Tuesday, October 12, 2021

Soaring Prices of Imported LNG Threaten Pakistan's Economic Recovery

Soaring LNG prices are adversely affecting Pakistan's balance of payments and threatening the nation's post-COVID economic recovery.  Pakistan's trade deficit has widened to nearly $12 billion in July-September 2021 quarter, up more than 100% from the same period last year. The nation's heavy reliance on expensive imported energy has been the main cause of prior balance of payments crises that have forced it to seek IMF bailouts more than a dozen times in the last 70 years. 

Global LNG Prices. Source: The Peninsula Qatar 

Pakistan: World's Fastest Growing LNG Market. Source: Bloomberg

Global Commodity Price Increases

The average LNG price for November delivery into Northeast Asia was estimated at about $32 per metric million British thermal units (mmBtu), up nearly 20 percent from the previous week, according to the Peninsula Qatar publication. Price agency S&P Global Platts said on Thursday that its Japan-Korea-Marker, which is widely used as a benchmark for spot LNG contracts, rose to $34.47 per mmBtu.       

Pakistan Trade Stats. Source: Topline Securities

Rising LNG prices have forced power generating companies in Pakistan, Bangladesh and the Middle East to start switching fuels pushing oil prices higher.  About 60% of Pakistan's current LNG needs are covered by long-term contracts at significantly lower prices than the current spot prices. US crude closed above $80 for the first time since late in 2014, bringing its climb since the end of last October to 125%, according to the Wall Street Journal

Pakistan Coal Power Plants Under CPEC. Source:China's Global Power Database

All Pakistani Power Plants Under CPEC. Source: China's Global Power Database

The key to Pakistan managing its current accounts lies in reducing reliance on imported energy and dramatically increasing its exports. Pakistan already faces climate change pressures forcing it to change its energy mix to reduce the use of fossil fuels. 

Pakistan's Malik Amin Aslam with CNN's Becky Anderson 

Malik Amin Aslam, Pakistan Prime Minister Imran Khan's special assistant on climate change, said recently in an interview with CNN that his country is seeking to change its energy mix to favor green.  He said Pakistan's 60% renewable energy target would to be based on solar, wind and hydro power projects, and 40% would come from hydrocarbon and nuclear which is also low-carbon. “Nuclear power has to be part of the country’s energy mix for future as a zero energy emission source for clean and green future,” he concluded. Here are the key points Aslam made to Becky Anderson of CNN:

1. Pakistan wants to be a part of the solution even though it accounts for less than 1% of global carbon emissions. 

 2. Extreme weather events are costing Pakistan significant losses of lives and property. Pakistan is among the countries most vulnerable to the effects of climate change. 

3. Pakistan is moving towards renewable energy by converting 60% of its energy mix to renewable by 2030. Electric vehicle (EV) transition is also beginning in his country. 

4. Aslam said:  “We are one of the world leaders on nature based solutions. However, the World Bank (WB) in its Report yesterday came up with really good numbers in a comparison done of countries who are shifting their mainstream development towards environment friendly policies and Pakistan came atop among them,” the SAPM explained. 

900 MW Zonergy Solar Park in Bhawalpur, Pakistan

To a question on Pakistan’s capacity to make investments in nature based solutions, he said, “We cannot afford not to do it….that’s a cliche in our country and we are living that cliche in Pakistan. We are not just talking the climate talk rather doing climate action in Pakistan.” 

1,100 MW Karachi Nuclear Power Plant Unit 2

To a question on the 26th Conference of Parties (COP-26) under the United Nations Framework Convention on Climate Change, Amin said his country’s revised "national determined contributions" (NDCs) are going to be released next week. “….that’s going to clearly tell the world that this (money) we had spent in nature and could do further and that was also our direction,” he added. The SAPM informed that Pakistan was going to COP 26 with a very clear message that the country has been affected by climate change, climate injustice, adding, “but we are one of the countries that are leading the way to nature based solutions.” 

Pakistan Among Top 3 Countries For Newly Installed Hydro

He cited the WB Report and said 44% of the country’s mainstream development was climate friendly investment and it had doubled in the past one year. He said 60% renewable energy target would to be based on solar, wind and hydro power projects, and 40% would come from hydrocarbons and nuclear which is also low-carbon. “Nuclear power has to be part of the country’s energy mix for future as a zero energy emission source for clean and green future,” he concluded.

Installed Wind Power in Pakistan. Source: Modor Intelligence 

It's noteworthy that Pakistan's neighbor India currently generates 70% of its electricity from coal extracted from Indian coal mine.  It is aiming for renewables and nuclear energy to account for 40% of its installed electricity capacity by 2030.   

Pakistan NDCs (Nationally Determined Contributions) For Climate Goals. Source: UN

Here's a video of Malik Amin Aslam's interview with CNN"s Becky Anderson:



Riaz Haq said...

farrukh saleem
To be fair, the following prices are not in PTI's control:
Oil from $37 to $84
Palm Oil up 36%
Coal from $60 to $250
LNG from $10 to $50


Pando said...

Most of our LNG is imported via long term contracts. Problem is with spot buying which is like a wild draw so it can wither be really good or really bad. Need to convert it to long term for at least 90% of our use. Rest 10% we can buy if required from spot market.

Riaz Haq said...

Pando: "Most of our LNG is imported via long term contracts. Problem is with spot buying which is like a wild draw so it can wither be really good or really bad. Need to convert it to long term for at least 90% of our use. Rest 10% we can buy if required from spot market"

About 60% of Pakistan's current LNG demand is covered by long term contracts.

PTI Fan said...

There is no reason for alarm. Our brothers in east Malaysia and Indonesia are largest producers of palm. Preferential rates are to be negotiated. For gas we can rely on brothers in west. Team PTI will announce good news soon. Meanwhile we have to focus on solar with China.

samir sardana said...

There is ONLY 1 SOLUTION AND 1 OPPORTUNITY,for Pakistan in this Power Crisis !

Which is the power source,which has NIL SUPPLY CHAIN RISK AND LOGISTICS RISK ?


Which is the power source,which can be run at 100% or more capacity - and where THERE CAN BE NO FUEL SHORTAGE ?

What has been the experience of RE,in Texas,last year ?

There is ONLY 1 SOURCE for Pakistan.Even if Thar Coal is beneficiated,there can be a logistics problem,on occasions - if by rakes,and if trucks - then there is a risk of pollution - and there are fuel (diesel) prices and fuel shortages.

There is ONLY 1 FUEL with no Raw Material Supply risk,No diesel price risk (for logistics) and no logistics risk and no need for spinning or reactive power,and which is base load and peak load power.


Import Chinese reactors on 40 year loans, with decommissioning contracts
Make the Chinese take back the DU
Import the Fuel Rods,from PRC
Some Fuel Rods - can be made in Pakistan - after importing Yellow Cake,or UF6 or LEU from PRC (so that some fuel diversion is possible)
Use COVID,as the Force Majeure event
Place order for Nuke Subs,with PLN or France (after Aussie fiasco) - and divert the HEU,for sub fuel
Place the Commercial Power reactor, in as much safeguard,as the Indians do,

And then use the Nukes on India ! dindooohindoo

It is a clear message from providence !

samir sardana said...

PTI Fan said...
"There is no reason for alarm. Our brothers in east Malaysia and Indonesia are largest producers of palm"

The Indonesian brothers,do NOT talk of Kashmir !

The Malaysian Brother Maha-Teer (The Great Arrow) Mohammad said that India had INVADED AND ANNEXED KASHMIR - and Chaiwala was rattled and stopped buying CPO from KL. BUT THEN THE INDON-ASSS-EANS SUPPLIED THE CPO !

Let the Indians buy Soya Oil and Mustard Oil from LATAM !

If the Indonesian and Malaysian Brothers,just support the KASHMIR BROTHERS and RAISE THE CPO rates for the INDIANS - and then give zakat to Kashmir,and REDUCE THE RATES for PAKISTAN - so that Pakistan can give charity to the Kashmiri Mujahideen - then Kashmir will be a NATION OF INDEPENDENT BROTHERS !

But the Indian OWNS the Indon-ass-eaans ! They own their coal mines and there are several large industries in Indon-ass-eaah run by Indians - like the Lohias - Indo - RAMA !

Indon-ass-eeans say that they are Hindoos by Culture,and Muslims by religion ! What does that mean ? Several Indon-ass-ean Muslims,have Hindoo names - like Saraswati,Rama and Sita!




Y ?

When will these Brothers awaken ? dindooohindoo

If Saud stops selling Oil to the Hindoos - Chaiwala will buy from US or ...


Riaz Haq said...

