Tuesday, January 12, 2010

Pakistan's Twin Energy Shortages of Gas and Electricity

Hagler Bailly, a global management consulting firm with an office in Islamabad, warned in a 2006 study that Pakistan is going to witness gas shortage starting in 2007, and the imbalance will grow every year to cripple the economy by 2025, when shortage will be 11,092 MMCFD (Million standard cubic feet per day) against total 13,259 MMCFD production. The Hagler Bailly report added that Pakistan's gas shortage would get much worse in the next two decades if it did not manage any alternative sources. It appears that we are seeing the beginning of the crisis that HB predicted back in 2006.

Recent Growth in Gas Demand:
Demand for natural gas in Pakistan increased by almost 10 percent annually from 2000-01 to 2007-08, reaching around 3,200m cubic feet per day (MMCFD) last year, against the total production of 3,774 MMCFD, according to Pakistani official sources. But, during 2008-2009, the demand for natural gas exceeded the available supply, with production of 4,528 MMCFD gas against demand for 4,731 MMCFD, indicating a shortfall of 203 MMCFD. This winter, Sui Northern Gas sources have reportedly told the media that the company is dealing with a shortfall of 700 MMCFD of gas due to increasing use of heaters and geysers.



Energy Shortages:

The potentially devastating effect of the gas shortage on the nation can be gauged by the fact that Pakistanis heavily depend on gas for their energy needs, much more so than neighboring Indians. With a gas pipeline network stretching around 56,400 km, pipeline density of 1044 km/mmscmd (million metric standard cubic meter per day) and a 31,000 km distribution network to serve its domestic and commercial consumers and nearly 3000 CNG stations, the gas consumption in Pakistan is much higher than its bigger South Asian neighbor. India relies more heavily on its vast coal reserves for energy.

According to BMI, gas is the dominant fuel, accounting for 47.5% of Pakistan's primary energy demand (PED) in 2007, followed by oil at 30.7%, hydro-electric energy at 12.9% and coal with a 7.9% share. Regional energy demand is forecast to reach 4,859 million tonnes of oil equivalent (toe) by 2013, representing 24.9% growth from the estimated 2008 level. Pakistan’s estimated 2008 market share of 1.52% is set to ease to 1.45% by 2013. The country’s estimated 2.5TWh of nuclear demand in 2008 is forecast to reach 5.0TWh by2013, with its share of the Asia Pacific nuclear market rising from 0.49% to 0.75% over the period.

In terms of overall energy requirements, here is a more complete picture for per capita energy consumption in South Asia and China, using Nationmaster, with 2006-2007 figures and rankings:

Pakistan per capita gas consumption 187 cu meters(ranked 73)
India per capita gas consumption 36 cu meters (ranked 99)
China per capita gas consumption 53 cu meter (ranked 95)

India per capita electric consumption 466 KWhr (ranked 160)
Pakistan per capita electric consumption 430 KWhr (ranked 164)
China per capita electric consumption 2,179 KWhr (ranked 91)



India coal consumption per capita 0.3 ton (ranked 23)
Pakistan coal consumption per capita 0.03 ton (ranked 35)
China coal consumption per capita 1 ton (ranked 16)

India oil consumption per day per 1000 people 2.4 barrels (ranked 165)
Pakistan oil consumption per day per 1000 people 2.2 barrels (ranked 169)
China oil consumption per day per 1000 people 5.7 barrels (ranked 144)

There is strong correlation between energy availability and level of any nation's development. The nations topping the list of human development rankings are also the largest per capita consumers of energy.

Only 54% of Pakistanis have access to electricity. Per capita energy consumption in Pakistan is estimated at 14.2 million Btu, which is much higher than Bangladesh's 5 million BTUs per capita but slightly less than India's 15.9 million BTU per capita energy consumption. South Asia's per capita energy consumption is only a fraction of other industrializing economies in Asia region such as China (56.2 million BTU), Thailand (58 million BTU) and Malaysia (104 million BTU), according to the US Dept of Energy 2006 report. To put it in perspective, the world average per capita energy use is about 65 million BTUs and the average American consumes 352 million BTUs. With 40% of the Pakistani households that have yet to receive electricity, and only 18% of the households that have access to pipeline gas, the energy sector is expected to play a critical role in economic and social development. With this growth comes higher energy consumption and stronger pressures on the country’s energy resources. At present, natural gas and oil supply the bulk (80 percent) of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the supply. For instance, Pakistan currently produces only 18.3 percent of the oil it consumes, fostering a dependency on imports that places considerable strain on the country’s financial position. On the other hand, hydro and coal are perhaps underutilized today, as Pakistan has ample potential supplies of both.

Energy Projects:

Pakistan and Germany have initiated serious discussions of German funding of eight ongoing and new hydropower projects worth billions of dollars. These talks have takien place in Islamabad between German Minister for Economic Co-operation and Development Ms. Heidemaire Wiegoreak Zeul and Pakistani Prime Minister's Adviser on Finance Mr. Shaukat Tarin, according Business Recorder newspaper.

