Saturday, August 1, 2020

Pakistan: Hopes Rise For Cheap and Abundant Electricity

Pakistani power sector is continuing its march toward cheap indigenous sources of electricity. Hydropower component has increased 22%, coal 57% and nuclear 8% while oil is down 54% and natural gas and LNG are down 32% and 15% respectively, according to Bloomberg. These changes in power mix are expected to help significantly reduce power subsidies that run into hundreds of billions of rupees contributing to large annual budget deficits.

Data From NEPRA. Courtesy Pakistan Today

Coal's contribution to power mix now stands at just 21%, in spite of 57% increase in use of coal in Fiscal Year 2020. It is still almost half of the global average of 38% of electricity produced from coal. Overall, the contribution of fossil fuels in electricity generation is now about 54%, down from nearly 66% a few years ago.

Pakistan Power Generation Mix. Source: Bloomberg

Hydropower and natural gas now contribute 32% each, making them the biggest sources of electricity in Pakistan. Coal comes next at 21%, followed by nuclear at 8%.

Pakistan Power Generation Plan 2019-2040. Courtesy of World Economic Forum

One of the biggest economic challenges Pakistan faces is it growing debt and deficit from subsidies to the power sector. Often referred to as "circular debt" in Pakistan, the government owes Rs. 1.6 trillion ($7.2 billion) to power sector at the end of June 2019. Pakistan government is now is committed to improving the situation by its development of an Indicative Generation Capacity Expansion Plan (IGCEP) that runs until 2040.



Change in Sources of Electricity in 2020. Source: Bloomberg

Pakistan recent efforts to diversify its fuel mix for cost reduction are raising hopes for cheap and abundant electricity needed for its industries and residential consumers.  Already, the electricity generation cost is down 11% and current account deficit has declined 78%. There is a plan called "Indicative Generation Capacity Expansion Plan" in place. Execution is the key to making the power sector greener, cheaper and more reliable.

Fuel Mix For Power Generation in Pakistan. Source: Third Pole

20 comments:

Anonymous said...

The new capacity is built via loans from China which have to be repaid in USD.If the PKR keeps depreciating by 5% per annum what is the IRR for break even?

Do the present tarrifs and leakages make this investment financially viable ?

What is the projected FX outflow on loan servicing + fuel imports+spare parts and other consumables to run these plants?

Riaz Haq said...

Anon: "What is the projected FX outflow on loan servicing + fuel imports+spare parts and other consumables to run these plants?"

It's already helping. Electricity generation cost is down 11% and current account deficit has declined 78%.There is a plan called "Indicative Generation Capacity Expansion Plan" in place. Execution is the key to making the power sector greener, cheaper and more reliable.

Rashid A. said...

Circular Debt is now at 2.2 Trillion Rupees.

Circular debt at the end of June:
2013: 308 B
End of PPP govt.

Begin PMLN Govt.
🔻 223 B
2014: 531 B
🔻119 B
2015: 650 B
🔻39 B
2016: 689 B
🔻130 B
2917: 819 B
🔻307 B
2018: 1126 B
End of PMLN govt.

Begin PTI Govt.
🔻492 B
2019: 1618 B
🔻532 B
2020: 2150 B
🔻45 B
Current estimate
End of July 2020: 2195 B
Ref: https://nation.com.pk/20-Jul-2020/taking-total-debt-to-rs2150b-pti-govt-adds-rs962b-to-power-circular-debt-in-less-than-2-years

Riaz Haq said...

Rashid: "Circular Debt is now at 2.2 Trillion Rupees."

Higher capacity charges with increased capacity and rupee devaluation are the main contributors to this increase in "circular debt".

Please read the following from The News:

The capacity charges payments of the power plants have alarmingly ballooned to Rs900 billion this year from Rs650 billion in last fiscal year. The increase in capacity charges payments mainly came on account of Neelum-Jehlum hydropower project. In addition, one more RLNG-based power plant that is built at Trimmu is going to come on stream, may be in the later part of ongoing financial year.

In the wake of these projects, the capacity payment will soar to whopping Rs900 billion, a senior official at Power Division told The News. The capacity charge payment component has now emerged as one of the major factors causing the hike in power tariff. The hike in tariff by Rs1.50 per unit effective from July 1, 2019 is mainly because of the capacity charges payments.

Thar coal-based power plants are being built and one more imported coal based power plant in Baluchistan has almost come on stream. More importantly, the capacity payments have also been increased because of the massive devaluation of Pak Rupee by Rs40 during the PTI government.

https://www.thenews.com.pk/print/496166-capacity-charges-go-up-to-rs900-bn-from-rs650-bn

Riaz Haq said...

Neelum-Jhelum traiff:


Neelum Jhelum Hydropower Company rejected the tariff determined by the National Electric Power Regulatory Authority (Nepra) for sale of power to Central Power Purchasing Company and filed a review petition, the official added.

