Energy Consumption:
Energy consumption in this day and age generally indicates a nation's level of industrialization, productivity and standards of living. Going by this yardstick, Pakistan's 14 million BTUs per capita consumption in 2009 indicates that the country has a long way to go to achieve levels comparable with the world average productivity signified by 71 million BTUs per capita as estimated by US Energy Information Administration for 2009.
Regional Comparison:
Although Pakistan's 14 million BTUs per capita energy use is ahead of Bangladesh's 6 million BTUs and Sri Lanka's 10 million BTUs, it is less than India's 18 million BTUs, and far behind China's 68 million BTUs and Malaysia's 97 million BTUs.
Energy Costs:
Fossil fuels are currently the primary source of the bulk of energy used. Cost of producing energy from various fossil fuels ranges from $2-4 per million BTUs for coal to $19-20 per million BTUs from oil. Costs of energy from natural gas vary widely depending on the source. Cost of shale gas in the United States has plummeted to about $2 per million BTU recently, while Pakistan has signed agreements to purchase gas from Iran and Turkmenistan in the range of $10 to $12 per million BTUs. Cost of production of domestic natural gas is in the range of $2 to $4 per million BTU.
Impact on Economy:
Energy costs have had a huge impact on Pakistan's economy. Its heavy dependence on imported oil has been a big contributor to balance of payments crises in the past. In 2008, for example, the oil prices jumped from less than $50 a barrel to $150 a barrel and forced the country to seek IMF bailout. Pakistan oil import bill has increased from about $7 billion in 2007 to over $12 billion in 2011. Energy shortages have also put a significant dent in Pakistan's GDP growth.
If Pakistan could generate all of the 14 million BTUs of energy per capita from coal, the cost would be $28 to $56 for each person. Alternatively, the cost of using oil for the entire production would add up to about $280 per person, a significant chunk of Pakistan's per capita income of $1372 in 2011-12. The costs therefore range from a low of $28 to a high of $280 per Pakistani.
Energy Policy Suggestions:
As the nation develops and the energy demand increases, the policy makers have to try and produce as much of the needed energy at costs closer to the low-end of the range from $2 to $20 per million BTUs. Here are some policy suggestions for Pakistan's energy policy going forward:
1. Develop Pakistan's shale gas reserves estimated at 51 trillion cubic feet near Karachi in southern Sindh province. The US experience has shown that investment in shale gas can increase production quite rapidly and prices brought down from about $12 per mmBTU in 2008 to under $2 per mmBTU recently. Pursuing this option requires US technical expertise and significant foreign investment on an accelerated schedule.
2. Increase production of gas from nearly 30 trillion cubic feet of remaining conventional gas reserves. This, too, requires significant investment on an accelerated schedule.
3. Convert some of the idle power generation capacity from oil and gas to imported coal to make electricity more available and affordable.
4. Utilize Pakistan's vast coal reserves in Sindh's Thar desert. The problem here is that the World Bank, Asian Development Bank and other international financial institutions (IFIs) are not lending for coal development because of environmental concerns.And the Chinese who were showing interest in the project have since pulled out.
5. Invest in hydroelectric and other renewables including wind and solar. Several of these projects are funded and underway but it'll take a while to bring them online to make a difference.
6. Curb widespread power theft, improve collection of electricity dues from consumers, and resolve spiraling circular debt to make Pakistan's energy sector attractive to domestic and foreign investors.
Energy Conservation:
In addition to significantly increasing energy production, Pakistan needs to take prudent steps to conserve by promoting the use of energy-saving electric bulbs and machines. Concerns about the environment have propelled many developed nations to cut energy consumption in recent years. For example, serious conservation efforts have reduced Japan's 172 million BTUs per capita in 2009 down from 178 in 2005, Germany is at 163 million BTUs in 2009 down from 175 in 2005, and the United States is down to 308 million BTUs in 2009 from 340 million BTUs per person per year in 2005.
Summary:
Instead of addressing different pieces of the energy puzzle in an ad hoc fashion under multiple ministries and bureaucracies fighting turf battles, Pakistani policy makers need to look at the big picture for the sake of the nation's future. Nothing short of a holistic approach with a comprehensive energy policy formulated and implemented under a competent and powerful energy czar will do.
Related Links:
Haq's Musings
US EIA International Data on Per Capita Energy Consumption
Affordable Fuel for Pakistan's Electricity
Pakistan Needs Shale Gas Revolution
US Census Bureau's International Stats
Pakistan's Vast Shale Gas Reserves
US AID Overview of Pakistan's Power Sector
US Can Help Pakistan Overcome Energy Crisis
Abundant and Cheap Coal Electricity
US Dept of Energy Report on Shale Gas
Pakistan's Twin Energy Crises
Pakistan's Electricity Crisis
Pakistan's Gas Pipeline and Distribution Network
Pakistan's Energy Statistics
US Department of Energy Data
Electrification Rates By Country
CO2 Emissions, Birth, Death Rates By Country
China Signs Power Plant Deals in Pakistan
Pakistan Pursues Hydroelectric Projects
Pakistan Energy Industry Overview
Energy from Thorium
Comparing US and Pakistani Tax Evasion
Pakistan's Oil and Gas Report 2010
Circular Electricity Debt Problem
International CNG Vehicles Association
Rare Earths at Reko Diq?
Lessons From IPP Experience in Pakistan
Correlation Between Human Development and Energy Consumption
51 comments:
Dr. Haq,
This is an excellent article. Pakistan certainly needs lots of investment in the energy sector, and foreign direct or indirect investment certainly has a role to play.
However, I would like to point out that in all the other fast growing Asian economies, the DOMESTIC component of investment far, far, far exceeds any FOREIGN investment component.
Here are the conventional formulae to grasp--
1) Gross Domestic Savings Rate = Total Domestic Production - Total Domestic Consumption
2) Gross Savings Rate = Gross Domestic Savings Rate + Aid & Remittances
3) Gross Investment Rate = Gross Savings Rate + Current Account Deficit
4) Gross Fixed Investment Rate = Gross Investment Rate - Inventory & Valuables
As you can see DOMESTIC Savings is the KEY sustainable factor that decides how much physical investment is possible. The foreign investment component shows up in the Current Account Deficit term in (3) and is usually a small part of total physical investment. If foreign investment becomes disproportionally dominant, then, as history shows, that it leads to economic and financial instability. This is why all the other Asian countries try to manage its proportion such that it never dominates total investment.
You can see for yourself--
http://www.tradingeconomics.com/malaysia/gross-domestic-savings-percent-of-gdp-wb-data.html
http://www.tradingeconomics.com/thailand/gross-domestic-savings-percent-of-gdp-wb-data.html
http://www.tradingeconomics.com/indonesia/gross-domestic-savings-percent-of-gdp-wb-data.html
http://www.tradingeconomics.com/china/gross-domestic-savings-percent-of-gdp-wb-data.html
http://www.tradingeconomics.com/bangladesh/gross-domestic-savings-percent-of-gdp-wb-data.html
http://www.tradingeconomics.com/india/gross-domestic-savings-percent-of-gdp-wb-data.html
http://www.tradingeconomics.com/singapore/gross-domestic-savings-percent-of-gdp-wb-data.html
http://www.tradingeconomics.com/south-korea/gross-domestic-savings-percent-of-gdp-wb-data.html
The common thing in all these other rapidly developing Asian countries is the OVERALL TREND of increasing Domestic Savings leading to increasing Investment.
All these countries seem to be following a PLAN to first increase domestic savings rates to > 30% of GDP and invest heavily in development of energy, infrastructure, industry, health and education. As you can see, while all of them welcome foreign investment, none of these countries are overly dependent on foreign investment as most of their Investment comes from Domestic Savings.
Now compare the above countries to our own country:
http://www.tradingeconomics.com/pakistan/gross-domestic-savings-percent-of-gdp-wb-data.html
As you can see, our country does not even seem to have a plan. Our boom years are accompanied by low savings and a horrific over-dependence on foreigners. In fact, our trend is more similar to countries in Sub-Saharan Africa:
http://www.tradingeconomics.com/kenya/gross-domestic-savings-percent-of-gdp-wb-data.html
http://www.tradingeconomics.com/sierra-leone/gross-domestic-savings-percent-of-gdp-wb-data.html
We are nothing like the other fast growing Asian countries. If we are indeed following some "model", then it looks more like an African-Latin model than any version of any Asian Model. This worries me because there is not one single example of a poor, Third-World country that ever on the basis of foreign investment alone. And I fail to see how Pakistan could prove to be the sole exception.
I would like to suggest that you re-focus your top-notch analytical abilities on the core issue facing our country: HOW can we get Pakistanis to SAVE more such that our Gross Domestic Savings Rate INCREASES CONSISTENTLY over the next 10-20 years so to match the sustainable growth path of all the other Asian Countries.
Here is a start from our fellow-Pakistani blogger (he is actually an economist) on this very subject-http://economicspoint.blogspot.com/2009/08/foreign-direct-investment-and-domestic.html
Thank you.
Here's an ET story on Punjab's plans to generate electricity:
The business community of Punjab, while praising the provincial government for allocating Rs10 billion for energy projects, has underlined the need for some concrete measures in this regard before starting any joint ventures between the government and private sector.
They have even offered their cooperation to the government as energy is the most critical issue of the industry, which has been battered by power and gas shortages.
“Though the provincial government has taken this step too late, we still appreciate them for taking the initiative to save the industry to some extent,” said Kashif Younis Meher, Acting President of the Lahore Chamber of Commerce and Industry (LCCI).
Meher agreed to the idea of public-private partnerships in developing coal-gasification plants.
According to budget documents, the provincial government has chalked out a policy to install coal-fired plants at six different industrial estates. Each plant will produce 50 megawatts of electricity and provide uninterrupted power supply to industries. Special incentives will be given to those who will invest in this project.
The government has also claimed to have completed feasibility study on 10 hydropower projects at a cost of Rs29 billion, which will generate 80 megawatts. It plans to complete five projects through public-private partnerships while the remaining will be undertaken by the government with the help of Asian Development Bank.
Besides these, the Punjab Power Development Board has started research work on 54 different projects, which will generate 688 megawatts of electricity.
http://tribune.com.pk/story/392150/energy-projects-industry-seeks-concrete-measures-before-joint-ventures/
Here's a BR story on latest energy consumption figures in Pakistan:
The primary energy supply in the country has witnessed 2.3 per cent increase during current fiscal year as compared to last year.
The availability of energy per capita remained 0.372 TOE (14.76 million BTUs using conversion factor of 39.68 million BTUs equals 1 TOE) during the year as compared to 0.371 TOE in 2010, posting a positive growth rate of 0.16 percent.
An official source on Tuesday said due to population growth rate of almost two per cent, the balance between energy supply and emerging needs was outset.
He said analysis of composition of final energy supplies in the country suggests that the supply of coal during last ten years grew at an average rate of 7.5 per cent per annum followed by gas, electricity, petroleum products and crude oil with average growth rates of 5.7 per cent, 3.4 per cent, 2.1
http://www.brecorder.com/pakistan/industries-a-sectors/61840-primary-energy-supply-registers-23pc-increase.html
http://www.businessdictionary.com/definition/tonne-of-oil-equivalent-TOE.html
Riaz another lost decade in the offing 2007-2012 is already the half way mark.
Here's World Bank economist's assessment of Pak competitiveness, according to The News:
Pakistan needs to improve its competitiveness for rapid industrialisation, which offers it a range of potential benefits, including more jobs creation, tax revenues and economic growth, said Dan Biller, World Bank’s lead economist on South Asia Region for Sustainable Development.
Addressing businessmen in Lahore, he said that the GDP growth of Pakistan in 2011 was only 24 percent, while China grew at 9.2 percent, India 7.8 percent, Sri Lanka at eight percent, Indonesia 6.4 percent and Malaysia 5.2 percent.
Among all these countries, Pakistan has the largest agricultural share of GDP and smallest industrial share, he said.
Biller said that lower industrialisation in Pakistan against other regional countries is due to its lower competitiveness, adding that Pakistan ranks poorly on the Global Competitive Index of the World Economic Forum. Pakistan’s institutions are weak, scoring 3.4 points out of 10, he said, adding that Malaysia score 5.2 points, China 4.3 points, India 3.8 points, Indonesia 3.8 points and Sri Lanka scored 4.2 points on quality of institutions.
Biller said that Pakistan’s score in infrastructure was dismal 2.8 points, while Malaysia scored 5.5, China 4.3, India 3.6, Indonesia 3.8 and Sri Lanka scored 4.1 points.
Similarly, he said, Pakistan’s score was the lowest among these countries in macroeconomic stability, health and primary education, higher education and training, goods market efficiency and labour market efficiency. Only in the market size, Pakistan had a better score than Sri Lanka, he added.
He also said that Pakistan has the most expensive and least-efficient port systems in the region, adding that the handling charges at the Karachi Port Trust are $110 per ton. India charges $80 per ton, Sri Lanka $150 per ton and Hong Kong charged $140 per ton. Ship charges of 2,800 tons are $30,000 at KPT, $5,500 in Sri Lanka, $6,000 in Hong Kong and $25,000 in the Indian port.
He said Pakistan handles 55 containers per hour, Sri Lanka 70 per hour, Hong Kong 100 per hour and India 65 per hour. The Customs authorities in Pakistan examine 10 percent containers physically; Sri Lanka and Hong Kong less than five percent, while physical examination of containers in India is also high, but less than 100 percent, he said, adding that Pakistani ports lack water depth, which is 10.5 feet at KPT, 13 feet in Sri Lanka, 14 feet in Hong Kong and 12 feet in Indian ports.
The World Bank economist said that Pakistan provides relatively low access to services that impeded foreign investment. Pakistan has two fixed telephone lines per 100 people against 22 in China, 2.9 in India, 17.2 in Sri Lanka, 15.8 in Indonesia and 16.1 in Malaysia.
Around 99.4 percent of the population in China has access to electricity; it is 66.3 percent in India, 76.6 percent in Sri Lanka, 62.4 percent in Pakistan, 64.5 percent in Indonesia and 99.4 percent in Malaysia, he added.