#Remittances of $8 billion from #Pakistani diaspora in July-Sept 2022 quarter will pay for two-thirds of the $12 billion #trade deficit. #Pakistan government still needs to borrow over $4 billion to pay for the rest. https://www.dawn.com/news/1650949

Overseas Pakistanis sent the highest-ever $8 billion remittances during the first quarter of the current fiscal year, registering a growth of 12.5 per cent over the same period last year.

The State Bank of Pakistan (SBP) on Friday reported that with inflows of $2.7bn in September, workers’ remittances continued their strong momentum and remaining above $2bn since June 2020.

“This is the 7th consecutive month when inflows recorded around $2.7bn on average,” said the SBP. In terms of growth, remittances increased by 17pc in September compared to the same month last year, while comparing with August inflows it was 0.5pc higher.

The surging imports in 1QFY22 widened the trade deficit putting immense pressure on the rupee-dollar exchange rate which ultimately reflected in higher current account deficit. The situation for the economic managers is not comfortable except the higher remittance supported the economy beyond imagination.

The country had received record remittances of $29.4bn in FY21 which helped it curtail the current account deficit.

“The proactive policy measures by the government and SBP to incentivise the use of formal channels, curtailed crossborder travel in the face of Covid19, altruistic transfers to Pakistan amid the pandemic, and orderly foreign exchange market conditions have positively contributed towards the sustained improvement in remittance inflows since last year,” the central bank said in statement.

However, the deterioration of exchange rate has created serious problems for the external trade activities. Recently, the SBP has taken several measures to curtail outflow of dollars and reduce the import bill, but the exchange rate is still against the rupee which has lost about 11.5pc during the last five months.

The highest remittances were received from Saudi Arabia but they were 2.6pc less than the same period of last year. During July-September 2021-22 the remittances from Saudi Arabia were $2.025bn against $2.080bn last year. The contribution of Saudi Arabia in the total remittances during the first quarter of FY22 was almost 25pc. In September, Pakistan received $691m from the kingdom against $694m in the same month of last year.

The remittance from the United Arab Emirates was second highest as it witnessed a growth of 8.7pc while it amounted to $1.545bn during the first quarter of FY22.

The inflows from UK and USA noted a growth of 13.2pc and 32pc amounting to $1.115bn and $836m respectively. The growth in the first quarter of FY21 was 71.5pc for UK and 63pc for USA.

For the first time, the inflows from EU countries surpassed the total inflows from other GCC countries. The inflows from EU countries rose $889m compared to $880.7 from the GCC countries. The remittances from EU countries increased by 47.8pc compared to the same period of last fiscal year.

Riaz Haq said...

From Twitter:
Syed Arif Rehman
Excellent communication by Finance Ministry. Even during these tough times, it is always great to see government communicating transparently with stakeholders. Well done.



Key Points:

Current Account Deficit in Q1 FY 2021-22 is $3.4 billion'

Imports include nearly $1 billion of COVID vaccines

High prices of energy imports

Exports up 12.5% in Q1

Improved outlook for food imports due better wheat & sugarcane harvest as well higher cotton output

Riaz Haq said...

#Coal will power much of #India for the next few decades, according to leaked documents seen by BBC News. India is among countries lobbying the #UN against completely moving away from #fossil fuels, the documents show. #COP26Glasgow #carbon #ClimateCrisis https://www.bbc.com/news/world-asia-india-58991207

Countries will be asked to commit to slashing greenhouse gas emissions at the COP26 climate summit in November.

India is the world's third-largest carbon emitter, after China and the US.

India aims for renewables and nuclear energy to account for 40% of its installed electricity capacity by 2030 - a goal it could achieve ahead of time, according to the Climate Action Tracker (CAT).

But it remains the world's second-largest consumer of coal, which still powers more than 70% of its grid. But coal will be difficult to give up, India has told the team of scientists compiling the UN report ahead of the summit in Glasgow.

The reports - which bring together evidence on how best to slow down global warming - are by the Intergovernmental Panel on Climate Change (IPCC), the UN body studying climate change.

"In spite of substantial growth in renewable energy sector in India, coal is likely to remain the mainstay of energy production in the next few decades for sustainable economic growth of the country," said a senior scientist from India's Central Institute of Mining and Fuel Research, according to the leaked documents.

CAT estimates that by 2030, India's emissions intensity will fall to 50% below 2005 levels, going past its avowed target, 35%. But India has yet to explain how it will reach net zero emissions - nor has it said by when it plans to do so.

China, the world's biggest carbon emitter and coal consumer, has pledged to go carbon neutral by 2060. And demand for coal in the country has also flattened, possibly leaving the future of the fossil fuel in the hands of Indian policy makers.

Riaz Haq said...

#FossilFuel Drilling Plans Undermine #Climate Pledges. As #China and #US are expecting to cut back on #coal extraction in the decades ahead, that would be offset by plans for new mining in places like #Australia , #India & #Russia. #COP26Glasgow #Carbon https://www.nytimes.com/2021/10/20/climate/fossil-fuel-drilling-pledges.html

Countries are planning to produce more than twice as much oil, gas and coal through 2030 as would be needed if governments want to limit global warming to Paris Agreement goals.

The report looked at future mining and drilling plans in 15 major fossil fuel producing countries, including the United States, Saudi Arabia, Russia, Canada, China, India and Norway. Taken together, those countries are currently planning to produce more than twice as much oil, gas and coal through 2030 as would be needed if governments want to limit warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above preindustrial levels.

Scientists and world leaders increasingly say that holding global warming to 1.5 degrees Celsius is crucial if humanity wants to avoid the most catastrophic consequences of climate change, such as ever-deadlier heat waves, large scale flooding and widespread extinctions. The world has already heated up roughly 1.1 degrees since the Industrial Revolution.


Making the task even tougher, the world is currently experiencing a severe energy crunch, with Europe, Asia and Latin America all facing shortages of natural gas this fall to supplant their renewable power operations. The International Energy Agency recently warned that nations need to significantly increase their investment in clean energy to overcome these problems, but the disruptions could also bolster calls for more fossil fuel production. China’s government, for example, recently ordered coal companies to increase their mining output to manage an electricity shortage that has led to rolling blackouts nationwide.

To address these challenges, the new report calls for closer international coordination “to ensure that declines in fossil fuel production are distributed as equitably as possible, while minimizing the risks of disruption.”

Riaz Haq said...

#US intelligence report identifies #India, #Pakistan & #Afghanistan among 11 countries most at risk due to climate change. #Himalayas Glaciers are melting. Pakistan relies on downstream #water from heavily glacier-fed rivers. #ClimateCrisis #food #COP26 https://timesofindia.indiatimes.com/world/us/first-ever-us-intel-report-on-climate-puts-india-pakistan-among-11-countries-of-high-risk-and-concern/articleshow/87212037.cms

Riaz Haq said...

SBP eases terms for renewable energy financing


The State Bank of Pakistan (SBP) has allowed all Renewable Energy Investment Entities (RE-IEs) to avail financing on easy conditions to remove growing electricity shortage in the country.

The SBP on Monday said that to promote investment in RE solutions by companies, the central bank has eased the conditions for renewable energy solution providers under its Refinance Scheme for Renewable Energy.

With the aim of helping address the challenges of energy shortages and climate change, the central bank revised its Financing Scheme for Renewable Energy in July 2019. Since the inception of the scheme, 717 projects having potential of adding 1,082MW of energy supply through renewable sources have been financed. As of June 30, 2021, total outstanding financing under the scheme is Rs53 billion.

RE, often referred to as clean energy, comes from natural sources — sunlight, water and wind — or processes that are constantly replenished.

Since 2019, projects promising 1,082MW of energy supply have been financed

“Now, all RE-IEs interested in installing renewable energy projects and solutions are allowed to avail refinance under Category-III of the scheme,” said the SBP.

An RE-IE is a business entity (including vendors and suppliers) whose business is to establish renewable energy projects for onward leasing, renting out or selling on deferred payment basis or selling of electricity generated from these projects to end users.

The SBP also launched a Sharia-complaint version of the scheme in August 2019. The scheme now comprises of three categories. Under Category-I, financing is allowed for setting up of RE power projects with capacity ranging from 1-50 MW for own use or selling of electricity to the national grid or a combination of both.

Under Category-II, financing is allowed to domestic, agriculture, commercial and industrial borrowers for installation of renewable energy based projects of up-to 1 MW to generate electricity for own use or selling to the grid or distribution company under net metering.

Under Category-III, financing is allowed to vendors, suppliers and energy sale companies for installation of wind and solar systems of up to 5 MW.