Neelum-Jhelum Hydropower Company — a subsidiary of the Water and Power Development Authority (Wapda) — filed a tariff review petition before the Nepra, asking for Rs13.24/kilowatt-hour (kWh) reference tariff over the 50 year life span of the project.

The reference tariff is Rs14.59/kWh for the first 20 years, which will then drop to Rs5.10/kWh for the remaining 30 years.

The total cost of the project has been reported at $4.825 billion.

The National Electric Power Regulatory Authority, however, allowed the seller to charge a tariff of Rs5.9180/kWh on take and pay basis with must run condition for a period of one year.

The tariff was determined on take and pay basis as against request of tariff determination on take or pay basis in line with the government’s power generation policy for hydel independent power producers (IPPs) and on the analogy of tariff determined by Nepra for hydel IPP and Wapda hydroelectric projects.

The company requested the National Electric Power Regulatory Authority to determine power sale rate in two parts i.e. variable charge to meet with revenue requirement for variable overhaul and maintenance (O&M) and water utilisation charges based upon actual generation and fixed charge to meet revenue requirement for fixed O&M, insurance, debt servicing and return on equity based upon installed capacity of Neelum Jhelum hydropower project.

https://www.thenews.com.pk/print/435892-neelum-jhelum-hydropower-company-rejects-new-tariff

Rashid A. said...

That is true Riaz Sahib.

The other reason is Islamic Republic of Pakistan’s citizens, those who shout slogans against Tauheen Risalat also have the dubious distinction of being the main cause of the HIGHEST IN THE REGION electric power line losses (POWER THEFT).

Read this:

https://tribune.com.pk/story/2217986/2-pakistans-power-sectors-losses-highest-region?amp=1


K-Electric is even buying Fatwas by Imams.
400 units of power free if the Imam issues a Fatwa against Power theft! Best Fatwa that money can buy!

https://www.dawn.com/news/1426193

nayyer ali said...

Pakistan's power sector has doubled in last decade to 40 GW of installed base, but is still 30% smaller per capita than India, which has 360 GW of capacity. Pakistan likely needs to double capacity to 80 GW by 2030 and 160 GW by 2040 to meet soaring demands. Currently, there is overcapacity due to COVID slowdown, but that could be eaten up quickly in 2021 if there is a vaccine. There is largescale rooftop solar going in, and that does not get counted in the national grid, but that is still only about 1 GW I believe.
Interesting new comparative data from World Bank, which recently released results from their 2017 ICP data round. In PPP GDP per capita, India was at 6150 dollars, Pakistan at 5000, and Bangladesh at 4400. But when they looked at individual consumption per capita, which is a better measure of the average material standard of living, the numbers were Bangladesh 3370, India 4170, and Pakistan 4600. This fits with consumption data showing middle-class Pakistanis with higher living standards than Indians, and much lower extreme poverty in Pakistan. Another element that the World Bank has to leave out is that Pakistan still has not rebased its GDP from 2006, and so it is likely 20-25% higher than official measurements if the rebasing was done, which would put Pakistan's GDP per capita on par with India. The PMLN government was supposed to do that in 2017, but never finished the work, so we are using a faulty ruler to measure Pak GDP.
The biggest macroeconomic imbalances of the last decade, the massive overvaluation of the rupee which caused a soaring current account and trade deficit, and high inflation, have both now been corrected. The tight policy of the SBP, combined with COVID-19, has taken inflation from 14% down to zero now on month over month basis for last few months. Once the pandemic is controlled, Pakistan may be well-positiioned for sustained economic growth. This will have to include continued rapid expansion of the power grid.

Riaz Haq said...

Integrated plan devised to generate 100,000 MW by indigenous resources

https://dunyanews.tv/en/Pakistan/557578-Integrated-plan-devised-to-generate-100,000-MW-by-indigenous-resources

ISLAMABAD (Dunya News) – The incumbent government has devised an integrated plan to generate 100,000 MW by 2047 through indigenous resources to ensure energy security and boost industries.

Under the devised plan, share of indigenous energy would be enhanced to 80 per cent to get rid of expensive energy based on imported fuel.

Minister for Power Division Omar Ayub Khan Tuesday said Renewable Energy (RE) policy has already been chalked out with the consultation of all stakeholders and it would now be placed before Council of Common Interests (CCI).

Sindh and Balochistan would be major beneficiaries as many solar and wind projects would be set up in these provinces, he said. He said the energy projects would be set up in areas under the integrated programme.

The minister said the policy targets increasing the share of alternative energy in the energy mix up to a level of 20% by 2025 and 30% by 2030. Some 8000 MW would be added through RE by 2025 and its share would be increase to 30,000 MW by 2030, he added.

He said the past governments signed agreements with power companies at high rates and these projects were mostly based on imported fuel resulting increase in tariff. Unfortunately, the previous government generated expensive electricity through liquefied natural gas (LNG) and winded up many low cost RE projects. However, he said the incumbent government revived all RE projects to provide maximum relief to the consumers.