In addition to megaprojects such as 1000 MW Neelum-Jhelum hydropower project, a number of community-based micro hydro projects are being executed with the help of the Agha Khan Foundation in Pakistan's Northern Areas and NWFP. Within this region, out of a total of 137 micro-hydro plants, the AKRSP has established 28 micro-hydros with an installed capacity of 619kW. Initially, in 1986, these plants started as research and demonstration units. These projects were extended to Village Organizations (VOs) and became participatory projects. A Village Organization (VO) is a body of villagers who have organized themselves around a common interest.

Pakistan has vast reserves of coal. But there is very little energy produced by burning coal. China has now agreed to invest about $600 million for setting up an integrated coal mining-cum-power project in Sindh. The project will produce 180 million tons of coal per year, which is sufficient to fuel the proposed 405 MW power plant. Pakistan is currently world's seventh largest coal-producing country, with coal reserves of more than 185 billion tons, ranking as the fourth of fifth largest coal reserves in the world. Almost all (99 percent) of Pakistan's coal reserves are found in the province of Sindh. Pakistan's largest coal field is Thar coal field which is spread over an area of 9100 square kilometers, and contains 175 billion tons of coal. So far this coal field has not been developed but efforts are underway.

In addition to the coal project, China has agreed to build several other power plants in Pakistan to help the South Asian nation deal with its worsening electricity crisis. When completed over the next several years, these plants, including Nandipur (425 MW, Thermal), Guddu(800 MW, Thermal) and Neelam-Jhelum(1000 MW, Hydro), Chashma (1200 MW, Nuclear) will add more than 3000 MW of power generating capacity for the energy-hungry country. Pakistan is currently facing a deficit of 4,000 to 5,000 megawatts, resulting in extensive load-shedding (rolling blackouts) of several hours a day.

China has already installed a 325-megawatt nuclear power plant (C1) at Chashma and is currently working on another (C2) of the same capacity that is expected to be online by 2010. The agreements for C3 and C4 have also been signed. The United States has objected to China supplying C3 and C4 on the grounds that any Pak-China nuclear cooperation would require consensus approval by the NSG, of which China is now a member, for any exception to the guidelines. The US is applying double standards since it supported and got approval for such an exception from NSG for its own nuclear deal with India.

Beyond the power generation capacity expansion projects, Pakistan must also pay attention to modernizing its national grid. The country's creaky and outdated electricity infrastructure loses over 30 percent of generated power in transit, partly due to theft, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south.

In terms of the cost of renewable sources such as wind and solar, the cost of not empowering the poor rural communities is far greater than the cost of providing a Grameen Shakti type solar system, or Agha Khan Foundation's microhydro or the gearless wind microturbines that are beginning to show up on the rural landscape in Pakistan.

Given the unresponsive nature of "democracies" and incompetent and corrupt governance in India and Pakistan, many of the poor rural communities far away from the national grid will probably never be electrified unless there are community-based local green initiatives pursued with the help of NGOs.

Compressed Natural Gas (CNG) Industry Growth:

According to International Association of Natural Gas Vehicles, as of December 2008, Pakistan has the world’s highest number of vehicles running on compressed Natural Gas (CNG). The number is 2 million. Pakistan also has the World’s largest number of CNG refueling stations, 2941 as of July 29, 2009.

Just as the worst electricity crisis of its history is currently gripping the nation, it appears that the gas crisis has begun to rear it ugly head, with recurring reports of low gas pressure, CNG station closures and rationing, and gas "load shedding" for businesses and consumers. The blame game has already started and there appears to be little relief in sight on either the electricity or the gas fronts. One of the reported effects of the gas shortage is delay in the availability of power from the rental power plants which are expected to operate on gas. It appears that the attempt to solve the electricity crisis has made life even more difficult for the people by spawning a gas crisis at the same time.

Citizens and industries in Lahore have been particularly badly hit, resulting in angry protests widely reported in the media. The All Pakistan Textile Mills Association (APTMA), the textile industry group, has claimed that it suffered losses of about Rs 1 billion in December due to lack of smooth gas supply to the industry. Pakistan's CNG industry is also feeling the pinch after rapid growth in the last few years.

Rental Power Plants (RPPs):
A story in Pakistani newspaper the News is alleging that "these expensive rental power plants, which were being installed with tall claims to address the energy crises in the country, were said to have now become one of the major reasons behind a new sorts of energy crises in Pakistan, as their gas requirements are bound to hit other sectors of economy running on gas supplies".

Solutions For Gas Shortage:

The best solution to alleviate the gas shortage is to build a pipeline to import over a billion cubic feet of gas a day from Iran, but such a project will take many years to implement even on an accelerated schedule. In the meantime, Pakistan's Sui Southern Gas Company (SSGC) is working on completing a project, dubbed Mashal LNG Project, that was started three years ago to import 500 MMCFD of LNG from Qatar by 2010. But even that won't happen till October 2011. The second phase of this project will add an additional 500 MMCFD of LNG by 2013.

