Since the middle of the 18th century, the Industrial Revolution has transformed the world. Energy-hungry machines are now doing more and more of the work at much higher levels of productivity than humans and animals who did it in pre-industrial era. In recent years, the rapid growth in computers and mobile phones spawned by the Information and Communications Technology (ICT) revolution has further increased demand for energy. Currently somewhere between 5-10% of electrical consumption is for ICT and it's likely to continue to grow rapidly.
Energy consumption in this day and age generally indicates a nation's level of industrialization, productivity and standards of living. Going by this yardstick, Pakistan's 14 million BTUs per capita consumption in 2009 indicates that the country has a long way to go to achieve levels comparable with the world average productivity signified by 71 million BTUs per capita as estimated by US Energy Information Administration for 2009.
Although Pakistan's 14 million BTUs per capita energy use is ahead of Bangladesh's 6 million BTUs and Sri Lanka's 10 million BTUs, it is less than India's 18 million BTUs, and far behind China's 68 million BTUs and Malaysia's 97 million BTUs.
Fossil fuels are currently the primary source of the bulk of energy used. Cost of producing energy from various fossil fuels ranges from $2-4 per million BTUs for coal to $19-20 per million BTUs from oil. Costs of energy from natural gas vary widely depending on the source. Cost of shale gas in the United States has plummeted to about $2 per million BTU recently, while Pakistan has signed agreements to purchase gas from Iran and Turkmenistan in the range of $10 to $12 per million BTUs. Cost of production of domestic natural gas is in the range of $2 to $4 per million BTU.
Impact on Economy:
Energy costs have had a huge impact on Pakistan's economy. Its heavy dependence on imported oil has been a big contributor to balance of payments crises in the past. In 2008, for example, the oil prices jumped from less than $50 a barrel to $150 a barrel and forced the country to seek IMF bailout. Pakistan oil import bill has increased from about $7 billion in 2007 to over $12 billion in 2011. Energy shortages have also put a significant dent in Pakistan's GDP growth.
If Pakistan could generate all of the 14 million BTUs of energy per capita from coal, the cost would be $28 to $56 for each person. Alternatively, the cost of using oil for the entire production would add up to about $280 per person, a significant chunk of Pakistan's per capita income of $1372 in 2011-12. The costs therefore range from a low of $28 to a high of $280 per Pakistani.
Energy Policy Suggestions:
As the nation develops and the energy demand increases, the policy makers have to try and produce as much of the needed energy at costs closer to the low-end of the range from $2 to $20 per million BTUs. Here are some policy suggestions for Pakistan's energy policy going forward:
Develop Pakistan's shale gas reserves estimated at 51 trillion cubic feet near Karachi in southern Sindh province. The US experience has shown that
investment in shale gas can increase production quite rapidly and prices
brought down from about $12 per mmBTU in 2008 to under $2 per mmBTU
recently. Pursuing this option requires US technical expertise and
significant foreign investment on an accelerated schedule.
Increase production of gas from nearly 30 trillion cubic feet of
remaining conventional gas reserves. This, too, requires significant
investment on an accelerated schedule.
some of the idle power generation capacity from oil and gas to imported
coal to make electricity more available and affordable.
Utilize Pakistan's vast coal reserves in Sindh's Thar desert. The
problem here is that the World Bank, Asian Development Bank and other
international financial institutions (IFIs) are not lending for coal
development because of environmental concerns.And the Chinese who were
showing interest in the project have since pulled out.
5. Invest in hydroelectric and other renewables including wind and solar. Several of
these projects are funded and underway but it'll take a while to bring
them online to make a difference.
6. Curb widespread power theft, improve collection of electricity dues from consumers, and resolve spiraling circular debt to make Pakistan's energy sector attractive to domestic and foreign investors.
In addition to significantly increasing energy production, Pakistan needs to take prudent steps to conserve by promoting the use of energy-saving electric bulbs and machines. Concerns about the environment have propelled many developed nations to cut energy consumption in recent years. For example, serious conservation efforts have reduced Japan's 172 million BTUs per capita in 2009 down from 178 in 2005, Germany is at 163 million BTUs in 2009 down from 175 in 2005, and the United States is down to 308 million BTUs in 2009 from 340 million BTUs per person per year in 2005.
Instead of addressing different pieces of the energy puzzle in an ad hoc fashion under multiple ministries and bureaucracies fighting turf battles, Pakistani policy makers need to look at the big picture for the sake of the nation's future. Nothing short of a holistic approach with a comprehensive energy policy formulated and implemented under a competent and powerful energy czar will do.
US EIA International Data on Per Capita Energy Consumption
Affordable Fuel for Pakistan's Electricity
Pakistan Needs Shale Gas Revolution
US Census Bureau's International Stats
Pakistan's Vast Shale Gas Reserves
US AID Overview of Pakistan's Power Sector
US Can Help Pakistan Overcome Energy Crisis
Abundant and Cheap Coal Electricity
US Dept of Energy Report on Shale Gas
Pakistan's Twin Energy Crises
Pakistan's Electricity Crisis
Pakistan's Gas Pipeline and Distribution Network
Pakistan's Energy Statistics
US Department of Energy Data
Electrification Rates By Country
CO2 Emissions, Birth, Death Rates By Country
China Signs Power Plant Deals in Pakistan
Pakistan Pursues Hydroelectric Projects
Pakistan Energy Industry Overview
Energy from Thorium
Comparing US and Pakistani Tax Evasion
Pakistan's Oil and Gas Report 2010
Circular Electricity Debt Problem
International CNG Vehicles Association
Rare Earths at Reko Diq?
Lessons From IPP Experience in Pakistan
Correlation Between Human Development and Energy Consumption
This is an excellent article. Pakistan certainly needs lots of investment in the energy sector, and foreign direct or indirect investment certainly has a role to play.
However, I would like to point out that in all the other fast growing Asian economies, the DOMESTIC component of investment far, far, far exceeds any FOREIGN investment component.
Here are the conventional formulae to grasp--
1) Gross Domestic Savings Rate = Total Domestic Production - Total Domestic Consumption
2) Gross Savings Rate = Gross Domestic Savings Rate + Aid & Remittances
3) Gross Investment Rate = Gross Savings Rate + Current Account Deficit
4) Gross Fixed Investment Rate = Gross Investment Rate - Inventory & Valuables
As you can see DOMESTIC Savings is the KEY sustainable factor that decides how much physical investment is possible. The foreign investment component shows up in the Current Account Deficit term in (3) and is usually a small part of total physical investment. If foreign investment becomes disproportionally dominant, then, as history shows, that it leads to economic and financial instability. This is why all the other Asian countries try to manage its proportion such that it never dominates total investment.
You can see for yourself--
The common thing in all these other rapidly developing Asian countries is the OVERALL TREND of increasing Domestic Savings leading to increasing Investment.
All these countries seem to be following a PLAN to first increase domestic savings rates to > 30% of GDP and invest heavily in development of energy, infrastructure, industry, health and education. As you can see, while all of them welcome foreign investment, none of these countries are overly dependent on foreign investment as most of their Investment comes from Domestic Savings.
Now compare the above countries to our own country:
As you can see, our country does not even seem to have a plan. Our boom years are accompanied by low savings and a horrific over-dependence on foreigners. In fact, our trend is more similar to countries in Sub-Saharan Africa:
We are nothing like the other fast growing Asian countries. If we are indeed following some "model", then it looks more like an African-Latin model than any version of any Asian Model. This worries me because there is not one single example of a poor, Third-World country that ever on the basis of foreign investment alone. And I fail to see how Pakistan could prove to be the sole exception.
I would like to suggest that you re-focus your top-notch analytical abilities on the core issue facing our country: HOW can we get Pakistanis to SAVE more such that our Gross Domestic Savings Rate INCREASES CONSISTENTLY over the next 10-20 years so to match the sustainable growth path of all the other Asian Countries.
Here is a start from our fellow-Pakistani blogger (he is actually an economist) on this very subject-http://economicspoint.blogspot.com/2009/08/foreign-direct-investment-and-domestic.html
Here's an ET story on Punjab's plans to generate electricity:
The business community of Punjab, while praising the provincial government for allocating Rs10 billion for energy projects, has underlined the need for some concrete measures in this regard before starting any joint ventures between the government and private sector.
They have even offered their cooperation to the government as energy is the most critical issue of the industry, which has been battered by power and gas shortages.
“Though the provincial government has taken this step too late, we still appreciate them for taking the initiative to save the industry to some extent,” said Kashif Younis Meher, Acting President of the Lahore Chamber of Commerce and Industry (LCCI).
Meher agreed to the idea of public-private partnerships in developing coal-gasification plants.
According to budget documents, the provincial government has chalked out a policy to install coal-fired plants at six different industrial estates. Each plant will produce 50 megawatts of electricity and provide uninterrupted power supply to industries. Special incentives will be given to those who will invest in this project.
The government has also claimed to have completed feasibility study on 10 hydropower projects at a cost of Rs29 billion, which will generate 80 megawatts. It plans to complete five projects through public-private partnerships while the remaining will be undertaken by the government with the help of Asian Development Bank.
Besides these, the Punjab Power Development Board has started research work on 54 different projects, which will generate 688 megawatts of electricity.
Here's a BR story on latest energy consumption figures in Pakistan:
The primary energy supply in the country has witnessed 2.3 per cent increase during current fiscal year as compared to last year.
The availability of energy per capita remained 0.372 TOE (14.76 million BTUs using conversion factor of 39.68 million BTUs equals 1 TOE) during the year as compared to 0.371 TOE in 2010, posting a positive growth rate of 0.16 percent.
An official source on Tuesday said due to population growth rate of almost two per cent, the balance between energy supply and emerging needs was outset.
He said analysis of composition of final energy supplies in the country suggests that the supply of coal during last ten years grew at an average rate of 7.5 per cent per annum followed by gas, electricity, petroleum products and crude oil with average growth rates of 5.7 per cent, 3.4 per cent, 2.1
Riaz another lost decade in the offing 2007-2012 is already the half way mark.
Here's World Bank economist's assessment of Pak competitiveness, according to The News:
Pakistan needs to improve its competitiveness for rapid industrialisation, which offers it a range of potential benefits, including more jobs creation, tax revenues and economic growth, said Dan Biller, World Bank’s lead economist on South Asia Region for Sustainable Development.
Addressing businessmen in Lahore, he said that the GDP growth of Pakistan in 2011 was only 24 percent, while China grew at 9.2 percent, India 7.8 percent, Sri Lanka at eight percent, Indonesia 6.4 percent and Malaysia 5.2 percent.
Among all these countries, Pakistan has the largest agricultural share of GDP and smallest industrial share, he said.
Biller said that lower industrialisation in Pakistan against other regional countries is due to its lower competitiveness, adding that Pakistan ranks poorly on the Global Competitive Index of the World Economic Forum. Pakistan’s institutions are weak, scoring 3.4 points out of 10, he said, adding that Malaysia score 5.2 points, China 4.3 points, India 3.8 points, Indonesia 3.8 points and Sri Lanka scored 4.2 points on quality of institutions.
Biller said that Pakistan’s score in infrastructure was dismal 2.8 points, while Malaysia scored 5.5, China 4.3, India 3.6, Indonesia 3.8 and Sri Lanka scored 4.1 points.
Similarly, he said, Pakistan’s score was the lowest among these countries in macroeconomic stability, health and primary education, higher education and training, goods market efficiency and labour market efficiency. Only in the market size, Pakistan had a better score than Sri Lanka, he added.
He also said that Pakistan has the most expensive and least-efficient port systems in the region, adding that the handling charges at the Karachi Port Trust are $110 per ton. India charges $80 per ton, Sri Lanka $150 per ton and Hong Kong charged $140 per ton. Ship charges of 2,800 tons are $30,000 at KPT, $5,500 in Sri Lanka, $6,000 in Hong Kong and $25,000 in the Indian port.