While there is substantial take up under Category-I and II, solution suppliers under Category-III faced problems, said the SBP.

Accordingly, in light of the feedback received from stakeholders including RE solution suppliers, Alternate Energy Development Board (AEDB) and banks, the requirement of AEDB certification has been relaxed for RE-IEs who do not undertake installations on their own but hire services of installers or vendors for installation of RE projects.

“However, vendors, suppliers, engineering procurement and construction (EPC) contractors of these RE-IEs will still be required to be certified under the AEDB certification regulations,” said the SBP.

The SBP expects that this revision in Category-III will further facilitate production of clean energy in the country.

Riaz Haq said...

#Qatar to Invest in #Pakistan’s Next #LNG Import Terminal
in a bid to support one of the fastest growing buyers of the super-chilled fuel. Energas’ terminal will be Pak’s largest with a capacity to import 1 billion cubic feet of #gas a year.- Bloomberg


Qatar, the world’s top supplier of liquefied natural gas, will invest in Pakistan’s next import terminal in a bid to support one of the fastest growing buyers of the super-chilled fuel.

Qasim Terminal Holding Co., a subsidiary of Qatar Energy, has applied for clearance with Pakistan’s government to take a stake in Energas Terminal Pvt., according to people familiar with the matter. Qatar Energy and Energas did not respond to requests for comments while Pakistan’s competition commission declined to comment.

The deal comes as Qatar plans to dramatically increase production over the next decade, which will require the Middle Eastern nation to find more buyers for its fuel. Qatar is already Pakistan’s largest gas supplier with its latest long-term deal slated to start this year.

Energas’ terminal will be the nation’s largest with a capacity to import 1 billion cubic feet of gas a year. Pakistan currently operates two LNG terminals, while Energas and Japan’s Mitsubishi Corp. are vying to build the nation’s first twoprivate projects.

Pakistan is going to dominate LNG growth in emerging Asia along with Bangladesh and Thailand over the next five years. The three nations will almost double LNG imports over 2021-25, according to BloombergNEF.

Riaz Haq said...

Energy Consumption in Residential Sector of Pakistan

Sadia Gul
University of California, Davis
Rafia Akbar
Muhammad Bilal Sajid
Ghulam Ishaq Khan Institute of Engineering Sciences and Technology


Energy consuming buildings account for 30-40% of the overall energy consumption in the world and are responsible for more than one third of greenhouse gases emissions. In Pakistan Residential building sector has around 47% share in total energy consumption. Study is conducted to identify the energy consumption pattern and the areas of energy wastage in residential sector of Islamabad. From the analysis of its annual energy usage it can be clearly seen that electricity consumption dominates in term of cost but natural gas has major share in annual energy consumption. Recommendations are provided which include required energy retrofit measures for improving building performance and financial assistance from Government officials. Through these energy efficiency measure significant reduction in carbon footprint can be achieved.

Riaz Haq said...

According to the World Bank, Pakistan is one of the top five vulnerable countries, despite having no significant contribution to climate change. Another report mentions: “In 2019, CO2 emissions for Pakistan was 223.6 million tons. Between 1970 and 2019, CO2 emissions of Pakistan grew substantially from 17.7 to 223.6 million tons rising at an increasing annual rate that reached a maximum of 15.38 percent in 1987 and then decreased to 1.33 percent in 2019.”


The drastic decrease in carbon emissions is, surely, the result of steps taken by Pakistan under its Climate Action – the Sustainable Development Goal (SDG) 13. The flagship project, Ten Billion Tree Tsunami (TBTT), is not just a tree plantation movement, but a comprehensive initiative for ecosystem conservation and management. More than a billion new plantations, revised plans for forest management and development across the countries with the engagement of provinces and administrative entities, and capacity of institutions have already been noticed and appreciated by the national and international environment and climate watchdogs.

The Sustainable Development Report 2020, written by a group of authors led by Prof. Jeffrey Sachs, President of the Sustainable Development Solutions Network (SDSN), and published by Cambridge University Press, has declared Pakistan accomplished all targets of the SD-13 ten years ahead of the actual date – 2030. The UNDP SDGs report has also shown Pakistan’s remarkable progress on SDG-13 Climate Action.

COP26 is an opportunity for Pakistan to vigorously showcase its achievements so far as well as its vulnerabilities. Pakistan has been facing the worst impact in the forms of short-span heavy rains, flash floods, unprecedented land-sliding incidents, glacial melting, air pollution and fast diminishing water resources, climate prone crop diseases and low productivity and many others. Overburdened by debt, incapacity and capital shortfall have further increased Pakistan’s vulnerability. Keeping in view the performance on climate action, Pakistan should be slated among the global top priorities for funding, human resource development and institutional strengthening to protect masses living at the edge and their livelihood resources.

The government has approved Pakistan’s Nationally Determined Contribution (NDC) for the UN Climate Conference COP26 where it has aimed for an ambitious 50 per cent reduction on top of the present 1.3 per cent carbon emissions by 2030 subject to the provision of $100 bn climate finance. Special Assistant to Prime Minister Malik Amin Aslam has mentioned that national funding, professional capacity and institutional strengthening will simultaneously take place while mobilising global resources to attain the goal.

Riaz Haq said...

‘Pakistan to present diverse agenda at COP-26’


Pakistan is all set to have a diverse representation at the 26th Conference of the Parties (COP-26) in Glasgow where the key negotiations would open up with a debate on developing countries’ plight of bearing the brunt of environmental degradation caused by the developed countries, said Dr. Abid Qaiyum Suleri, Executive Director, Sustainable Development Policy Institute (SDPI).

Dr. Suleri was addressing a pre-COP-26 briefing held here by SDPI.

Dr. Suleri said that this year, the conference is going to have an extraordinary representation of civil society, parliamentarians, think tanks, and the private sector from across the globe.

He went on to say that the developed countries during the moot would focus on emerging economies like China, India, Brazil, and South Africa to reduce their carbon emissions and provide a financing work plan for chipping in global climate change mitigation efforts.

Dr. Shafqat Munir from SDPI, while moderating the briefing highlighted the key features of the SDPI’s study on Green Recovery during COVID-19 in power and energy sectors.

Dr. Hina Aslam and Dr. Sajid Amin, authors of the study, underpinned the outcomes and recommendations of their research that suggested an ambitious opportunity to convincingly reduce emissions and debt burden through investments in renewable energy projects.

Earlier, SDPI held a discussion on ‘Green Financing and Economic Recovery of Pakistan’ in the backdrop of climate goals for COP-26.

Speaking on the occasion, Secretary Power Division, Ministry of Energy, Ali Raza Bhutta, asserted that the energy mix of Pakistan is very healthy as around 29% of electricity is coming through hydropower. Likewise, the contribution of solar, wind, and biogas is projected to increase significantly in the future.

Shah Jahan Mirza, Managing Director, Private Power, and Infrastructure Board (PPIB) informed the participants that the Government of Pakistan has shown a strong commitment towards increasing the share of renewable energy through HRE Policy 2019 which targets to increase the renewable energy share in power generation to 20% by 2025 and 30% by 2030.

Dr. Sardar Moazzam, Managing Director, National Energy Efficiency and Conservation Authority (NEECA) explained the role of energy efficiency and conservation in green recovery and said that it has been missing from the landscape of energy planning.

Faisal Sharif, Director, Project Appraisals, Private Power & Infrastructure Board, suggested that the green stimulus can accelerate the transition towards green and clean energy, simultaneously spurring green economic recovery and growth by creating millions of jobs and putting emissions into structural decline.

M Ali Kemal, Chief, SDGs, Planning Commission of Pakistan, emphasised the debt swaps and green financing mechanisms support green recovery from Covid-19.

Kashmala Kakakhel, the climate finance specialist, was of the view that there is a need to further address all the relevant SDGs of the country such as poverty as green recovery is not only about Net-Zero.

Hartmut Behrend, Coordinator, Pakistan-German Climate and Energy Initiative, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Dr Sajid Amin Javed from SDP and Dr Fareeha Armughan also shared their views with the participants, especially about green financing and climate finance mechanism.

Riaz Haq said...

With Climate Pledges, Some Wall Street Titans Warn of Rising Prices
Leaders of some of the world’s biggest financial firms say that the rush to transition to clean energy could have unintended consequences for the global economy.


GLASGOW — Big business finally seems to be taking the climate crisis seriously. After years spent lurking on the sidelines, the chief executives of the world’s largest banks, companies and investment firms this week took a spot at the center of the debate at COP26.

Banks, asset managers and insurers in recent days pledged to use trillions of dollars to achieve net-zero emissions targets as pension funds and other big investors move to divest trillions more from the fossil fuel industry.