In response to the alarming gas situation, there are reports that Pakistan is finally going ahead with the multi-billion dollar Iran-Pakistan Gas Pipe Line Project and has initiated the process of arranging financing of US $1.245 needed for laying 800 Km long pipe line from Pakistan-Iran border to Nawab Shah. Pakistan will also import 1.05 billion cubic feet of gas per day from Iran at 78 percent of crude oil parity price. Pakistan and Iran have already signed Gas Sales Agreement (GSPA) for importing 750 million cubic feet gas per day which will be used to generate 4500 MW of electricity and would be a cheaper alternative to the presently expensive imported furnace oil used in the existing thermal power houses. Another 250 million cubic feet of Gas per day is also envisaged to the purchased for development projects at Gawadar in Balochistan. Considering the magnitude and strategic nature of the Gas Line Project, the government has adopted a private-public partnership approach for financing the project with debt equity ratio of 70:30 under which the Pakistan government will provide 51 per cent equity. This equity financing would be provided upfront through selected Public Sector Entities like OGDCL, Pakistan Petroleum Limited , Government Holding Private Limited, Employees Old Age Benefits Institution and State Life Insurance Corporation. The debt will be sourced from the market backed by the government guarantees for transportation tariff. Any gap in raising the required debt from the market, the funds will be available by PDSP allocations.

The current completion date for Iran-Pakistan gas pipeline project is June, 2014, if things go smoothly. There is significant investor interest. Russia's Gazprom is very keen on the project. "We are ready to join the project as soon as we receive an offer," Russia's deputy energy minister Anatoly Yankovsky has been quoted as saying by the media. Another top Russian government official has said Moscow sees the pipeline as a means to divert Iranian gas from competing with Russian exports on the European market.

Iranian Consul General in Pakistan, Masoud Mohammad Zamani has told Pakistani news site the Dawn that Iran has completed major portion of work on Iran-Pakistan gas pipeline project and within couple of months the pipeline will be at Iran-Pakistan border. Hopefully, by 2013 Iran gas will be used in Pakistan, Iranian envoy explained during a meeting with members of Karachi Chamber of Commerce and Industry.

India, too, needs to import gas to meet its growing energy needs. But it pulled out of the pipeline project after the US-India nuclear deal. If and when India does come back to the table, the pipeline built from Iran to Nawabshah in Pakistan can be extended to support additional capacity for India.

Current Issues:

As the nation's attention turns to the gravity of the worsening gas energy crisis, the growing supply-demand gap for electricity is still unaddressed. The government's attempts to fill the gap with rental power have raised many questions and drawn serious corruption charges from the opposition parties and the media. Analysts at Center for Research and Security Studies are asking why have some private power producers completely shut down? And why are other private power producers operating well below their full capacity? It is being alleged that the reasons for buying rental power to fill the electricity gap rather than pay the outstanding dues of the independent power producers (IPPs) to fully utilize exiting installed capacity have to do with the kickbacks offered by the rental power operators. According to Reuters, Finance Minister Shaukat Tarin almost resigned after failing to persuade the cabinet against renting, an option he considered expensive and inefficient.

There have been widespread complaints in Islamabad, including by Mr. Tarin, that the government had solutions to improve the power output but was refusing to implement them in order to benefit a handful of power plant operators, such as those supplying rental power, while the IPPs are not being paid for supplying power from currently underutilized installed capacity. Requests for information by Transparency International Pakistan regarding rental power contracts have been ignored by the Ministry of Water and Power. There are widespread corruption allegations against President Asif Ali Zardari personally who has allegedly influenced the award of the 783 MW rental power contracts to a former governor of Oklahoma and his Pakistani partner.

Rental power is not an issue by itself. While it does provide some relief, it does not address the core problem of making sure that government departments, politicians, businesses and all consumers pay for power they use to make it attractive for private investments in the power sector.

Currently, most IPPs in Pakistan are operating well below capacity because they are not being paid billions of rupees owed to them. Paying them should be the first step toward filling the supply-demand gap by fully utilizing current capacity, and restoring order in the power market. Unless this done, the electricity rates will keep rising because the honest consumers end up footing the power bill for the many deadbeats and power thieves.

Meeting Energy Demand Growth:
BMI forecasts Pakistan real GDP growth averaging 3.98% a year between 2009 and 2013, with the 2009 estimate at 2.50%. The population is expected to expand from 161mn to 177mn, with per capita GDP and electricity consumption increasing by 20% and 11% respectively. Power consumption is expected to increase from an estimated 81TWh in 2008 to 99TWh by the end of the forecast period, which provides are relatively stable theoretical generation surplus (before transmission losses, etc.), assuming 4.3% annual growth in electricity generation.


Between 2008 and 2018, BMI is forecasting an increase in Pakistani electricity generation of 59.2%,which is mid-range for the Asia Pacific region. This equates to 27.2% in the 2013-2018 period, up from25.1% in 2008-2013. PED growth is set to increase from 19.1% in 2008-2013 to 25.8%, representing 49.9% for the entire forecast period. An increase of 49% in hydro-power use during 2008-2018 is a key element of generation growth. Thermal power generation is forecast to rise by 52% between 2008 and2018, with nuclear usage up 380% from a low base.