He said Pakistan handles 55 containers per hour, Sri Lanka 70 per hour, Hong Kong 100 per hour and India 65 per hour. The Customs authorities in Pakistan examine 10 percent containers physically; Sri Lanka and Hong Kong less than five percent, while physical examination of containers in India is also high, but less than 100 percent, he said, adding that Pakistani ports lack water depth, which is 10.5 feet at KPT, 13 feet in Sri Lanka, 14 feet in Hong Kong and 12 feet in Indian ports.
The World Bank economist said that Pakistan provides relatively low access to services that impeded foreign investment. Pakistan has two fixed telephone lines per 100 people against 22 in China, 2.9 in India, 17.2 in Sri Lanka, 15.8 in Indonesia and 16.1 in Malaysia.
Around 99.4 percent of the population in China has access to electricity; it is 66.3 percent in India, 76.6 percent in Sri Lanka, 62.4 percent in Pakistan, 64.5 percent in Indonesia and 99.4 percent in Malaysia, he added.
The roads and power generation are number one infrastructure concern for the businesses worldwide, Biller said, and advised Pakistan to reduce the transport cost that is critical to competitiveness.
In addition, the state should ensure safe mobility and enhance regional connectivity. Pakistan’s foreign market access potential is at least 4.5 times higher than the United States, he said, adding that its current market access is only 4-9 percent of the United States.
Pakistan’s market share in total global exports is less than half percent and remained stagnant since 2000. India, on the other hand, increased its global export share from 0.6 percent in 2000 to 1.5 percent in 2010, he added.
Here's a Daily Mail piece on the economic history of the world since Jesus:
A stunning chart that shows the entire economic history of the world's most powerful countries over the past 2,000 years has been released by investment bank JP Morgan.
Viewed as a whole, the graph shows the creeping restoration of Asian economic supremacy as the rest-of-the-world catches up to the West and its levels of industrialisation.
Charting the globe's 10 major powers since the time of Jesus, the graph can be broken down by simply applying a cut off point at around the 1800 AD mark.
That was the birth of the Industrial Revolution in the U.K. and when taken into account, everything to the left of that mark can bee seen as economic power through sheer size of population and to the right is the effect of mass production on a country's economic output.
One feature of the simple graph is to show that up until around 1500 AD India and China accounted for between 50 and 60 percent of the world's economy until the late 18th century when the Industrial Revolution rendered countries with large populations, just countries with the largest populations.
In 1 AD, China had a population of almost 60 million people, while the United States had a population of 680,000.
It took the United States 1800 years to overtake China's economic output.
But by 1950, even though the U.S had a population three times less than China, it's economic output was three times as great.
Additionally, in 1913, China had a population of 437 million and the U.K. had a population of 45 million, but their economic output was almost identical.
Indeed, when the graph is broken down into its constituent parts, the analysis of what happened in Europe and later the United States shows that the Western lead was taken even before 1800.
For the majority of human history the most important factor in economic growth was the relationship between births and deaths.
If there were too many births then there was not enough food to go around and without mass production techniques people went without until there was starvation or disease.
After a higher death rate, a stable supply of food was re-established, goods were shared among a smaller group of people and everyone felt and became richer until the cycle occurred again.
However, between 1000 AD and 1500 AD, wages, or GDP per capita had started to slowly rise as small economies of scale were made in agrarian organisation and moderate technological advances were made which improved the quality and length of life.
If a similar graph is opened up to show the world from Jesus to Napoleon, the slow building growth especially of Europe is clear to see, even without factoring in the Industrial Revolution.
However, if the graph is expanded to show the world from 1500 to World War I then the effect of mechanisation on the planets economic growth is clear.
Theories about why the Industrial Revolution occurred in the U.K. and then Northern Europe include the dense, localised population, easy availability of natural resources and the mild climate that exists around the North Sea and the U.K. for cotton spinning.
As the world escaped the trap foreseen by Thomas Malthus of a rising population never matched by food production, population and GDP exploded.
The industrial revolution changed the Malthusian Trap leading to a situation today where the U.S. accounts for five percent of the world population and 21 percent of its GDP whereas Asia (minus Japan) has 60 percent of the world's population and only 30 percent of its GDP.
Here's ET on electricity bill collection problems in Pakistan:
The government has failed to collect Rs495 billion worth of electricity bills in the last eleven months, taking recovery ratio to 47%, one of the lowest ever in the country’s history.
The unrecovered amount is two times more than what the government claims is the circular debt, which has caused massive load-shedding across the country, leading to riots across Punjab and Khyber-Pakthunkhwa.
According to a fact sheet, prepared by the finance ministry on the basis of information provided by finance department of Pakistan Electric Power Company, from July to May (2011-12) all the distribution companies, including Karachi Electric Supply Company, billed consumers Rs895.3 billion while collection remained at only Rs400.8 billion, which is 47% of the total billing.
During this period, Syed Naveed Qamar was the Federal Minister for Water and Power, who has recently been assigned the portfolio of Minister for Defence after he failed to improve electricity supply in the country.
The collection has significantly dipped despite the fact that the government has obtained a $325 million loan from the Asian Development Bank to improve the efficiency of power distribution companies. A cabinet committee on energy, headed by Finance Minister Dr Abdul Hafeez Shaikh also could not improve the situation.
According to the details, February was the worst month in terms of collection when the power distribution companies (Discos) collected only Rs26 billion against total billing of Rs99.2 billion, showing a gap of Rs73.2 billion in a single month. October was the second worst month when the Discos collected only Rs45.9 billion against total bills of Rs114.1 billion, showing a gap of Rs68.2 billion.
In May this year, the total collection remained at Rs35.9 billion against the billing of Rs87.4 billion- a gap of Rs51.5 billion. In April, the Discos billed Rs79.4 billion but collected only Rs30.2 billion, in March against Rs51.8 billion billing the collection remained at Rs31.3 billion and in January the collection was Rs29.3 billion against total billing of Rs77 billion.
November was the only month when the collection rose to 71% as the Discos managed to collect Rs41.2 billion against total bills of Rs57.6 billion.
The spokesman for the Water and Power Ministry contested the low collection figure. Zargum Khan said that Discos excluding KESC billed Rs534.3 billion consumers from July 2011 to April 2012 and managed to collect Rs461 billion, showing 86.3% recovery rate. The amount is inclusive of distribution margins of Discos.
He, however, admitted that during the first ten months of the fiscal year all power generation companies generated 74 trillion units of electricity but Discos sold 72 trillion units while the rest were lost on account of technical losses and theft.
100% collection of data is not possible as 10-12% of the billed amount is retained by power distribution companies as distribution margins while there are also some justified line losses, Khan said.
To a question, he said Rs166 billion dues were outstanding against private consumers and the amount has surged due to stay orders granted by courts against fuel price adjustment charges. Khan admitted that in some cases collection was as low as 5.5% (tribal regions) and 29% (Quetta) but in other cases the ratio was 100% for Gujranwala and 99% for Faisalabad regions.
Here's an FT piece on the negative impact of power sector in Pakistan:
...Munir, born and educated in Lahore, makes his case in the latest issue of the Economic & Political Weekly of India, to be published on Saturday.
“The 1994 privatisation of the energy sector offered investors generous returns and created pricey overcapacity,” he told beyondbrics. “This created an expensive legacy which is the real problem of today’s energy crisis.”
Unless that problem is dealt with, he sees no light at the end of the energy tunnel.
He says Pakistan’s government, helped by the World Bank, “sweetened” its energy privatisation with attractive conditions, fearing it wouldn’t be able to attract investors otherwise. It guaranteed a 12 to 15 per cent annual return (indexed in dollars, not rupees), gave tax breaks and paid interest on private funding – more expensive for the government than providing the funding itself. ”The deal was too good to be true for investors,” Munir says.
The government gave those guarantees during an economic boom it assumed would continue. That turned out not to be the case.
Munir says the model turned out to be badly constructed in terms of creating value for the government and people of Pakistan. Even in an environment of economic growth and efficient energy generation, it would have been hard for the government to finance the plan. But since both have been absent, it became nearly impossible to pay for privatised energy.
What else went wrong?
Most private investors chose to build oil-powered plants because of their low construction costs and short lead times. This backfired as the oil price has trebled since the 1990s. Variable costs, and therefore prices to consumers, are at unsustainable levels. “No wonder many consumers can’t afford to pay their bills,” Munir says.
To make things worse, the government neglected to step on the brakes when its generous conditions attracked too many investors. Assuming economic growth would continue, it allowed too much capacity to be built and guaranteed the same return on that extra capacity, whether it was used or not.
But as growth stalled, the government could no longer meet its commitments. So operators have begun shutting down power plants, killing the lights across Pakistan – which is now enduring daily power outages in spite of having excess generating capacity of almost 35 per cent.
Munir says the government should develop new power plants using cheaper fuels, and that this shouldn’t be a problem in a country with an abundance of coal, waterways and sun.
But Pakistan must first escape its vicious payment cycle. The Economist magazine reports that Pakistan’s so-called circular debt to energy producers stands at $880m. It is only getting worse because of rising interest costs and dollar-rupee appreciation.
“We need to get out of the the current deals,” says Munir. But at what cost, and does this imply default? “Your guess is as good as mine,” the academic admits.
Still, he felt it was time to make his point. “I’m not defending people who don’t pay bills and I’m not promoting government subsidies to keep prices low,” Munir says. “But why isn’t anyone talking about the policy that led to this situation to begin with?”
Here's a Business Recorder story on energy generation in Pakistan:
Till the introduction of Power Policy 2002, there were 13 IPPs operating in the country with an installed capacity of 4,340 MW. These include Hub Power 1,292 MW, AES Lalpir (now Pakgen Power) 362 MW, AES Pak-Gen (now Pakgen Power) 365 MW, Altern Energy 29 MW, Fauji Kabirwala 157 MW, Gul Ahmed 136 MW, Habibullah Coastal 140 MW, Japan Power 120 MW, Kohinoor Energy 131 MW, Liberty Power 235 MW, Rousch Pakistan 412 MW, Saba Power 114 MW, SEPCO 135 MW, Tapal Energy 126 MW and Uch Power 586 MW. In subsequent years, another 12 IPPs of total installed capacity of 2,468 MW were commissioned, whereas WAPDA-owned KAPCO of 1,638 MW also emerged as an IPP. Power plants commissioned after implementation of the Power Policy 2002 are Attock Gen 165 MW, Atlas Power 225 MW, Engro Energy 227 MW, Foundation Power (Daharki) 110 MW, Halmore Power 225 MW, Hub Power Narowal 225 MW, Liberty Power Tech 202 MW, Nishat Power 202 MW, Nishat Chunian 202 MW, Orient Power 225 MW, Saif Power 225 MW and Sapphire Electric 235 MW. A number of small IPPs, or SPPs, generate electricity with a total capacity of over 700 MW, of which mostly are in-house or captive power plants.
The long list includes ICI Pakistan 26 MW, Sapphire Power 26 MW, Crescent Power 11 MW, Ellicott Spinning 22 MW, Gulistan Power 40 MW, Kohinoor Mills 25 MW, Monno Energy 5 MW, Mahmood Textile 40 MW, DS Power 2 MW, Sitara Energy 78 MW, Bhanero Energy 17 MW, Quetta Textile 31 MW, Ideal Energy 12 MW, Ghazi Power 21 MW, Genertech 28 MW, Nimir Industries 18 MW, Zeeshan Energy 7 MW, Ibrahim Fibers 32 MW, Crescent Bahuman Energy 23 MW and Kohinoor Power 15 MW. In addition, DHA CoGen of 94 MW and Pakistan Steel Mills power plant of 110 MW have in-house power generation facilities. The role of the captive power plants is, nonetheless, significant as these have eased-out the demand on national grid. The SPPs and many captive power units provide their surplus electricity to the network--up to 182 MW to PEPCO-NTDC and 40 MW to the KESC. Textile sector, having an installed captive power plants to achieving dependable and uninterrupted power supply for hi-tech machinery, is the main contributor to NTDC system.