Yet some leaders of the world’s biggest financial firms — including some who were part of pledges made at the climate summit in Glasgow — are warning that the rush to rapidly transition away from a carbon-intensive energy system could unleash unintended consequences that would jeopardize the world’s economic recovery in the near term.

While some of their concerns are so far largely speculative, they suggest that less investment in fossil fuel production could send energy prices soaring, and that divestment could make it harder to monitor dirty energy production.

Speaking at a conference in Saudi Arabia last week, Stephen A. Schwarzman, chief executive of the private equity firm Blackstone, said the growing number of institutional investors pledging to divest their holdings from fossil fuel companies was making it harder for oil and gas producers to finance production.

“If you try and raise money to drill holes, it’s almost impossible to get that money,” Mr. Schwarzman said, adding that an energy shortage could lead to “real unrest” around the world. It is a sentiment that has been echoed by other executives in recent weeks, as U.S. oil prices hit $85 a barrel, a seven-year high.

Jamie Dimon, the chief executive of JPMorgan Chase, said in an interview that the world should be transitioning to a decarbonized economy “right now.” But he cautioned that while less money was being invested in fossil fuels, therefore tightening the supply, it was important for banks to keep funding conventional energy production.

Riaz Haq said...

The Pakistan LPG market is expected to grow gradually in the coming years. The country is facing natural gas shortages to meet its energy needs, and, encouragingly, LPG is being promoted as a bridge fuel, especially for energy-starved populations in remote and hilly areas. However, the pace of demand growth will be determined mostly by whether government policies will move LPG toward pricing parity with natural gas and restructure the priority order in the natural gas allocation policy.


Natural gas market overview

Natural gas is a major contributor to Pakistan’s primary energy mix, providing almost 50% of the total energy needs (see Figure 1). It is used extensively across a number of sectors—power, residential and commercial, industry, fertilizer, and transport (compressed natural gas [CNG]).

Domestic natural gas production comes primarily from mature nonassociated gas fields in the province of Sindh (see Figure 2). The country’s major gas fields include Sui, Uch, Qadirpur, Sawan, Zamzama, Badin, Bhit, Kandhkot, Mari, and Manzalai. Pakistan’s gas production has been largely flat since 2008, with production peaking at 4.23 Bcf/d in 2012, and eased to 4.01 Bcf/d in 2016 (see Figure 3).

Natural gas reserves have also fallen, from 0.85 Tcm (30.0 Tcf) to 0.50 Tcm (17.6 Tcf), declining by an average of 5% per year since 2005 (see Figure 3). Based on the current rate of production (4 Bcf/d), reserves are expected to last less than 20 years. New investments and exploration have been challenged by regulatory hurdles, insufficient gas prices, and security risks, particularly in the province of Balochistan.

Gas demand in Pakistan is spread across multiple sectors, but high regional imbalances exist. The Punjab region accounts for the most consumption but has the lowest share of production (see Figure 2). The power sector was the largest consumer at 33% of total demand, followed by the residential (21%), industrial (19%), and fertilizer (19%) sectors in fiscal year 2016 (see Figure 4).

The country has a well-developed gas transmission and distribution pipeline network. The network of more than 11,000 km of transmission lines and over 139,000 km of distribution lines belongs solely to two companies: Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC). Owing to the country’s large transmission and distribution gas grid, natural gas will remain a major part of the energy mix (see Figure 1).

Gas demand is Pakistan is highly supply constrained, with an unmet demand potential of 1.5–2.0 Bcf/d (see Figure 5). To supplement the gas shortages in various sectors of the economy, Pakistan has plans to ramp up LNG imports. The country’s first LNG import terminal developed by a JV between Engro Corporation and Royal Vopak of the Netherlands came online in March 2015.

The government awarded three tenders to Eni and Gunvor in 2016, two of which are tied to the second FSRU targeted to start up in 2017. Pakistan has plans for development of transnational gas pipelines— the TAPI and IPI pipelines—but both projects face geopolitical and technical challenges.

IHS Markit anticipates Pakistan’s LPG production from gas processing to remain stagnant owing to sluggish E&P activities and domestic gas shortages. Furthermore, LPG production from refineries is expected to increase modestly over the forecast period, as no significant Greenfield and brownfield capacity expansions are envisaged

Riaz Haq said...

Pakistan is seeking to buy liquefied natural gas (LNG) cargoes from the spot market after two long-term suppliers failed to fulfil commitments to deliver shipments in March, Bloomberg reported on Friday while citing “people with knowledge of the matter”.


Pakistan LNG Ltd has issued a tender for two cargoes to be delivered next month, the international news agency said.

Two suppliers, Eni SpA and Gunvor Group Ltd, recently informed Islamabad about their inability to deliver cargoes scheduled for March, Pakistan LNG Ltd told Bloomberg.

A global energy crunch has resulted in LNG spot prices surging to levels that are too high for cash-strapped nations like Pakistan. The South Asian nation purchased its most expensive LNG cargo ever in November after a similar cancellation, and has avoided additional purchases since then.

Pakistan is “carefully” analysing its gas shortage, and will purchase cargoes depending on the prices they receive, Pakistan LNG Ltd told the news agency. It’s looking for the cargoes to be delivered between March 2 and March 3 and from March 10 to March 11, it said. The offers are due on Feb 22.

Eni’s LNG deliveries to Pakistan were disrupted after its supplier defaulted on obligations for an unspecified reason, the Italian company told Bloomberg in an emailed statement. “Eni is evaluating all contractual remedies, including legal actions,” the company said by email.

Gunvor declined to comment, the Bloomberg report said.

Riaz Haq said...

Stephen Stapczynski
Europe's campaign to quit Russian fuel plunges Pakistan into darkness ����⚡

EU's energy policy is designed to punish Moscow for the war in Ukraine. But it's also wreaking havoc thousands of miles away as Pakistan grapples with a gas shortage



Europe's campaign to quit Russian fuel is designed to punish Moscow for its invasion of Ukraine. It's also wreaking havoc thousands of miles away from the conflict, plunging Pakistan into darkness, undermining one regime and threatening the stability of the country's new leadership.
A decade ago, the world's fifth-most populous country took specific steps to insulate itself from the kinds of violent price spikes that are roiling the market today. It made a massive investment in liquified natural gas and signed long-term contracts with suppliers in Italy and Qatar. Now some of those suppliers have defaulted, though they continue to sell into the more lucrative European market, leaving Pakistan in exactly the position it tried so hard to avoid.

In order to avoid blackouts during the Eid holiday last month, the government paid nearly $100 million to procure a single LNG shipment from the spot market, a record for the cash-strapped nation. In the fiscal year ending July, the country's costs for LNG could top $5 billion, twice what they were a year ago. Even so, the government can't cushion the blow for its citizens: The International Monetary Fund is in talks to bail out the nation with a key condition that it cuts fuel and electricity subsidies.

Now parts of Pakistan are experiencing planned blackouts of more than 12 hours, limiting the effectiveness of air conditioning to offer relief during the ongoing heatwave. The previous prime minister continues to draw large crowds to rallies and protests, amplifying citizens' anger about inflation that's rising at 13.8%. Prime-time talk show hosts regularly discuss how Pakistan will get the fuel it needs, and how much it will have to pay.

Last week, the government announced a new raft of energy-saving measures. Civil servants were released from regular Saturday shifts, and the budget for security personnel was slashed 50%.

"I am acutely aware of the hardships people are facing," Prime Minister Shehbaz Sharif said in a tweet in April ahead of the Eid holiday. He ordered his government to resume purchasing expensive overseas natural gas shipments that same week. And earlier this month he warned that they don't have enough money to continue buying gas from overseas.

The supply crunch will go beyond blackouts. The government has redirected existing natural gas supplies to power plants, short-changing fertilizer makers that depend on the fuel as a feedstock. That move could threaten the next harvest, leading to even higher food costs next year. Cellphone towers are using backup generators to sustain service through the blackouts, but they too are running out of fuel.

There's little reprieve on the horizon. The cost of LNG has surged by more than 1,000% in the last two years, first on post-pandemic demand, then on the Russia invasion of Ukraine. Russia is Europe's biggest supplier of natural gas, and the threat of supply disruptions sent spot rates to a record in March.


Riaz Haq said...

Meanwhile, Europe has been demanding more and more LNG. So far this year, Europe's LNG imports are up 50% from the same period last year and aren't showing any sign of slowing down. Policymakers in the European Union drafted a plan to significantly increase LNG deliveries as an alternative to Russian gas as they break ties with President Vladimir Putin's regime over the war in Ukraine. Countries like Germany and the Netherlands are fast-tracking the construction of floating import terminals, with the first ones slated to start within the next six months.