Summary:

The failures of successive Pakistani governments in tackling the growing energy crisis are shameful. Inaction at this point would be criminal. The Iran-Pakistan gas pipeline project has to be accelerated to avoid significant further harm to the country. At the same time, the shortages of electricity and gas need to be managed actively and fairly to minimize the impact on the consumers and the businesses to help the economy recover from the current slump. The issue of unpaid electricity bills and the rampant power theft should be confronted head-on to restore investor confidence in long-term energy projects in the country. Since the federal government is the biggest dead beat, followed by the four provincial governments, FATA, the KESC and the KW&SB, it is an opportunity for the current leadership in Islamabad to lead by example by paying off their outstanding utility bills, and resolving the circular debt issue in energy sector expeditiously.

Here is a recent video clip of former President Muharraf talking about the power crisis in Pakistan:

https://youtu.be/sKw_Qa7o8UA


>

Related Links:

Pakistan's Electricity Crisis

Integrated Energy Plan 2009-2022

Pakistan's Gas Pipeline and Distribution Network

Pakistan's Energy Statistics
US Department of Energy Data

Electrification Rates By Country

CO2 Emissions, Birth, Death Rates By Country

China Signs Power Plant Deals in Pakistan

Pakistan Pursues Hydroelectric Projects

Water Scarcity in Pakistan

Energy from Thorium

Comparing US and Pakistani Tax Evasion

Zardari Corruption Probe

Pakistan's Oil and Gas Report 2010

Circular Electricity Debt Problem

International CNG Vehicles Association

Lessons From IPP Experience in Pakistan

Correlation Between Human Development and Energy Consumption

BMI Energy Forecast Pakistan

209 comments:

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Riaz Haq said...


#Russia to Spend Billions on #Gas Pipeline in #Pakistan. #Putin http://learningenglish.voanews.com/content/russia-to-spend-billions-on-gas-pipeline-in-pakistan/3193228.html …


Russian President Vladimir Putin is expected to visit Pakistan in the next few months to begin a gas pipeline project.

Pakistan’s Prime Minister Nawaz Sharif asked Putin to visit.

Mobin Saulat heads Inter State Gas Systems, the Pakistani company that would build the pipeline. He says Putin may visit Pakistan before June.

He says Russia is interested in the project because 200 million people live in Pakistan, and investing in the country could help Russia gain influence in other South Asian nations.

When Pakistani officials and energy experts visited Moscow recently, they met with the heads of three large Russian energy companies for the first time in more than 20 years. He says that shows Russia’s interest in Pakistani energy issues.

Saulat says he believes the pipeline is the first of many investments Russia will make in Pakistan.

Experts say both countries may have strategic and political reasons to work together on the gas pipeline project.

Pakistan has tried to form new partnerships to reduce its dependence on the United States and China.

Russia will spend about two to $2.5 billion dollars on the project. That is almost 85 percent of the cost.

The 1,100-kilometer-long pipeline will be able to transport 34 million cubic meters of gas per day throughout Pakistan from Karachi to Lahore. The first part of the project is expected to be finished in two years. The last two parts are set to be completed in 2019.

Riaz Haq said...

Increase in Pakistan’s energy consumption depicts higher economic activities

Pakistan's primary energy consumption increased by 5.9 percent to 78.2 million ton oil equivalent (MTOE) in 2015, compared with 73.2MTOE in 2014 depicting higher economic activities.

According to the statistical data of British Petroleum on energy use around the world, the primary energy consumption in China grew by 1.12 percent from 2014 to 2015 that has resulted in slowdown in China’s economy. India’s primary energy consumption increased by 5.1 percent during the same period which is lower than that of Pakistan. Indian GDP growth, though highest in the world remains much below the peaks it attained at the start of this decade.

The fuels consumed for producing primary energy show that in 2014, Pakistan consumed 22.8MTOE of oil that increased to 25.2MTOE in 2015. Its natural gas use also increased from 37.7MTOE in 2014 to 39.0MTOE in 2015. The consumption of coal remained the same at 4.7MTOE in both years.

According to the report, electricity consumption in Pakistan increased from 96.2 terawatt-h in 2008 110.0 terawatt-h in 2015. The increase was restricted to 99.3 terawatt-h till 2012; showing cumulative increase of 4 percent only, but in the next three years the consumption cumulatively increased by 10.7 percent of which 2.7 percent increase was in 2015 over 2014. Indian electricity consumption in comparison increased more robustly being 833.4 terawatt-h in 2008 that increased to 1,304.8 terawatt-h in 2015.

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India produces 45.5MTOE from natural gas, 407.2MTOE from coal that is 100 times more than the primary energy that Pakistan derives from coal. Its hydro electric generation is 8.6MTOE. It derives 15.5MTOE from renewable that is 30 times more than what Pakistan obtains from renewable. The primary energy obtained by China from natural gas is 177.6MTOE, from coal it is a whopping 19,203MTOE. Its hydro electric energy amounts to 254.9MTOE, nuclear 38.6MTOE and renewable 62.7MTOE. The renewable energy extracted by China is equivalent to 60 percent of the total energy produced in Pakistan.

Bangladesh in 2008 consumed only 34.2 terawatt-h electricity that was almost 1/3rd of the power consumption in Pakistan. In 2015 the gap was reduced to 60 percent of the power consumed in Pakistan. Bangladesh is exporting much more than Pakistan despite low power use because it adds high value to its apparel. The power requirement of the garment industry is nominal when compared with spinning, weaving and processing that produce low value-added textiles exported by Pakistan. The electricity consumption in China increased to 5,810 terawatt-h in 2015 compared with 3495 terawatt-h in 2008.