In the power system, a balance between electricity generation and consumption has to be continuously maintained. It was planned to make available a committed net power generation to the level of 23,726 MW (compared to existing 18,580 MW) by June 2012 but the target could not be achieved. A total of 3,400 MW installed generation capacity has been added to the national grid instead since 2008. To overcome power shortages in short term, an investment of RS 32.5 billion was envisaged through the 2011-12 national budget, whereas 14 on-going power projects of cumulative capacity of about 3,000 MW were scheduled for completion during October 2011-June 2012.
Here's an ET story on Russian interest in energy projects in Pakistan:
Pakistan has agreed to award contracts without bidding for multi-billion-dollar Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects to Russia, which will also extend financial assistance.
However, in an understanding reached with Russia, Pakistan made it clear that it would award the contracts on government-to-government basis only. Private Russian firms will not be entertained.
“Pakistan’s government will ask the cabinet to waive public procurement rules for award of pipeline contracts to Russia,” a participant of the meeting of Pak-Russia Joint Working Group on Energy told The Express Tribune.
A 15-strong delegation of Russia, led by the deputy minister for energy, participated in the meeting held in Islamabad on Wednesday.
The two sides would sign a memorandum of understanding (MoU) in next two to three months to move ahead with the projects, he said. Third meeting of the joint working group will be held in Moscow in 2013.
The government has already floated tenders, inviting bids for giving contracts for construction and pipeline procurement for the IP project, costing $1.5 billion.
“Russian energy giant Gazprom may also participate in bidding for the engineering, procurement and construction (EPC) contract, which gives an edge to the company that will pledge financing as well,” a government official said, adding Moscow also agreed to finance the rehabilitation of Guddu and Muzaffargarh power plants.
According to sources, Pakistan will submit a draft of agreement for financial and technical assistance for the IP pipeline in 15 days. Though the Russian side assured financial assistance for the pipelines, they did not indicate the amount.
In a preliminary meeting held in Islamabad on Tuesday, the Russian authorities offered cooperation in gas import through pipelines and the Central Asia South Asia (CASA) electricity import project, which would bring electricity from Central Asian states.
Besides Russia, Iran is also willing to provide $250 million on government-to-government basis for constructing the IP pipeline. Pakistan wants $500 million for the pipeline.
Iran has also come up with a plan to lay Pakistan’s portion of the pipeline based on a mechanism called ‘supplier’s credit’, which Pakistan will repay after two years.
Pakistan is also seeking China’s help for the IP pipeline. In a recent visit to Beijing, President Asif Ali Zardari and Adviser to Prime Minister on Petroleum Dr Asim Hussain succeeded in convincing the Chinese leadership to take part in bidding for the construction of the pipeline.
In addition to supporting the gas pipelines, Russia has also expressed its willingness to cooperate in import of 1,000 megawatts of electricity from Central Asia. Leading financial institutions including the World Bank and Islamic Development Bank have committed financial support for the power import project.
Construction of a cross-border transmission line is being considered for creating a dedicated link aimed at supplying surplus hydropower during summer months from Kyrgyzstan and Tajikistan to Pakistan.
Here's an Asia Times story on power outages or loadshedding in India:
Power outages in India, now enduring the peak demand of hot summer months, are running to as long as eight to 10 hours in northern cities, including the capital, and while large parts of the country continue to be off grid rural areas with access to electricity can be without power for over 20 hours at a stretch.
The Uttar Pradesh government this week ordered that electricity be cut off at malls and shopping centers in the evenings, before apparently backtracking in the face of angry traders who put up defiant protests, clashing with police.
Billions of dollars have been invested by power producers to create new capacity over the past few years, but numerous factors linked to populist politics, over-zealous implementation of
environment norms, transmission losses, pilferage, free power to agriculture and bureaucratic tardiness have resulted in under utilization of existing capacity. In short, India can produce more power if it wants to, but is unable to.
One bottleneck is coal, the majority of which is mined by state-owned Coal India Ltd (CIL). The bulk of Indian power is produced at coal-fired thermal plants, but CIL has not been able to increase output to meet the country's needs.
The environment ministry has declared many of the company's mines to be in "no go" zones, while the bulk of CIL's coal supply comes from areas in eastern India where Maoist rebels are active.
It also has to rely on another government institution, the slip-shod Indian Railways, to move the coal. Coupled with in-built delays and indecision within the government, CIL's output growth has been near stagnant over the past three years, with the result that more than one-third of India's coal-based thermal power plants are running on critically low levels of fuel stocks this season.
Estimates suggest that if CIL continues to falter in supplying coal, India's target for adding new power capacity for the 2012-17 period will need to be slashed to 45,000 megawatts from the proposed 76,000 MW. New Delhi has already scaled down its capacity addition target for the next five years by 25,000 MW to 75,000MW from conventional sources.
The coal ministry, meanwhile, has projected that India's annual coal demand could rise over 40% by March 2017 to nearly 1 billion tonnes while domestic coal output may increase by less than 30%, leaving a gap of around 300 million tonnes that will have to be met by imports.
India's power woes do not stop there. Electricity generators such as NTPC, Tata Power and Adani have the option of buying coal from the likes of Indonesia, Africa and Australia, but overseas prices are too steep compared with the artificially depressed domestic prices set by the government.----------
As India does not produce enough of its own oil, the bulk of the diesel is imported, draining foreign exchange, creating balance of payments problems and weakening the rupee - which drives up the cost of imported products such as oil and coal.
The government continues to subsidize diesel to protect among others the transport sector - which adds to the ever-rising fiscal deficit, which again helps to fuel inflation. It is no surprise that rating companies such as Standard & Poor's have cautioned that India's investment climate could be pegged at "junk'' levels.
Meanwhile, in the sweltering streets and fields of India, the poor die of heatstroke, a savage reminder that the structural infirmities built into power generation ostensibly to protect the poor are actually harming the impoverished the most. While India pushes to increase its use of renewable and nuclear power, it is the thermal power energy chain that needs some serious attention and reform.
Here's an interesting Friday Times story on reliable power supply in may parts of Karachi where people pay their bills:
e have not had loadshedding for more than 10 months as far as I can remember," said Umar Ansari, a resident of Gulshan-e-Iqbal Karachi. "We have no loadshedding. Just the usual breakdowns once in a while," says Yasir Khan, who lives in PECHS. That might be unbelievable for people living in other parts of Pakistan, but some residents of Karachi have found new respect for the once-loathed Karachi Electric Supply Company.
"We have devised a new mechanism for loadshedding," says Muhammad Haroon, a KESC official. "If the recovery rate in an area is up to a certain mark, we exempt that area from loadshedding. It is very simple. If you pay your bills, you get electricity, if you don't, then you're not on the priority list."
The situation in interior Sindh is somewhat different. "Despite the falling recovery rates, average load shedding is 2 to 4 hours a day in most parts of Sindh and Balochistan," says Yaqoob Chandio, an official working at the HUB Power Company. Punjab has said the uneven distribution of power is unfair.
Raja Pervez Ashraf, the newly elected prime minister, promised during his recent visit to Karachi that he would improve power supply in Karachi and the rest of Pakistan. "I will do my best," he said. "One of the first meetings I called after becoming prime minister was to discuss the power crisis. Inshallahh we will resolve this issue."
The shortfall of electricity in the country is about 7,000 megawatts, according to Saeed Muhammad, a PEPCO official. Experts say the problem is not of generation capacity, but of circular debts, recovery and theft.
According to WAPDA and PEPCO figures, Pakistan Railway alone owes Rs422 million to various electricity distribution companies. The ISI owes more Rs8.2 million, Pakistan Rangers Rs120 million, the Senate Rs49 million.
The total billing in May 2012 was Rs87.4 billion, but only Rs35,9 billion were recovered. In April, the total bills amounted to Rs79.4 billion but the distribution companies collected only Rs30.2 billion. In March, only 31.3 billion were collected in bills, instead of Rs51.8 billion. In January this year, the collection was Rs29.3 billion of the total bills of Rs77 billion.
According to information provided by the Finance Department, the ratio of recovery from consumers of electricity was only 51 percent. That means 49 percent of electricity bills in Pakistan were not paid. The highest number of defaulters are in Balochistan and Sindh.
"If the KESC owes PEPCO for power purchases, the finance ministry owes KESC for tariff differential claims. KESC therefore holds payments until the finance minister delivers, and if pressed, offers to adjust its receivables against its payables," says Khurram Hussain, an energy policy expert.
The other key factor in the power crisis is line losses - stolen electricity for which no one is billed. Officials in various departments in Sindh say line losses in Sindh are over four times than those in Punjab. That means an average consumer in Punjab pays for the consumer who is stealing electricity in Sindh.
Karachi Chamber of Commerce and
"The solution is very simple," according to policy expert Muhammad Yahya. "Enough with the free rides. The government and the consumers must pay for the electricity they consume."...
Here's a Daily Times report on Punjab's plans to deal with power crisis:
The Punjab government has finalised plans to install coal energy plants in industrial estates across the province through public-private partnership, Chief Minister Shahbaz Sharif said on Thursday.
Presiding over a meeting at his Minar-e-Pakistan tent office to review the pace of development of energy-related projects in the province, the CM said that provision of relief to the people, who are undergoing agonising load shedding, poverty and inflation, was of utmost importance.
He said that the government had chalked out a plan to provide solar panels to poor families and biogas units to small farmers for running their tube wells. He said that the programme of providing solar panels to poor families would be initiated from south Punjab. “The solar panel will run one fan and two electric bulbs,” he said, adding that
Shahbaz said that the present energy crisis had adversely affected all sectors, and had deprived citizens of their sleep and peace. “Therefore, under these circumstances, provision of immediate relief to the people has become essential,” he said.
The CM said that provision of solar panels to the poor would be made through transparent balloting, and similar method would be adopted for distribution of biogas units among small farmers.
He directed the officials concerned to evolve a methodology for distribution of solar panels and biogas units so that the programme could be implemented at the earliest.
He also told them to hold negotiations with reliable and best companies for the purchase of solar panels. He disclosed that the quota of south Punjab with regard to provision of biogas units to small farmers would be 10 percent higher and, initially, 1000 biogas units would be distributed.
Shahbaz said that a programme had also been evolved to set up coal-energy plants of 50MW in the industrial estates with public-private partnership.
Earlier, Energy Secretary Jehanzeb Khan informed the meeting about the progress on coal-related energy projects. The investors present in the meeting also showed interest in make investment in the energy sector.
Here's an Indian Express story on Gurgaon power cuts:
Morning traffic was brought to a standstill on Tuesday by Gurgaon residents protesting acute shortage of power and water.
The city has been battling severe power and water crisis, made worse by the delay in arrival of monsoon and the heatwave.
As per official estimates, the power demand in the city has surpassed previous records and continues to rise.
On June 28, the demand was to the tune of 1,528.33 lakh units (the highest demand for one day), against 1,127.45 lakh units on the same day last year, said Amit Kumar Agrawal, Managing Director of Dakhshin Haryana Bijli Vitran Nigam (DHBVN).
To rein in the shortfall, the Nigam has announced that starting Wednesday, all industries will be given just eight hours of power. They will be supplied power from 8 am to 12 pm and 3 pm to 7 pm.
Residents, on the other hand, blame the sharp rise in demand to the mushrooming of small guesthouses in buildings meant for a single family.
“In front of my house there is a 120 sq yard area, which has been turned into living quarters for 20-odd families. The power demand will automatically shoot up,” said Anthony Cruz, a resident of DLF Phase-III.
Residents of both old and new Gurgaon claim outages stretch to as long as 16 hours a day. This, in turn, has affected the water situation in the city.
“The Basai water plant is supplying very little water, while the private water plant is almost dry. Power cuts leads to non-storage of water and residents have to buy water. We shell out Rs 800 for around 5,000 litres of water,” said Cruz.
DHBVN Superintendent Engineer Sanjiv Chopra told Newsline, “There has been a 20-22 per cent shortfall in power supply in Gurgaon. While the demand is around 200 lakh units, we have been able to supply 150 lakh units. Sometimes the supply went down to 130 lakh units. We are trying to make the situation normal.”
Power officials said supply could dip further as Yamuna Nagar units I and II of 300 MW each and Hisar unit-I of 600 MW are closed. Hisar unit-II of 600 MW and Jharali (Jhajjar) units I and II of 500 MW each had tripped, resulting in sharp reduction in availability of power in the state.