Regarding circular debt, the minister said circular debt had reached to Rs 450 billion during PML-N government and Rs39 billion per month was pilling up in it.

The PTI government successfully brought down it to Rs 12 billion per month, he added.

Omar Ayub said the previous government did not also enhance the power tariff despite NEPRA’s determination. This move was aimed at winning the general elections and continued power supply to loss making feeders resulted in the piling up of Rs 200 billion in dues, he added.

Regarding investment in transmission system, Omar Ayub said the government enhanced the transmission capacity by 5500 MW during the last two years.

Owing to up-gradation of transmission lines, now over 25000 MW could easily be transmitted it. Earlier, the system could only transmit 18,000 MW, he added.

He said in past the NTDC 500 kV and 220 Kv always witnessed frequent tripping particularly in winter season, however, not a single tripping incident occurred after up-grading the transmission system.

He said Pakistan Tehreek-e-Insaf (PTI) government collected Rs 121 billion more revenue in the energy sector. Around 80% feeders had already been cleared from power pilferage and efforts were being made to clear remaining 20 per cent.

He said various mega projects including Diamer Basha, Mohmand dams and other hydel projects have been started to get cheap hydel electricity.

Riaz Haq said...

Pakistan to boost renewables and continue coal expansion

https://www.trtworld.com/business/pakistan-to-boost-renewables-and-continue-coal-expansion-38743

Mix of renewables to include mainly wind and solar power, but also geothermal, tidal, wave and biomass energy, according to Syed Aqeel Hussain Jafry, policy director for the government's Alternative Energy Development Board.

Pakistan has set in motion a plan this week to boost the share of its electric power that comes from renewables to 30 percent by 2030, up from about 4 percent today.

“The targets in the newly announced policy are a 20 percent share of renewables in installed capacity of Pakistan’s power mix by 2025 and 30 percent by 2030,” said Syed Aqeel Hussain Jafry, policy director for the government's Alternative Energy Development Board.

That will include mainly wind and solar power, but also geothermal, tidal, wave and biomass energy, he said.

With boosts in hydropower capacity expected as well, the shift could bring the share of clean energy in Pakistan's electricity mix to 65 percent by 2030, said Nadeem Babar, head of a task force on energy reforms in Pakistan.

But the legislation leaves in place plans to build seven more coal-fired power plants as part of the second phase of the China Pakistan Economic Corridor project - something that could impede scale-up of renewable power, warned Zeeshan Ashfaq, a solar and wind energy developer in Pakistan.

"A coal pipeline of around 4,000-5,000 megawatts will not provide much space for renewables," said Ashfaq, managing director of SOWITEC (Solar Wind Technology) Pakistan.

The new national renewables policy, approved by the prime minister's cabinet last December, was delayed by the coronavirus pandemic and as negotiators tried to resolve disputes with individual provinces.

But Asad Umar, federal minister for planning and development, said on social media the resolution of those disputes now opened the way to "unleash Pakistan's full potential" for renewables.

Reorganised sector

Hobbled by decades of energy shortages, successive Pakistani governments have pursued private sector investment in power production, offering lucrative returns backed by sovereign guarantees.

Up until 2017, prolonged power outages hit the country’s industrial production.

Power cuts and scheduled outages, known as load shedding, in urban areas were sharply reduced from about 12 hours a day previously to only occasional outages by mid 2018.

Despite the progress, seasonal production gaps and distribution woes remain.

New investment in renewable energy is also expected to come from private investors, with potential suppliers bidding in annual auctions and low-tariff proposals winning, said Nadeem Babar, chair of the energy task force and now special assistant to the prime minister.

Jafry, of the alternative energy board, said the policy represented a significant shift from the past, when investors approached the government with individual projects.

READ MORE: Economy forces Pakistan to reopen even as Covid-19 cases spike

A new focus

Ashfaq, the renewables developer, said the current government had shown more interest in renewable energy than previous administrations.

"The last government’s focus was on investing in fossil fuel power plants. This new government is much more open to renewable energy and wants to promote it” he said.

Babar said most of the new planned renewable power would be solar or wind, divided roughly equally between the two technologies, and coming from everything from wind farms to rooftop solar.

"We already have more than 30 wind and solar plants in operation, all financed privately by local and international banks, multilaterals and export credit agencies. New ones will be financed the same way," he said.

The new renewables plan represents "an ambitious target but achievable", he said.

Riaz Haq said...

Pakistan government’s finance Advisor Abdul Hafeez Shaikh has said that Pakistan has failed to increase its tax collection and exports. Last year, tax collection was 17% higher despite difficulties.

https://dunyanews.tv/en/Pakistan/558491-Pakistan-failed-increase-tax-collection-exports-Hafeez-Shaikh


Talking about the economic situation of the country to Dunya News program "Dunya Kamran Khan Kay Saath", the finance advisor said that the problems of refunds are being eliminated completely. Last year, refunds of Rs 240 billion were given and next week, refunds of up to Rs 50 million will be given.