Coal, wind and solar energy are the cheapest source of energy around the world. Wind and solar along with hydro electricity are the cleanest energy fuels. China fulfilled 1,920MTOE of its energy needs from coal, India 388.7MTOE, and Pakistan only 4.7MTOE. Coal use for energy production is confined only to the private sector in Pakistan. Around 3,000MW coal based power plants are expected to be commissioned by 2019 after which share of coal in the energy mix would substantially increase. Wind power consumption in China was 41MTOE in 2015, it was 9.4MTOE in India and only 0.1MTOE in Pakistan. Solar power production in 2015 was 8.9MTOE in China, 1.5MTOE in India and only 0.3MTOE in Pakistan. Pakistan is also on the course to double its hydro electric production to over 16,000MW by the end of 2021.

https://www.thenews.com.pk/print/131885-Increase-in-Pakistans-energy-consumption-depicts-higher-economic-activities

http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf

Riaz Haq said...

This Mile-Wide Hole Could Revolutionize #Pakistan's #Economy - Bloomberg #Thar #Coal #energy

https://www.bloomberg.com/news/articles/2017-03-21/coal-addiction-spreads-as-chinese-workers-dig-in-pakistan-desert

In the dusty scrub of the Thar desert, Pakistan has begun to dig up one of the world’s largest deposits of low-grade, brown, dirty coal to fuel new power stations that could revolutionize the country’s economy.

The project is one of the most expensive among an array of ambitious energy developments that China is helping the country to build as part of a $55 billion economic partnership. A $3.5 billion joint venture between the neighbors will extract coal to generate 1.3 gigawatts of electricity that will be sent across the country on a new $3 billion transmission network.

“When I came it was a mess. There was nothing here,” said Dileep Kumar, one of the first mining engineers at lead contractor Sindh Engro Coal Mining Co., standing atop the mile-wide hole in the earth, busy with yellow trucks and diggers on the floor below. “Now look at it. This wasn’t possible without the Chinese.”

On paper, Pakistan could be one of Asia’s top economies, with almost 200 million people spread over an area twice the size of California, from the ice-bound peaks of the Karakorum to the warm, dry shores of the Arabian Sea. But it remains hobbled by corruption, political turmoil, terrorism and poverty, all underpinned by a crippling shortage of energy.

The country has natural gas reserves, four nuclear-power stations and the world’s largest dam. Some 700 kilometers north of the Thar mine another Chinese company is helping build a solar farm eight times the size of New York’s Central Park. Yet power outages remain a way of life with blackouts of 12 hours or more even in Karachi and Islamabad. By one estimate, the shortage of electricity is wiping 2 percentage points off economic growth every year.

Thirst for energy is taking Pakistan in the opposite direction of Western countries that are trying to reduce coal power, or use cleaner-burning fuel and technologies. Germany, which still relies on coal-fired stations for two fifths of its electricity, has promised to switch half of them off by 2030.

Pakistan by contrast relies on coal for just 0.1 percent of its power, according to the Pakistan Business Council. The Thar projects and others could see that jump to 24 percent by 2020, according to Tahir Abbas, analyst at Karachi-based brokerage Arif Habib Ltd.

Pakistan’s coal reserves would give the nation a cheap domestic alternative to expensive oil and gas imports. The nation spends about $8 billion a year on imported petroleum and is one of the region’s biggest buyers of liquefied natural gas.

In an effort to curb the import bill and meet demand for power, Pakistan plans to dig up some of the world’s biggest known deposits of lignite, a lower-grade brown coal. But first, it must clear 160 meters of sand to get to the coal.

On a flat, arid plain, separated from a hot cerulean sky by a thin line of spindly scrub, yellow-edged containers sit neatly around paved quadrangles. In the centre of each, a lumpy circle of green turf, irrigated by a hosepipe, provides some respite from the dust and heat.

Riaz Haq said...

Pakistan to lock another 3 mil mt of LNG in term contracts by year-end


Singapore (Platts)--28 Sep 2017 232 am EDT/632 GMT

https://www.platts.com/latest-news/natural-gas/singapore/interview-pakistan-to-lock-another-3-mil-mt-of-27875446

Pakistan is currently in negotiations to secure an additional three million mt of LNG in long-term contracts by the end of the year to supply its new LNG floating terminal due to arrive by December, according to M. Adnan Gilani, chief operating officer with Pakistan LNG Ltd.

The negotiations are taking place with over half a dozen potential suppliers on a bilateral government-to-government basis, Gilani said at an interview with S&P Global Platts Thursday on the sidelines of the 9th CWC LNG Asia Pacific Summit, held in Singapore September 19-22.

"We hope to have two to three government-to-government agreements signed by the end of this year," Gilani said. "In the interim, we will secure around four spot cargoes a month [the equivalent of 3 million mt/year] until our contracts start."

The new supply agreements will increase Pakistan's total LNG contractual commitment to more than 11 million mt/year, as the country aims to resolve a decade-long energy crisis, driven by mounting gas consumption and faltering domestic production.