About 150 MW power from Lanco Amarkantak Project is also not available due to non-availability of coal, officials said.
Here's a News report on CNG growth in Pakistan:
Pakistan has become the third country in the list of countries with the most natural gas vehicles, as over 26 percent of the vehicles on the roads consume natural gas, suggests the data of Natural Gas Vehicles (NGV) Europe.
The NGV Global suggests that Pakistan has observed the fastest growth in natural gas vehicles since the year 2000 as the number of gas vehicles has surged to around 3.5 million from less than 100,000 vehicles back in the year 2000. While Pakistan is the country with the highest number of CNG refilling stations in the world.
Former CEO of OGDCL, Zahid Khan said that independent seminars and analysts consider CNG to be a burden on the system.An official at the Ministry of Petroleum said that from 2005-06 to 2010-11, CNG consumption increased at the rate of 24 percent, the highest increase witnessed in any sector.
“With gas production facing a decline, this growth is at the expense of other value-added sectors like fertilizers, the general industry and the power sector,” he said.With growing car ownership and CNG prices being kept at 55 percent of petrol prices, the CNG monster is fast eating into the legitimate gas share of other sectors. Commenting on the investments made by the CNG sector, the official said that many CNG stations were initial investments based on a government incentive.
However the initial cost to set up a CNG station is approximately Rs55 million including Rs.31 million of the land cost and on average, the payback period is three years. Based on current CNG prices, most of the CNG stations have already made significant profits. The industry people say that when deciding on gas allocation, the government should consider the opportunity cost of the allocation of the gas to different sectors.
Fertilizer, textile and other manufacturers are value added industries producing goods locally with capital and equipment, which is already present in the country and this reduces the import of goods and increases the exports of locally manufactured items.
CNG, on the other hand, involves the substitution of one fuel by another.“Keeping energy prices in the form of CNG artificially low, encourages energy inefficiency. But energy spent using petrol for example, is likely to be less as the efficiency of use will be higher. Hence total expenditure on transport will not increase proportionately if CNG is withdrawn,” industry sources said. “The government should consider the fact that petrol is a perfect substitute for CNG, but there is no substitute available for fertilizer plants that use gas as a raw material,” he added. The ministry official said that the CNG sector was stating inaccurately that the government was imposing Rs141 cess tax per mmbtu on CNG.
In reality, in the first official communication on Cess dated Dec 15, 2011, the Cess for CNG was announced to be Rs 141/mmbtu for Region-1 (KPK, Baluchistan, Potohar Region) and Rs 79/mmbtu for Region-2 (Sindh, Punjab excluding Potohar Region). Later on it was reduced to Rs 84.6/mmbtu for Region-1 and Rs 47.4/mmbtu for Region 2 after the CNG associations went into negotiations with the government of Pakistan. Whereas, the fertilizer industry pays Rs 300/mmbtu.
Here's a Bloomberg report on PSO's tender for crude oil purchase:
Pakistan State Oil Co. (PSO) is seeking to buy 2 million metric tons of high-sulfur fuel oil over one year starting in August, according to a notice on its website.
The state-owned company is Pakistan’s largest fuel retailer. Details of the tender are as follow:
Product: High-sulfur fuel oil
Quantity: 2 million tons
Delivery: One year from award of contract
Port: Fauji Oil Terminal (FOTCO), Karachi
Offers close: Aug. 7, 10 a.m. local time
Offers valid: Aug. 18, 9 p.m. local time
Here's an ET story on Iran-Pakistan electricity deal:
Iran has linked the price for export of 1,000 megawatts of electricity with international crude prices and the rate will fluctuate in the range of 7 to 11 cents per unit.
Pakistan and Iran have already signed a memorandum of understanding (MoU) for electricity supply. According to a government official, the two sides have also agreed on the price which will be in the range of 7 to 11 cents per unit.
An official of the Ministry of Water and Power said gas prices in Iran were linked with global oil rates, therefore, it based the power price on crude oil prices in the international market.
According to the price formula, Pakistan will be paying a maximum rate of 11 cents per unit of electricity if crude prices reach $110 per barrel and the price range will be reviewed after five years.
“The electricity price has been capped by the time oil rates do not cross the $145 per barrel mark. However, if crude prices rise above that level, the two countries will be bound to review the electricity rate before the end of five-year period,” the ministry official said.
Under the proposed project, Iran will build a powerhouse in Zahedan province bordering Pakistan to generate electricity for export and has also expressed its willingness to provide $800 to $900 million for the project. A 700km transmission line of 500 kilovolts will also be laid from the Pak-Iran border to Quetta.
Some officials suggest that the government should ask Iran to install the power plant in Pakistan in order to avoid expenditure on laying the distribution and transmission line.
Besides the 1,000MW for which an MoU has been signed, Iran has also offered to export a huge quantity of 10,000MW to Pakistan.
However, the ministry official pointed out that Iran, at present, had no power plants to export such a huge quantity. “So the best way is to press Tehran to establish power plants in Pakistan,” the official said, adding Iran had already shown interest in setting up a 200MW plant in Balochistan near the border.
To push ahead with talks on electricity supply, a four-member delegation of Iran’s Mapna group of companies, headed by Abbas Ali Abadi, held a meeting with Federal Water and Power Minister Chaudhry Ahmed Mukhtar at the ministry on Monday.
The delegation expressed great interest in the power sector and discussed the setting up of plants of 1,000MW capacity immediately. The Iranians were also keen on installing smaller plants of 25MW on the ground as well as on barges to help Pakistan overcome the prevailing power crisis.
Here's a Bloomberg report on FDI in Pakistan's energy sector:
Pakistan may receive the most overseas investment in four years as companies set up wind and coal generation plants, helping curb the nation’s record energy shortage, a government agency official said.
“Pakistan serves as the gateway to Iran, central Asia and even India so we have a lot of potential to attract foreign investment,” Mohammad Zubair Motiwala, chairman, Sindh Board of Investment, said in an interview in Karachi today. “Energy is a field where an investor can come and really make money.”
Pakistan needs to increase overseas investment to help meet an economic growth target of 4.3 percent in the year that began July 1. Power outages lasting as long as 18 hours a day have led to factory shutdowns and riots across the nation.
Foreign direct investment may rise to $2.5 billion in the year that began July 1, mostly in energy, said Motiwala, 56. That would be the highest since the 12 months ended June 30, 2009, when overseas companies invested $3.7 billion. Overseas investment declined 50 percent to $813 million in the year ended June 30, according to the central bank.
Norway’s NBT AS and Malaysia’s Malakoff Corp. Bhd signed an agreement with Pakistan yesterday to build a $600 million wind power plant in the southern province of Sindh that will generate 500 megawatts a day within 18 months, Motiwala said.
South Korea, China and India are among the countries “most interested” to invest in Pakistan, he said.
Pakistan’s $200 billion economy faces the fastest inflation in Asia, an insurgency on the Afghan border and reduced aid flows. Political tension has increased after a dispute between civilian leaders and the judiciary led to Yousuf Raza Gilani’s ouster as prime minister last month.
Here's PakTribune report on "huge incentives" for energy investors in Pakistan:
There is great investment opportunity for local as well as foreign investors to invest in the energy sector, especially in renewable energy components, said President Asif Ali Zardari.
During a meeting with the Chinese delegation of China Electric Equipment Group (CEEG) headed by its president Jia Yangang, Zardari said, “Government has committed to provide all possible facilitation to the local and foreign investors with great incentives.”
The delegation of CEEG comprised of Awan Arshad, Ms Violet Rong, Sun Yumingm, Steven Chen, Lu Tinghua and others.
Highlighting Pak-China historical friendship Zardari said Pakistan welcomes Chinese investors, in particular, to invest in the energy sector and help the government meeting its energy requirements.
He said the prevailing energy shortage was a great challenge for the government and was hampering our growth and economy.
However, he emphasised Pakistan possesses huge resources of different kinds of energy including wind and solar that could be harnessed.
He said having abundant sunshine and sufficient wind speed offered great opportunity for harnessing this clean and efficient source of energy.
Pakistan greatly appreciated Chinese experience of growth and looks towards Chinese expertise in overcoming the challenges facing its economy. While appreciating Chinese assistance and interest of the Chinese businessmen in various projects in the country, he reiterated Chinese investors would be provided all facilitation in their business ventures by the government of Pakistan.
He called upon the company to assist in solar water pumping system, especially in the rural areas, and in stand-alone small house solar system for rural electrification. He said the existing water pumps could be converted from electricity to the solar energy.
He asked CEEG to give advice on captive power plants and invited it to establish offices in Pakistan for which the government would extend necessary support. He advised the Sindh government, in particular should consider exploiting solar energy in meeting the energy requirements of the far-flung areas.
President said the availability of loan facility from the Chinese banks would further facilitate company's business in Pakistan.
Jia Yangang briefed the President about his company and their future investment plans in Pakistan in the energy sector on public private partnership basis.
He said CEEG wished to cooperate in the fields of technology, manufacturing, training and research in solar energy and its applications. He assured his Company's continuous support to the country in the energy sector.
Here's a News report on South Korean proposal to build 300 MW solar plant:
Board of Investment (BOI), Government of Pakistan and Concentrix Solar Company of Korea Wednesday signed a Memorandum of Understanding (MoU) to construct a 300 MW Solar Energy Plant near Quetta, Balochistan.
The MoU was signed by M. Saleem Mandviwala, Chairman Board of Investment from Pakistan side and Dr. Choi Moon-Sok, Chief Executive Officer Concentrix Solar Company. The signing ceremony was held at the PM’s Secretariat which was witnessed by Prime Minister Raja Pervaiz Ahsraf, Federal Ministers and Chief Ministers of Balochistan and Sindh.
Concentrix is a subsidiary of German Company and is keen to make investment in the energy sector in Pakistan. Dr. Choi Moon-Sok met the PM yesterday and apprised him of his company’s plans.
Here are two reports of rising profits at Pakistani energy companies:
1. PSO hits trillion rupees in sales, according to Dawn:
Board of Management of Pakistan State Oil (PSO) meeting Thursday at Karachi reviewed performance for year ended June 30, 2012, in which it achieved a major milestone by becoming Pakistan’s first company with revenues exceeding a trillion rupees.
For the year ended June 30, 2012, PSO’s revenue exceeded Rs1,199 billion as compared to Rs 975 billion in FY11, representing 23 per cent growth.
It announced after tax earnings of Rs9.06 billion in FY12 as compared to Rs14.78 billion in last year.
Profitability was severely impacted by rapid devaluation of Pak rupee along with reduction in inventory gains. These losses absorbed improvement in margins of Furnace Oil and HSD along with recovery of financial income from power sector.
Earnings in FY12 are lower as compared to FY11 due to a deferred tax adjustment made in previous year amounting to Rs2.29 billion which had resulted from reinstatement of rate of turnover tax by tax authorities.
Further, financial cost resulting from accumulation of highest ever receivables continue to constrain both profitability and liquidity of PSO.
In period under review, industry’s volumes for Black Oil reduced by 8 per cent, whereas, White Oil grew by 4 per cent reflecting increase in PMG consumption of 22 per cent while a decline of 1 per cent was recorded in HSD demand.
In spite of reduction in market size of HSD, PSO has been able to increase its market share from 54.9 per cent to 56 per cent. It also continued its overall domination of market with its share in Black Oil and White Oil segments standing at 78.1 per cent and 55.1 per cent respectively, thereby contributing to an overall market share of 65.4 per cent.
Based on this performance, the company’s Board declared a final cash dividend of Rs2.5 per share in addition to already paid interim dividend of Rs3 per share.
2. OGDC profits rise 53%, reports Platts:
Pakistan's largest exploration and production company, Oil and Gas Development Company Ltd's, net profit rose 53% to Pakistani Rupees 96.9 billion ($1.03 billion) in its 2011-12 fiscal year (July-June) from 63.5 billion in 2010-11, OGDCL announced Thursday.