The roads and power generation are number one infrastructure concern for the businesses worldwide, Biller said, and advised Pakistan to reduce the transport cost that is critical to competitiveness.
In addition, the state should ensure safe mobility and enhance regional connectivity. Pakistan’s foreign market access potential is at least 4.5 times higher than the United States, he said, adding that its current market access is only 4-9 percent of the United States.
Pakistan’s market share in total global exports is less than half percent and remained stagnant since 2000. India, on the other hand, increased its global export share from 0.6 percent in 2000 to 1.5 percent in 2010, he added.
http://www.thenews.com.pk/Todays-News-3-114426-Pakistan-needs-to-improve-competitiveness-for-rapid-industrialisation
Here's a Daily Mail piece on the economic history of the world since Jesus:
A stunning chart that shows the entire economic history of the world's most powerful countries over the past 2,000 years has been released by investment bank JP Morgan.
Viewed as a whole, the graph shows the creeping restoration of Asian economic supremacy as the rest-of-the-world catches up to the West and its levels of industrialisation.
Charting the globe's 10 major powers since the time of Jesus, the graph can be broken down by simply applying a cut off point at around the 1800 AD mark.
That was the birth of the Industrial Revolution in the U.K. and when taken into account, everything to the left of that mark can bee seen as economic power through sheer size of population and to the right is the effect of mass production on a country's economic output.
One feature of the simple graph is to show that up until around 1500 AD India and China accounted for between 50 and 60 percent of the world's economy until the late 18th century when the Industrial Revolution rendered countries with large populations, just countries with the largest populations.
In 1 AD, China had a population of almost 60 million people, while the United States had a population of 680,000.
It took the United States 1800 years to overtake China's economic output.
But by 1950, even though the U.S had a population three times less than China, it's economic output was three times as great.
Additionally, in 1913, China had a population of 437 million and the U.K. had a population of 45 million, but their economic output was almost identical.
Indeed, when the graph is broken down into its constituent parts, the analysis of what happened in Europe and later the United States shows that the Western lead was taken even before 1800.
For the majority of human history the most important factor in economic growth was the relationship between births and deaths.
If there were too many births then there was not enough food to go around and without mass production techniques people went without until there was starvation or disease.
After a higher death rate, a stable supply of food was re-established, goods were shared among a smaller group of people and everyone felt and became richer until the cycle occurred again.
However, between 1000 AD and 1500 AD, wages, or GDP per capita had started to slowly rise as small economies of scale were made in agrarian organisation and moderate technological advances were made which improved the quality and length of life.
If a similar graph is opened up to show the world from Jesus to Napoleon, the slow building growth especially of Europe is clear to see, even without factoring in the Industrial Revolution.
However, if the graph is expanded to show the world from 1500 to World War I then the effect of mechanisation on the planets economic growth is clear.
Theories about why the Industrial Revolution occurred in the U.K. and then Northern Europe include the dense, localised population, easy availability of natural resources and the mild climate that exists around the North Sea and the U.K. for cotton spinning.
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As the world escaped the trap foreseen by Thomas Malthus of a rising population never matched by food production, population and GDP exploded.
The industrial revolution changed the Malthusian Trap leading to a situation today where the U.S. accounts for five percent of the world population and 21 percent of its GDP whereas Asia (minus Japan) has 60 percent of the world's population and only 30 percent of its GDP.
http://www.dailymail.co.uk/news/article-2163610/Fascinating-new-graph-shows-economic-history-world-Jesus.html
Here's ET on electricity bill collection problems in Pakistan:
The government has failed to collect Rs495 billion worth of electricity bills in the last eleven months, taking recovery ratio to 47%, one of the lowest ever in the country’s history.
The unrecovered amount is two times more than what the government claims is the circular debt, which has caused massive load-shedding across the country, leading to riots across Punjab and Khyber-Pakthunkhwa.
According to a fact sheet, prepared by the finance ministry on the basis of information provided by finance department of Pakistan Electric Power Company, from July to May (2011-12) all the distribution companies, including Karachi Electric Supply Company, billed consumers Rs895.3 billion while collection remained at only Rs400.8 billion, which is 47% of the total billing.
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During this period, Syed Naveed Qamar was the Federal Minister for Water and Power, who has recently been assigned the portfolio of Minister for Defence after he failed to improve electricity supply in the country.
The collection has significantly dipped despite the fact that the government has obtained a $325 million loan from the Asian Development Bank to improve the efficiency of power distribution companies. A cabinet committee on energy, headed by Finance Minister Dr Abdul Hafeez Shaikh also could not improve the situation.
According to the details, February was the worst month in terms of collection when the power distribution companies (Discos) collected only Rs26 billion against total billing of Rs99.2 billion, showing a gap of Rs73.2 billion in a single month. October was the second worst month when the Discos collected only Rs45.9 billion against total bills of Rs114.1 billion, showing a gap of Rs68.2 billion.
In May this year, the total collection remained at Rs35.9 billion against the billing of Rs87.4 billion- a gap of Rs51.5 billion. In April, the Discos billed Rs79.4 billion but collected only Rs30.2 billion, in March against Rs51.8 billion billing the collection remained at Rs31.3 billion and in January the collection was Rs29.3 billion against total billing of Rs77 billion.
November was the only month when the collection rose to 71% as the Discos managed to collect Rs41.2 billion against total bills of Rs57.6 billion.
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The spokesman for the Water and Power Ministry contested the low collection figure. Zargum Khan said that Discos excluding KESC billed Rs534.3 billion consumers from July 2011 to April 2012 and managed to collect Rs461 billion, showing 86.3% recovery rate. The amount is inclusive of distribution margins of Discos.
He, however, admitted that during the first ten months of the fiscal year all power generation companies generated 74 trillion units of electricity but Discos sold 72 trillion units while the rest were lost on account of technical losses and theft.
100% collection of data is not possible as 10-12% of the billed amount is retained by power distribution companies as distribution margins while there are also some justified line losses, Khan said.
To a question, he said Rs166 billion dues were outstanding against private consumers and the amount has surged due to stay orders granted by courts against fuel price adjustment charges. Khan admitted that in some cases collection was as low as 5.5% (tribal regions) and 29% (Quetta) but in other cases the ratio was 100% for Gujranwala and 99% for Faisalabad regions.
http://tribune.com.pk/story/398357/law-abiding-citizens-only-47-consumers-pay-for-electricity/
Here's an FT piece on the negative impact of power sector in Pakistan:
...Munir, born and educated in Lahore, makes his case in the latest issue of the Economic & Political Weekly of India, to be published on Saturday.
“The 1994 privatisation of the energy sector offered investors generous returns and created pricey overcapacity,” he told beyondbrics. “This created an expensive legacy which is the real problem of today’s energy crisis.”
Unless that problem is dealt with, he sees no light at the end of the energy tunnel.
He says Pakistan’s government, helped by the World Bank, “sweetened” its energy privatisation with attractive conditions, fearing it wouldn’t be able to attract investors otherwise. It guaranteed a 12 to 15 per cent annual return (indexed in dollars, not rupees), gave tax breaks and paid interest on private funding – more expensive for the government than providing the funding itself. ”The deal was too good to be true for investors,” Munir says.
The government gave those guarantees during an economic boom it assumed would continue. That turned out not to be the case.
Munir says the model turned out to be badly constructed in terms of creating value for the government and people of Pakistan. Even in an environment of economic growth and efficient energy generation, it would have been hard for the government to finance the plan. But since both have been absent, it became nearly impossible to pay for privatised energy.
What else went wrong?
Most private investors chose to build oil-powered plants because of their low construction costs and short lead times. This backfired as the oil price has trebled since the 1990s. Variable costs, and therefore prices to consumers, are at unsustainable levels. “No wonder many consumers can’t afford to pay their bills,” Munir says.
To make things worse, the government neglected to step on the brakes when its generous conditions attracked too many investors. Assuming economic growth would continue, it allowed too much capacity to be built and guaranteed the same return on that extra capacity, whether it was used or not.
But as growth stalled, the government could no longer meet its commitments. So operators have begun shutting down power plants, killing the lights across Pakistan – which is now enduring daily power outages in spite of having excess generating capacity of almost 35 per cent.
Munir says the government should develop new power plants using cheaper fuels, and that this shouldn’t be a problem in a country with an abundance of coal, waterways and sun.
But Pakistan must first escape its vicious payment cycle. The Economist magazine reports that Pakistan’s so-called circular debt to energy producers stands at $880m. It is only getting worse because of rising interest costs and dollar-rupee appreciation.
“We need to get out of the the current deals,” says Munir. But at what cost, and does this imply default? “Your guess is as good as mine,” the academic admits.
Still, he felt it was time to make his point. “I’m not defending people who don’t pay bills and I’m not promoting government subsidies to keep prices low,” Munir says. “But why isn’t anyone talking about the policy that led to this situation to begin with?”
http://blogs.ft.com/beyond-brics/2012/06/22/pakistans-real-power-problem-a-failed-privatisation/
http://www.epw.in/system/files/pdf/2012_47/25/Pakistans_Power_Politics.pdf
Here's a Business Recorder story on energy generation in Pakistan:
Till the introduction of Power Policy 2002, there were 13 IPPs operating in the country with an installed capacity of 4,340 MW. These include Hub Power 1,292 MW, AES Lalpir (now Pakgen Power) 362 MW, AES Pak-Gen (now Pakgen Power) 365 MW, Altern Energy 29 MW, Fauji Kabirwala 157 MW, Gul Ahmed 136 MW, Habibullah Coastal 140 MW, Japan Power 120 MW, Kohinoor Energy 131 MW, Liberty Power 235 MW, Rousch Pakistan 412 MW, Saba Power 114 MW, SEPCO 135 MW, Tapal Energy 126 MW and Uch Power 586 MW. In subsequent years, another 12 IPPs of total installed capacity of 2,468 MW were commissioned, whereas WAPDA-owned KAPCO of 1,638 MW also emerged as an IPP. Power plants commissioned after implementation of the Power Policy 2002 are Attock Gen 165 MW, Atlas Power 225 MW, Engro Energy 227 MW, Foundation Power (Daharki) 110 MW, Halmore Power 225 MW, Hub Power Narowal 225 MW, Liberty Power Tech 202 MW, Nishat Power 202 MW, Nishat Chunian 202 MW, Orient Power 225 MW, Saif Power 225 MW and Sapphire Electric 235 MW. A number of small IPPs, or SPPs, generate electricity with a total capacity of over 700 MW, of which mostly are in-house or captive power plants.
The long list includes ICI Pakistan 26 MW, Sapphire Power 26 MW, Crescent Power 11 MW, Ellicott Spinning 22 MW, Gulistan Power 40 MW, Kohinoor Mills 25 MW, Monno Energy 5 MW, Mahmood Textile 40 MW, DS Power 2 MW, Sitara Energy 78 MW, Bhanero Energy 17 MW, Quetta Textile 31 MW, Ideal Energy 12 MW, Ghazi Power 21 MW, Genertech 28 MW, Nimir Industries 18 MW, Zeeshan Energy 7 MW, Ibrahim Fibers 32 MW, Crescent Bahuman Energy 23 MW and Kohinoor Power 15 MW. In addition, DHA CoGen of 94 MW and Pakistan Steel Mills power plant of 110 MW have in-house power generation facilities. The role of the captive power plants is, nonetheless, significant as these have eased-out the demand on national grid. The SPPs and many captive power units provide their surplus electricity to the network--up to 182 MW to PEPCO-NTDC and 40 MW to the KESC. Textile sector, having an installed captive power plants to achieving dependable and uninterrupted power supply for hi-tech machinery, is the main contributor to NTDC system.
In the power system, a balance between electricity generation and consumption has to be continuously maintained. It was planned to make available a committed net power generation to the level of 23,726 MW (compared to existing 18,580 MW) by June 2012 but the target could not be achieved. A total of 3,400 MW installed generation capacity has been added to the national grid instead since 2008. To overcome power shortages in short term, an investment of RS 32.5 billion was envisaged through the 2011-12 national budget, whereas 14 on-going power projects of cumulative capacity of about 3,000 MW were scheduled for completion during October 2011-June 2012.
http://www.brecorder.com/articles-a-letters/187/1206239/
Here's an ET story on Russian interest in energy projects in Pakistan:
Pakistan has agreed to award contracts without bidding for multi-billion-dollar Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects to Russia, which will also extend financial assistance.
However, in an understanding reached with Russia, Pakistan made it clear that it would award the contracts on government-to-government basis only. Private Russian firms will not be entertained.
“Pakistan’s government will ask the cabinet to waive public procurement rules for award of pipeline contracts to Russia,” a participant of the meeting of Pak-Russia Joint Working Group on Energy told The Express Tribune.
A 15-strong delegation of Russia, led by the deputy minister for energy, participated in the meeting held in Islamabad on Wednesday.
The two sides would sign a memorandum of understanding (MoU) in next two to three months to move ahead with the projects, he said. Third meeting of the joint working group will be held in Moscow in 2013.
The government has already floated tenders, inviting bids for giving contracts for construction and pipeline procurement for the IP project, costing $1.5 billion.
“Russian energy giant Gazprom may also participate in bidding for the engineering, procurement and construction (EPC) contract, which gives an edge to the company that will pledge financing as well,” a government official said, adding Moscow also agreed to finance the rehabilitation of Guddu and Muzaffargarh power plants.
According to sources, Pakistan will submit a draft of agreement for financial and technical assistance for the IP pipeline in 15 days. Though the Russian side assured financial assistance for the pipelines, they did not indicate the amount.
In a preliminary meeting held in Islamabad on Tuesday, the Russian authorities offered cooperation in gas import through pipelines and the Central Asia South Asia (CASA) electricity import project, which would bring electricity from Central Asian states.
Besides Russia, Iran is also willing to provide $250 million on government-to-government basis for constructing the IP pipeline. Pakistan wants $500 million for the pipeline.
Iran has also come up with a plan to lay Pakistan’s portion of the pipeline based on a mechanism called ‘supplier’s credit’, which Pakistan will repay after two years.