Dr Abdul Hafeez Shaikh said that the Federal Board of Revenue (FBR) would set aside Rs 10 billion for refunds every month. With regards to refunds, the focus will be on private sector as the committee for the refund process will be headed by someone from the private sector.

Answering a question, Abdul Hafeez Shaikh said that reforms in the power sector are the number one priority of the Prime Minister. Today, the Prime Minister has made five major decisions regarding the energy sector, the effects of which will be observed in the coming weeks.

He said that today it has also been decided to improve electricity bills collection and reduce distribution losses. The government has to conclude negotiations with the IPPs in a few days, promote cheap power generation from alternative sources and involve the private sector in power distribution companies, he added.

He said that power sector reforms were a part of the IMF negotiations and there can be no slip-ups in this regard. Shehzad Qasim is responsible for implementing the government’s power sector reforms, he added.

Answering another question, he said that the Karachi steel mills would be run through foreign investment and a system is being devised to run it in a modern manner. He cautioned that the Privatization Commission has to carefully follow the rules and said that after the power sector, the matters of government corporations will be improved.

Riaz Haq said...

Minister for Planning and Development Asad Umar said that Moody’s reconfirmation of Pakistan’s credit rating with a stable outlook reflected that Pakistan’s economy was witnessing a ‘V’ shaped recovery amid COVID-19 pandemic.



https://www.gulftoday.ae/business/2020/08/10/pakistan-economy-witnessing--v-shaped-recovery-says-minister





In the middle of a global pandemic it was a testimony to the ‘V’ shaped recovery, Pakistan had seen, Umar said in his tweet.

He said the economic recovery could become possible due to prime minister Imran Khan’s balanced approach to safeguarding national health and livelihoods, delivering success on both counts.

Meanwhile the State Bank of Pakistan (SBP) has enhanced the limits for housing finance and microenterprise loans up to Rs3 million from the existing limit of Rs1 million for borrowings from the microfinance banks.

Likewise, the maximum size of general loans has been enhanced from Rs150,000 to Rs350,000.

Further, to commensurate with enhanced loan sizes, annual income eligibility for general loans and housing loans has been increased up to Rs1.2 million and Rs1.5 million, respectively. Moreover, the limit for lending against gold collateral to meet borrowers’ immediate domestic or emergency needs has also been enhanced.

The decision to increase the limit of housing finance loans has been made in view of the fact that the existing loan limit was insufficient to promote low cost housing finance through MFBs.

Similarly, limits for lending to micro enterprises needed to be enhanced considering the large unmet demand from Micro and Small Enterprise (MSEs). These initiatives would further support the micro borrowers and enterprises and an early revival of economic activities in the current challenging times.

However, in order to ensure sustainability, the enhanced loans sizes for housing and microenterprises would be allowed to those MFBs which are on sound footing and have the capacity to successfully cater the higher loan sizes.

In addition, SBP Relief Package for microfinance banks, which included deferment of principal and restructuring of microfinance loans to deal with the adverse implications of the ongoing Covid-19 pandemic, have now been expanded with three measures.

First, the relief measures that were earlier available from Feb.15, 2020 have now been allowed to borrowers who were regular on December 31, 2019. This would allow more borrowers to avail the regulatory relief who were previously not eligible.

Second, to facilitate MFBs during these testing times, the provisioning requirements have been extended by 2-months; and third, client’s consent through recorded lines has been allowed to facilitate the customers to avail the relief package.

Prime Minister of Pakistan, announced a Fiscal Package of over Rs1200 billion in the wake of Covid-19 Pandemic.

The ECC of Cabinet Division has approved the proposals on May 13, 2020. Out of this Package, an amount of Rs6.861 billion has been approved for provision of financial relief in terms of markup subsidy on Bank’s loans to the most deserving sub segment of farming community, i.e. farmers with land holding up to 12.5 acres, throughout the country.

Over 70 per cent of the farmers in Pakistan own land up to 12.5 acres.

A Mark-up subsidy at 10 per cent on the loans extended or to be extended during the fiscal year 2020-21 to the farmers of 12.5 acres of land has been approved by the Government of Pakistan.  Total amount of subsidy is Rs6.86 billion. All the loans with passbook as collateral are eligible to avail the subsidy.

Meanwhile the advisor to Prime Minister on Commerce Abdul Razak Dawood said the government is vigorously following a prudent policy to boost export and minimise import for the economic stability through offering lucrative package of incentives to industrialists and businessmen.

It was stated by him while talking to a high level delegation of United Business Group led by President SAARC Chamber of Commerce and Industry Iftikhar Ali Malik.

Riaz Haq said...