OGDCL's sales revenues in 2011-12 rose 27.7% to Rupees 197.8 billion from Rupees 155.6 billion, the company said in a statement to the Karachi Stock Exchange.
The company's exploration expenses fell 39% to Rupees 4.047 billion from Rupees 6.621 billion the previous fiscal year. Financing costs rose 15.7% year-on-year to Rupees 1.718 billion in 2011-12 from Rupees 1.484 billion.
"Non-payment of gas bills from state-run companies forced OGDCL to borrow more to pay its debt, creating financial difficulties," said Nauman Khan, research analyst at Karachi-based brokerage Topline Securities Ltd.
Royalty payments in 2011-12 rose 30.6% and operating expenses were up 4.2% to Rupees 23.12 billion and Rupees 34.37 billion respectively, the statement said.
Pakistan's oil and gas sector has been caught in a spiral of circular debt since mid-2008, with state-held utilities defaulting on payments to oil marketing companies, which in turn are unable to pay refiners their dues, which then have trouble financing crude oil purchases and running plants.
The total value of outstanding dues currently amounts to around Pakistan Rupees 425 billion, and has also affected the liquidity of local exploration and production companies, restricting drilling activity.
Here's an NDTV story on foreign investor disenchantment with India:
India's economy is growing at its slowest pace in nearly a decade, with stubborn inflationary pressures and high interest rates.
But what global firms often find hardest is the red tape and the policy paralysis that has stalled major reforms.
"Doing business in India is difficult because the problem is there are too many decision makers," Amit Midha, president of Asia Pacific and Japan for Dell, told Reuters in an interview.
"And decision makers change quite often. New decision makers come and they don't honour the contract previously signed."
Irked by a lack of opportunities, Germany's Fraport - the world's second-biggest airport operator - recently decided to shut its development office in India, becoming the latest in a growing list of companies exiting Asia's third-largest economy.
"When a company is trying to leave India and that company is well respected, then clearly it suggests that there is something, this place is not easy to work," Midha said.
UNCERTAIN TAXES, TOUGH GESTATION
A lack of clarity in recent proposals aimed at targeting tax evasion, including retrospective taxation on foreign corporate deals involving Indian assets, panicked foreign investors. Those rules have now been put on hold.
"Policies like retroactive taxes...are a huge risk for us to make an investment. We just do not know how to assess our results and how to report our results globally," said Shanghai-based Midha during a visit toNew Delhi.
"That sort of a set-up doesn't work for any global company for that matter."
Dell has operations in eight cities in India, where it has had a presence since 1996.
With 27,000 employees, India is Dell's biggest employee base outside the United States.
Chief Executive Officer Michael Dell told Reuters in July that Dell is bullish on India, along with China andBrazil.
Dell's experience in India has helped it deal better with the complications of doing business in a high-growth, but poor-infrastructure market, Midha said.
"From our experience, we tell people, in India, the initial gestation period can be hard, but once it's over, it can be a lot smoother," said Midha, who is also the chairman of Global Emerging Markets for Dell.
"If you don't have the resources, don't get into it. Because you need to make sure you have some staying power to go through the initial gestation period."
Midha said Dell had no plans to leave India and is now familiar with how to "navigate" in the country.
"There is a lot of progress made here in terms of infrastructure, but things like blackouts and other things doesn't give India a good position in the global stage," he said.
Hundreds of millions of Indians were left without power earlier this month in one of the world's worst blackouts when electricity grids collapsed two days in a row.
"I think the government is committed to promote investments in India, I see lots of signs of that," Midha said. "But, that said, proof is in the pudding."
Here's a BR story on massive Rs 1.2 trillion subsidy to power sector in last 4 years:
Prime Minister Raja Pervez Ashraf has said that the government has provided Rs1,200 billion subsidy on electricity over the past four years. Moreover, he added, the government initiated short-, medium- and long-term projects to bridge the demand-supply gap.
Addressing a function organised in connection with Independence Day celebrations here on Tuesday, the Prime Minister highlighted the PPP-led coalition government’s performance over the past four years, criticised the previous government and said that it was responsible, especially for the energy crisis and security situation in Balochistan.
Raja Pervez Ashraf also acknowledged that people were also facing problems because high inflation and unemployment. He said that the government had provided subsidy to the people through Utility Stores Corporation (USC) to minimise their problems.
Raja Pervez Ashraf said that the government had “inherited energy problem” but after coming into power had been making serious efforts to address it.
According to him, the government had added more than 3,500 megawatts of electricity in the national electricity network.
“We have initiated short-, medium- and long-term projects to bridge the demand-supply gap. We are working for quick completion of these projects,” he added.
The Prime Minister said that to address the grievances and complaints of the provinces about unequal electricity distribution, the Council of Common Interests (CCI) had formed a special committee to submit suggestions in this regard.
The government, he said, had also decided to exploit 175-billion-ton coal reserves in Thar on a fast-track basis for electricity generation.
He said that the size of the Public Sector Development Programme (PSDP) had been increased from Rs416 billion to Rs873 billion over the past four years and remittances had crossed $13 billion mark....
Here's a Power Engg report on inefficient electricity generation in Pakistan:
A recent research study by Arshad H Abbasi, advisor Water and Power, Sustainable Development Policy Institute (SDPI) highlights inefficient electricity production and chronic line losses as the major reason for an energy crisis in Karachi Electric Supply Company (KESC).
The only ways out of this crisis, the report suggests, is to invest and buy affordable electricity from hydro power, improve fuel efficiency of power plants and introduce 'smart grid' with advanced metering system, said a press release on Friday.
The report 'Pakistan Power Outlook: Appraisal of KESC after Privatisation' underpins the causes of chaotic energy situation in Pakistan while discussing KESC as a case study. It is the first ever study that comprehensively assesses the performance of KESC since its nationalisation in the early fifties.
The report highlights that KESC has been given huge amounts of subsidy even after privatisation, which distorts the purpose of privatising the utility, which was to reduce the burden on government of Pakistan.
The report says that thermal power plants in Pakistan, particularly of KESC, operate at extremely low efficiency and consume very high quantity of fuel to generate per unit of electricity.
KESC takes 11 to 18 cubic feet of gas to generate one KWh of electricity whereas plants of other companies such as Uch Power, Saif power and Orient Power take only 7.37, 7.47 and 7.56 cubic feet of gas respectively for generating one unit.
On regional level, when gas consumption is compared with thermal plants of Bangladesh, the consumption of KESC was found to be almost double. "Control of fuel costs, exercised through benchmarks alone could help substantially reduce or even eliminate the subsidies that government has to pay for reducing tariff to a politically acceptable level," the report added.
One of the recommendations stressed in report was to go for cheap and green hydro and wind power projects which are holded up due to lack of investment. "Dams like Bunji, Dasu, Lower Spat, Kohala and Tarbela 4th extension are capable of adding 15631 MW into the system.
The feasibility studies of most of these projects have been completed but the development is stalled or slowed down due to lack of fund and inefficiencies within the departments," report says.
The report calls on KESC and concerned authorities to invest and buy electricity from these hydro power plants at minimal cost instead of purchasing it from independent power producers (IPPs) at very high costs.
Currently, KESC is purchasing electricity on average at the rate of Rs8/KWh to Rs16/ KWh, which is very high as compare to Rs0.37/KWh obtained from hydro power plants with minimal wheeling charges by National Transmission and Despatch Company (NTDC). The report says, increased dependency on fossil fuel is the fundamental cause of present energy crisis and the best option available is to skew the generation mix with the renewable energy resources.
The findings, conclusions and recommendations of the report are equally applicable to all thermal power plants of the country. "These thermal plants are the backbone of our electricity system with the capacity of generating almost 70 percent electricity," it says...
Here's a Washington Post piece on India's thirst for energy:
Like China two decades ago and the United States in 1950, India stands on the cusp of transformational economic and social change, a jumping-off point at which the demand for electricity is about to explode.
Its economy and population are among the fastest growing in the world, and it has ambitious and energy-intensive plans to develop its infrastructure and industrial base. But business leaders are crying out for uninterrupted power supplies, and a third of India’s population is not even connected to the national grid.
Every modern, industrial society in history has gone through a 20-year period “where there was extremely large investment in the power sector, and electricity made the transition from a privilege of an urban elite to something every family would have,” Varro said. “India is right now just at that jump point.”
Whether it succeeds in meeting that demand could be the single most important determinant of India’s economic prospects over the next two decades, one of the main factors that will decide whether the country can continue to pull hundreds of millions of people out of poverty and realize its ambitions to be a 21st-century economic powerhouse.
But even if India finds the fuel it needs to power its generators, it is not clear how it will pay for the electricity they produce.
State electricity distribution companies across India are mostly bankrupt, forced by their political masters to give power away — free to farmers to run water pumps to irrigate their land, and at below-cost prices to everyone else. Theft and losses of power amount to 28 to 30 percent of output, further bleeding the distributors of resources.
Nationally, separate ministries for coal, gas, power and renewable energy routinely fail to coordinate.
“Policymaking in the energy sector is rather fragmented, and we really don’t have a forward vision,” said Rajendra Pachauri, who won the Nobel Prize in 2007 for his work as head of the Intergovernmental Panel on Climate Change.
Pachauri forecasts that if India continues on its path of “business as usual,” it will have to import unimaginable, and unfeasible, amounts of coal and oil in two decades.
A failure to invest properly in researching and developing renewable energy also threatens environmental ruin. “India can’t possibly continue on the path we are on,” he said.
Charles Ebinger, director of the Energy Security Initiative at the Brookings Institution in Washington, said the difficulties that India faces in meeting its rising energy demand “would pose a serious political challenge for a well-run government — and that certainly isn’t the case here.”
He said the country could struggle to hold its own against other emerging economies, including Brazil, Russia, China and South Africa, countries that with India constitute what is known as the BRICS group.
“If I had to bet, I would say there is a greater possibility of India failing to meet the challenge than of meeting it,” Ebinger said. “You will see India slip down, out of the ranks of the fast-growing BRICS emerging markets, and you will see more political disturbances when energy fails.”
This is a nice graph you have published:
But why stop at 2005? Why not link the most current data from World Bank?
GAS % is DOWN, OIL % is UP:
Where are those "super-huge coal reserves in Thar"? Why are they still not doing anything after all these years?
Have you finally understood the evil plan that the cunning Baniyas are hatching against our country?
They saw that we have very low savings and are very cleverly using their high savings advantage to surround us from all sides and then trap us into quiet obedience and helpless servitude.
Do you now see what they are trying to do? Do our thick Paindoos in Pindi & Aabpara understand the strategy of the baniya who smiles even as he nervously clutches his ragged dhoti? Can you appreciate the grave danger our country is in? Our ghairat itself is at stake.
I have trying to explain to you that the Cunning Baniyas have a policy-driven long-term strategic plan.
Having seen the graphs (below) that I had sent you once before:
(1) Do you now understand what they are trying to do?
(2) Do you now understand their plan?
(3) Can you see how devilishly cunning it is?
(4) Can you appreciate its diabolical nature?
(5) Have you understood its strategic implications for Pakistan?
Do you now comprehend what I mean by "ominous signs"?
We must move beyond the over-analyzed blog-articles on FDI in Fat-Burgers, Halal Pizzas, Cows & Buffaloes, Mango-Lassi Factories et cetera. We need to focus on core issues and avoid falling into the pitfall of superficial analyses of mundane consumption trends.
HWJ: "Do you now comprehend what I mean by "ominous signs"?"
No, I don't. The bottom line is that the energy consumption per capita in both India and Pakistan is growing very slowly and currently at 14-15 million BTUs, far below the world average of 70 million BTUs. It requires more attention, planning and investment to improve the productivity of ordinary people.
HWJ: "We must move beyond the over-analyzed blog-articles on FDI in Fat-Burgers, Halal Pizzas, Cows & Buffaloes, Mango-Lassi Factories et cetera. We need to focus on core issues and avoid falling into the pitfall of superficial analyses of mundane consumption trends."
There is nothing superficial about growth in per capita production and availability of something as basic as food. Rising consumption by growing middle class represents real progress on the ground for the real people.