Pakistan is also seeking China’s help for the IP pipeline. In a recent visit to Beijing, President Asif Ali Zardari and Adviser to Prime Minister on Petroleum Dr Asim Hussain succeeded in convincing the Chinese leadership to take part in bidding for the construction of the pipeline.
Electricity import
In addition to supporting the gas pipelines, Russia has also expressed its willingness to cooperate in import of 1,000 megawatts of electricity from Central Asia. Leading financial institutions including the World Bank and Islamic Development Bank have committed financial support for the power import project.
Construction of a cross-border transmission line is being considered for creating a dedicated link aimed at supplying surplus hydropower during summer months from Kyrgyzstan and Tajikistan to Pakistan.
http://tribune.com.pk/story/400262/breakthrough-pakistan-to-award-gas-pipeline-contracts-to-russia/
Here's an Asia Times story on power outages or loadshedding in India:
Power outages in India, now enduring the peak demand of hot summer months, are running to as long as eight to 10 hours in northern cities, including the capital, and while large parts of the country continue to be off grid rural areas with access to electricity can be without power for over 20 hours at a stretch.
The Uttar Pradesh government this week ordered that electricity be cut off at malls and shopping centers in the evenings, before apparently backtracking in the face of angry traders who put up defiant protests, clashing with police.
Billions of dollars have been invested by power producers to create new capacity over the past few years, but numerous factors linked to populist politics, over-zealous implementation of
environment norms, transmission losses, pilferage, free power to agriculture and bureaucratic tardiness have resulted in under utilization of existing capacity. In short, India can produce more power if it wants to, but is unable to.
One bottleneck is coal, the majority of which is mined by state-owned Coal India Ltd (CIL). The bulk of Indian power is produced at coal-fired thermal plants, but CIL has not been able to increase output to meet the country's needs.
The environment ministry has declared many of the company's mines to be in "no go" zones, while the bulk of CIL's coal supply comes from areas in eastern India where Maoist rebels are active.
It also has to rely on another government institution, the slip-shod Indian Railways, to move the coal. Coupled with in-built delays and indecision within the government, CIL's output growth has been near stagnant over the past three years, with the result that more than one-third of India's coal-based thermal power plants are running on critically low levels of fuel stocks this season.
Estimates suggest that if CIL continues to falter in supplying coal, India's target for adding new power capacity for the 2012-17 period will need to be slashed to 45,000 megawatts from the proposed 76,000 MW. New Delhi has already scaled down its capacity addition target for the next five years by 25,000 MW to 75,000MW from conventional sources.
The coal ministry, meanwhile, has projected that India's annual coal demand could rise over 40% by March 2017 to nearly 1 billion tonnes while domestic coal output may increase by less than 30%, leaving a gap of around 300 million tonnes that will have to be met by imports.
India's power woes do not stop there. Electricity generators such as NTPC, Tata Power and Adani have the option of buying coal from the likes of Indonesia, Africa and Australia, but overseas prices are too steep compared with the artificially depressed domestic prices set by the government.----------
As India does not produce enough of its own oil, the bulk of the diesel is imported, draining foreign exchange, creating balance of payments problems and weakening the rupee - which drives up the cost of imported products such as oil and coal.
The government continues to subsidize diesel to protect among others the transport sector - which adds to the ever-rising fiscal deficit, which again helps to fuel inflation. It is no surprise that rating companies such as Standard & Poor's have cautioned that India's investment climate could be pegged at "junk'' levels.
Meanwhile, in the sweltering streets and fields of India, the poor die of heatstroke, a savage reminder that the structural infirmities built into power generation ostensibly to protect the poor are actually harming the impoverished the most. While India pushes to increase its use of renewable and nuclear power, it is the thermal power energy chain that needs some serious attention and reform.
http://www.atimes.com/atimes/South_Asia/NF28Df03.html
Here's an interesting Friday Times story on reliable power supply in may parts of Karachi where people pay their bills:
e have not had loadshedding for more than 10 months as far as I can remember," said Umar Ansari, a resident of Gulshan-e-Iqbal Karachi. "We have no loadshedding. Just the usual breakdowns once in a while," says Yasir Khan, who lives in PECHS. That might be unbelievable for people living in other parts of Pakistan, but some residents of Karachi have found new respect for the once-loathed Karachi Electric Supply Company.
"We have devised a new mechanism for loadshedding," says Muhammad Haroon, a KESC official. "If the recovery rate in an area is up to a certain mark, we exempt that area from loadshedding. It is very simple. If you pay your bills, you get electricity, if you don't, then you're not on the priority list."
The situation in interior Sindh is somewhat different. "Despite the falling recovery rates, average load shedding is 2 to 4 hours a day in most parts of Sindh and Balochistan," says Yaqoob Chandio, an official working at the HUB Power Company. Punjab has said the uneven distribution of power is unfair.
Raja Pervez Ashraf, the newly elected prime minister, promised during his recent visit to Karachi that he would improve power supply in Karachi and the rest of Pakistan. "I will do my best," he said. "One of the first meetings I called after becoming prime minister was to discuss the power crisis. Inshallahh we will resolve this issue."
The shortfall of electricity in the country is about 7,000 megawatts, according to Saeed Muhammad, a PEPCO official. Experts say the problem is not of generation capacity, but of circular debts, recovery and theft.
According to WAPDA and PEPCO figures, Pakistan Railway alone owes Rs422 million to various electricity distribution companies. The ISI owes more Rs8.2 million, Pakistan Rangers Rs120 million, the Senate Rs49 million.
The total billing in May 2012 was Rs87.4 billion, but only Rs35,9 billion were recovered. In April, the total bills amounted to Rs79.4 billion but the distribution companies collected only Rs30.2 billion. In March, only 31.3 billion were collected in bills, instead of Rs51.8 billion. In January this year, the collection was Rs29.3 billion of the total bills of Rs77 billion.
According to information provided by the Finance Department, the ratio of recovery from consumers of electricity was only 51 percent. That means 49 percent of electricity bills in Pakistan were not paid. The highest number of defaulters are in Balochistan and Sindh.
"If the KESC owes PEPCO for power purchases, the finance ministry owes KESC for tariff differential claims. KESC therefore holds payments until the finance minister delivers, and if pressed, offers to adjust its receivables against its payables," says Khurram Hussain, an energy policy expert.
The other key factor in the power crisis is line losses - stolen electricity for which no one is billed. Officials in various departments in Sindh say line losses in Sindh are over four times than those in Punjab. That means an average consumer in Punjab pays for the consumer who is stealing electricity in Sindh.
----------
Karachi Chamber of Commerce and
"The solution is very simple," according to policy expert Muhammad Yahya. "Enough with the free rides. The government and the consumers must pay for the electricity they consume."...
http://www.thefridaytimes.com/beta3/tft/article.php?issue=20120629&page=6
Here's a Daily Times report on Punjab's plans to deal with power crisis:
The Punjab government has finalised plans to install coal energy plants in industrial estates across the province through public-private partnership, Chief Minister Shahbaz Sharif said on Thursday.
Presiding over a meeting at his Minar-e-Pakistan tent office to review the pace of development of energy-related projects in the province, the CM said that provision of relief to the people, who are undergoing agonising load shedding, poverty and inflation, was of utmost importance.
He said that the government had chalked out a plan to provide solar panels to poor families and biogas units to small farmers for running their tube wells. He said that the programme of providing solar panels to poor families would be initiated from south Punjab. “The solar panel will run one fan and two electric bulbs,” he said, adding that
Shahbaz said that the present energy crisis had adversely affected all sectors, and had deprived citizens of their sleep and peace. “Therefore, under these circumstances, provision of immediate relief to the people has become essential,” he said.
The CM said that provision of solar panels to the poor would be made through transparent balloting, and similar method would be adopted for distribution of biogas units among small farmers.
He directed the officials concerned to evolve a methodology for distribution of solar panels and biogas units so that the programme could be implemented at the earliest.
He also told them to hold negotiations with reliable and best companies for the purchase of solar panels. He disclosed that the quota of south Punjab with regard to provision of biogas units to small farmers would be 10 percent higher and, initially, 1000 biogas units would be distributed.
Shahbaz said that a programme had also been evolved to set up coal-energy plants of 50MW in the industrial estates with public-private partnership.
Earlier, Energy Secretary Jehanzeb Khan informed the meeting about the progress on coal-related energy projects. The investors present in the meeting also showed interest in make investment in the energy sector.
http://www.dailytimes.com.pk/default.asp?page=2012%5C06%5C29%5Cstory_29-6-2012_pg13_6
Here's an Indian Express story on Gurgaon power cuts:
Morning traffic was brought to a standstill on Tuesday by Gurgaon residents protesting acute shortage of power and water.
The city has been battling severe power and water crisis, made worse by the delay in arrival of monsoon and the heatwave.
As per official estimates, the power demand in the city has surpassed previous records and continues to rise.
On June 28, the demand was to the tune of 1,528.33 lakh units (the highest demand for one day), against 1,127.45 lakh units on the same day last year, said Amit Kumar Agrawal, Managing Director of Dakhshin Haryana Bijli Vitran Nigam (DHBVN).
To rein in the shortfall, the Nigam has announced that starting Wednesday, all industries will be given just eight hours of power. They will be supplied power from 8 am to 12 pm and 3 pm to 7 pm.
Residents, on the other hand, blame the sharp rise in demand to the mushrooming of small guesthouses in buildings meant for a single family.
“In front of my house there is a 120 sq yard area, which has been turned into living quarters for 20-odd families. The power demand will automatically shoot up,” said Anthony Cruz, a resident of DLF Phase-III.
Residents of both old and new Gurgaon claim outages stretch to as long as 16 hours a day. This, in turn, has affected the water situation in the city.
“The Basai water plant is supplying very little water, while the private water plant is almost dry. Power cuts leads to non-storage of water and residents have to buy water. We shell out Rs 800 for around 5,000 litres of water,” said Cruz.
------------
DHBVN Superintendent Engineer Sanjiv Chopra told Newsline, “There has been a 20-22 per cent shortfall in power supply in Gurgaon. While the demand is around 200 lakh units, we have been able to supply 150 lakh units. Sometimes the supply went down to 130 lakh units. We are trying to make the situation normal.”
Power officials said supply could dip further as Yamuna Nagar units I and II of 300 MW each and Hisar unit-I of 600 MW are closed. Hisar unit-II of 600 MW and Jharali (Jhajjar) units I and II of 500 MW each had tripped, resulting in sharp reduction in availability of power in the state.
About 150 MW power from Lanco Amarkantak Project is also not available due to non-availability of coal, officials said.
http://www.indianexpress.com/news/power-cuts-bring-gurgaon-to-halt/970033/0
Here's a News report on CNG growth in Pakistan:
Pakistan has become the third country in the list of countries with the most natural gas vehicles, as over 26 percent of the vehicles on the roads consume natural gas, suggests the data of Natural Gas Vehicles (NGV) Europe.
The NGV Global suggests that Pakistan has observed the fastest growth in natural gas vehicles since the year 2000 as the number of gas vehicles has surged to around 3.5 million from less than 100,000 vehicles back in the year 2000. While Pakistan is the country with the highest number of CNG refilling stations in the world.
Former CEO of OGDCL, Zahid Khan said that independent seminars and analysts consider CNG to be a burden on the system.An official at the Ministry of Petroleum said that from 2005-06 to 2010-11, CNG consumption increased at the rate of 24 percent, the highest increase witnessed in any sector.
“With gas production facing a decline, this growth is at the expense of other value-added sectors like fertilizers, the general industry and the power sector,” he said.With growing car ownership and CNG prices being kept at 55 percent of petrol prices, the CNG monster is fast eating into the legitimate gas share of other sectors. Commenting on the investments made by the CNG sector, the official said that many CNG stations were initial investments based on a government incentive.
However the initial cost to set up a CNG station is approximately Rs55 million including Rs.31 million of the land cost and on average, the payback period is three years. Based on current CNG prices, most of the CNG stations have already made significant profits. The industry people say that when deciding on gas allocation, the government should consider the opportunity cost of the allocation of the gas to different sectors.
Fertilizer, textile and other manufacturers are value added industries producing goods locally with capital and equipment, which is already present in the country and this reduces the import of goods and increases the exports of locally manufactured items.
CNG, on the other hand, involves the substitution of one fuel by another.“Keeping energy prices in the form of CNG artificially low, encourages energy inefficiency. But energy spent using petrol for example, is likely to be less as the efficiency of use will be higher. Hence total expenditure on transport will not increase proportionately if CNG is withdrawn,” industry sources said. “The government should consider the fact that petrol is a perfect substitute for CNG, but there is no substitute available for fertilizer plants that use gas as a raw material,” he added. The ministry official said that the CNG sector was stating inaccurately that the government was imposing Rs141 cess tax per mmbtu on CNG.
In reality, in the first official communication on Cess dated Dec 15, 2011, the Cess for CNG was announced to be Rs 141/mmbtu for Region-1 (KPK, Baluchistan, Potohar Region) and Rs 79/mmbtu for Region-2 (Sindh, Punjab excluding Potohar Region). Later on it was reduced to Rs 84.6/mmbtu for Region-1 and Rs 47.4/mmbtu for Region 2 after the CNG associations went into negotiations with the government of Pakistan. Whereas, the fertilizer industry pays Rs 300/mmbtu.
http://www.thenews.com.pk/Todays-News-3-119151-Pakistan-third-largest-country-with-most-CNG-vehicles
Here's a Bloomberg report on PSO's tender for crude oil purchase:
Pakistan State Oil Co. (PSO) is seeking to buy 2 million metric tons of high-sulfur fuel oil over one year starting in August, according to a notice on its website.
The state-owned company is Pakistan’s largest fuel retailer. Details of the tender are as follow:
---------------------------------------------------------------
Product: High-sulfur fuel oil
Quantity: 2 million tons
Delivery: One year from award of contract
Port: Fauji Oil Terminal (FOTCO), Karachi
Offers close: Aug. 7, 10 a.m. local time
Offers valid: Aug. 18, 9 p.m. local time
http://mobile.bloomberg.com/news/2012-07-11/pakistan-state-oil-seeks-to-buy-one-year-s-supply-of-fuel-oil.html
Here's an AP report on US gas and electricity rates:
A plunge in the price of natural gas has made it cheaper for utilities to produce electricity. But the savings aren't translating to lower rates for customers. Instead, U.S. electricity prices are going up.