The new contractual volumes will be delivered to Pakistan's second floating, storage and regasification unit -- with a capacity of 4.5 million mt/year -- due to arrive at Port Qasim by the end of the year.

Currently, imports are being delivered to the Exquisite, an FSRU with a similar capacity, with another two due start up in the second half of 2018, all in Port Qasim.

Pakistan term LNG contracts fromo 2018

OIL INDEXATION

As with PLL's previous supply agreements, the new deals will also be priced against international crude oil benchmarks, Gilani said.

PLL aims to change the electricity feedstock landscape by replacing fuel oil with regasified LNG, so LNG priced at a low slope to crude would guarantee the competitiveness of LNG over crude.

"Because of the fuel-oil substitution effect, the risk of oil prices moving in one direction or another is less of a concern; as long as it is oil linked, it is always better for us compared to fuel oil," Gilani said.

The excess use of fuel oil in power generation as a result of Pakistan's decade-long gas shortage has cost the government an extra $1 billion-$2 billion/year.

The country's consumption of diesel and fuel oil, a more expensive alternative to gas in power generation, peaked at 387,140 b/d in fiscal year 2014-15 (July-June), according to data from Pakistan's Oil Companies Advisory Council, before falling 1% in fiscal 2015-20, following the startup of the country's first LNG import terminal in March 2015.

SPOT, SHORT TERM

In the longer term, Pakistan aims to allocate a quarter of its LNG purchases to the spot and short-term markets, Gilani said.

"Initially, our goal is to solve our energy crisis. We have long-term downstream commitments, so we do not mind going to mid-to-long term initially," he said.

"Over the course of time, we will be able to cater to our variable non-cyclical demand... and allocate about a quarter of our portfolio to spot and short term.

PLL is currently purchasing four cargoes per month on a short-term basis as it awaits the start of new term volumes.

In the company's most recent tender, issued Tuesday, PLL sought four cargoes for delivery in January, with an award due to be announced November 3. PLL's previous tender, for four December cargoes, received 15 bids from a total of six sellers: Vitol, Engie, Gas Natural Fenosa, Gunvor, Trafigura and BB Energy. The lowest offer, at 13.98% of ICE Brent, was submitted by BB Energy. An award is yet to be announced.

Riaz Haq said...

Country’s (Pakistan's) installed electricity capacity increases by 30pc to 29,573MW

https://www.thenews.com.pk/print/309535-country-s-installed-electricity-capacity-increases-by-30pc-to-29-573mw

Economic Survey 2017-18 unfolds that Pakistan’s installed capacity to generate electricity has surged up to 29,573MW by February 2018 which stood at 22,812MW in June 2013, showing the growth of 30 percent.

As far as the transmission and distribution losses are concerned, the Economic Survey says average losses were at 18.9 percent in 2013 which have now reduced to 17.9 percent in 2018 showing the government has succeeded to reduce the losses by 1 percent.

The recovery of the billed amount of electricity sold to the consumers stood at 89.6 percent. During the period from 2013 to 2018, as many as 39 projects with cumulative capacity of 12,230MW have been added. Due to significant improvement in the energy mix, the country’s reliance on expensive oil has been reduced.

The better energy supply has helped large scale manufacturing (LSM) and in turn manufacturing to both grew above 6 percent in FY 2017-18, which is an 11-year high. In power sector, per capita electricity consumption is considered one of the most important economic welfare indicator regarding availability of affordable energy. Pakistan is bestowed with enormous hydro and coal potential which, if carefully exploited, can ensure our future energy security on long-term basis. Further, the expansion in generation capacity requires supporting expansion in the transmission infrastructure for evacuation of the power.

China-Pakistan Economic Corridor (CPEC) is another major breakthrough in the development of the country’s energy sector, under which financial outlay of around $35 billion has been made for energy sector projects including power generation and transmission projects to be implemented in IPP mode. In case of natural gas, the gap between demand and supply was widening due to increase in gas demand and depletion of existing sources.

The government has made efforts to exploit indigenous resources as well as import gas though transnational pipelines and LNG to mitigate the shortfall. Indigenous crude oil meets only 15 percent of the country’s total requirements, while 85 percent requirements are met through imports of crude oil and refined petroleum products. The indigenous and imported crude is refined by six major and two small refineries. The present government not only made concerted efforts for upgradation of existing refineries, but also made addition of six depots with inland freight equalisation margin. Further, to promote fuel efficiency, the government has introduced marketing of 92 RON premier motor gasoline replacing the existing 87 RON PMG under the regulated environment.

Pakistan has large indigenous coal reserves estimated at over 186 billion tons which are sufficient to meet the energy requirements of the country on long-term basis. There has been significant increase in import of coal due to commissioning of new coal based power plants at Sahiwal and Port Qasim.

Riaz Haq said...

India’s Power Mess Is Enron Times 20
Banks are on the hook for $26 billion in loans to stressed electricity projects.


https://www.bloomberg.com/view/articles/2018-05-14/india-s-latest-power-industry-debt-debacle-is-enron-times-20



Enron Corp. is long gone, but the scandal it left behind in India has beguiled the country’s lenders for almost two decades.