"Europe is sucking LNG" from the world, said Steve Hill, executive vice president at Shell Plc, the world's top trader of the fuel. "But that means less LNG will go to developing markets."

Not long ago, Pakistan represented the future for the LNG industry. By the mid-2010s, demand for the fuel, gas cooled to 162 degrees Celsius so it can be shipped around the world via tanker, had plateaued in developed markets. But technological advancements had brought down the costs and construction times for import terminals, and new gas fields cut the prices of the fuel itself.

At the new, lower prices, poorer countries could finally consider the fuel. Suppliers set their sights on these new markets, and when Pakistan issued a tender for long-term LNG supplies, more than a dozen companies bid for its business.

In 2017, Pakistan selected Italy's Eni SpA and trading house Gunvor Group Ltd to supply the country with LNG into the next decade. At the time, the terms were considered good, and the prices were lower than a similar contract signed with Qatar the previous year.

Now, though, the two suppliers have canceled more than a dozen shipments scheduled for delivery from October 2021 through June 2022, coinciding with the surge in European gas prices.

Such defaults are almost unheard of in the LNG industry, said Bruce Robertson, an analyst at the Institute for Energy Economics and Financial Analysis. Traders and industry insiders interviewed by Bloomberg couldn't remember the last time so many cargoes were scrapped without being directly related to a major outage at an export facility.

Eni and Gunvor have said they had to cancel because they're facing their own shortages and don't have the LNG to send to Pakistan. Typically when exporters face those kinds of challenges, they replace the deliveries by buying a shipment on the spot market, but Eni and Gunvor haven't done that.

Gunvor declined to comment for this story. Eni's supplier didn't meet their obligation, and was therefore forced to default on shipments to Pakistan, the Italian company said in an emailed statement, also noting that it did not take advantage or benefit from the cancellations and applied all contractual provisions to manage such disruptions.

Suppliers are usually loathe to cancel. It damages the business relationship, and it's often very, very expensive. Developed markets typically demand "failure to deliver" penalties of up to 100%. According to Valery Chow, an analyst at Wood Mackenzie Ltd., "it's very rare for LNG suppliers to renege on long-term contracts beyond force majeure events."

Pakistan's contracts called for a more modest 30% penalty for cancellation, most likely in exchange for lower prices overall. At this point, prices in the European spot market are high enough to more than offset those penalties. An LNG shipment for May delivery to Pakistan via a long-term contract would cost $12 per million British thermal units, according to Bloomberg calculations. For comparison, a May delivery spot cargoes to Europe were being traded at over $30. Eni and Gunvor have continued to meet their commitments to clients there.

Riaz Haq said...

Strong #US #Dollar Spells Trouble for World #Economy. Its rise being felt in #fuel and #food shortages in #SriLanka, in #Europe’s record #inflation, in #Japan’s exploding #trade deficit, #Pakistan's #IMF bailout and #Bangladesh seeking IMF help https://www.wsj.com/articles/dollars-rise-spells-trouble-for-global-economies-11663437428?st=bg6daop4fdh9848 via @WSJ

For the U.S., a stronger dollar means cheaper imports, a tailwind for efforts to contain inflation, and record relative purchasing power for Americans. But the rest of the world is straining under the dollar’s rise.

“I think it’s early days yet,” said Raghuram Rajan, a finance professor at the University of Chicago’s Booth School of Business. When he served as governor of the Reserve Bank of India last decade, he complained loudly about how Fed policy and a strong dollar hit the rest of the world. “We’re going to be in a high-rates regime for some time. The fragilities will build up.”


The U.S. dollar is experiencing a once-in-a-generation rally, a surge that threatens to exacerbate a slowdown in growth and amplify inflation headaches for global central banks.

The dollar’s role as the primary currency used in global trade and finance means its fluctuations have widespread impacts. The currency’s strength is being felt in the fuel and food shortages in Sri Lanka, in Europe’s record inflation and in Japan’s exploding trade deficit.

This week, investors are closely watching the outcome of the Federal Reserve’s policy meeting for clues about the dollar’s trajectory. The U.S. central bank is expected Wednesday to raise interest rates by at least 0.75 percentage point as it fights inflation—likely fueling further gains in the greenback.

In a worrying sign, attempts from policy makers in China, Japan and Europe to defend their currencies are largely failing in the face of the dollar’s unrelenting rise.

Last week, the dollar steamrolled through a key level against the Chinese yuan, with one dollar buying more than 7 yuan for the first time since 2020. Japanese officials, who had previously stood aside as the yen lost one-fifth of its value this year, began to fret publicly that markets were going too far.

The ICE U.S. Dollar Index, which measures the currency against a basket of its biggest trading partners, has risen more than 14% in 2022, on track for its best year since the index’s launch in 1985. The euro, Japanese yen and British pound have fallen to multidecade lows against the greenback. Emerging-market currencies have been battered: The Egyptian pound has fallen 18%, the Hungarian forint is down 20% and the South African rand has lost 9.4%.

The dollar’s rise this year is being fueled by the Fed’s aggressive interest-rate increases, which have encouraged global investors to pull money out of other markets to invest in higher-yielding U.S. assets. Recent economic data suggest that U.S. inflation remains stubbornly high, strengthening the case for more Fed rate increases and an even stronger dollar.

Dismal economic prospects for the rest of the world are also boosting the greenback. Europe is on the front lines of an economic war with Russia. China is facing its biggest slowdown in years as a multidecade property boom unravels.

Riaz Haq said...

Strong #US #Dollar Spells Trouble for World #Economy. Its rise being felt in #fuel and #food shortages in #SriLanka, in #Europe’s record #inflation, in #Japan’s exploding #trade deficit, #Pakistan's #IMF bailout and #Bangladesh seeking IMF help https://www.wsj.com/articles/dollars-rise-spells-trouble-for-global-economies-11663437428?st=bg6daop4fdh9848 via @WSJ

For the U.S., a stronger dollar means cheaper imports, a tailwind for efforts to contain inflation, and record relative purchasing power for Americans. But the rest of the world is straining under the dollar’s rise.

“I think it’s early days yet,” said Raghuram Rajan, a finance professor at the University of Chicago’s Booth School of Business. When he served as governor of the Reserve Bank of India last decade, he complained loudly about how Fed policy and a strong dollar hit the rest of the world. “We’re going to be in a high-rates regime for some time. The fragilities will build up.”


On Thursday, the World Bank warned that the global economy was heading toward recession and “a string of financial crises in emerging market and developing economies that would do them lasting harm.”

The stark message adds to concerns that financial pressures are widening for emerging markets outside of well-known weak links such as Sri Lanka and Pakistan that have already sought help from the International Monetary Fund. Serbia became the latest to open talks with the IMF last week.

“Many countries have not been through a cycle of much higher interest rates since the 1990s. There’s a lot of debt out there augmented by the borrowing in the pandemic,” said Mr. Rajan. Stress in emerging markets will widen, he added. “It’s not going to be contained.”

A stronger dollar makes the debts that emerging-market governments and companies have taken out in U.S. dollars more expensive to pay back. Emerging-market governments have $83 billion in U.S. dollar debt coming due by the end of next year, according to data from the Institute of International Finance that covers 32 countries.

Riaz Haq said...

Stephen Stapczynski
Europe needs "immediate action" to avoid a natural gas shortage in 2023, says the

⚠️ Europe faces a 30bcm shortfall next summer in gas needed to fuel its economy AND sufficiently refill storage
🇷🇺 Next year's challenge: lower Russian supply, higher Chinese LNG demand


Riaz Haq said...

New hydel projects to produce over 11,000MW
Will enhance overall hydroelectric power capacity to 20,684MW


The Water and Power Development Authority (Wapda) is pursuing six hydroelectric power projects that will add 11,241 megawatts of environment-friendly electricity to the existing hydel generation capacity of 9,443MW in the coming years.

Talking to APP, Wapda officials said that at present total installed capacity of 24 hydel power stations of Wapda stood at 9,443MW and the addition of 11,241MW would enhance it to 20,684MW.

The existing hydel power stations included Tarbela, Mangla, Ghazi Barotha, Neelum-Jhelum and Warsak, which contributed about 25% to the total system capacity of 36,166MW from all sources.

The net electricity output of those power stations was about 32,000 gigawatt-hours (GWh) per annum.

Sharing details of the upcoming hydel power projects, the officials said that the Dasu Hydropower Project would contribute 4,320MW, Tarbela 5th Extension 1,510MW, Mohmand Dam 800MW, Diamer-Bhasha Dam 4,500MW, Keyal Khwar Power Project 128MW and Kurram Tangi 83.4MW to the national grid system.