Electricity prices are forecast to rise slightly this summer. But any increase is noteworthy because natural gas, which is used to produce nearly a third of the country's power, is 43 percent cheaper than a year ago. A long-term downward trend in power prices could be starting to reverse, analysts say. Pacific Gas & Electric, for instance, is asking to raise gas and electric rates by $144 a year for the typical customer in 2014.
"It's caused us to scratch our heads," says Tyler Hodge, an analyst at the Energy Department who studies electricity prices.
The recent heat wave that gripped much of the country increased demand for power as families cranked up their air conditioners. And that may boost some June utility bills. But the nationwide rise in electricity prices is attributable to other factors, analysts say:
In many states, retail electricity rates are set by regulators every few years. As a result, lower power costs haven't yet made their way to customers.
Utilities often lock in their costs for natural gas and other fuels years in advance. That helps protect customers when fuel prices spike, but it prevents customers from reaping the benefits of a price drop.
The cost of actually delivering electricity, which accounts for 40 percent of a customer's bill on average, has been rising fast. That has eaten up any potential savings from the production of electricity.
Utilities are building transmission lines, installing new equipment and fixing up power plants after what analysts say has been years of under-investment.
This may reverse what has been a gradual decline in retail electricity prices. Adjusted for inflation, the average retail electricity price has been drifting mostly lower since 1984, when it was 16.7 cents per kilowatt-hour.
"The ratepayer is going to have to foot the bill," says David Wright, vice chairman of the South Carolina Public Service Commission and president of the National Association of Regulatory Commissioners.
PG&E is seeking permission to raise gas and electric rates by $1.25 billion in 2014, $1.75 billion in 2015 and $2.25 billion in 2016, arguing it needs the money to upgrade its distribution network and hire an additional 2,200 employees. If approved by state regulators, the average residential customer would see their combined gas and electric bill rise in the first year by $12 a month, or $144 a year.
The average U.S. residential electricity price is expected to be 12.4 cents per kilowatt hour for the June-to-August period, up 2.4 percent from the same time last year. For the full year, electricity prices are expected to rise 2 percent. PG&E's average residential price is 16.1 cents per kilowatt hour.
In a typical summer month, that would mean an extra $3 on a residential bill, which includes the cost of generating the power and delivering it to a home, plus local taxes and fees. ...
http://www.mercurynews.com/pge/ci_21053334/electricity-is-cheaper-make-but-bills-are-still
Here's an ET story on Iran-Pakistan electricity deal:
Iran has linked the price for export of 1,000 megawatts of electricity with international crude prices and the rate will fluctuate in the range of 7 to 11 cents per unit.
Pakistan and Iran have already signed a memorandum of understanding (MoU) for electricity supply. According to a government official, the two sides have also agreed on the price which will be in the range of 7 to 11 cents per unit.
An official of the Ministry of Water and Power said gas prices in Iran were linked with global oil rates, therefore, it based the power price on crude oil prices in the international market.
According to the price formula, Pakistan will be paying a maximum rate of 11 cents per unit of electricity if crude prices reach $110 per barrel and the price range will be reviewed after five years.
“The electricity price has been capped by the time oil rates do not cross the $145 per barrel mark. However, if crude prices rise above that level, the two countries will be bound to review the electricity rate before the end of five-year period,” the ministry official said.
Under the proposed project, Iran will build a powerhouse in Zahedan province bordering Pakistan to generate electricity for export and has also expressed its willingness to provide $800 to $900 million for the project. A 700km transmission line of 500 kilovolts will also be laid from the Pak-Iran border to Quetta.
Some officials suggest that the government should ask Iran to install the power plant in Pakistan in order to avoid expenditure on laying the distribution and transmission line.
Besides the 1,000MW for which an MoU has been signed, Iran has also offered to export a huge quantity of 10,000MW to Pakistan.
However, the ministry official pointed out that Iran, at present, had no power plants to export such a huge quantity. “So the best way is to press Tehran to establish power plants in Pakistan,” the official said, adding Iran had already shown interest in setting up a 200MW plant in Balochistan near the border.
To push ahead with talks on electricity supply, a four-member delegation of Iran’s Mapna group of companies, headed by Abbas Ali Abadi, held a meeting with Federal Water and Power Minister Chaudhry Ahmed Mukhtar at the ministry on Monday.
The delegation expressed great interest in the power sector and discussed the setting up of plants of 1,000MW capacity immediately. The Iranians were also keen on installing smaller plants of 25MW on the ground as well as on barges to help Pakistan overcome the prevailing power crisis.
http://tribune.com.pk/story/406416/electricity-supply-iran-links-power-price-with-world-crude-rates/
Here's a Bloomberg report on FDI in Pakistan's energy sector:
Pakistan may receive the most overseas investment in four years as companies set up wind and coal generation plants, helping curb the nation’s record energy shortage, a government agency official said.
“Pakistan serves as the gateway to Iran, central Asia and even India so we have a lot of potential to attract foreign investment,” Mohammad Zubair Motiwala, chairman, Sindh Board of Investment, said in an interview in Karachi today. “Energy is a field where an investor can come and really make money.”
Pakistan needs to increase overseas investment to help meet an economic growth target of 4.3 percent in the year that began July 1. Power outages lasting as long as 18 hours a day have led to factory shutdowns and riots across the nation.
Foreign direct investment may rise to $2.5 billion in the year that began July 1, mostly in energy, said Motiwala, 56. That would be the highest since the 12 months ended June 30, 2009, when overseas companies invested $3.7 billion. Overseas investment declined 50 percent to $813 million in the year ended June 30, according to the central bank.
Norway’s NBT AS and Malaysia’s Malakoff Corp. Bhd signed an agreement with Pakistan yesterday to build a $600 million wind power plant in the southern province of Sindh that will generate 500 megawatts a day within 18 months, Motiwala said.
South Korea, China and India are among the countries “most interested” to invest in Pakistan, he said.
Pakistan’s $200 billion economy faces the fastest inflation in Asia, an insurgency on the Afghan border and reduced aid flows. Political tension has increased after a dispute between civilian leaders and the judiciary led to Yousuf Raza Gilani’s ouster as prime minister last month.
http://www.bloomberg.com/news/2012-07-18/pakistan-targets-2-5-billion-of-overseas-investment-in-energy.html
Here's PakTribune report on "huge incentives" for energy investors in Pakistan:
There is great investment opportunity for local as well as foreign investors to invest in the energy sector, especially in renewable energy components, said President Asif Ali Zardari.
During a meeting with the Chinese delegation of China Electric Equipment Group (CEEG) headed by its president Jia Yangang, Zardari said, “Government has committed to provide all possible facilitation to the local and foreign investors with great incentives.”
The delegation of CEEG comprised of Awan Arshad, Ms Violet Rong, Sun Yumingm, Steven Chen, Lu Tinghua and others.
Highlighting Pak-China historical friendship Zardari said Pakistan welcomes Chinese investors, in particular, to invest in the energy sector and help the government meeting its energy requirements.
He said the prevailing energy shortage was a great challenge for the government and was hampering our growth and economy.
However, he emphasised Pakistan possesses huge resources of different kinds of energy including wind and solar that could be harnessed.
He said having abundant sunshine and sufficient wind speed offered great opportunity for harnessing this clean and efficient source of energy.
Pakistan greatly appreciated Chinese experience of growth and looks towards Chinese expertise in overcoming the challenges facing its economy. While appreciating Chinese assistance and interest of the Chinese businessmen in various projects in the country, he reiterated Chinese investors would be provided all facilitation in their business ventures by the government of Pakistan.
He called upon the company to assist in solar water pumping system, especially in the rural areas, and in stand-alone small house solar system for rural electrification. He said the existing water pumps could be converted from electricity to the solar energy.
He asked CEEG to give advice on captive power plants and invited it to establish offices in Pakistan for which the government would extend necessary support. He advised the Sindh government, in particular should consider exploiting solar energy in meeting the energy requirements of the far-flung areas.
President said the availability of loan facility from the Chinese banks would further facilitate company's business in Pakistan.
Jia Yangang briefed the President about his company and their future investment plans in Pakistan in the energy sector on public private partnership basis.
He said CEEG wished to cooperate in the fields of technology, manufacturing, training and research in solar energy and its applications. He assured his Company's continuous support to the country in the energy sector.
http://paktribune.com/business/news/Govt-to-give-huge-incentives-for-energy-sector-investors-10073.html
Here's a News report on South Korean proposal to build 300 MW solar plant:
Board of Investment (BOI), Government of Pakistan and Concentrix Solar Company of Korea Wednesday signed a Memorandum of Understanding (MoU) to construct a 300 MW Solar Energy Plant near Quetta, Balochistan.
The MoU was signed by M. Saleem Mandviwala, Chairman Board of Investment from Pakistan side and Dr. Choi Moon-Sok, Chief Executive Officer Concentrix Solar Company. The signing ceremony was held at the PM’s Secretariat which was witnessed by Prime Minister Raja Pervaiz Ahsraf, Federal Ministers and Chief Ministers of Balochistan and Sindh.
Concentrix is a subsidiary of German Company and is keen to make investment in the energy sector in Pakistan. Dr. Choi Moon-Sok met the PM yesterday and apprised him of his company’s plans.
http://www.thenews.com.pk/Todays-News-13-16665-Pakistan-Korea-sign-MoU-to-build-300MW-solar-energy-plant
Here are two reports of rising profits at Pakistani energy companies:
1. PSO hits trillion rupees in sales, according to Dawn:
Board of Management of Pakistan State Oil (PSO) meeting Thursday at Karachi reviewed performance for year ended June 30, 2012, in which it achieved a major milestone by becoming Pakistan’s first company with revenues exceeding a trillion rupees.
For the year ended June 30, 2012, PSO’s revenue exceeded Rs1,199 billion as compared to Rs 975 billion in FY11, representing 23 per cent growth.
It announced after tax earnings of Rs9.06 billion in FY12 as compared to Rs14.78 billion in last year.
Profitability was severely impacted by rapid devaluation of Pak rupee along with reduction in inventory gains. These losses absorbed improvement in margins of Furnace Oil and HSD along with recovery of financial income from power sector.
Earnings in FY12 are lower as compared to FY11 due to a deferred tax adjustment made in previous year amounting to Rs2.29 billion which had resulted from reinstatement of rate of turnover tax by tax authorities.
Further, financial cost resulting from accumulation of highest ever receivables continue to constrain both profitability and liquidity of PSO.
In period under review, industry’s volumes for Black Oil reduced by 8 per cent, whereas, White Oil grew by 4 per cent reflecting increase in PMG consumption of 22 per cent while a decline of 1 per cent was recorded in HSD demand.
In spite of reduction in market size of HSD, PSO has been able to increase its market share from 54.9 per cent to 56 per cent. It also continued its overall domination of market with its share in Black Oil and White Oil segments standing at 78.1 per cent and 55.1 per cent respectively, thereby contributing to an overall market share of 65.4 per cent.
Based on this performance, the company’s Board declared a final cash dividend of Rs2.5 per share in addition to already paid interim dividend of Rs3 per share.
2. OGDC profits rise 53%, reports Platts:
Pakistan's largest exploration and production company, Oil and Gas Development Company Ltd's, net profit rose 53% to Pakistani Rupees 96.9 billion ($1.03 billion) in its 2011-12 fiscal year (July-June) from 63.5 billion in 2010-11, OGDCL announced Thursday.
OGDCL's sales revenues in 2011-12 rose 27.7% to Rupees 197.8 billion from Rupees 155.6 billion, the company said in a statement to the Karachi Stock Exchange.
The company's exploration expenses fell 39% to Rupees 4.047 billion from Rupees 6.621 billion the previous fiscal year. Financing costs rose 15.7% year-on-year to Rupees 1.718 billion in 2011-12 from Rupees 1.484 billion.
"Non-payment of gas bills from state-run companies forced OGDCL to borrow more to pay its debt, creating financial difficulties," said Nauman Khan, research analyst at Karachi-based brokerage Topline Securities Ltd.
Royalty payments in 2011-12 rose 30.6% and operating expenses were up 4.2% to Rupees 23.12 billion and Rupees 34.37 billion respectively, the statement said.
Pakistan's oil and gas sector has been caught in a spiral of circular debt since mid-2008, with state-held utilities defaulting on payments to oil marketing companies, which in turn are unable to pay refiners their dues, which then have trouble financing crude oil purchases and running plants.
The total value of outstanding dues currently amounts to around Pakistan Rupees 425 billion, and has also affected the liquidity of local exploration and production companies, restricting drilling activity.
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8615494
Here's an NDTV story on foreign investor disenchantment with India:
India's economy is growing at its slowest pace in nearly a decade, with stubborn inflationary pressures and high interest rates.
But what global firms often find hardest is the red tape and the policy paralysis that has stalled major reforms.
"Doing business in India is difficult because the problem is there are too many decision makers," Amit Midha, president of Asia Pacific and Japan for Dell, told Reuters in an interview.
"And decision makers change quite often. New decision makers come and they don't honour the contract previously signed."
Irked by a lack of opportunities, Germany's Fraport - the world's second-biggest airport operator - recently decided to shut its development office in India, becoming the latest in a growing list of companies exiting Asia's third-largest economy.
"When a company is trying to leave India and that company is well respected, then clearly it suggests that there is something, this place is not easy to work," Midha said.
UNCERTAIN TAXES, TOUGH GESTATION
A lack of clarity in recent proposals aimed at targeting tax evasion, including retrospective taxation on foreign corporate deals involving Indian assets, panicked foreign investors. Those rules have now been put on hold.
"Policies like retroactive taxes...are a huge risk for us to make an investment. We just do not know how to assess our results and how to report our results globally," said Shanghai-based Midha during a visit toNew Delhi.
