. The ECC would also take up a summary for lifting of ban on the import of live animals from Bovine Spongiform Encephalopathy (BES) infected countries, which was imposed in 2001 to protect and safeguard domestic cattle stock as well as the export of meat and other bovine products. The BSE infected countries include UK, Ireland, Belgium, Denmark Luxembourg, Holland, Spain, Germany, Italy, France Switzerland, Portugal, Finland, Canada and USA. According to Commerce Ministry not only USA, Canada as well as European countries have been requesting Pakistan to review its import policy regarding live animal and animal products but Pakistani importers have also been making similar demands.

Copyright Business Recorder, 2014

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