Pakistan can save $5bn by scaling up renewable energy: WB - Profit by Pakistan Today

https://profit.pakistantoday.com.pk/2020/11/10/pakistan-can-save-5bn-by-scaling-up-renewable-energy-wb/

The study, titled Variable Renewable Energy (VRE) Integration and Planning, finds that Pakistan needs to urgently implement a major expansion of solar and wind “variable renewable energy”, to achieve a share of at least 30per cent of total capacity by 2030. This would help lower the cost of power, achieve greater energy security, and reduce greenhouse gas (GHG) emissions.

“A large and sustained expansion of solar photovoltaic and wind power, alongside hydropower and substantial investments in the grid, is both achievable and desirable”, World Bank Country Director for Pakistan Najy Benhassine said.

“Such an initiative would lead to immediate and long-term economic and environmental benefits. It would enhance the security of supply as well as positioning Pakistan at the forefront of the global energy transition. We stand ready to support Pakistan in achieving the goal of affordable, reliable power for all by 2030,” he added.

According to the study, many sources of fossil fuel generation are no longer competitive and should be retired or their use significantly reduced. This includes domestic and imported coal, which is not economical over the next 10 years compared to VRE and has the additional downsides of GHG emissions, air pollution, and use of scarce water resources.

The study, based on an hour-by-hour analysis of all generation options, finds that a substantial and immediate scaling up of VRE capacity represents a “least-cost” strategy for expanding capacity in Pakistan, including consideration of the costs of integrating the variable supply from solar and wind.

Riaz Haq said...

#Karachi-based Denim-Maker Artistic Milliners Makes $370M Investment in #Hydropower Projects in #Pakistan demonstrating commitment to sustainability. It will also include the development of wind and solar projects, as well as an operational #wind farm. https://sourcingjournal.com/denim/denim-mills/artistic-milliners-hydropower-projects-pakistan-energy-generation-ushu-river-264756/

Karachi, Pakistan-based denim manufacturer Artistic Milliners further demonstrated its commitment to sustainability with a $370 million investment in two run of river hydropower projects.

Artistic Milliners’ hydropower plants, Hydro I and Artistic Hydro II, will contribute a combined 521 GWh per year. According to Italian energy company ERG SpA, that’s enough energy to meet the demand of more than 133,000 homes. Both plants are located in Khyber Pakhtunkhwa province, with Artistic I Hydro pulling from the Panjkora River and Artistic II Hydro pulling from the Ushu River.


The project will also include the development of wind and solar projects, as well as an operational wind farm.

Regulatory authorities are currently processing generation licenses and tariffs needed for the projects, and commercial operation is slated to begin by December 2027.

According to the International Hydropower Association, renewable hydropower is a clean and low-cost source of electricity generation and responsible water management. Specifically, run-of-river hydropower channels flowing water from a river to spin a turbine. This form of energy uses water flow that is regulated by the facility for a continuous supply of electricity. It’s currently a significant energy source in Pakistan, representing around 25 percent of capacity and 21 percent of generation.

This investment is part of Artistic Milliner’s overall commitment to the land in which it operates. At the end of last year, Artistic Milliners launched the Milliner Cotton Initiative, a call for visibility and women empowerment throughout the cotton supply chain. It also encompasses capacity building for ginners and promotes practices for mitigating extortion throughout the Rahim Yar Khan district of Punjab, Pakistan.

Artistic Milliners is also the first and only Pakistan-based company to abide by the United Nations’ 1.5°C-compliant business model to help mitigate the climate crisis. It has aggressive sustainability targets in place to reach net zero emission by 2025.

Riaz Haq said...

#Pakistan Forced to Pay Very High Prices for #LNG to Avoid Blackouts. Pakistan bought 4 cargoes for September delivery at around $15 per mmbtu. Earlier, govt scrapped a tender for September in hopes of lower prices later. #energy #PTI https://www.bloomberg.com/news/articles/2021-07-29/pakistan-forced-to-buy-priciest-lng-shipments-to-avoid-blackouts

Nation’s gamble that spot prices would fall fails to pay off
Global supply crunch has boosted rates from Europe to the U.S.

Cash-strapped Pakistan’s bet that liquefied natural gas prices would go down has failed, forcing the South Asian nation to pay more than ever for the power plant fuel or risk blackouts.

Pakistan LNG this week bought four cargoes for September delivery at around $15 per million British thermal units, the highest since the nation began imports in 2015, according to people with knowledge of the matter. The importer scrapped a tender for September cargoes that closed earlier this month in a gamble that prices would fall.

Riaz Haq said...

#Pakistan begins extracting #coal from a 2nd major #mine in #Thar, #Sindh. Block 1 mine has lignite coal deposits of over 3 billion tons (5 billions barrels of crude oil) with an annual output of 7.8 million tons to generate 1320 MW #electricity. #energy https://www.dawn.com/news/1672580


Sino-Sindh Resources Ltd (SSRL) said on Monday it successfully extracted the first shovel of lignite coal at Block 1 of the Thar coalfields near Islamkot Town of Tharparkar, Sindh.