"That sort of a set-up doesn't work for any global company for that matter."
Dell has operations in eight cities in India, where it has had a presence since 1996.
With 27,000 employees, India is Dell's biggest employee base outside the United States.
Chief Executive Officer Michael Dell told Reuters in July that Dell is bullish on India, along with China andBrazil.
Dell's experience in India has helped it deal better with the complications of doing business in a high-growth, but poor-infrastructure market, Midha said.
"From our experience, we tell people, in India, the initial gestation period can be hard, but once it's over, it can be a lot smoother," said Midha, who is also the chairman of Global Emerging Markets for Dell.
"If you don't have the resources, don't get into it. Because you need to make sure you have some staying power to go through the initial gestation period."
Midha said Dell had no plans to leave India and is now familiar with how to "navigate" in the country.
"There is a lot of progress made here in terms of infrastructure, but things like blackouts and other things doesn't give India a good position in the global stage," he said.
Hundreds of millions of Indians were left without power earlier this month in one of the world's worst blackouts when electricity grids collapsed two days in a row.
"I think the government is committed to promote investments in India, I see lots of signs of that," Midha said. "But, that said, proof is in the pudding."
http://profit.ndtv.com/News/Article/dell-takes-swipe-at-indian-way-of-doing-business-309520?pfrom=home-lateststories
Here's a BR story on massive Rs 1.2 trillion subsidy to power sector in last 4 years:
Prime Minister Raja Pervez Ashraf has said that the government has provided Rs1,200 billion subsidy on electricity over the past four years. Moreover, he added, the government initiated short-, medium- and long-term projects to bridge the demand-supply gap.
Addressing a function organised in connection with Independence Day celebrations here on Tuesday, the Prime Minister highlighted the PPP-led coalition government’s performance over the past four years, criticised the previous government and said that it was responsible, especially for the energy crisis and security situation in Balochistan.
Raja Pervez Ashraf also acknowledged that people were also facing problems because high inflation and unemployment. He said that the government had provided subsidy to the people through Utility Stores Corporation (USC) to minimise their problems.
Raja Pervez Ashraf said that the government had “inherited energy problem” but after coming into power had been making serious efforts to address it.
According to him, the government had added more than 3,500 megawatts of electricity in the national electricity network.
“We have initiated short-, medium- and long-term projects to bridge the demand-supply gap. We are working for quick completion of these projects,” he added.
The Prime Minister said that to address the grievances and complaints of the provinces about unequal electricity distribution, the Council of Common Interests (CCI) had formed a special committee to submit suggestions in this regard.
The government, he said, had also decided to exploit 175-billion-ton coal reserves in Thar on a fast-track basis for electricity generation.
He said that the size of the Public Sector Development Programme (PSDP) had been increased from Rs416 billion to Rs873 billion over the past four years and remittances had crossed $13 billion mark....
http://www.brecorder.com/top-news/1-front-top-news/73836-power-subsidies-cost-exchequer-rs12trn-in-four-years-pm-.html
Here's a Power Engg report on inefficient electricity generation in Pakistan:
A recent research study by Arshad H Abbasi, advisor Water and Power, Sustainable Development Policy Institute (SDPI) highlights inefficient electricity production and chronic line losses as the major reason for an energy crisis in Karachi Electric Supply Company (KESC).
The only ways out of this crisis, the report suggests, is to invest and buy affordable electricity from hydro power, improve fuel efficiency of power plants and introduce 'smart grid' with advanced metering system, said a press release on Friday.
The report 'Pakistan Power Outlook: Appraisal of KESC after Privatisation' underpins the causes of chaotic energy situation in Pakistan while discussing KESC as a case study. It is the first ever study that comprehensively assesses the performance of KESC since its nationalisation in the early fifties.
The report highlights that KESC has been given huge amounts of subsidy even after privatisation, which distorts the purpose of privatising the utility, which was to reduce the burden on government of Pakistan.
The report says that thermal power plants in Pakistan, particularly of KESC, operate at extremely low efficiency and consume very high quantity of fuel to generate per unit of electricity.
KESC takes 11 to 18 cubic feet of gas to generate one KWh of electricity whereas plants of other companies such as Uch Power, Saif power and Orient Power take only 7.37, 7.47 and 7.56 cubic feet of gas respectively for generating one unit.
On regional level, when gas consumption is compared with thermal plants of Bangladesh, the consumption of KESC was found to be almost double. "Control of fuel costs, exercised through benchmarks alone could help substantially reduce or even eliminate the subsidies that government has to pay for reducing tariff to a politically acceptable level," the report added.
One of the recommendations stressed in report was to go for cheap and green hydro and wind power projects which are holded up due to lack of investment. "Dams like Bunji, Dasu, Lower Spat, Kohala and Tarbela 4th extension are capable of adding 15631 MW into the system.
The feasibility studies of most of these projects have been completed but the development is stalled or slowed down due to lack of fund and inefficiencies within the departments," report says.
The report calls on KESC and concerned authorities to invest and buy electricity from these hydro power plants at minimal cost instead of purchasing it from independent power producers (IPPs) at very high costs.
Currently, KESC is purchasing electricity on average at the rate of Rs8/KWh to Rs16/ KWh, which is very high as compare to Rs0.37/KWh obtained from hydro power plants with minimal wheeling charges by National Transmission and Despatch Company (NTDC). The report says, increased dependency on fossil fuel is the fundamental cause of present energy crisis and the best option available is to skew the generation mix with the renewable energy resources.
The findings, conclusions and recommendations of the report are equally applicable to all thermal power plants of the country. "These thermal plants are the backbone of our electricity system with the capacity of generating almost 70 percent electricity," it says...
http://www.power-eng.com/news/2012/08/20/pakistan-inefficient-electricity-production-chronic-line-losses-main-reasons-for-kesc-crisis.html
Here's a Washington Post piece on India's thirst for energy:
Like China two decades ago and the United States in 1950, India stands on the cusp of transformational economic and social change, a jumping-off point at which the demand for electricity is about to explode.
Its economy and population are among the fastest growing in the world, and it has ambitious and energy-intensive plans to develop its infrastructure and industrial base. But business leaders are crying out for uninterrupted power supplies, and a third of India’s population is not even connected to the national grid.
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Every modern, industrial society in history has gone through a 20-year period “where there was extremely large investment in the power sector, and electricity made the transition from a privilege of an urban elite to something every family would have,” Varro said. “India is right now just at that jump point.”
Whether it succeeds in meeting that demand could be the single most important determinant of India’s economic prospects over the next two decades, one of the main factors that will decide whether the country can continue to pull hundreds of millions of people out of poverty and realize its ambitions to be a 21st-century economic powerhouse.
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But even if India finds the fuel it needs to power its generators, it is not clear how it will pay for the electricity they produce.
State electricity distribution companies across India are mostly bankrupt, forced by their political masters to give power away — free to farmers to run water pumps to irrigate their land, and at below-cost prices to everyone else. Theft and losses of power amount to 28 to 30 percent of output, further bleeding the distributors of resources.
Nationally, separate ministries for coal, gas, power and renewable energy routinely fail to coordinate.
“Policymaking in the energy sector is rather fragmented, and we really don’t have a forward vision,” said Rajendra Pachauri, who won the Nobel Prize in 2007 for his work as head of the Intergovernmental Panel on Climate Change.
Pachauri forecasts that if India continues on its path of “business as usual,” it will have to import unimaginable, and unfeasible, amounts of coal and oil in two decades.
A failure to invest properly in researching and developing renewable energy also threatens environmental ruin. “India can’t possibly continue on the path we are on,” he said.
Charles Ebinger, director of the Energy Security Initiative at the Brookings Institution in Washington, said the difficulties that India faces in meeting its rising energy demand “would pose a serious political challenge for a well-run government — and that certainly isn’t the case here.”
He said the country could struggle to hold its own against other emerging economies, including Brazil, Russia, China and South Africa, countries that with India constitute what is known as the BRICS group.
“If I had to bet, I would say there is a greater possibility of India failing to meet the challenge than of meeting it,” Ebinger said. “You will see India slip down, out of the ranks of the fast-growing BRICS emerging markets, and you will see more political disturbances when energy fails.”
http://www.washingtonpost.com/world/asia_pacific/satisfying-indias-thirst-for-power-could-be-nations-biggest-challenge/2012/08/22/65f6c6d2-e21c-11e1-98e7-89d659f9c106_story_1.html
This is a nice graph you have published:
http://4.bp.blogspot.com/-wRj1_BBR15Y/T6YR8rlhziI/AAAAAAAACfA/prOg6MCDFTM/s1600/Fuel%2BMix%2BPakistan.jpg
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But why stop at 2005? Why not link the most current data from World Bank?
GAS % is DOWN, OIL % is UP:
http://2.bp.blogspot.com/-x5cHnfC-Ltc/UEeihNoMYvI/AAAAAAAAAVc/J4NESu3Z5xU/s1600/ScreenHunter_106+Sep.+05+15.03.jpg
Where are those "super-huge coal reserves in Thar"? Why are they still not doing anything after all these years?
Have you finally understood the evil plan that the cunning Baniyas are hatching against our country?
http://2.bp.blogspot.com/-leU3ZfhXHY8/UEeaZqnF2II/AAAAAAAAAUw/Y4GhTVGucEs/s1600/ScreenHunter_104+Sep.+05+14.29.jpg
They saw that we have very low savings and are very cleverly using their high savings advantage to surround us from all sides and then trap us into quiet obedience and helpless servitude.
Do you now see what they are trying to do? Do our thick Paindoos in Pindi & Aabpara understand the strategy of the baniya who smiles even as he nervously clutches his ragged dhoti? Can you appreciate the grave danger our country is in? Our ghairat itself is at stake.
http://tribune.com.pk/story/411082/euphoria-evaporates-pakistan-and-india-fail-to-strike-oil-trade-deal/
http://articles.chicagotribune.com/2012-04-28/news/sns-rt-us-india-pakistan-oilbre83r052-20120428_1_prime-minister-manmohan-singh-fuel-demand-fuel-exports
http://dawn.com/2012/05/03/oil-import-from-india-not-to-exceed-1-5bn/
http://www.nytimes.com/2012/04/28/business/global/refinery-venture-reflects-easing-of-india-pakistan-relations.html
http://tribune.com.pk/story/430753/product-differences-pakistan-not-to-import-fuel-from-india-before-2014/
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Dr. Haq,
I have trying to explain to you that the Cunning Baniyas have a policy-driven long-term strategic plan.
Having seen the graphs (below) that I had sent you once before:
(1) Do you now understand what they are trying to do?
(2) Do you now understand their plan?
(3) Can you see how devilishly cunning it is?
(4) Can you appreciate its diabolical nature?
(5) Have you understood its strategic implications for Pakistan?
Do you now comprehend what I mean by "ominous signs"?
http://2.bp.blogspot.com/-leU3ZfhXHY8/UEeaZqnF2II/AAAAAAAAAUw/Y4GhTVGucEs/s1600/ScreenHunter_104+Sep.+05+14.29.jpg
http://3.bp.blogspot.com/-nAGvTQjc2lM/UEeaa0ynl-I/AAAAAAAAAU4/BGqb4yMHwoo/s1600/ScreenHunter_103+Sep.+05+14.29.jpg
We must move beyond the over-analyzed blog-articles on FDI in Fat-Burgers, Halal Pizzas, Cows & Buffaloes, Mango-Lassi Factories et cetera. We need to focus on core issues and avoid falling into the pitfall of superficial analyses of mundane consumption trends.
Thank you.
HWJ: "Do you now comprehend what I mean by "ominous signs"?"
No, I don't. The bottom line is that the energy consumption per capita in both India and Pakistan is growing very slowly and currently at 14-15 million BTUs, far below the world average of 70 million BTUs. It requires more attention, planning and investment to improve the productivity of ordinary people.
HWJ: "We must move beyond the over-analyzed blog-articles on FDI in Fat-Burgers, Halal Pizzas, Cows & Buffaloes, Mango-Lassi Factories et cetera. We need to focus on core issues and avoid falling into the pitfall of superficial analyses of mundane consumption trends."
There is nothing superficial about growth in per capita production and availability of something as basic as food. Rising consumption by growing middle class represents real progress on the ground for the real people.
RIAZ HAQ: "No, I don't. The bottom line is that the energy consumption per capita in both India and Pakistan is growing very slowly and currently at 14-15 million BTUs, far below the world average of 70 million BTUs...... Some Management Slogans (SMS)"
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Ten years from now, with a continued rapid expansion of their High-ICOR Heavy Industrial Base, India is projected be at an estimated 2/3 level of per capita energy consumption in China today.
Given that we have no heavy industrial base "worth mentioning" (as the economist said) and little savings with which to even begin to build it, where will we be 10 years from now?
Again: SAVINGS, SAVINGS, SAVINGS. Savings-> Investment-> Sustainable growth. There are NO SHORTCUTS.
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RIAZ HAQ: "There is nothing superficial about growth in per capita production and availability of something as basic as food. Rising consumption by growing middle class represents real progress on the ground for the real people"
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But where is this "growth in per capita PRODUCTION" of which you speak? The total GDP growth rate is at about the same level as the population growth rate; therefore, by definition, there is little growth in per capita PRODUCTION.
If that was just a typographical error and you were actually refering to the growth in per capita CONSUMPTION, I would point to the inescapable fact that rising per capita consumption in the face of stagnant per capita production can ONLY be possible-- again, by definition-- when accompaned by TOTAL COLLAPSE of per capita SAVINGS & INVESTMENTS.
We are in effect destroying our future. We are taking a sledgehammer to our economy RIGHT NOW. It is only a matter of time before we face both, a financial crisis as well as total macroeconomic collapse. The only unknown at this point is as to which one will come first. I suspect the financial crisis will come first, and that the total macroeconomic collapse will come later, but that is admittedly just a guess.
Our whole economy is headed in the WRONG direction. We must refrain from singing songs about well we are dining even as we eat our Seed-Corn. We must slow consumption and boost savings. There IS NO OTHER WAY.