RIAZ HAQ: "No, I don't. The bottom line is that the energy consumption per capita in both India and Pakistan is growing very slowly and currently at 14-15 million BTUs, far below the world average of 70 million BTUs...... Some Management Slogans (SMS)"
Ten years from now, with a continued rapid expansion of their High-ICOR Heavy Industrial Base, India is projected be at an estimated 2/3 level of per capita energy consumption in China today.
Given that we have no heavy industrial base "worth mentioning" (as the economist said) and little savings with which to even begin to build it, where will we be 10 years from now?
Again: SAVINGS, SAVINGS, SAVINGS. Savings-> Investment-> Sustainable growth. There are NO SHORTCUTS.
RIAZ HAQ: "There is nothing superficial about growth in per capita production and availability of something as basic as food. Rising consumption by growing middle class represents real progress on the ground for the real people"
But where is this "growth in per capita PRODUCTION" of which you speak? The total GDP growth rate is at about the same level as the population growth rate; therefore, by definition, there is little growth in per capita PRODUCTION.
If that was just a typographical error and you were actually refering to the growth in per capita CONSUMPTION, I would point to the inescapable fact that rising per capita consumption in the face of stagnant per capita production can ONLY be possible-- again, by definition-- when accompaned by TOTAL COLLAPSE of per capita SAVINGS & INVESTMENTS.
We are in effect destroying our future. We are taking a sledgehammer to our economy RIGHT NOW. It is only a matter of time before we face both, a financial crisis as well as total macroeconomic collapse. The only unknown at this point is as to which one will come first. I suspect the financial crisis will come first, and that the total macroeconomic collapse will come later, but that is admittedly just a guess.
Our whole economy is headed in the WRONG direction. We must refrain from singing songs about well we are dining even as we eat our Seed-Corn. We must slow consumption and boost savings. There IS NO OTHER WAY.
And this is precisely what I have been trying to drum into your head.
Here's Platts on Pakistan's new energy exploration policy:
Pakistan has released 60 oil and gas exploration and production blocks for auction, a Ministry of Petroleum official said Tuesday.
The release is part of a new policy to spur development of the country's oil and gas industry that includes a rise in rates for any gas produced to $6-6.60/MMBtu, from $4.20/MMBtu earlier, the official said. The rate for offshore blocks in areas designated shallow zones is set higher at $7/MMBtu, deep zones at $8/MMBtu and ultra-deep zones at $9/MMBtu.
"Interested oil and exploration companies and countries have almost two months to submit bids, the official said.
The bids will be opened December 13 and the names of successful bidders announced a week later, he added.
The government is hoping to sell four of the blocks under government- to-government agreements, he added.
Exploration activity in Pakistan has slowed in recent years due to the low prices offered by the government and the impact of circular debt issues in the oil and gas sector. The country has gas reserves of 23 Tcf/day.
Pakistan's current domestic gas demand exceeds its production capacity of 4.2 Bcf/day by 1.2-1.4 Bcf/day, which increases to 2 Bcf/day in winter. If adequate gas is not discovered within 3-4 years, the shortfall is projected to increase to 2.5-3 Bcf/day.
Riaz Sahab, I have been using my blog to get a lot of statistics about Pakistan in my work. Thanks also for this piece on energy policy. However, I think you have not given enough credit to what energy efficiency can achieve. In many ways, it can also be seen as a source of energy, since it gives access to additional services while utilizing the same or lower amount of energy. Pakistan needs to include it for a truly comprehensive energy policy.
Please check out my energy conservation campaign on:
Here's a News report on Pak energy policy encouraging Thar coal-fired power plant development:
Of course, it was not an easy decision in the context of country’s squeezed financial resources as elaborated by Prime Minister Raja Pervaiz Ashraf himself while presiding over a recent meeting of Thar Coal and Energy Board at PM Secretariat the other day in which the request of Sindh government for modelling of two Jamshoro plants on coal source was not only accepted but also made the basis of switching the entire thermal generation industry to coal.
During this meeting, the prime minister admitted that, given the financial constraints, it was very difficult to give sovereign guarantees nevertheless he directed the Ministry of Finance to arrange sovereign guarantee for Sindh Engro Coal Mining Company (SECMC), a joint venture of Sindh government and Engro Power Generation, with the sole objective of starting work, without further delay, on coal-based generation. The first two projects include one existing 800MW unit and another new 600MW unit, both located in Jamshoro, Sindh. These two plants would be redesigned and designed, respectively, as per Thar coal specifications and this conversion would be financed by ADB.
the SECMC and Engro Corporation are working on $1.3 billon integrated coal mining and power project in Thar area. The project covers mining of 6.5 million tonnes of coal and generation of1200 MW power. It is a matter of national pride to note that the Thar lignite (coal) resources of 175 billion tonnes constitute the sixth largest reserve in the world (however, total national coal reserves amount to 185.5 billion tonnes). For sure, these resources present an opportunity for development into a sustainable fossil fuel reserve that has the capability of meeting a large portion of Pakistan’s energy needs.
Here's an ET report on ADB supporting Thar coal-fired plants development:
The Asian Development Bank (ADB) has dispelled the impression that the bank has some reservations about the viability of Thar coal consumption in power plants, but at the same time it lays stress on the importance of environmental standards and project timelines.
ADB Country Director Werner Liepach highlighted the issues in a meeting between Sindh Chief Minister Syed Qaim Ali Shah and ADB board of directors at Chief Minister House on Wednesday.
Speaking about the potential of Thar coal, the chief minister said coal was the most feasible fuel for power plants, which were being switched to coal. A new 600-megawatt coal-based power plant is also being set up at Jamshoro with the aim of diversifying the fuel mix and moving away from expensive imported furnace oil...
Officials of the provincial government told the meeting that international environmental standards would be followed in Thar coal mining. They also said any timing mismatch between conversion of existing power plants into coal and readiness of coalmine at Thar block-II would be covered by Sindh Engro Coal Mining Company through imported coal of Thar specification.
It was agreed that the ADB and Sindh government would work for a better understanding and push ahead with different projects. An amount of $105 million will be extended for such projects.
Here's Power Engineering report on Japanese investment in Pak coal power transmission project:
ISLAMABAD, Nov. 3 -- Japan has offered to support Thar Coal power projects and construct transmission line to inter link the project with national grid.
Japanese Ambassador to Pakistan, Hiroshi OE stated this during a meeting with the Federal Minister for Water and Power, Ch. Ahmed Mukhtar here on Thursday.
During the meeting, the Ambassador discussed various matters of mutual interest, energy situation and current political situation.
The Ambassador expressed his views on investment opportunities in Pakistan and observed that the investment environment is better here in Pakistan so that Japanese companies are interested to put their capital in Pakistan in various projects. He also offered to invest in the Mangla Dam power extension project. He assured that Japan would continue its financial and technical support for social sector development. The Ambassador also appreciated the current recovery drive of the Ministry of Water and Power and said that it would help to increase the cash flow for power generation.
The Minister while welcoming the envoy appreciated the Japanese offers and said that the government is taking all possible measures for generation of cheap electricity. He said that the indigenous resources are being utilized for future projects to generate affordable energy. He said that a wind power project would start generation next couple of month while the other wind projects would be completed next year. Mr. Mukhtar also asked the Ambassador to invest in the wind, solar and other hydel power projects.
Here's a Nation story on KESC's planned investments to add capacity and reduce cost of generating power:
Karachi Electric Supply Company has reaffirmed its commitment towards Pakistan by announcing an ambitious investment plan in excess of Rs40 billion. According to the statement, KESC has already invested around USD one billion over the last four years in various large scale projects in generation, transmission and distribution. The new Rs40 billion investment plan is aimed at enhancing KESC’s generation capacity, improving its generation fleet efficiency, reducing the cost of power generation and building the requisite transmission capacity to meet growing power demand across its service territory. These projects will be completed over the next 18-36 months and KESC will be arranging required funding from local and foreign institutions in shape of both debt and equity.CEO KESC, in a related statement said, “We believe in the potential that Pakistan offers and despite the difficult operating environment we have demonstrated this through unprecedented investments in the past. The new investment plan is just a reiteration of this belief and comes at a time when Pakistan is witnessing dampening of investors’ sentiments, both local and foreign”.Under the new investment plan, KESC is undertaking combined cycle projects at its three power plants at Korangi and SITE that will significantly enhance the efficiency of these plants and add additional 47 MW of generation capacity. A specially designed ‘Transmission Package’ will see the installation of new transformer bays, addition of 3 new grid stations at strategic locations and extension of 6 existing grid stations. In line with the strategic intent to bring down the cost of generation, the new investment plan will allow KESC to convert two of its oil-fired units of 210 MW each at its Bin Qasim-I to coal. KESC is also undertaking to develop a bio-waste to energy project which will convert cattle manure from Landhi Cattle Colony and organic food waste to produce 22MW of electricity. The new investment plan will help KESC accomplish many strategic objectives, including creation of social and environmental values.
Here's an ET piece on energy situation in Pakistan:
..Since Pakistan came into being, people have been facing loadshedding due to shortage of power supply, with frequent outages affecting economy in many ways.
Uncountable working hours have been lost, leading to an increase in poverty and economic loss of billions of rupees to the country. Surprisingly, it is happening despite the fact that only about 60% of the population has access to electricity. According to the World Energy Statistics 2011, published by the International Energy Agency (IEA), Pakistan’s per capita electricity consumption is one-sixth of the world average.
World average per capita electricity consumption is 2,730 kilowatt hours (kwh) compared to Pakistan’s per capita electricity consumption of 451 kwh.
According to the Pakistan Energy Year Book 2011, the country’s installed power generation capacity is 22,477 megawatts and demand is approximately the same. The country needs to redesign the electricity portfolio and substitute oil and gas with an abundantly available indigenous fuel source. It must develop indigenous energy resources to meet future electricity needs and can overcome energy crisis by utilising untapped coal reserves.
Fortunately, Pakistan has a very inexpensive source to get energy through coal. Coal is economically viable and a long-term solution to balance the demand and supply chain of electricity in the country, which has the fifth largest coal deposits in the world.
According to last estimates made in 2011, coal deposits in the country are up to 185 billion tons. The largest deposits are in Thar desert, which is about 850 trillion cubic feet spanning over 10,000 square kilometers, surprisingly more than the oil reserves in Saudi Arabia having a collective quantity of approximately 375 billion barrels.
At present, 40.6% of world’s electricity is being generated from coal and it is the single largest contributor to world electricity generation. By looking at the electricity generation mix of the countries that are blessed with coal, it is evident that coal is the largest contributor.
Countries like Poland, South Africa, China, India, Australia, Czech Republic, Kazakhstan, Germany, USA, UK, Turkey, Ukraine and Japan are generating 96%, 88%, 78%, 78%, 77%, 72%, 69.9%, 52.5%, 52%, 37%, 31.3%, 27.5% and 22.9% of electricity from coal respectively. In comparison, Pakistan generates only 2.27% of electricity through coal.
However, coal reserves of only Thar can generate 20,000MW of electricity for the next 40 years without loadshedding and at a rate Rs4 less than the current cost of electricity production. The government has given the task to experts to enhance energy efficiency by focusing on coal and ensure large scale power generation through this resource.
At the International Coal Conference 2011, Pakistan had invited investors from around the world, encouraging them to pour money into coal power projects as the country initially requires $1.2 billion to build power generation infrastructure in Thar. Japan is keen to finance transmission lines from the Thar coalfield to the national grid and Chinese companies have expressed interest in developing coal-based power plants in Thar and Badin.
Here's a Reuters' story on Italian energy giant exploring oil and gas onshore and offshore in Pakistan:
MILAN: Italy’s Eni has strengthened its hand in Pakistan by agreeing to buy offshore gas acreage as the oil and gas major continues to channel cash into more profitable upstream activity.
In a statement on Thursday Eni said it had signed a deal with Pakistan and state oil company OGDCL to acquire 25 per cent and operatorship of the offshore Indus Block G licence, located in Pakistan’s Indus Basin.