Block 1 boasts lignite coal deposits of over three billion tonnes (equivalent to over 5bn barrels of crude oil) with an annual output of 7.8 million tonnes.

SSRL, whose majority shareholder is Shanghai Electric Group, was granted a mining lease on May 24, 2012, and the project was included in the Joint Energy Working Group by the governments of Pakistan and China.

As soon as the two governments officially announced the China-Pakistan Economic Corridor, the Thar coal project was included in it as an early-harvest project.

---------

After back-to-back meetings between SSRL and the Energy Department of the government of Sindh, the first excavation took place on Jan 23, 2019, for the development of the largest open-pit coal mine in Block 1.

According to the Thar Coal Energy Board, SSRL and Shanghai Electric Group have already signed a coal supply agreement for power generation through two mine-mouth power plants of 660 megawatt each.

Financial close of the project was achieved on Dec 31, 2019. Soon after the first excavation, the SSRL management started importing mining equipment from China and by July 2020 all the required equipment was at the project site.

Speaking to Dawn, Ministry of Energy spokesperson Muzzammil Aslam said both majority (Shanghai Electric Group) and minority (SSRL) investors in Block 1 are Chinese. Unlike Block 2 where the Sindh government owns a stake of 54.7 per cent, Block I has no direct shareholding by the provincial government, he said.

“Shanghai Electric’s power plant will achieve financial close within this year. It’s a big development because the 1,320MW plant will run on indigenous fuel and produce affordable electricity,” Mr Aslam added.

SSRL officials said the development of the indigenous resource base at Thar will help Pakistan achieve its long-cherished goal of energy security and economic sovereignty.

Riaz Haq said...

Fitch Affirms Pakistan Water and Power Development Authority at 'B-'; Outlook Stable


https://www.fitchratings.com/research/international-public-finance/fitch-affirms-pakistan-water-power-development-authority-at-b-outlook-stable-14-03-2022



WAPDA is established under a special statute. The Authority has close operational and administrative linkage to the government and is mandated to develop water and power resources in Pakistan. The government exercise strong influence over WAPDA's corporate governance and debt, sanctioned by the government, shall be transferred to the government according to the Pakistan Water and Power Development Authority Act.

KEY RATING DRIVERS
Status, Ownership and Control: 'Very Strong'


Our 'Very Strong' assessment of 'Status, Ownership and Control' remains unchanged, given the strong statutory support, stable government ownership - which we do not expect to change - and high level of government control. Employees of WAPDA are deemed to be public servants when acting in pursuance of WAPDA activities. The government has strong influence on WAPDA's corporate governance, including budget, accounts, financing activity and new power station investment plans, because the Authority is mandated to execute the government's responsibility of utilising Pakistan's water and power resources.

Support Track Record: 'Very Strong'


The build-up of circular debt in the energy sector exposes WAPDA to external funding. The government aims to mitigate the circular debt issue by providing financial support; it had guaranteed 22% of WAPDA's interest-bearing debt as of June 2021 and 56% of the debt comprises of government loans. The government will be liable for loans passed by the Authority with the sanction of the government under the WAPDA Act. Supportive policies, such as corporate tax exemptions, land acquisitions and a tariff mechanism, also enhance WAPDA's operational stability.

Socio-Political Implications of Default: 'Strong'


Pakistan's policies aim to boost the hydropower generation mix and reduce reliance on fossils. WAPDA's hydropower generation accounted for 27% of the generation mix in 2021, while other renewable energy only accounted for 3%. The government aims for hydro power to contribute over 40% of Pakistan's energy demand by 2030, implying that the development of hydropower generation is of significant strategic importance to the country. We believe WAPDA's installed capacity would be difficult to substitute and that any transition process would lead to severe service disruption.

Financial Implications of Default: 'Very Strong'


We deem WAPDA as a proxy financing vehicle for the government in the energy sector. The Authority still relies on the government to fund its investments, although it is expanding its borrowing capacity, including via recent bond issues. We believe the government's borrowing ability would be significantly impaired if WAPDA come under financial stress due to the high level of funding it receives from international development finance institutions and its debt mix - 78% of interest-bearing debt comprised loans or was guaranteed by the government.

Derivation Summary

WAPDA's ratings reflect our assessment of government linkage and support incentive and results in a weighted score of 50, based on our Government-Related Entities Rating Criteria. We adopt a top-down approach and equalise WAPDA's rating with those of Pakistan (B-/Stable), regardless of WAPDA's Standalone Credit Profile.

Riaz Haq said...

SECMC has already commissioned a study for converting the China-Pakistan Economic Corridor coal plants in Hub, Jamshoro and Sahiwal to indigenous lignite. A 105km long Thar Rail project is being planned to connect Thar coal fields with Main Line at the New Chhor Halt Station to transport lignite to the power plants in the rest of the country.