And this is precisely what I have been trying to drum into your head.
Here's Platts on Pakistan's new energy exploration policy:
Pakistan has released 60 oil and gas exploration and production blocks for auction, a Ministry of Petroleum official said Tuesday.
The release is part of a new policy to spur development of the country's oil and gas industry that includes a rise in rates for any gas produced to $6-6.60/MMBtu, from $4.20/MMBtu earlier, the official said. The rate for offshore blocks in areas designated shallow zones is set higher at $7/MMBtu, deep zones at $8/MMBtu and ultra-deep zones at $9/MMBtu.
"Interested oil and exploration companies and countries have almost two months to submit bids, the official said.
The bids will be opened December 13 and the names of successful bidders announced a week later, he added.
The government is hoping to sell four of the blocks under government- to-government agreements, he added.
Exploration activity in Pakistan has slowed in recent years due to the low prices offered by the government and the impact of circular debt issues in the oil and gas sector. The country has gas reserves of 23 Tcf/day.
Pakistan's current domestic gas demand exceeds its production capacity of 4.2 Bcf/day by 1.2-1.4 Bcf/day, which increases to 2 Bcf/day in winter. If adequate gas is not discovered within 3-4 years, the shortfall is projected to increase to 2.5-3 Bcf/day.
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8822519
Riaz Sahab, I have been using my blog to get a lot of statistics about Pakistan in my work. Thanks also for this piece on energy policy. However, I think you have not given enough credit to what energy efficiency can achieve. In many ways, it can also be seen as a source of energy, since it gives access to additional services while utilizing the same or lower amount of energy. Pakistan needs to include it for a truly comprehensive energy policy.
Please check out my energy conservation campaign on:
http://www.indiegogo.com/projects/230826?c=home&a=1174702
Here's a News report on Pak energy policy encouraging Thar coal-fired power plant development:
Of course, it was not an easy decision in the context of country’s squeezed financial resources as elaborated by Prime Minister Raja Pervaiz Ashraf himself while presiding over a recent meeting of Thar Coal and Energy Board at PM Secretariat the other day in which the request of Sindh government for modelling of two Jamshoro plants on coal source was not only accepted but also made the basis of switching the entire thermal generation industry to coal.
During this meeting, the prime minister admitted that, given the financial constraints, it was very difficult to give sovereign guarantees nevertheless he directed the Ministry of Finance to arrange sovereign guarantee for Sindh Engro Coal Mining Company (SECMC), a joint venture of Sindh government and Engro Power Generation, with the sole objective of starting work, without further delay, on coal-based generation. The first two projects include one existing 800MW unit and another new 600MW unit, both located in Jamshoro, Sindh. These two plants would be redesigned and designed, respectively, as per Thar coal specifications and this conversion would be financed by ADB.
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the SECMC and Engro Corporation are working on $1.3 billon integrated coal mining and power project in Thar area. The project covers mining of 6.5 million tonnes of coal and generation of1200 MW power. It is a matter of national pride to note that the Thar lignite (coal) resources of 175 billion tonnes constitute the sixth largest reserve in the world (however, total national coal reserves amount to 185.5 billion tonnes). For sure, these resources present an opportunity for development into a sustainable fossil fuel reserve that has the capability of meeting a large portion of Pakistan’s energy needs.
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Here's an ET report on ADB supporting Thar coal-fired plants development:
KARACHI:
The Asian Development Bank (ADB) has dispelled the impression that the bank has some reservations about the viability of Thar coal consumption in power plants, but at the same time it lays stress on the importance of environmental standards and project timelines.
ADB Country Director Werner Liepach highlighted the issues in a meeting between Sindh Chief Minister Syed Qaim Ali Shah and ADB board of directors at Chief Minister House on Wednesday.
Speaking about the potential of Thar coal, the chief minister said coal was the most feasible fuel for power plants, which were being switched to coal. A new 600-megawatt coal-based power plant is also being set up at Jamshoro with the aim of diversifying the fuel mix and moving away from expensive imported furnace oil...
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Officials of the provincial government told the meeting that international environmental standards would be followed in Thar coal mining. They also said any timing mismatch between conversion of existing power plants into coal and readiness of coalmine at Thar block-II would be covered by Sindh Engro Coal Mining Company through imported coal of Thar specification.
It was agreed that the ADB and Sindh government would work for a better understanding and push ahead with different projects. An amount of $105 million will be extended for such projects.
http://tribune.com.pk/story/456539/adb-says-has-no-reservations-about-thar-coal/
Here's Power Engineering report on Japanese investment in Pak coal power transmission project:
ISLAMABAD, Nov. 3 -- Japan has offered to support Thar Coal power projects and construct transmission line to inter link the project with national grid.
Japanese Ambassador to Pakistan, Hiroshi OE stated this during a meeting with the Federal Minister for Water and Power, Ch. Ahmed Mukhtar here on Thursday.
During the meeting, the Ambassador discussed various matters of mutual interest, energy situation and current political situation.
The Ambassador expressed his views on investment opportunities in Pakistan and observed that the investment environment is better here in Pakistan so that Japanese companies are interested to put their capital in Pakistan in various projects. He also offered to invest in the Mangla Dam power extension project. He assured that Japan would continue its financial and technical support for social sector development. The Ambassador also appreciated the current recovery drive of the Ministry of Water and Power and said that it would help to increase the cash flow for power generation.
The Minister while welcoming the envoy appreciated the Japanese offers and said that the government is taking all possible measures for generation of cheap electricity. He said that the indigenous resources are being utilized for future projects to generate affordable energy. He said that a wind power project would start generation next couple of month while the other wind projects would be completed next year. Mr. Mukhtar also asked the Ambassador to invest in the wind, solar and other hydel power projects.
http://www.power-eng.com/news/2012/11/04/pakistan-japan-offers-to-construct-transmission-line-for-thar-coal-project.html
Here's a Nation story on KESC's planned investments to add capacity and reduce cost of generating power:
Karachi Electric Supply Company has reaffirmed its commitment towards Pakistan by announcing an ambitious investment plan in excess of Rs40 billion. According to the statement, KESC has already invested around USD one billion over the last four years in various large scale projects in generation, transmission and distribution. The new Rs40 billion investment plan is aimed at enhancing KESC’s generation capacity, improving its generation fleet efficiency, reducing the cost of power generation and building the requisite transmission capacity to meet growing power demand across its service territory. These projects will be completed over the next 18-36 months and KESC will be arranging required funding from local and foreign institutions in shape of both debt and equity.CEO KESC, in a related statement said, “We believe in the potential that Pakistan offers and despite the difficult operating environment we have demonstrated this through unprecedented investments in the past. The new investment plan is just a reiteration of this belief and comes at a time when Pakistan is witnessing dampening of investors’ sentiments, both local and foreign”.Under the new investment plan, KESC is undertaking combined cycle projects at its three power plants at Korangi and SITE that will significantly enhance the efficiency of these plants and add additional 47 MW of generation capacity. A specially designed ‘Transmission Package’ will see the installation of new transformer bays, addition of 3 new grid stations at strategic locations and extension of 6 existing grid stations. In line with the strategic intent to bring down the cost of generation, the new investment plan will allow KESC to convert two of its oil-fired units of 210 MW each at its Bin Qasim-I to coal. KESC is also undertaking to develop a bio-waste to energy project which will convert cattle manure from Landhi Cattle Colony and organic food waste to produce 22MW of electricity. The new investment plan will help KESC accomplish many strategic objectives, including creation of social and environmental values.
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/karachi/08-Nov-2012/kesc-to-funnel-rs40b-for-power
Here's an ET piece on energy situation in Pakistan:
..Since Pakistan came into being, people have been facing loadshedding due to shortage of power supply, with frequent outages affecting economy in many ways.
Uncountable working hours have been lost, leading to an increase in poverty and economic loss of billions of rupees to the country. Surprisingly, it is happening despite the fact that only about 60% of the population has access to electricity. According to the World Energy Statistics 2011, published by the International Energy Agency (IEA), Pakistan’s per capita electricity consumption is one-sixth of the world average.
World average per capita electricity consumption is 2,730 kilowatt hours (kwh) compared to Pakistan’s per capita electricity consumption of 451 kwh.
According to the Pakistan Energy Year Book 2011, the country’s installed power generation capacity is 22,477 megawatts and demand is approximately the same. The country needs to redesign the electricity portfolio and substitute oil and gas with an abundantly available indigenous fuel source. It must develop indigenous energy resources to meet future electricity needs and can overcome energy crisis by utilising untapped coal reserves.
Fortunately, Pakistan has a very inexpensive source to get energy through coal. Coal is economically viable and a long-term solution to balance the demand and supply chain of electricity in the country, which has the fifth largest coal deposits in the world.
According to last estimates made in 2011, coal deposits in the country are up to 185 billion tons. The largest deposits are in Thar desert, which is about 850 trillion cubic feet spanning over 10,000 square kilometers, surprisingly more than the oil reserves in Saudi Arabia having a collective quantity of approximately 375 billion barrels.
At present, 40.6% of world’s electricity is being generated from coal and it is the single largest contributor to world electricity generation. By looking at the electricity generation mix of the countries that are blessed with coal, it is evident that coal is the largest contributor.
Countries like Poland, South Africa, China, India, Australia, Czech Republic, Kazakhstan, Germany, USA, UK, Turkey, Ukraine and Japan are generating 96%, 88%, 78%, 78%, 77%, 72%, 69.9%, 52.5%, 52%, 37%, 31.3%, 27.5% and 22.9% of electricity from coal respectively. In comparison, Pakistan generates only 2.27% of electricity through coal.
However, coal reserves of only Thar can generate 20,000MW of electricity for the next 40 years without loadshedding and at a rate Rs4 less than the current cost of electricity production. The government has given the task to experts to enhance energy efficiency by focusing on coal and ensure large scale power generation through this resource.
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At the International Coal Conference 2011, Pakistan had invited investors from around the world, encouraging them to pour money into coal power projects as the country initially requires $1.2 billion to build power generation infrastructure in Thar. Japan is keen to finance transmission lines from the Thar coalfield to the national grid and Chinese companies have expressed interest in developing coal-based power plants in Thar and Badin.
http://tribune.com.pk/story/467668/coal-powered-energy--the-best-substitute/
Here's a Reuters' story on Italian energy giant exploring oil and gas onshore and offshore in Pakistan:
MILAN: Italy’s Eni has strengthened its hand in Pakistan by agreeing to buy offshore gas acreage as the oil and gas major continues to channel cash into more profitable upstream activity.
In a statement on Thursday Eni said it had signed a deal with Pakistan and state oil company OGDCL to acquire 25 per cent and operatorship of the offshore Indus Block G licence, located in Pakistan’s Indus Basin.
Eni is the leading foreign producer in Pakistan with an equity output of 58,000 barrels of oil equivalent per day (boed).
In September it announced a significant onshore gas discovery in a country which it is counting on as part of its strategy to develop assets and bring them to market rapidly.
Huge cost overruns and delays at Kashagan, the world’s largest oil development, have raised questions about its ability to deliver large-scale projects on budget and on time.
Eni, the world’s No. 7 oil company in terms of production, is selling non-core assets like gas transport group Snam and Portuguese energy group Galp Energia to focus on oil and gas exploration.
The company, which produced 1.7 million boed in 2011, has said it is looking to add more than 1.3 million boed of new production by 2022.
Over the past year, Eni has dispelled some of the scepticism about its profitability and growth potential by clinching a deal with Russia’s Rosneft and scoring exploration successes in Norway and Mozambique.
The 7,500-square-kilometre block in Pakistan is “in ultra deep water of an underexplored and promising area offshore Pakistan”, Eni said.
The consortium managing the block is composed of the two state companies OGDCL and Pakistan Petroleum, Eni and United Energy Pakistan Limited – each holding a 25 per cent stake.
http://dawn.com/2012/12/13/eni-to-buy-new-exploration-block-in-pakistan/
Here's Reuters on opening of a new refinery in Pakistan:
Karachi-based Byco Oil said it had completed Pakistan's largest oil refinery at Balouchistan with a capacity of 120,000 barrels per day, which is expected to reduce the country's imports of oil products.
The new refinery, manufactured in the UK and assembled in Pakistan, is currently in the pre-commissioning stage, with tests being done on various equipment, the company said on its website. Byco Oil is the parent company of listed Byco Petroleum .
"It will enhance overall crude oil refining capacity in the country from an existing 12.25 to 18 million tonnes per year and will significantly contribute in reducing a shortage of refined petroleum products in the country," the statement read.
Byco officials could not be reached for comment.
The new plant will more than triple Byco's current capacity of 35,000 bpd at its existing refinery.
The refinery can be further expanded up to 180,000 bpd, the company said.
An isomerisation plant to produce higher volumes and cleaner motor gasoline is also being commissioned with the refinery.
Pakistan operates five other refineries, the largest of which is Pak-Arab Refinery's 100,000 bpd plant.
Pakistan State Oil, a major oil importer in the country, imports about 250,000 tonnes of diesel every month through term volumes, they added.
http://www.reuters.com/article/2012/12/21/pakistan-refinery-idUSL4N09V3ND20121221
Here's BR on PPL introducing new petroleum exploration technology in Pakistan:
A PPL statement here on Saturday said that developed by NXT Energy Solutions (NXT), a geophysical service company based in Canada, SFD (Stress Field Detection) is a proprietary cutting edge, eco-friendly airborne reconnaissance method to identify potential hydrocarbon traps and reservoirs in a time- and cost-effective manner, especially in unexplored on- and off-shore frontier regions with limited access and infrastructure.
It said that the SFD is expected to be particularly useful in the current energy scenario, warranting fast track identification of, and production from, relatively deeper, more complex reserves of hydrocarbons to bridge the supply-demand gap.