However, if the bankers who financed the U.S. energy company’s unviable power plant in Maharashtra state aren’t ruing that 2,000-megawatt debacle any more, it’s only because they’re now staring at a mess 20 times bigger.

India’s total electricity-generation ability is 344,000 megawatts, a 72 percent increase over six years. The country, notorious for its outages, still doesn’t have a power surplus. But coal-fired plants in the private sector that ran at 84 percent capacity utilization at the start of the decade are struggling to stay alive with load factors of 55 percent. As much as 40,000 megawatts of capacity — equal to 20 Enron plants — has become stressed assets for the banking system.

Struggling to Stay Open
Capacity utilization of India's coal-based power plants in the private sector has collapsed

Lenders, on the hook for $26 billion, are yet to classify these exposures as nonperforming, let alone provide for losses out of (their increasingly nonexistent) profits. However, now that the central bank is forcing them to clean up their act, they’re trying to think of creative solutions. According to BloombergQuint, the banks will convert debt that’s unsustainable into equity and sell those shares to a jointly owned asset management company. The AMC will hawk its controlling stakes in power producers after a turnaround.

A better idea may to be to fix the underlying profitability of the power business.

Forget long-term power purchase agreements. State utilities are shy to sign such contracts anyway and prone to ditch them at the first hint of cheaper electricity in the wholesale market. Let most of the demand and supply move to exchanges with open access for all bulk buyers and sellers, says Hemant Kanoria, chairman of India Power Corp., a 99-year-old company involved in both electricity generation and distribution.

The share of power trading in the country’s overall demand-supply equation has been stagnant for years at about 10 percent. This needs to change.

The other big issue, as Kanoria rightly notes, is coal. India has no shortage of the fuel, but its dominant miner, which met 95 percent of its 600 million ton production target last year, needs to crack the whip on underperforming subsidiaries.

Power plants’ coal inventories are falling, and linking domestic availability to whether a producer has a long-term electricity purchase agreement with a state utility isn’t helping. Rather than continue with a less-than-satisfactory auction system, let Coal India Ltd. fix a price at which it would assure supply to whoever is willing to pay and take away the feedstock.

Running Low
Despite massive growth in India's power capacity, coal inventory at electricity plants is below this decade's average

Finally, financing costs, which have ballooned to half of the total expense of putting up a power plant, need a tweak. Restructuring unserviceable loans into other instruments — such as preference shares — would give producers some breathing room, Kanoria says.

It’s silly of lenders to expect that debt with annual interest rates of 16-percent-plus won’t eventually turn bad. Dragging borrowers to the bankruptcy tribunal won’t solve anything. Most assets would sell for scrap value; jobs would be lost. Sweeping the problem under the carpet of an asset management company may preserve employment, but the immediate financial hit to banks could upset their already weak capital position. Besides, if existing owners are booted out, who will run the plants?

It was relatively easy to leave Enron’s Indian unit in the care of a couple of state-run companies, as the government did in 2005. That can’t be a template for a problem 20 times larger.


Riaz Haq said...

Record power generation of 18,900MW achieved
Khaleeq Kiani Updated June 03, 2017

https://www.dawn.com/news/1337054

Following protracted power breakdowns in the country, with Sindh and Khyber Pakhtunkhwa being the hardest hit, the government finally took a sigh of relief on Friday as the total generation on the national grid reached 18,904MW for the first time amid a lower demand owing to a slight let-up in the intensity of the heatwave.

The Guddu Thermal Power Station achieved a maximum production of 1,300MW after it received 28 per cent enhanced gas supply from the Kandhkot Gas Field (KGF), and the Nandipur power plant reached its full capacity of operations at 415MW.

A power ministry official said even though the demand for power had not exceeded 23,000MW this year, sustained generation at this level would be sufficient for load management of about 3,500MW with an average of four to five hours of loadshedding, while parking most of the shortfall in high-theft-low-recovery areas.

A spokesperson for the Pakistan Petroleum Limited (PPL) said the company had increased gas supply from the KGF — from 180 million cubic feet per day (MMCFD) to 230MMCFD — and was ready to ramp it up to a further 250 MMCFD if required.


Two other 200MW units at the Guddu power plant are currently being refurbished and would become available in a month to help increase its capacity to about 1,700MW, with utilisation of full gas supplies from KGF, making it the country’s largest power station.

Riaz Haq said...

Work on Tarbela 5th extension adding 1,410MW to national grid to begin this year

https://dailytimes.com.pk/261826/work-on-tarbela-5th-extension-adding-1410mw-to-national-grid-to-begin-this-year/

The construction work on Tarbela 5th extension hydropower project on River Indus in Swabi district will start in 2018-19 fiscal year, Daily Times learnt on Monday.

While talking to Daily Times, the official spokesperson of WAPDA, Abid Rana, said that the project would be completed in four years at a cost of Rs.82,361.6 million. “It will have generation capacity of 1,410 megawatts (MW), with its three units each contributing 470MWs. The annual energy generation of the project would be 1,810 Gigawatts hours (GWh). Its benefits are estimated at US$ 134 million per year,” he said, adding, “It is a huge quantum of electricity and will definitely bridge the gap between the demand and supply. This project will also affect the tariffs as at present the overall energy mix has high thermal share and with increase of hydel ratio the tariffs will get stable and it will lead to a decrease in the cost of generation.”