The transportation of lignite by trucks to Karachi and Kallar Kahar shows its movement by road and rail is feasible and safe despite higher moisture. “Transportation is manageable; no combustion encountered during mining or transportation,” he adds.


https://www.dawn.com/news/1702647

————

“The (Lucky)power plant has been designed to operate on Thar Lignite Coal, subject to its availability; however, during the interim period, it will mainly operate on imported Lignite Coal till the completion of Phase III of Sindh Engro Coal Mining Company (SECMC), which is expected in the second quarter of CY 2023,” read the notice.

https://www.brecorder.com/news/40162068/lucky-electric-commissions-660-mw-coal-power-plant-at-bin-qasim

————

The government has decided to convert 3,960 MW of electricity generated from imported coal onto local coal of Thar to stop consuming the costly foreign exchange reserves for the import of coal, which is no longer available at low prices. The coal price has shot up to $400 per metric ton, a senior official at the Energy Ministry told The News.

https://www.thenews.com.pk/print/967637-govt-mulls-plan-to-use-thar-coal-for-generation-of-3-960-megawatts

—————-


The (2nd CPEC coal power) project is likely to start its full commercial operations by the end of the current month. With the launch of the new power plant, 990 MWs of Thar coal-based electricity is being produced to overcome the power shortfall in the country.


https://gulfnews.com/world/asia/pakistan/pakistan-second-thar-coal-power-plant-launched-under-cpec-1.89717641

Riaz Haq said...

IS THERE A SOLUTION TO PAKISTAN’S ENERGY PUZZLE?
Countries around Asia weigh up the costs and benefits of nuclear power over coal and LNG

https://tribune.com.pk/story/2369846/is-there-a-solution-to-pakistans-energy-puzzle

According to data released at the beginning of August, out of 18,400MW of energy generated, almost 11,000MW are from hydro power plants and nuclear power plants. The remaining 7,400MW of energy was mostly from gas and coal fired power plants.

These figures show that decision-makers have learnt how to produce cheaper energy. At least 1000MW of energy is produced by wind. In 2020, the US Energy Information Administration predicted that by 2025, coal would cost slightly more than $90 per megawatt-hour, compared to $63 for onshore wind and $48 for solar. Still, Pakistan and most of the Asian countries rely heavily on nuclear, hydro and/or coal power options.

Pakistan is relying too much on coal-fired power plants which are volatile options considering the climate crisis and the environmental cost of carbon emission. Before, Pakistan relied too much on liquified natural gas (LNG) to fulfill its energy shortcomings but because of the Russia-Ukraine war, LNG is not available in the market. At the moment, all of the LNG is going to Europe due to a ban on Russian petroleum products. Over time, Pakistan increased its generation capacity through the installation of new RLNG and coal-fired power plants. However, the country does not have enough funds to purchase fuel for these plants. Gas and coal-fired power plants are extremely sensitive to price fluctuations in the international market.

To address the shortage of electricity, the government recently issued a tender for the purchase of ten LNG cargos on the spot market. But as expected, none of the companies submitted bids due to high demand and higher prices in Europe. Given the current scenario, expensive LNG and coal-based power plants are proving difficult options, suggesting Pakistan should have focused more on nuclear power facilities.

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In the fiscal year 2019-2020, four coal-fired CPEC power plants generated 19 percent of Pakistan’s electricity. The 4.62 GW of coal-fired generation funded by CPEC includes the 1,320 MW Huaneng Shandong Ruyi-Sahiwal Coal Power Plant, the 1,320 MW Port Qasim Coal Fired Power Plant, the 1,320 MW HubCo Coal Fired Power Plant, and the 660 MW Engro Thar Coal Power Plant, all of which began supplying electricity to the national grid between 2017 and 2019. Construction on the Thal Nova, Thar Energy (HubCo), and Shanghai Electric (SSRL Thar Coal Block I) power plants to increase 1,980 MW of capacity is currently underway.

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Coal consumption increased at a rapid rate in 2018-19, owing to increased use of cement and other enterprises. Local coal production was 5.5 million tons between 2018 and 2019, while imports totaled 15.7 million tons. During this time-period, the residential sector consumed nearly half of total electricity usage, while hydroelectric power supplied 21.3 percent of Pakistan's power generated.


Riaz Haq said...

Answering Pakistan’s Burning Question: How To Ignite Lignite?
Amy Kover

https://www.ge.com/news/reports/answering-pakistans-burning-question-ignite-lignite

Buried 1,000 feet below the parched Thar Desert in Pakistan lies more fuel energy than all the known oil in Iran and Saudi Arabia combined. Just a small fraction of this 175-billion-ton lignite coal reserve is plentiful enough to supply one-fifth of Pakistan’s current energy levels for 50 years. This would significantly bolster the energy supply to Pakistan’s 200 million residents, who per capita have access to roughly just 3 percent of the electricity a typical American consumes. As a local resource, it would also lower hefty bills for imported oil and coal, diminishing Pakistan’s reliance on outside sources for energy.