Welcoming the guests, PPL's Managing Director and Chief Executive Officer, Asim Murtaza Khan, underscored the increasing importance of deploying latest exploration technology to meet production and reserves replacement targets to address the current deficit and ensure future energy security. SFD technology has been successfully applied by leading oil and gas companies in North America, Colombia and other countries. PPL is proud to be the first company to apply the technology in Pakistan', he said.
http://www.brecorder.com/top-news/108-pakistan-top-news/98349-ppl-introduces-stress-field-detection-technology-in-pakistan.html
Here's PakTribune on reduced hydel power in winter causing increased load shedding:
The current wave of load-shedding will end soon, as water flow in canals will come to normal levels in coming days and production of electricity will increase. The government is making all-out efforts to cope with the current situation and eliminate load-shedding.
The energy mix of the country consists of around 34% electricity generation from hydel resources and 66% from oil and gas. Reports show that hydropower production has dropped from 6,500 megawatts to 1,500MW these days.
Every year, canals are closed in winter for de-silting and the Indus River System Authority (Irsa) curtails water releases from major reservoirs of Mangla and Tarbela during December and January, leading to a sharp decline in hydropower production.
On the other hand, gas companies also cut supply in winter to those power producers, which have nine-month gas supply agreements, disrupting electricity production. Thus, the shortfall increases and the Ministry of Water and Power is left with no choice but to opt for power outages.
However, considering the scale of gas and water curtailment, the power supply has been managed very well. The ministry is mindful of providing maximum relief to people by resorting to load-shedding mostly during night and very less power cuts in day time so that routine life of people is not disturbed.
The canals are expected to be opened in the second week of January and production of hydropower will increase and outages will come down.
The ministry is also making alternative plans to cope with the power crisis as it is working to increase the generation capacity of existing power plants.
It is very important that the people should also come forward and help the government in conserving electricity, which could be done by saving power through all possible ways. This way, they will not only be helping the government, but will also reduce their electricity bills....
http://paktribune.com/business/news/Prolonged-power-outages-to-end-soon-10726.html
Here's a Dawn report on PPL exploring for oil and gas:
ISLAMABAD, Jan 8: The Pakistan Petroleum Limited, in collaboration with ENI, a foreign exploratory firm, is set to start drilling of a well in the Arabian Sea along Pakistani waters for discovery of oil.
The PPL has acquired exploration rights in a block located at 100km from Baghdad for oil exploration and it is hopeful about discovery of oil.
In a briefing to Senate Standing Committee on Petroleum and Natural Resources at the Parliament House, the PPL MD, Asif Murtaza, informed that drilling of exploratory well has already started in the block acquired in Iraq and there are bright chances of oil discovery.
In case of major success, the Pakistani company would benefit. The company is already working in Yemen on two blocks.
Regarding previous attempts made by the company to find oil from the sea, off Pakistani coast, the PPL MD informed the committee that in Mekran deep sea, some 12 exploration wells were drilled, but none succeeded.
The committee, which met with Senator Mohammad Yousuf in the chair, was informed that many foreign exploration companies still have interest in drilling of exploration well in Mekran Deep Sea. However, drilling has been delayed for one year due to various reasons.
Additional Secretary of Petroleum Naeem Malik informed the committee that drilling of an exploration well in deep-sea requires at least $100 million investment and foreign companies take decisions with due care.
The federal government recently announced new exploration incentives and the companies which would make first three discoveries in deep-sea would be given extra benefits with incentives to encourage more companies to come forward. The PPL MD informed that PPL is working in Zandan Block (Khyber Pakhtunkhwa) and is planning to acquire five more blocks in KPK as Tal Block area has great potential of discoveries.
To exploit un-conventional gas reserves in the country, some seven exploratory wells, eight appraisal wells, and 19 development wells have been planned in the next five years and the expected outcome would be 150bcf shale and tight gas production in the country.
He informed that shale gas and tight gas price approval has been sought from the regulator to speed up exploration activity. He further informed that some seven pilot projects have been planned for exploration of shale and tight gas reserves. He further informed that in Kirthar block, one exploratory well Rahman-1 is under way.
He informed that Hala, Kotri, Notari North, Jangshahi, Gambat and South blocks are potential areas for discovery of shale and tight gas reserves.
The committee was informed that PPL has geared up its seismic survey in the country and some 780sq kms were surveyed in 2011-12, while during the current fiscal year, some 1,400sq km have been surveyed.During the meeting, it was informed that District Kohlu (Balochistan) has huge gas reserves and due to law and order situation, exploration companies do not go there.
The committee was informed that the federal government was collecting 12.5 per cent royalty on gas production and the entire amount is transferred to provinces and if any provincial government is not spending the amount on welfare of its population or in the relevant district, where oil and gas have been found, it is their internal issue.
http://dawn.com/2013/01/09/ppl-to-start-drilling-in-arabian-sea/
Here's PakistanToday on expansion of re4fining capacity to 18 million tons:
Karachi - country’s largest oil refinery at Mouza Kund, District Lasbella, Balochistan. At present the refinery is in a state of pre-commissioning and preparatory activities wherein different plants, equipment and instrumentation are being put to confirmatory checks and tests.
The cold circulation of crude oil has already been established and sustained. Also furnaces of different process units have been test fired. The refinery is ready for hot commissioning and start up.
This newly-commissioned petroleum refinery would have an installed refining capacity of 120, 000 barrels per day.
Combined with existing and fully operative smaller refinery, the cumulative capacity shall be over 155,000 barrels per day which is 55% higher than the existing largest refinery in Pakistan.
Thus it would enhance overall crude oil refining capacity in the country from existing 12.25 to 18 million tons per year and would significantly contribute in reducing import of deficit refined petroleum products in the country.
This refinery can be further expanded up to 180,000 bpd.
“This milestone, for sure, has been made possible with sheer hard work of our Employees and support & cooperation of all our valued contractors. Upon commissioning this Refinery, with the blessings of the Almighty, will become the single largest in the country,” said Qaiser Jamal CEO Byco Oil Pakistan while declaring the completion.
Along with this new Refinery, the Country’s first isomerisation plant is being commissioned, he said.
The introduction of isomerisation technology in Pakistan would not only enable this refinery to produce higher volumes of motor gasoline to meet the country’s demand but this will be the first environment friendly motor gasoline, with almost nil content of Benzene.
The first parcel of crude oil for this refinery will be brought to the country’s first single point mooring installed 10km into the Arabian Sea for direct discharge to the Refinery storage tanks. This facility can discharge tankers carrying over 100,000 metric tons of crude oil.
With an investment of significantly over $600 million and rising, Byco also operates as a fast growing petroleum marketing business network comprising of 222 retail outlets.
Amir Abbassciy, CEO of Byco Industries Incorporated, parent company of Byco’s operating companies in the country said: “These are the first significant steps toward achieving our aim to be in integrated oil to chemicals and related infrastructure businesses.”
http://www.pakistantoday.com.pk/2012/12/19/news/profit/bycos-largest-unit-takes-countrys-oil-refining-capacity-to-18mt/
Here's ET on ADB not objecting to Thar coal:
ISLAMABAD:
Engro Corporation President and CEO Muhammad Aliuddin Ansari has stated that the Asian Development Bank (ADB) does not object to financing the switchover of thermal power plants to Thar coal.
“The directors of ADB have met me and the chief minister of Sindh and said that they had no objection to the conversion of power plants to Thar coal and are ready to finance [such projects],” he told The Express Tribune.
The revelation comes on the heels of the Ministry of Water and Power’s claim that the ADB is not ready to finance the conversion of power plants to Thar coal, and that the lending authority would finance power plants that run only on imported coal.
Ansari also said he is ready to travel to Manila along with a delegation from the water and power ministry to meet ADB officials and negotiate a financing deal for such projects.
Ansari recalled that it had been decided in a special board meeting of the Thar Coal Energy Board (TCEB) on October 3, 2012, chaired by the prime minister of Pakistan, that existing oil-based power plants should be modified and redesigned to Thar coal specifications, and that new coal-based plants should also be designed keeping the same specifications in mind.
It was also decided in the meeting that agreements would be signed between power generation companies and the Sindh Engro Coal Mining Company (SECMC) for the supply of coal for an existing 420 megawatt (MW) power plant in Jamshoro, as well as a new 600MW power plant to be built in the same location. These agreements were to be finalised and signed within a week, but never materialised.
Ansari said that Pakistan was facing a circular debt issue due to the poor energy mix employed by generation companies, and that conversion of power plants to run on Thar coal could address this issue. He claimed that Thar held the future of Pakistan, and reiterated that all future power plants should be designed on Thar coal specifications.
“Not only has the fuel mix shifted from gas to furnace oil, the price of furnace oil has increased four times in the last five years. This has increased the furnace oil bill by 461%, whereas power generation through furnace oil has increased by only 79%,” said a handout provided by Engro Corp as part of the interview.
Ansari said that Indonesia and India both held coal reserves that were similar in specification to the coal available in Thar. He remarked that India is expected to become a major market for coal by 2016: it already imports significant quantities to meet its needs....
http://tribune.com.pk/story/498215/engro-says-adb-has-no-objections-to-thar-coal-project/
Here's PakistanToday on nuclear power expansion in Pakistan:
ISLAMABAD - Pakistan Atomic Energy Commission (PAEC) envisages production of 8,800 MW by the year 2030 through nuclear power reactors. Two nuclear power plants, 340MW each, are under construction at Chashma and expected to be commissioned by 2016 with Chinese assistance. Construction of these power plants became possible after a long-standing agreement, while three other nuclear power plants already commissioned in the country are performing well. According to official sources, the allocation for PAEC is almost 11% of the total federal development budget estimated at Rs 360 billion for the financial year 2012-13.
Officials said a major chunk of the PAEC budget has been allocated to two nuclear power plants.
“An amount of Rs 34.6 billion has been set aside for Chashma Nuclear Power Plants, C3 and C4. The total cost of these two projects is Rs 190 billion which will be partially funded by a Rs 136 billion Chinese loan.
The government has so far spent Rs 62.4 billion on the mega project having a 660 MW generation capacity. With Rs 34.6 billion additional spending, the government will be able to complete almost half of the work by June 2013, an official said. According to an official in Ministry of Science and Technology, government is harmonising the efforts made in the energy sector by different ministries, departments and research centres by creating an ‘Energy Council’ with heads of relevant organisations. The council will be entrusted to advise on priority areas for Research and Development (R&D) and management of resources and to fill the gaps.
Acquisition of technology for building nuclear power reactors through R&D, as well as transfer of technology agreements is also in consideration, he said.
http://www.pakistantoday.com.pk/2013/01/24/news/profit/paec-to-produce-8800-mw-by-2030/
Here's a summary of BMI report on Pak power sector:
Boston, MA -- (SBWIRE) -- 01/03/2013 -- BMI View: In spite of chronic and persistent power shortages, reflecting under-investment and system inefficiencies, Pakistan has a plethora of potentially varied and rich power options from which to choose. There is vast untapped hydro and renewables capacity available, but it remains to be seen if the investment will actually materialise. Thus, this is likely to increases the country's reliance on growing its gas-fired, coal-fuelled capacity, as well as its modest nuclear programme, although controversial import deals with Iran could cause political backlash. While these opportunities exist for the thermal generation, delays in payments by state-owned transmission companies to independent power producers limit the profitability of the sector, and could cap its growth.
View Full Report Details and Table of Contents
The country continues to suffer from a shortfall of electricity of more than 3 gigawatts (GW) daily, and while this has fallen from the highs of 7GW, permanent resolutions and solutions to the situation remain out of sight. While the shortfall is caused by poor performance from existing generating assets, the lack investment in generating capacity, and an inefficient grid, the government also faces difficulty in sustaining subsidies. This, in turn, drains the profitability of power generation companies, forcing them to cut back on much-needed investment in the sector.
The key trends and recent developments in the Pakistani electricity market include:
- The constructions of the various dams have met with increasing environmental concerns and financing issues, which threaten to stall works. In particular, the World Bank and other international aid agencies have withdrawn their support for the Diamer-Basha dam project due to environmental concerns raised by India. Given the growing demand for electricity, a delay in the completion or cancellation of the project could mean ,the electricity shortfall is likely to persist beyond the government's original timeline.
- Progress of talks between India and Pakistan regarding the sale of electricity and petrol remains slow, with Indian officials citing their Pakistani counterparts keeping a cautious stance. While several suggestions have been raised during the talks, including building of a pipeline directly to Lahore, the Pakistan government remains wary of issues such as security and dependability of oil imports from India. However, worsening energy shortage in Pakistan may push Pakistani authorities to push ahead with negotiations, although imports from India are unlikely to exceed supplies from Kuwait.
http://www.sbwire.com/press-releases/recently-released-market-study-pakistan-power-report-q4-2012-191192.htm
Here's PakistanToday on primary energy consumption in Pakistan:
KARACHI - Pakistan’s gas requirements are growing hastily, while the domestic gas production is not growing at the same pace. Primary energy consumption in Pakistan has grown by almost 80pc over the past 15 years, from 34 million tons oil equivalent (TOEs) in 1994/95 to 60 million TOEs in 2010/11 and has supported an average GDP growth rate in the country of about 4.5pc per annum.
Consumer Rights Commission of Pakistan (CRCP) in collaboration with Citizens’ Voice Project hold policy dialogues on “Role of Government and Regulators in the Gas Sector of Pakistan” with parliamentarians, policy makers, regulators and civil society organisations here on Wednesday.
CRCP recommended Effective Governance & Regulation for development of Gas Policy in dialogue.
The present natural Gas crisis clearly indicates that overall governance of the gas sector needs improvement. The growing energy shortages have made life difficult for Pakistanis across the board. The quality of life of citizens has deteriorated.
Dialogue reported that economic growth rates have been stunted, and industry and agriculture have suffered. The Government of Pakistan has not yet recognising magnitude of crisis and its effect on the people and the economy. Government has to take emergency measures to address, manage and reduce the impact of crisis. The reasons for present crisis in gas sector have both technical and governance aspects.
The dialogues have given comprehensive insight into the current situation of transparency, public participation and accountability processes in gas sector of Pakistan. The intervention is likely to result in enhanced understanding of the sect oral issues for the stakeholders.