Meanwhile, Pakistan Atomic Energy Commission has developed several nuclear power projects to support economic uplift in Pakistan.

Total installed capacity of the nuclear power plants connected with the national grid was 3,530MW, which included 1,330MW Chashma nuclear power project and 2,200MW Karachi nuclear power project.

Riaz Haq said...

Until about a decade ago, the Jhimpir region in Sindh was a dry, barren stretch of land, inhabited by nomadic tribes. Today, it is home to hundreds of mammoth rotating blades in about two dozen wind farms.


Around 90 kilometres from Karachi, Jhimpir is the heartland of the country’s largest ‘wind corridor’, which has the potential to produce 11,000 megawatts (MW) of clean energy.

Among early investors was the China Three Gorges Corporation, a Chinese state-owned power company, operating under an investment holding company, China Three Gorges South Asia Investment Limited.

The company has funded and built three wind projects with a combined capacity of nearly 150 MW. The first of these began construction in 2012.

The latter two projects, completed in 2018, were funded under the China Pakistan Economic Corridor (CPEC), an integral part of Beijing’s flagship multibillion-dollar Belt and Road Initiative (BRI).

In an official statement following Prime Minister Shehbaz Sharif’s visit to China on Nov 1-2, the premier reaffirmed the importance of CPEC to Pakistan’s development.

For the time being, renewables represent only a small portion of Pakistan’s power generation mix. Of a total of 43,775 MW, installed capacity for wind and solar represent around 4.2 per cent (1,831 MW) and 1.4pc (630 MW) respectively, according to the National Electric Power Regulatory Authority’s State of Industry 2022 report.

In terms of CPEC, the November 2022 joint statement from China and Pakistan listed oil and gas as among the “priority areas of CPEC cooperation”.

But a recent shift in the direction of Chinese investment may be hugely significant for the country’s energy future, and the climate.

The shift from coal?
In the years before the launch of CPEC in 2015, Pakistan was desperate to end its long, crippling power shortages.

The country was keen to develop its untapped indigenous coal in Thar desert, but multilateral financial institutions were not interested. Along came China in 2013, with an offer to lend massive amounts for infrastructure development and coal mining.

Details of the financing deals are a closely guarded secret, but multiple Chinese-funded coal projects followed. Eight completed or under-construction coal projects are listed as part of CPEC, totalling 6,900 MW, which include four on Thar coal.

Then in 2021, after growing pressure on China — currently the world’s biggest polluter — to curb its greenhouse gas emissions, Beijing announced it would not build new coal-fired power plants overseas, and would increase support for low-carbon energy.

In December 2020, Pakistan announced that it would not build any new power projects that depend on imported coal, and pledged that by 2030, 60pc of its energy will come from clean and renewable sources.

The government has since scrapped a number of potential coal projects, including a 300 MW plant at the Chinese-controlled Gwadar sea port in Balochistan. Reportedly, it is to be replaced by a solar plant.

‘Greening’ CPEC
As Beijing tries to rebrand the BRI as an eco-friendly initiative, Chinese officials have promoted the idea of a ‘green’ CPEC. But Hina Aslam, research fellow at the Sustainable Development Policy Institute (SDPI), a think tank in Islamabad, points out that “in the energy sector, it has meant a greater focus on hydro rather than wind and solar”.

Besides wind energy in Jhimpir, China Three Gorges Corporation is investing heavily in what it is globally known for: hydropower (the company is behind the Three Gorges Dam in China, the world’s biggest power station).

In June 2022, it completed a 720 MW project in Karot in northern side of the country.

Work is advancing on a 1,124 MW hydropower plant near Muzaffarabad, and a third 640 MW project has recently been approved in Mahl. The same company is behind both projects.

Riaz Haq said...

Put together, China Three Gorges aims to produce 2,500 MW of renewable energy in Pakistan, mostly through hydro. The Pakistan government – like many others – includes hydropower under the umbrella of renewable energy, but this is disputed by many environmentalists due to the often high environmental, social and financial costs of hydropower, including disruption of important riverine ecosystems. In Pakistan, dams are also politically contentious and a source of discord between upstream and downstream provinces. Yet, both Beijing and Islamabad appear keen to pursue hydropower.

But there are huge challenges facing Pakistan’s shift to renewable energy. “A lack of consistency in policy has been the biggest issue,” says Noman Sohail, senior business manager at China Three Gorges South Asia Investment Ltd.

“Arranging lenders and finance for renewable projects is not a problem. But it’s disorienting when policies are reversed, tariffs renegotiated and unpaid capacity payments allowed to pile up.”

Growing popularity of solar
There is one form of renewable energy in particular that presents immense potential for Pakistan, but which has seen little investment to date: solar. A World Bank study in 2020 urged Pakistan to urgently expand solar and wind “to at least 30 per cent of electricity generation capacity by 2030, equivalent to around 24,000 MW”.

As of 2022, the proportion is 5.6pc according to the National Electric Power Regulatory Authority’s State of Industry 2022 report.

Pakistan’s slow take-up of solar energy is evident from the fact that of the 21 energy projects completed or in development under CPEC, only one is solar: the 1,000 MW Quaid-i-Azam Solar Park in Cholistan Desert, Punjab, built by Chinese company Zonergy.

This project, promoted as one of the world’s biggest solar parks, was meant to be completed by 2017. But only 40pc of this capacity has been implemented so far.

Suleman Rehman, chief executive of Burj Capital, a Dubai-based investment company focused on renewable energy in Pakistan, says that regardless of the government’s apparent lack of focus, the demand for affordable solar power is growing exponentially.

“The competition is getting intense. More and more local players are coming up every month. Installing a 4MW solar project is no longer a big deal for us,” says Rehman.

According to Rehman, the private sector is not waiting for policymakers to facilitate the energy transition. Those who can are turning to the solar option. That explains the recent proliferation of rooftop photovoltaic panels in big cities, as well as in off-grid villages across the country.

The solar future
Costly fuel imports have already had a crippling effect on Pakistan’s economy. This year, the volatility of global energy prices, exacerbated by Russia’s invasion of Ukraine, took a damaging toll on Pakistan’s foreign exchange reserves. The country was on the verge of a default before the International Monetary Fund agreed to step in to help it stay afloat.

In an attempt to reduce dependence on imported fuel, on 1 September 2022 Prime Minister Shahbaz Sharif announced the rapid deployment of 10,000 MW of solar power in the country. But details of how this will be achieved, and by when, are sketchy.

The plan reportedly involves transitioning all public sector buildings to solar power. The proposal also encourages power plants running on coal, oil and gas to partially shift to solar power.

China will have a crucial role to play if this shift to solar is to happen, says Rehman, though it may come in a different form than the mega-projects seen under CPEC.

“China will still have a big role because they are producing the cheapest [solar] equipment worldwide. But I really hope the government won’t put this under CPEC because that would put local players at a disadvantage,” says Rehman.

Riaz Haq said...

Green investment on rise, Pakistan to get 30 % renewable energy - Pakistan Observer


Until now, renewable energy sources make up a very minor fraction of Pakistan’s overall power generation mix. According to a recent report of the National Electric Power Regulatovry Authority, the installed capacity for wind and solar accounts for roughly 4.2% (1,831 MW) and 1.4% (630 MW) of a total of 43,775 MW, respectively.

China is already the biggest investor in green energy in Pakistan. Currently, out of the $144 million in foreign investment in solar PV plants in Pakistan, $125 million is from China, accounting for nearly 87% of the total.

Thanks to Chinese investments, a few weeks ago Federal Power Minister Khurram Dastgir Khan inaugurated two new wind energy projects in Jhimpir, Thatta District, Sindh, with an aim to produce cheaper and clean electricity through indigenous energy sources. Wind projects in this region have been one of several renewable energy projects to have received Chinese investment in recent years. Around 90 kilometers from Karachi, Jhimpir is the heartland of the country’s largest ‘Wind corridor’, which has the potential to produce 11,000 megawatts (MW) of energy from green resources.

Riaz Haq said...

Pakistan plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming years, its energy minister told Reuters on Monday, as it seeks to ease a crippling foreign-exchange crisis.


A shortage of natural gas, which accounts for over a third of the country's power output, plunged large areas into hours of darkness last year. A surge in global prices of liquefied natural gas (LNG) after Russia's invasion of Ukraine and an onerous economic crisis had made LNG unaffordable for Pakistan.