The problem is that lignite is about as combustible as soggy logs in a fireplace. Composed of more than 50 percent water, as well as other impurities, lignite is known as low-caloric fuel — an ideal description for diet products, but not so much for an electricity resource. That’s partly why Thar’s reserve has gone largely untapped since its accidental discovery in 1992 by geologists searching for drinkable water. Even nine years ago, when the private-public partnership Sindh Engro Coal Mining Company purchased 1 percent of the reserve for mining, one question continued to confound power plant operators: How to ignite lignite?


Last month, an answer arrived. GE Power — which has experience burning a similar form of lignite coal in Europe and the U.S. — will bring its boiler and steam turbine technology to Pakistan. Chinese contractor SEPCOIII announced plans, in June, to use GE Power’s systems as part of its new power plant near Karachi. Known as “Qasim-Lucky,” the plant will generate 660 megawatts of electricity to power 1.3 million Pakistani homes and businesses when Lucky Power begins commercial operations in 2021. “As the first lignite-fueled ultra-supercritical power plant across the Middle East, North Africa and Turkey region, the project will help to set new industry benchmarks in Pakistan,” Qin Xubao, project director at SEPCOIII, said recently.

An “ultra supercritical” steam turbine at the RDK8 power plant in Germany. The water pressure inside reaches 4,000 pounds per square inch, more than what’s exerted when a bullet strikes a solid object. The water, which exists in a “supercritical state,” is heated to 1,112 degrees Fahrenheit (600 degrees Celsius). Top: The boilers of an ultra-supercritical power plant in Neurath, Germany. Images credit: GE Steam Power.
When it comes to combusting lignite, size matters. Every square centimeter of the boiler must fill evenly with gas. Since different fuels burn at different temperatures, GE designs its boilers with Goldilocks dimensions: neither so small that the fuel overheats nor so big that it won’t combust. Just as crucial is the positioning of each component in the boiler. “The way you inject the air into the flame, the way you manage the size of the flame and positioning of the flame, it all impacts how the lignite will react and burn,” explains Sacha Parneix, commercial general manager for GE’s Steam Power business in the Middle East, North Africa and Turkey (MENAT). “We have a lot of design features to make sure that we manage to truly burn this fuel that does not want to completely burn easily.”

Riaz Haq said...

Answering Pakistan’s Burning Question: How To Ignite Lignite?
Amy Kover

https://www.ge.com/news/reports/answering-pakistans-burning-question-ignite-lignite



Flue gas then travels up to the steam boiler, where its heat transforms water stored in tubes into steam power. The steam’s mechanical energy spins enormous turbines to power electricity generators. It’s also when another kind of engineering magic — GE Power’s steam turbine — kicks in. GE’s ultra-supercritical science puts steam under pressure of roughly 4,000 pounds per square inch — the same impact as a bullet striking a solid object — and heats to 1,112 degrees Fahrenheit (600 degrees Celsius). The heat and pressure turn steam into a supercritical fluid, a phenomenon where a substance no longer has specific liquid and gas phases but exhibits properties of both at the same time. In this state, the steam can get turbines spinning faster than any other system in operation, more than 20 percent above the world-average net thermal-efficiency rate of coal-fired power plants — a measure of how well the plant converts fuel into heat. That kind of efficiency gobbles up less fuel, reducing both operating expenses and carbon dioxide emissions per kilowatt-hour generated.


Though Lucky Power plans to rely on lignite mined from Thar (with some exports for backup), the plant itself is situated 276 miles (445 kilometers) away in the outskirts of densely populated Karachi. That’s a significant boon to Qasim. “On top of being designed for local Pakistani Thar coal, the project’s location ensures easy connectivity to the national grid and very low transmission and distribution losses in supplying affordable power to the major load center of the city of Karachi,” Parneix says.


All of this further augments GE Power’s work to help Pakistan diversify its power grid. Last May, the company achieved commercial operation for two HA gas turbines for the Bhikki combined-cycle plant in Lahore to power up to 2.4 million homes. GE’s HA gas turbines are planned for operation at two other power plants in Pakistan: Balloki, near Chunian, and Haveli Bahadur Shah, in Jhang. The Haveli Bahadur Shah plant alone is expected to add the electricity capacity needed for another 2.5 million homes. GE also worked with Hawa Energy to launch a 50-megawatt wind farm along the Gharo-Keti Bandar wind corridor in Jhimpir. So far, a quarter of Pakistan’s electricity flows through fuel-agnostic GE-built technologies, supporting Pakistan’s fuel-diversification power-generation strategy.


If things go as planned at Qasim, Thar-mined lignite will get to play a starring role in this story of “How Pakistan Got Its Electric Groove On.”