Eni is the leading foreign producer in Pakistan with an equity output of 58,000 barrels of oil equivalent per day (boed).
In September it announced a significant onshore gas discovery in a country which it is counting on as part of its strategy to develop assets and bring them to market rapidly.
Huge cost overruns and delays at Kashagan, the world’s largest oil development, have raised questions about its ability to deliver large-scale projects on budget and on time.
Eni, the world’s No. 7 oil company in terms of production, is selling non-core assets like gas transport group Snam and Portuguese energy group Galp Energia to focus on oil and gas exploration.
The company, which produced 1.7 million boed in 2011, has said it is looking to add more than 1.3 million boed of new production by 2022.
Over the past year, Eni has dispelled some of the scepticism about its profitability and growth potential by clinching a deal with Russia’s Rosneft and scoring exploration successes in Norway and Mozambique.
The 7,500-square-kilometre block in Pakistan is “in ultra deep water of an underexplored and promising area offshore Pakistan”, Eni said.
The consortium managing the block is composed of the two state companies OGDCL and Pakistan Petroleum, Eni and United Energy Pakistan Limited – each holding a 25 per cent stake.
Here's Reuters on opening of a new refinery in Pakistan:
Karachi-based Byco Oil said it had completed Pakistan's largest oil refinery at Balouchistan with a capacity of 120,000 barrels per day, which is expected to reduce the country's imports of oil products.
The new refinery, manufactured in the UK and assembled in Pakistan, is currently in the pre-commissioning stage, with tests being done on various equipment, the company said on its website. Byco Oil is the parent company of listed Byco Petroleum .
"It will enhance overall crude oil refining capacity in the country from an existing 12.25 to 18 million tonnes per year and will significantly contribute in reducing a shortage of refined petroleum products in the country," the statement read.
Byco officials could not be reached for comment.
The new plant will more than triple Byco's current capacity of 35,000 bpd at its existing refinery.
The refinery can be further expanded up to 180,000 bpd, the company said.
An isomerisation plant to produce higher volumes and cleaner motor gasoline is also being commissioned with the refinery.
Pakistan operates five other refineries, the largest of which is Pak-Arab Refinery's 100,000 bpd plant.
Pakistan State Oil, a major oil importer in the country, imports about 250,000 tonnes of diesel every month through term volumes, they added.
Here's BR on PPL introducing new petroleum exploration technology in Pakistan:
A PPL statement here on Saturday said that developed by NXT Energy Solutions (NXT), a geophysical service company based in Canada, SFD (Stress Field Detection) is a proprietary cutting edge, eco-friendly airborne reconnaissance method to identify potential hydrocarbon traps and reservoirs in a time- and cost-effective manner, especially in unexplored on- and off-shore frontier regions with limited access and infrastructure.
It said that the SFD is expected to be particularly useful in the current energy scenario, warranting fast track identification of, and production from, relatively deeper, more complex reserves of hydrocarbons to bridge the supply-demand gap.
Welcoming the guests, PPL's Managing Director and Chief Executive Officer, Asim Murtaza Khan, underscored the increasing importance of deploying latest exploration technology to meet production and reserves replacement targets to address the current deficit and ensure future energy security. SFD technology has been successfully applied by leading oil and gas companies in North America, Colombia and other countries. PPL is proud to be the first company to apply the technology in Pakistan', he said.
Here's a Dawn report on PPL exploring for oil and gas:
ISLAMABAD, Jan 8: The Pakistan Petroleum Limited, in collaboration with ENI, a foreign exploratory firm, is set to start drilling of a well in the Arabian Sea along Pakistani waters for discovery of oil.
The PPL has acquired exploration rights in a block located at 100km from Baghdad for oil exploration and it is hopeful about discovery of oil.
In a briefing to Senate Standing Committee on Petroleum and Natural Resources at the Parliament House, the PPL MD, Asif Murtaza, informed that drilling of exploratory well has already started in the block acquired in Iraq and there are bright chances of oil discovery.
In case of major success, the Pakistani company would benefit. The company is already working in Yemen on two blocks.
Regarding previous attempts made by the company to find oil from the sea, off Pakistani coast, the PPL MD informed the committee that in Mekran deep sea, some 12 exploration wells were drilled, but none succeeded.
The committee, which met with Senator Mohammad Yousuf in the chair, was informed that many foreign exploration companies still have interest in drilling of exploration well in Mekran Deep Sea. However, drilling has been delayed for one year due to various reasons.
Additional Secretary of Petroleum Naeem Malik informed the committee that drilling of an exploration well in deep-sea requires at least $100 million investment and foreign companies take decisions with due care.
The federal government recently announced new exploration incentives and the companies which would make first three discoveries in deep-sea would be given extra benefits with incentives to encourage more companies to come forward. The PPL MD informed that PPL is working in Zandan Block (Khyber Pakhtunkhwa) and is planning to acquire five more blocks in KPK as Tal Block area has great potential of discoveries.
To exploit un-conventional gas reserves in the country, some seven exploratory wells, eight appraisal wells, and 19 development wells have been planned in the next five years and the expected outcome would be 150bcf shale and tight gas production in the country.
He informed that shale gas and tight gas price approval has been sought from the regulator to speed up exploration activity. He further informed that some seven pilot projects have been planned for exploration of shale and tight gas reserves. He further informed that in Kirthar block, one exploratory well Rahman-1 is under way.
He informed that Hala, Kotri, Notari North, Jangshahi, Gambat and South blocks are potential areas for discovery of shale and tight gas reserves.
The committee was informed that PPL has geared up its seismic survey in the country and some 780sq kms were surveyed in 2011-12, while during the current fiscal year, some 1,400sq km have been surveyed.During the meeting, it was informed that District Kohlu (Balochistan) has huge gas reserves and due to law and order situation, exploration companies do not go there.
The committee was informed that the federal government was collecting 12.5 per cent royalty on gas production and the entire amount is transferred to provinces and if any provincial government is not spending the amount on welfare of its population or in the relevant district, where oil and gas have been found, it is their internal issue.
Here's PakistanToday on expansion of re4fining capacity to 18 million tons:
Karachi - country’s largest oil refinery at Mouza Kund, District Lasbella, Balochistan. At present the refinery is in a state of pre-commissioning and preparatory activities wherein different plants, equipment and instrumentation are being put to confirmatory checks and tests.
The cold circulation of crude oil has already been established and sustained. Also furnaces of different process units have been test fired. The refinery is ready for hot commissioning and start up.
This newly-commissioned petroleum refinery would have an installed refining capacity of 120, 000 barrels per day.
Combined with existing and fully operative smaller refinery, the cumulative capacity shall be over 155,000 barrels per day which is 55% higher than the existing largest refinery in Pakistan.
Thus it would enhance overall crude oil refining capacity in the country from existing 12.25 to 18 million tons per year and would significantly contribute in reducing import of deficit refined petroleum products in the country.
This refinery can be further expanded up to 180,000 bpd.
“This milestone, for sure, has been made possible with sheer hard work of our Employees and support & cooperation of all our valued contractors. Upon commissioning this Refinery, with the blessings of the Almighty, will become the single largest in the country,” said Qaiser Jamal CEO Byco Oil Pakistan while declaring the completion.
Along with this new Refinery, the Country’s first isomerisation plant is being commissioned, he said.
The introduction of isomerisation technology in Pakistan would not only enable this refinery to produce higher volumes of motor gasoline to meet the country’s demand but this will be the first environment friendly motor gasoline, with almost nil content of Benzene.
The first parcel of crude oil for this refinery will be brought to the country’s first single point mooring installed 10km into the Arabian Sea for direct discharge to the Refinery storage tanks. This facility can discharge tankers carrying over 100,000 metric tons of crude oil.
With an investment of significantly over $600 million and rising, Byco also operates as a fast growing petroleum marketing business network comprising of 222 retail outlets.
Amir Abbassciy, CEO of Byco Industries Incorporated, parent company of Byco’s operating companies in the country said: “These are the first significant steps toward achieving our aim to be in integrated oil to chemicals and related infrastructure businesses.”
Here's PakistanToday on nuclear power expansion in Pakistan:
ISLAMABAD - Pakistan Atomic Energy Commission (PAEC) envisages production of 8,800 MW by the year 2030 through nuclear power reactors. Two nuclear power plants, 340MW each, are under construction at Chashma and expected to be commissioned by 2016 with Chinese assistance. Construction of these power plants became possible after a long-standing agreement, while three other nuclear power plants already commissioned in the country are performing well. According to official sources, the allocation for PAEC is almost 11% of the total federal development budget estimated at Rs 360 billion for the financial year 2012-13.
Officials said a major chunk of the PAEC budget has been allocated to two nuclear power plants.
“An amount of Rs 34.6 billion has been set aside for Chashma Nuclear Power Plants, C3 and C4. The total cost of these two projects is Rs 190 billion which will be partially funded by a Rs 136 billion Chinese loan.
The government has so far spent Rs 62.4 billion on the mega project having a 660 MW generation capacity. With Rs 34.6 billion additional spending, the government will be able to complete almost half of the work by June 2013, an official said. According to an official in Ministry of Science and Technology, government is harmonising the efforts made in the energy sector by different ministries, departments and research centres by creating an ‘Energy Council’ with heads of relevant organisations. The council will be entrusted to advise on priority areas for Research and Development (R&D) and management of resources and to fill the gaps.
Acquisition of technology for building nuclear power reactors through R&D, as well as transfer of technology agreements is also in consideration, he said.
Here's a summary of BMI report on Pak power sector:
Boston, MA -- (SBWIRE) -- 01/03/2013 -- BMI View: In spite of chronic and persistent power shortages, reflecting under-investment and system inefficiencies, Pakistan has a plethora of potentially varied and rich power options from which to choose. There is vast untapped hydro and renewables capacity available, but it remains to be seen if the investment will actually materialise. Thus, this is likely to increases the country's reliance on growing its gas-fired, coal-fuelled capacity, as well as its modest nuclear programme, although controversial import deals with Iran could cause political backlash. While these opportunities exist for the thermal generation, delays in payments by state-owned transmission companies to independent power producers limit the profitability of the sector, and could cap its growth.
View Full Report Details and Table of Contents
The country continues to suffer from a shortfall of electricity of more than 3 gigawatts (GW) daily, and while this has fallen from the highs of 7GW, permanent resolutions and solutions to the situation remain out of sight. While the shortfall is caused by poor performance from existing generating assets, the lack investment in generating capacity, and an inefficient grid, the government also faces difficulty in sustaining subsidies. This, in turn, drains the profitability of power generation companies, forcing them to cut back on much-needed investment in the sector.
The key trends and recent developments in the Pakistani electricity market include:
- The constructions of the various dams have met with increasing environmental concerns and financing issues, which threaten to stall works. In particular, the World Bank and other international aid agencies have withdrawn their support for the Diamer-Basha dam project due to environmental concerns raised by India. Given the growing demand for electricity, a delay in the completion or cancellation of the project could mean ,the electricity shortfall is likely to persist beyond the government's original timeline.
- Progress of talks between India and Pakistan regarding the sale of electricity and petrol remains slow, with Indian officials citing their Pakistani counterparts keeping a cautious stance. While several suggestions have been raised during the talks, including building of a pipeline directly to Lahore, the Pakistan government remains wary of issues such as security and dependability of oil imports from India. However, worsening energy shortage in Pakistan may push Pakistani authorities to push ahead with negotiations, although imports from India are unlikely to exceed supplies from Kuwait.
Here's PakistanToday on primary energy consumption in Pakistan:
KARACHI - Pakistan’s gas requirements are growing hastily, while the domestic gas production is not growing at the same pace. Primary energy consumption in Pakistan has grown by almost 80pc over the past 15 years, from 34 million tons oil equivalent (TOEs) in 1994/95 to 60 million TOEs in 2010/11 and has supported an average GDP growth rate in the country of about 4.5pc per annum.
Consumer Rights Commission of Pakistan (CRCP) in collaboration with Citizens’ Voice Project hold policy dialogues on “Role of Government and Regulators in the Gas Sector of Pakistan” with parliamentarians, policy makers, regulators and civil society organisations here on Wednesday.