"LNG is no longer part of the long-term plan," Pakistan Energy Minister Khurram Dastgir Khan told Reuters, adding that the country plans to increase domestic coal-fired power capacity to 10 gigawatts (GW) in the medium-term, from 2.31 GW currently.

Pakistan's plan to switch to coal to provide its citizens reliable electricity underscores challenges in drafting effective decarbonisation strategies, at a time when some developing countries are struggling to keep lights on.

Despite power demand increasing in 2022, Pakistan's annual LNG imports fell to the lowest levels in five years as European buyers elbowed out price-sensitive consumers.

"We have some of the world's most efficient regasified LNG-based power plants. But we don't have the gas to run them," Dastgir said in an interview.

The South Asian nation, which is battling a wrenching economic crisis and is in dire need of funds, is seeking to reduce the value of its fuel imports and protect itself from geopolitical shocks, he said.

Pakistan's foreign exchange reserves held by the central bank have fallen to $2.9 billion, barely enough to cover three weeks of imports.

"It's this question of not just being able to generate energy cheaply, but also with domestic sources, that is very important," Dastgir said.

The Shanghai Electric (601727.SS) Thar plant, a 1.32 GW capacity plant that runs on domestic coal and is funded under the China-Pakistan Economic Corridor (CPEC), started producing power last week. The CPEC is a part of Beijing's global Belt and Road Initiative.

In addition to the coal-fired plants, Pakistan also plans to boost its solar, hydro and nuclear power fleet, Dastgir said, without elaborating.

If the proposed plants are constructed, it could also widen the gap between Pakistan's power demand and installed power generation capacity, potentially forcing the country to idle plants.

The maximum power demand met by Pakistan during the year ended June 2022 was 28.25 GW, more than 35% lower than power generation capacity of 43.77 GW.

It was not immediately clear how Pakistan will finance the proposed coal fleet, but Dastgir said setting up new plants will depend on "investor interest," which he expects to increase when newly commissioned coal-fired plants are proved viable.

Financial institutions in China and Japan, which are among the biggest financiers of coal units in developing countries, have been backing out of funding fossil-fuel projects in recent years amid pressure from activists and Western governments.

Riaz Haq said...

10,707 km pipelines being laid to reinforce gas transmission network in Pakistan


The two state-owned companies, SNGPL and SSGC, are in process of laying almost 10,707-kilometer pipelines to reinforce gas transmission networks in their operational areas across the country during the current fiscal year.

The Sui Northern Gas Pipelines Limited (SNGPL) would place 9,605 kilometers and Sui Southern Gas Company (SSGC) 1,102 transmission and distribution pipelines in their respective areas during 2022-23 aimed at improving the efficiency of the commodity supply to domestic, industrial, and commercial consumers.

The companies would collectively spend funds amounting to Rs 113.899 billion on the upgradation of the gas transmission and distribution system. “The SNGP and SSGC have planned to invest Rs 27,669 million on transmission projects, Rs 77,484 million on distribution projects, and Rs 8,746 million on other projects bringing the total investment of Rs 113,899 million during the fiscal year 2022-23,” according to an official document available with APP.

The available statistics indicated that Pakistan has an extensive gas network with more than 13,513 KM transmission, 155,679 KM distribution, and 41,231 KM service gas pipelines for cater to the requirement of millions of consumers.

The companies are also executing at least three strategic projects to supply gas to two Special Economic Zones (SEZs) and an industrial park in their respective areas to boost industrial production.—APP

Riaz Haq said...

Pakistan plans to push coal-fired power to 10 GW, shift away from gas


Soaring fuel prices have made Pakistan move away from importing LNG and use domestic lignite to generate electricity instead. “LNG is no longer part of the long-term plan,” Pakistan’s energy minister Khurram Dastgir Khan told Reuters, revealing targets to increase coal-fired capacity to 10 GW, up from currently 2.31 GW, and build no more gas-fired power plants.

Riaz Haq said...

State-owned Pakistan LNG (PLL) has announced its intention to secure nine LNG cargoes during the months of October, December, January 2024, and February 2024.



The federal government issued two tenders seeking spot liquefied natural gas (LNG) cargoes for the first time in nearly a year on Tuesday, while also announcing a deal that will see Azerbaijan provide the country with one LNG cargo per month.


Dependent on gas for power generation and running short of foreign exchange to pay for imports, the country has struggled to procure spot cargoes of LNG after global prices spiked last year following Russia’s invasion of Ukraine, leaving it to face widespread power outages.

But Asian spot LNG prices this year have eased from record highs of $70 per million British thermal units (mmBtu) hit in August, and are now trading below $10.

Pakistan LNG, a government subsidiary that procures LNG from the international market, has one tender seeking six cargoes on a delivered-ex-ship (DES) basis to Port Qasim in Karachi in October and December, according to the tenders posted online.

The delivery windows are October 5-6, 20-21 and 31, and December 7-8, 13-14 and 24-25. The tender will close on June 20.

Pakistan LNG’s second tender seeks three cargoes, also on DES basis to Port Qasim, for delivery windows of January 3-4, 28-29 and February 23-24. The second tender closes on July 14.

Pakistan LNG last issued a tender seeking 10 spot cargoes in July 2022, but received no offers.

Separately on Tuesday, Minister of State for Petroleum Musadik Malik told a news conference that Azerbaijan will supply an LNG cargo every month to Pakistan at a “cheaper price”.

He did not share details on the supply deal, but said that a contract had already been signed with Azerbaijan and that it will “start soon”.

Pakistan has two long-term supply deals with Qatar, one signed in 2016 for 3.75 million metric tons of LNG a year, and another signed in 2021 for 3m metric tons a year.

It also has an annual portfolio contract with ENI for 0.75m metric tons a year.

In 2022, Pakistan’s imports of LNG slowed to 6.93m metric tons for the year, down from 8.23m metric tons in 2021, according to data from data analytics group Kpler.

Riaz Haq said...

Pakistan will add up to 10 GW of new hydropower capacity by 2030 | Enerdata


In July 2022, Pakistan commissioned the 720 MW Karot hydropower plant, one of five projects on the Jhelum River (northern Pakistan), alongside the Azad Pattan plant (700 MW), the Mangla Dam (1.1 GW), the Neelum-Jehlum plant (969 MW) and the Kohala plant (1.1 GW).


700MW Azad Pattan hydropower project ready for construction: Energy China - Profit by Pakistan Today


Wang Huihua, Managing Director of China Energy Int’l Group’s Pakistan Branch, announced that the 700-megawatt Azad Pattan hydropower project, run by Energy China, is ready for construction after the completion of a feasibility study and land acquisition.

Wang made these remarks at the ‘Pakistan Energy Sector Landscape: Challenges & Opportunities’ conference held at NUST University, Islamabad.

He explained that the project would provide cheap, clean energy to Pakistan. “We have been developing this project for six years. We hope the government will give it more priority in the China-Pakistan Economic Corridor (CPEC) initiative to expedite financial closure,” he said.

He further stated that Energy China believed that investing in renewable energy in Pakistan was financially viable. “We are committed to setting up our long-term operation in Pakistan and investing more,” he said.

He highlighted that China Energy Engineering Corp. (Energy China) has been present in Pakistan for the past 20 years. “Energy China considers Pakistan as its favored investment destination,” he added.

Wang also pointed out some of the challenges faced by foreign investors in Pakistan, underscoring the importance of resolving them quickly to foster win-win cooperation.

Riaz Haq said...

Pakistan Expanding Nuclear Plant With New Hualong One Reactor


By Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).

China continues to be a world leader in exporting its nuclear power technology. Chinese officials in Pakistan on June 20 signed a memorandum of understanding (MOU) for a $4.8 billion deal with Pakistan’s nuclear energy agency for construction of a new 1,200-MW reactor at the Chashma power complex.

The new unit will be China’s Hualong One, or HPR1000, pressurized water reactor technology.

Pakistan Prime Minister Shehbaz Sharif on Tuesday said the country considers China its “most dependable ally.” Sharif, whose country is in the midst of an economic crisis and looking for outside investment in its energy sector, said construction of the Chashma 5 project, located in Punjab province, would begin immediately.

The Chashma complex has four CNP-300 reactors currently in operation, each with 325 MW of generation capacity. The units were developed by China National Nuclear Corp. (CNNC). The first unit came online in 1991; the other units entered commercial operation in 2011, 2016, and 2017, respectively.

Chashma 5 will be built by CNNC subsidiary CNNC China Zhongyuan Engineering Corp., the company said.

Chinese officials recently announced that an HPR1000 has also been proposed for construction at the Bradwell site in the UK. Britain’s Office for Nuclear Regulation and the Environment Agency said they have started a second, technical, phase of the assessment program for the HPR1000.