Most important of all, it is expected to inform the policy makers and especially the public representatives about the governance situation of the sector and shall persuade them to take positive actions for sectoral improvement. In Pakistan, industrial and fertilizer sectors are getting gas on subsidised rates, while the CNG stations were being subjected to an exorbitantly high tariff regime, neglecting the general public’s interest. The gas consumers’ woes could not be resolved unless Pakistan had an autonomous regulator free of political interference. Besides, the problems could not be resolved without improving people’s access to information, putting in place a system of strict penalties on consumers involved in gas pilferage and non-payment of gas bills
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/31-Jan-2013/primary-energy-consumption-grows-by-almost-80pc-in-15-years
Here's ET on ADB funding of coal power in Pakistan:
ISLAMABAD:
Giving in to the pressure from an international lender, the government has reversed its decision on consuming domestic coal for power generation as the Council of Common Interests has approved using a blend of imported and Thar coal in power plants.
The move will pave the way for an early sanction of a $900 million loan by the Asian Development Bank that will go for the construction of a 600-megawatt coal-fired power plant at Jamshoro and for switching an existing 600MW power plant to coal.
According to sources in the finance ministry, further discussions on the $900 million loan will be held with ADB Director General of Central and West Asia Department Klaus Gerhaeusser, who was due to arrive on Wednesday.
During his two-day visit, Gerhaeusser will meet Finance Minister Dr Abdul Hafeez Shaikh and Water and Power Minister Ahmad Mukhtar. He will also hold meetings to review communication projects.
Prime Minister Raja Pervez Ashraf had placed a ban on imported coal-powered plants in a bid to encourage consumption of Thar coal in such projects. However, the ADB resisted the move and refused to extend loans for Thar coal-based power plants.
The bank was of the view that higher dependence on lignite would increase pollution, which was against the environmental policy of the lending agency.
Following the ADB’s decision, the federal government placed the case in a meeting of the CCI – a constitutional body headed by the prime minister with all chief ministers as members – on January 23. According to official documents, the CCI decided that “instead of using only Thar coal, a blend of imported and Thar coal will be used in the 600MW Jamshoro plant.”
In this meeting, Sindh Chief Minister Syed Qaim Ali Shah, who actively promotes mining and consumption of Thar coal, was also present.
CCI also decided that the Ministry of Water and Power would work out further details in deliberations with representatives of the ADB.
Apart from the ADB, the Japan International Cooperation Agency (JICA) has also expressed interest in constructing power plants in Pakistan, besides laying a power transmission lines from Thar to Matiari.
In the past many years, heavy reliance on furnace oil has disturbed the country’s energy mix. Against a one-third share of thermal power generation earlier, the ratio has increased to three-fourths. The recent emphasis on the shift to coal is aimed at tackling the runaway circular debt that has plagued the entire energy chain, forcing the government to spend billions of rupees every month to prop up the energy system.
According to a government official, it was not yet clear whether Pakistan will again take up the issue of financing the Diamer Basha Dam with the ADB director general.
However, he said these days the dam, costing $11.3 billion, was not the top priority of the government, which has shifted funds meant for the dam to another project, the Neelum Jhelum hydropower plant. An amount of Rs1 billion has also been diverted to the PM’s discretionary funds.
http://tribune.com.pk/story/507021/coal-fired-power-plant-govts-about-turn-paves-way-for-900m-adb-loan/
Here's a BR report on unconventional oil ad gas policy in Pakistan:
Advisor to Prime Minister on Petroleumand Natural Resources Dr. Asim said that Pakistan offers great potential in the oil and gas sector and the government is doing its part by introducing new policies to meet the rising energy demand .
He was presiding over a seminar organized by the Petroleum Institute of Pakistan (PIP), a representative body of the oil and gas industry, on the topic "Shale Gas Potential in Pakistan" on Saturday.
The purpose of holding this seminar was to create awareness aboutpotential and challenges of shale gas in Pakistan and establish PIP'sprofessional standing in view of assisting the government on dealing with the energy crises in the country.
The forum consisted of 150 distinguished guests from the oil and gas fraternity including government officials, media personnel and students from Karachi's top universities/colleges.
Dr. Asim Hussain said he has been advocating the need to balancecountry's energy mix, which currently is heavily dependent on natural gas.
He stated that the US Energy Information Administration have estimated 51 TCF Shale Gas Reserves in Pakistan, while as estimated reserves for Low BTU Gas are 2 TCF and that of tight gas are 40 TCF.
He added that Shale Gas exploration is high technical and costly, therefore, in order to encourage its exploration, pilot projects are planned.
The Ministry of Petroleum and Natural Resources will facilitate E&P Companies wishing to explore shale gas, by granting special concessions through transparent process and based on merit.
Chairman PIP Asim Murtaza Khan stressed on PIP's role as an effective energy sector advisory body, supporting government and industry in Pakistan todevelop a progressive and sustainable roadmap to meet present and futurechallenges.
He said that PIP is planning to hold series of seminars in nearfuture. The big ticket items that will be discussed and which need theimmediate attention will be the "LPG Outlook in Pakistan", "Fast-trackingimports of LNG", "Refining Vision 2020", "Energy conservation" and"Restructuring of the Pakistan's gas sector".
http://www.brecorder.com/pakistan/business-a-economy/107602-pakistan-offers-great-potential-in-oil-gas-sectors-dr-asim-.html
Here's a Dawn story on oil and gas discoveries in Pakistan:
Following a lacklustre period of several years, when things remained quite on the oil and gas exploration sector, in the face of heightened security situation and circular debt issues, the oil and gas fields have started to buzz with activity.
In the current financial year-to-date (July 1, 2012 to March 11, 2013) the country’s oil and gas sector has spudded as many as 56 wells. It represents a big leap over the 31 wells drilled in the same period last year. The sector has drilled 20 new exploratory wells as against 12 wells same time last year, depicting a significant increase of 67 per cent.
On the discovery side, the picture was a lot brighter than the earlier years as a total of 10 discoveries have been made by the sector in FY13 so far.
The sector’s drilling of a total of 56 exploratory and development (E&D) wells during the period also represents achieving 61 per cent of the full year target set at 91 wells. Even in that sphere, the sector fared better than the comparable period last year when only 41 per cent of the target 76 wells could be drilled.
“O&G sector’s focus continues to remain on the development wells”, says Nauman Khan, analyst at Topline Securities. Of the total wells drilled, 36 were development wells (representing 64 per cent of total activity). It reflected improvement over 19 wells or 61pc of total wells drilled in the comparable period last year.
Apart from the development wells, the activity on the exploration side also represented encouraging growth. Although, contribution of the exploratory wells had slightly declined to 36pc as against 39pc in the same period last year, the overall trend was heartwarming.
The sector spudded 20 exploratory wells, which was significantly more than 12 wells drilled in the comparable period last year while it represented 45pc of full year target of 44 wells.
Analyst said that amongst the listed companies, Pakistan’s largest oil and gas explorer, the Oil and Gas Development Company (OGDC) had drilled 13 wells which were 63 per cent higher than eight wells drilled last year. Included in those 13 wells, were two exploratory wells and 11 development wells.
Pakistan Petroleum Limited drilled five wells (one exploratory and four development), up from two development wells in the comparable period last year. However, with full year target of 16 wells (six exploratory and 10 development), sector watchers expect the drilling activity of the company to significantly intensify in the remaining of the year.
The third major oil and gas E&P company, the Pakistan Oilfields Limited drilled only one exploratory. In the comparable period last year, POL had drilled two exploratory wells.
Though much of the success eluded the E&P companies on the listed sector, the revival and discovery would benefit the country. The darkest hour for the sector came possibly in late 2010 and early 2011, when exploration and development work had started to limp.
According to the data compiled by Pakistan Petroleum Information Services (PPIS), 28 E&P companies in the country, that hold operator licences, together had drilled only 19 wells in first half of the year 2011, compared to 80 wells targeted for all of the FY11.Besides the poor security situation, the two major reasons for the underperformance of E&P companies were the nagging circular debt, which had affected the drillers’ liquidity thereby restricting their drilling portfolio and secondly, the continuation of the carry over wells of the earlier year that stalled companies from launching into new wells, keeping them focused on already drilled ground.
http://dawn.com/2013/03/24/oil-gas-sector-makes-10-discoveries/
Here's a Time Magazine article on Enernet---the use of information technology(IT) and Big Data in power grids:
Cutting energy waste is first and foremost a data challenge. You can’t cut waste until you know what you’re wasting, and most of us have only the slightest idea. Standard electricity meters take one reading for an entire month. Imagine trying to diet if all you knew was the total amount of food you ate every four weeks. Says Bennett Fisher, CEO of the building-efficiency start-up Retroficiency: “You need data to make energy saving work.”
We’ve got the data, thanks to the growth of smart, Internet-enabled sensors that can read and relay energy use almost in real time. A host of new big-data companies are figuring out how to crunch that information so energy users from huge factories to individual households can track and reduce waste. This combination of energy technology with the Internet–the industry calls it the Enernet–is the hottest sector in clean tech, in part because it relies on relatively cheap, easily scalable software rather than on the expensive factories needed for, say, making solar panels. “It’s much more capital-efficient,” says Roy Johnson, CEO of EcoFactor, an energy-management start-up.
And efficiency is what the Enernet is all about. Take Virginia-based Opower, one of the oldest and most successful Enernet companies. Opower began by offering homeowners the chance to compare their power use with their neighbors’. Just knowing whether they were energy hogs or energy saints–along with following Opower’s energy-efficiency tips–was enough to reduce waste among homeowners. But as smarter meters taking dozens of readings per day have begun to gather more-granular data, Opower has been able to offer much more. The company sorts through the data collected by smart meters to help customers identify exactly where the waste is occurring and how it can be reduced. “These are things we could never do without big-data analytics,” says Dan Yates, CEO of Opower.
For utilities, big data can be even more powerful and valuable for the bottom line. Smarter energy management can keep overloaded grids running and prevent the need for new, expensive plants. Energy use isn’t constant throughout the day or the year, but because utilities keep power running 24/7, they need to have spare capacity to accommodate spikes. Even if it isn’t needed all the time, that extra power has to be generated, usually by polluting and costly coal or gas plants. Companies like AutoGrid help utilities spread out the demand for energy, smoothing the spikes and reducing the need for unused excess power. AutoGrid’s algorithms sort through the petabytes of data from smart meters–adjusting for variables like weather–and spit out solutions that let utilities and their customers automatically shift nonessential electricity use to nonpeak times. The Enernet can also help utilities make better use of wind and solar power, compensating when the wind isn’t blowing or the sun isn’t shining. Amit Narayan, AutoGrid’s CEO, estimates that his company’s algorithms can help utilities get about 30% more power out of existing resources.
If we’re ever going to truly clean up our electrical grid, we’ll need to replace coal and natural gas with zero-carbon sources like solar or nuclear while improving efficiency. It won’t be easy or cheap. But a smarter, more efficient grid–enabled by the same intelligence that brought us the Internet–can help smooth that transition.
http://business.time.com/2013/03/28/smart-power/
Here's a Dawn story on Saudi help for incoming Prime Minister Nawaz Sharif to overcome energy crisis in Pakistan:
ISLAMABAD, May 22: With an ‘amiable’ government in place, Saudi Arabia is expected to extend a bailout package of about $15 billion to Pakistan’s highly indebted energy sector by supplying crude and furnace oil on deferred payment to enable it to resolve the chronic circular debt issue.
A senior government official said the Saudis had been taking reasonable interest in helping out the incoming PML-N government led by Nawaz Sharif.
They had extended a similar special package to Pakistan soon after it went nuclear in 1998 and faced international economic sanctions.
Between 1998 and 2002, Pakistan received $3.5 billion (Rs190 billion at the exchange rate at that time) worth of oil from Saudi Arabia on deferred payment, a major part of which was converted into grant.
According to the official, as soon as the PML-N emerged as the majority party after the May 11 elections, the Saudi ambassador in Islamabad sought a briefing on the country’s oil requirements from the foreign ministry before calling on prime minister-designate Nawaz Sharif in Raiwind, Lahore.
He was immediately provided a position paper, the official said.
Pakistan expects about 100,000 barrels of crude oil and about 15,000 tons of furnace oil per day from Saudi Arabia on deferred payment for three years. The amount involved works out at about $12-15bn.
The facility can be utilised to reduce loadshedding in the short term and provide an opportunity in the medium term to restructure the power sector by minimising subsidies, eliminating circular debt, ensuring recovery from the public sector and reducing system losses to bring it to a self-sustainable level.
“During the package period, the PML-N government can resolve the electricity crisis and develop hydropower projects through a combination of public and private investments and bagasse-based power production by the sugar industry,” he said.
He said the arrangement for oil supplies on deferred payments could be further discussed during Mr Sharif’s first visit to Saudi Arabia soon after assuming the office of prime minister early next month.
Pakistan’s total crude oil import is about 400,000 barrels per day and 30,000 tons of furnace oil. Its total oil import bill stands at about $15bn per annum.
The official said a request for 100,000 barrels of oil and 15,000 tons per day of furnace oil had already been passed on through the Pakistan-Saudi Arabia Joint Ministerial Commission.
A meeting of the commission could be convened soon after the new government assumed charge, an official said.
The Saudi rulers had not taken any interest in the issue earlier ostensibly because of the chill in their relationship with the PPP government.
Large political delegations taken to Saudi Arabia by the PPP government were cold-shouldered, an official said, adding that warming up of diplomatic relations with Iran and the UAE and cancellation of hunting facilities for Saudi royals had also annoyed the kingdom.
The official said the breathing space provided by the likely Saudi package could also be used for renegotiating gas price with Iran for the Iran-Pakistan gas pipeline to bring it down to a sustainable level.
Under the gas sales and purchase price agreement, any party may seek revision of the rates in view of the cost of alternative import options one year ahead of the first gas flows scheduled to take place in December 2014.
The official ruled out any possibility that the Saudi oil package could be used to persuade Pakistan to stay away from the Iranian gas import. He said the project had reached an advanced stage and involved international agreements and, therefore, backtracking was no option, but the development could give leverage to Pakistan to secure lower gas prices.
http://beta.dawn.com/news/1013070/15-billion-saudi-bailout-likely/
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