According to an official of the Water and Power Development Authority (WAPDA), the PC-I (planning commission I) of the project had been approved by the Executive Committee of the National Economic Council (ECNEC), in a meeting held in December 2016. Two loan agreements amounting to USD 390 and 300 million have been signed with World Bank and Asian Infrastructure Investment Bank (AIIB), respectively, for the purpose. After completing all formalities, World Bank and AIIB loans became effective from August 11, 2017, whereas the loan closing date for both loans would be June 30, 2022.

The objective of the project is to facilitate a sustainable expansion of Pakistan’s electricity generation capacity without affecting the capacity for irrigation release. The total installed capacity of Tarbela Dam, after completion of the 5th Extension, will rise to 6,298 MW. The project would also benefit in further development of Pakistan’s hydropower potential along the Indus River Cascade which has been a cornerstone of the World Bank Strategy and Pakistan’s energy policy to reduce load-shedding, cost of electricity production, and improve financial sustainability.

Regarding progress of the project, the WAPDA official said the process of procurement and recruitment for consultancy services was underway and a Request for Proposal (RFP) had been issued to shortlisted consultants. The official said technical evaluations of the proposals received so far were being done currently.

Tarbela Dam was completed in 1974. It was designed to store water from Indus River for irrigation, flood control, and the generation of hydroelectric power. Almost 14 power generation units were installed at three tunnels during various stages with a cumulative installed capacity of 3,478MW, whereas the other two tunnels were for irrigation purposes only. The Tarbela 4th extension was made in October 2013 with a cost of $795.8 million and after the success of the project the 5th extension was planned which got approved by the Government of Pakistan.

Riaz Haq said...

Community-built #hydropower projects lighting up remote areas in #Pakistan, generating 5 to 100 kilowatts of power. Most micro-hydropower projects have a shelf life of up to 20 years but it's extendable. #renewable #energy #electricity https://scroll.in/article/888241/in-pakistans-mountains-community-built-hydropower-projects-are-lighting-up-remote-areas via @scroll_in


Two winters ago was the best winter Zulekha Begum can remember in her 42 years in Swat valley, 150 kilometres northeast of Peshawar, the capital of Khyber Pakhtunkhwa province. “It was the most comfortable winter; our rooms were nice and warm and we had hot water anytime of the day.”


For the first time last winter, her village of Jukhtai, in the idyllic alpine valley, received an uninterrupted supply of electricity thanks to the 65 KW of the micro-hydropower project that the Sarhad Rural Support Programme, an independent development organisation, helped install in their village of 2,300 people.

The Sarhad Rural Support Programme has been working in the Khyber Pakhtunkhwa province since 1989 with the aim of reducing poverty and ensuring sustainable means of livelihood. And since 2004, it has built more than 250 micro-hydro units supplying off-grid communities with cheap, environmentally-friendly and uninterrupted power supply. With financial support from the European Union to produce over 19 MW of electricity, it has benefitted over 570,000 people.

Six years ago, in 2012, the EU (in collaboration with the Pakistan government) started a four-year programme to “revitalise” rural economy and promote renewable energy for sustainable livelihoods in Malakand division of Khyber Pakhtunkhwa province. This was later extended to 2018.

Pumping in 40 million Euros into areas affected by conflict and natural disasters, the project planned to cover 100 union councils of seven districts (Swat, Shangla, Buner, Lower Dir, Upper Dir, Chitral and Malakand) to benefit 2.7 million people affected by conflict and floods.

This fitted closely with the work of the Khyber Pakhtunkhwa government, which was also planning on initiating over 350 units to produce 35 MW of electricity benefiting over 700,000 people by 2017.

In Pakistan, micro-hydropower projects have been led and popularised by the Aga Khan Rural Support Programme and the Sarhad Rural Support Programme, both of whom have been recipients of the Ashden international award for their work in Khyber Pakhtunkhwa, Gilgit-Baltistan, and Pakistan’s Kashmir region.

“The way we work with the community is that the latter provides us with land, labour, time even local material like stone, and earth which comes to 20% of the cost while 80% is borne by the SRSP [Sarhad Rural Support Programme],” said Dildar Ahmad, Sarhad’s district programme manager. The micro-hydropower project at Jukhtai (in Swat), cost Pakistani rupee 8,152,154 ($64,275) and provides connections to 315 households and some shops.


According to the Sarhad Rural Support Programme, the Khyber Pakhtunkhwa government gave them 105 micro-hydropower projects to be completed by December 2018, of which they have completed 90, and the rest are 78% complete. All the EU funded projects were completed by March 2018. Overall, the Sarhad Rural Support Programme says that, since 2009, it “has constructed 332 micro hydro projects, as of July 2017, benefiting approximately 900,000 population in rural areas of Malakand Division and Northern Districts of Khyber Pakhtunkhwa.” (Oddly, the graphic accompanying this claim suggests only 331 projects have been completed.)

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