Chinese Investment
Sharif, speaking Tuesday on Pakistan’s state-run news channel PTV after the signing of the MOU between the Pakistan Atomic Energy Commission and Chinese officials, said, “Investment from China in this project to the tune of $4.8 billion sends a message loud and clear that Pakistan is a place where Chinese companies and investors continue to show their trust and faith.”

The prime minister originally brokered the project during his time as chief minister of Punjab, an office he held three times, most recently from 2013 to 2018. He was elected as Pakistan’s prime minister in April 2022.

Sharif has supported nuclear power as a way to move Pakistan away from fossil fuels. Its most recent nuclear facility, the 2,200-MW Karachi Nuclear Power Plant, also known as KANUPP, in the southern port city of Karachi, commissioned its two reactors in 2021 and 2022, respectively. That facility, featuring two Hualong One Generation III pressurized water reactors, also was built with financial backing from China.

Sharif on Tuesday said the Chashma 5 project was originally planned to start in 2021. He said Chinese officials did not raise the cost of the project from original estimates despite the delay. Officials on Tuesday said China has to date disbursed 30 billion Pakistani rupees ($104.53 million) to start the project.

“We are deeply obliged to [China] President Xi Jinping, and the Chinese leadership for their generous help to Pakistan,” Sharif said. He also recognized Saudi Arabia, United Arab Emirates and Qatar for extending financial support to Pakistan’s government.

Pakistan for years has contended with power outages. Two of the worst incidents occurred in January 2021, and again in January of this year. In 2021, a fault at a power plant brought down the national grid, leading to calls for a massive overhaul of the country’s electricity transmission infrastructure.

A nationwide power outage on Jan. 30 of this year impacted all of Pakistan’s major cities and left millions of people without electricity.

Riaz Haq said...

10,000mw solar power plants to be installed before summers 2023
These solar plants will generate 10,000 megawatts of electricity under the initiative, saving Pakistan's billions of dollars.


The prime minister directed that work on the project begin immediately in order to bring respite to the masses before the next summer season begins.

These solar plants will generate 10,000 megawatts of electricity under the initiative, saving Pakistan’s billions of dollars.

In the initial phase, the electricity generated will be distributed to government buildings, tube-wells, and families that utilize less units of electricity.

He has also directed that a conference be held next week to solicit bids for the project.

The prime minister, who presided over a conference in Islamabad to bring huge relief to the people, stated that solar energy should be used instead of imported oil. The decision was taken with an aim to save the foreign exchange rate as the country would not need to spend billions of dollars on importing fuel for electricity generation.

He urged that the project be implemented as soon as possible by the relevant authorities.

The situation of loss in income and rising electricity bills makes a huge economic and financial burden on households. Skyrocketing electricity bills have blown the minds of consumers.

Consumers strongly condemned skyrocketed electricity bills in the month of August, even during long hours of unscheduled load shedding followed by blackouts by Islamabad Electric Supply Company (Iesco) and demanded that the federal government take up this burning issue immediately.

The Rawalpindi bench of the Lahore High Court (LHC) Tuesday suspended the collection of fuel price adjustment in electricity bills.

Justice Jawad Ul Hassan, while hearing the writ petition filed against the increase of taxes, directed WAPDA and NEPRA not to charge tax on consumers’ electricity bills. The judge also summoned the head of IESCO on September 15 and issued notices to the parties concerned to appear before the Court on the next hearing.

Riaz Haq said...

Dasu Hydropower Project: Stage 1 of concrete Starter Dam completed


In a major development towards implementation of Dasu Hydropower Project, Stage 1 of the concrete Starter Dam has been completed upstream of Main Dam site.

As per the design, the Starter Dam for Dasu Hydropower Project is to be completed in two stages; Stage 1 up to elevation of 785 meters while Stage 2 up to elevation of 798 meters above mean sea level, said a spokesperson WAPDA here. The Stage 1 of the concrete Starter Dam was completed in June this year before the high flow season – a major landmark which the project team successfully achieved, the spokesperson said.

As the high flow season has started, River Indus is flowing through the two diversion tunnels completed earlier this year, while some of the river water is overtopping the concrete Starter Dam as designed.

After the high flow season in October this year, the construction of the Starter Dam’s Stage 2 will be carried out. The Stage 2 is scheduled for completion during the coming low flow season. The project is being constructed across the River Indus, upstream of Dasu Town in Upper Kohistan district of Khyber Pakhtunkhwa. The 4,320-MW-Dasu Hydropower Project is planned to be completed in two stages. At present, WAPDA is constructing its stage-I with installed generation capacity of 2,160-MW and annual energy generation of 12 billion units. Stage-I of the project is likely to start electricity generation in 2026. The 2,160-MW stage-II, when implemented, will also provide 9 billion units to the national grid. On completion of the both stages, Dasu will become the project with highest annual energy generation in Pakistan i.e. 21 billion units per annum on the average. The project will commence by end 2026. It is worth mentioning here that in February this year, Dasu Hydropower Project crossed a major milestone as the River Indus was successfully diverted following completion of a 1.33-kilometre long diversion tunnel.

Following the completion of one of the two diversion tunnels, the River Indus was successfully diverted to the completed tunnel. Instead of its natural course, the River Indus is now flowing through a 1.33-kilometer long diversion tunnel with 20-metre width and 23-metre height. Consequently, construction activities have been initiated on the starter dam, leading towards construction of the main dam of Dasu Hydropower Project.

Riaz Haq said...

China Begins Construction of Pakistan's Largest Nuclear Power Plant


Pakistan held a groundbreaking ceremony Friday for what will be its largest civil nuclear power plant — constructed by China — that will contribute 1,200 megawatts of electricity daily to the national grid and is estimated to cost at least $3.5 billion.

Prime Minister Shehbaz Sharif and senior Chinese officials attended the televised event in the central city of Chashma, dubbed the birthplace of China-Pakistan nuclear energy cooperation.

Over the past 30 years, Beijing has installed four nuclear power generation units in Chashma, collectively generating about 1,300 megawatts, with China providing enriched uranium for fuel.

"This mutual cooperation to promote clean, efficient, and comparatively cheaper energy is a gift of friendship between the two countries and a model for other countries to emulate," Sharif said at the ceremony.

The plant, known as Chashma-5, or C-5, will feature what China says is its domestically developed third-generation pressurized water nuclear technology, the Hualong One or HPR1000, with "advanced safety and foolproof security features."

Raja Ali Raza, the head of the Pakistan Atomic Energy Commission, said the nuclear plant project will be completed by 2030.

"C-5 will be Pakistan's largest generation-III plus nuclear power project," Raza said. "This project has brought PAEC one step closer to its envisaged goal of production of 8,800 megawatts electric cheap and clean energy."

Beijing has previously supplied the HPR1000 technology for two nuclear power stations, each with a 1,100-megawatt generation capacity, built and operationalized in the last couple of years in the southern port city of Karachi, enhancing Pakistan's nuclear energy production to more than 3,500 megawatts a day.

Analysts see China's accelerated civil nuclear cooperation with Pakistan as part of efforts to globally find more lucrative buyers for its HPR1000 reactors developed by state-owned China National Nuclear Corporation or CNNC, the country's second-largest nuclear power producer company.

"HPR1000 is a homegrown nuclear technology of CNNC and a flagship of China's advanced equipment manufacturing," Yu Jianfeng, the CNNC chairman, told the ceremony. He noted that more than 17 units of HPR1000 are currently under construction in China.

"Today's groundbreaking for the C-5 project is a significant milestone for HPR1000's global journey and a new start for the China-Pakistan nuclear energy cooperation," Yu stated. "Our cooperation in nuclear energy has become an integral part of the China-Pakistan all-weather strategic cooperative partnership and a shining example of international nuclear energy cooperation."

Under its global Belt and Road Initiative, Beijing also has built and put into commercial operation 14 mostly coal-fired power plants in Pakistan in the last 10 years, with a total installed capacity of 8,000 megawatts daily.

The projects are part of the China-Pakistan Economic Corridor, or CPEC, which has also built road networks, highways, ports, and industrial zones with direct Chinese investment and "soft loans," expected to increase to about $62 billion by 2030 when the mega undertaking is due to be complete.

Critics blame CPEC for contributing to Pakistan's deepening economic troubles and depleting foreign exchange reserves, making it difficult for the country to catch up with its foreign debt repayments.

Pakistan owes more than $1.3 billion (350 billion rupees) to Chinese power plants. The amount keeps growing, and China has refused to defer or restructure the payment and CPEC debt repayments.