CRCP recommended Effective Governance & Regulation for development of Gas Policy in dialogue.
The present natural Gas crisis clearly indicates that overall governance of the gas sector needs improvement. The growing energy shortages have made life difficult for Pakistanis across the board. The quality of life of citizens has deteriorated.
Dialogue reported that economic growth rates have been stunted, and industry and agriculture have suffered. The Government of Pakistan has not yet recognising magnitude of crisis and its effect on the people and the economy. Government has to take emergency measures to address, manage and reduce the impact of crisis. The reasons for present crisis in gas sector have both technical and governance aspects.
The dialogues have given comprehensive insight into the current situation of transparency, public participation and accountability processes in gas sector of Pakistan. The intervention is likely to result in enhanced understanding of the sect oral issues for the stakeholders.
Most important of all, it is expected to inform the policy makers and especially the public representatives about the governance situation of the sector and shall persuade them to take positive actions for sectoral improvement. In Pakistan, industrial and fertilizer sectors are getting gas on subsidised rates, while the CNG stations were being subjected to an exorbitantly high tariff regime, neglecting the general public’s interest. The gas consumers’ woes could not be resolved unless Pakistan had an autonomous regulator free of political interference. Besides, the problems could not be resolved without improving people’s access to information, putting in place a system of strict penalties on consumers involved in gas pilferage and non-payment of gas bills
Here's ET on ADB funding of coal power in Pakistan:
Giving in to the pressure from an international lender, the government has reversed its decision on consuming domestic coal for power generation as the Council of Common Interests has approved using a blend of imported and Thar coal in power plants.
The move will pave the way for an early sanction of a $900 million loan by the Asian Development Bank that will go for the construction of a 600-megawatt coal-fired power plant at Jamshoro and for switching an existing 600MW power plant to coal.
According to sources in the finance ministry, further discussions on the $900 million loan will be held with ADB Director General of Central and West Asia Department Klaus Gerhaeusser, who was due to arrive on Wednesday.
During his two-day visit, Gerhaeusser will meet Finance Minister Dr Abdul Hafeez Shaikh and Water and Power Minister Ahmad Mukhtar. He will also hold meetings to review communication projects.
Prime Minister Raja Pervez Ashraf had placed a ban on imported coal-powered plants in a bid to encourage consumption of Thar coal in such projects. However, the ADB resisted the move and refused to extend loans for Thar coal-based power plants.
The bank was of the view that higher dependence on lignite would increase pollution, which was against the environmental policy of the lending agency.
Following the ADB’s decision, the federal government placed the case in a meeting of the CCI – a constitutional body headed by the prime minister with all chief ministers as members – on January 23. According to official documents, the CCI decided that “instead of using only Thar coal, a blend of imported and Thar coal will be used in the 600MW Jamshoro plant.”
In this meeting, Sindh Chief Minister Syed Qaim Ali Shah, who actively promotes mining and consumption of Thar coal, was also present.
CCI also decided that the Ministry of Water and Power would work out further details in deliberations with representatives of the ADB.
Apart from the ADB, the Japan International Cooperation Agency (JICA) has also expressed interest in constructing power plants in Pakistan, besides laying a power transmission lines from Thar to Matiari.
In the past many years, heavy reliance on furnace oil has disturbed the country’s energy mix. Against a one-third share of thermal power generation earlier, the ratio has increased to three-fourths. The recent emphasis on the shift to coal is aimed at tackling the runaway circular debt that has plagued the entire energy chain, forcing the government to spend billions of rupees every month to prop up the energy system.
According to a government official, it was not yet clear whether Pakistan will again take up the issue of financing the Diamer Basha Dam with the ADB director general.
However, he said these days the dam, costing $11.3 billion, was not the top priority of the government, which has shifted funds meant for the dam to another project, the Neelum Jhelum hydropower plant. An amount of Rs1 billion has also been diverted to the PM’s discretionary funds.
Here's a BR report on unconventional oil ad gas policy in Pakistan:
Advisor to Prime Minister on Petroleumand Natural Resources Dr. Asim said that Pakistan offers great potential in the oil and gas sector and the government is doing its part by introducing new policies to meet the rising energy demand .
He was presiding over a seminar organized by the Petroleum Institute of Pakistan (PIP), a representative body of the oil and gas industry, on the topic "Shale Gas Potential in Pakistan" on Saturday.
The purpose of holding this seminar was to create awareness aboutpotential and challenges of shale gas in Pakistan and establish PIP'sprofessional standing in view of assisting the government on dealing with the energy crises in the country.
The forum consisted of 150 distinguished guests from the oil and gas fraternity including government officials, media personnel and students from Karachi's top universities/colleges.
Dr. Asim Hussain said he has been advocating the need to balancecountry's energy mix, which currently is heavily dependent on natural gas.
He stated that the US Energy Information Administration have estimated 51 TCF Shale Gas Reserves in Pakistan, while as estimated reserves for Low BTU Gas are 2 TCF and that of tight gas are 40 TCF.
He added that Shale Gas exploration is high technical and costly, therefore, in order to encourage its exploration, pilot projects are planned.
The Ministry of Petroleum and Natural Resources will facilitate E&P Companies wishing to explore shale gas, by granting special concessions through transparent process and based on merit.
Chairman PIP Asim Murtaza Khan stressed on PIP's role as an effective energy sector advisory body, supporting government and industry in Pakistan todevelop a progressive and sustainable roadmap to meet present and futurechallenges.
He said that PIP is planning to hold series of seminars in nearfuture. The big ticket items that will be discussed and which need theimmediate attention will be the "LPG Outlook in Pakistan", "Fast-trackingimports of LNG", "Refining Vision 2020", "Energy conservation" and"Restructuring of the Pakistan's gas sector".
Here's a Dawn story on oil and gas discoveries in Pakistan:
Following a lacklustre period of several years, when things remained quite on the oil and gas exploration sector, in the face of heightened security situation and circular debt issues, the oil and gas fields have started to buzz with activity.
In the current financial year-to-date (July 1, 2012 to March 11, 2013) the country’s oil and gas sector has spudded as many as 56 wells. It represents a big leap over the 31 wells drilled in the same period last year. The sector has drilled 20 new exploratory wells as against 12 wells same time last year, depicting a significant increase of 67 per cent.
On the discovery side, the picture was a lot brighter than the earlier years as a total of 10 discoveries have been made by the sector in FY13 so far.
The sector’s drilling of a total of 56 exploratory and development (E&D) wells during the period also represents achieving 61 per cent of the full year target set at 91 wells. Even in that sphere, the sector fared better than the comparable period last year when only 41 per cent of the target 76 wells could be drilled.
“O&G sector’s focus continues to remain on the development wells”, says Nauman Khan, analyst at Topline Securities. Of the total wells drilled, 36 were development wells (representing 64 per cent of total activity). It reflected improvement over 19 wells or 61pc of total wells drilled in the comparable period last year.
Apart from the development wells, the activity on the exploration side also represented encouraging growth. Although, contribution of the exploratory wells had slightly declined to 36pc as against 39pc in the same period last year, the overall trend was heartwarming.
The sector spudded 20 exploratory wells, which was significantly more than 12 wells drilled in the comparable period last year while it represented 45pc of full year target of 44 wells.
Analyst said that amongst the listed companies, Pakistan’s largest oil and gas explorer, the Oil and Gas Development Company (OGDC) had drilled 13 wells which were 63 per cent higher than eight wells drilled last year. Included in those 13 wells, were two exploratory wells and 11 development wells.
Pakistan Petroleum Limited drilled five wells (one exploratory and four development), up from two development wells in the comparable period last year. However, with full year target of 16 wells (six exploratory and 10 development), sector watchers expect the drilling activity of the company to significantly intensify in the remaining of the year.
The third major oil and gas E&P company, the Pakistan Oilfields Limited drilled only one exploratory. In the comparable period last year, POL had drilled two exploratory wells.
Though much of the success eluded the E&P companies on the listed sector, the revival and discovery would benefit the country. The darkest hour for the sector came possibly in late 2010 and early 2011, when exploration and development work had started to limp.
According to the data compiled by Pakistan Petroleum Information Services (PPIS), 28 E&P companies in the country, that hold operator licences, together had drilled only 19 wells in first half of the year 2011, compared to 80 wells targeted for all of the FY11.Besides the poor security situation, the two major reasons for the underperformance of E&P companies were the nagging circular debt, which had affected the drillers’ liquidity thereby restricting their drilling portfolio and secondly, the continuation of the carry over wells of the earlier year that stalled companies from launching into new wells, keeping them focused on already drilled ground.
Here's a BMI report on Pak energy sector:
Boston, MA -- (SBWIRE) -- 05/24/2013 -- Successive energy shortages in Pakistan have led the government to acknowledge that longterm gas self-sufficiency has become impossible. A March 2013 agreement with Iran on the development of the IP pipeline by 2015 could ease the risk of an energy shortage. Domestic consumption continues to rise rapidly, boosted by the start-up of additional gas-fired power stations and continued use of Condensate Natural Gas cars. As import volumes rise, LNG is set to become part of the energy mix. In the meantime, Pakistan will again attempt to privatise more of its various state-controlled energy companies and stimulate investment in domestic oil and gas production. While we do not believe it would render Pakistan gas selfsufficient over the next 10 years, the recent start-up of shale gas exploration creates a large upside risk to our forecast.
View Full Report Details and Table of Contents
The main trends and developments we highlight for Pakistan's Oil & Gas sector are:
- Energy minister Asim Hussein has acknowledged that the current situation in Pakistan requires policy rationalisation. Several steps have been taken including a rise in regulated gas prices, a revamp of licensing regulation to promote exploration and distribution of production in local markets, the offer of 60 onshore blocks in a licensing round, offshore and unconventional exploration, and development of necessary import infrastructures.
- We expect gas reserves to fall until 2022 as consumption increases from 39bn cubic metres (bcm) in 2012 to 55bcm by the end of the forecast period. Production will not follow that trend. We see gas output peaking at 40.1bcm in 2015 and falling afterward to slightly above 35bcm by 2021 as the Sui Gas Field, the main producing field in Pakistan, reaches the end of its life.
- We see oil demand rising from an estimated 376,600 barrels per day (b/d) in 2012 to nearly 482,000b/d in 2022, about 30,000b/d more than previously forecast. While we expect production to continue its increase throughout the decade, this will leave the county with a growing import requirement. From 62,000b/d in 2011, we see oil output growing steadily until 73,500b/d in 2022.
- LNG imports will start in 2013. The government expects to import 2bcm of LNG in 2013, acquired on the spot market and arriving at Port Qasim. International supply contracts are to be allocated for up to 8bcm in the coming years, while discussions have reportedly already started with the US and Qatar.
- The controversies surrounding the IP and TAPI pipelines continue, with the US providing increasing support for Pakistan to meet its energy needs through LNG imports. While we can still see some risks to the completion of the line, especially from a political perspective, the IP pipeline appears to be on its way to start first flows in 2015. We do not believe that LNG imports will be sufficient and we hardly envisage a scenario where neither pipeline is completed by the end of the decade.
Here's a Nation newspaper report on German financing of hydel projects in Pakistan:
A delegation of the KfW Development Bank, Germany, headed by Dr Claudia Loy called on Wapda Chairman here on Monday and discussed with him the matters relating to financing of various hydropower projects.
The KfW Development Bank is providing 97 million Euros for the construction of 122 MW-Keyal Khwar and has also committed to co-finance the 35 MW-Harpo Hydropower Project along with its French counterpart AFD by providing 20 million Euros. In addition, the KfW Development Bank has also shown interest in financing the 80 MW-Phandar Hydropower Project.
During the meeting with the KfW Development Bank’s delegation, Wapda Chairman thanked them for their support in financing a number of Wapda projects.
He expressed the hope that the cooperation between the KfW Development Bank and WAPDA would be further enhanced in the days to come. He apprised the delegation that main works of Keyal Khwar Hydropower Project will soon be initiated, as all the pre-requisites are almost finalised in this regard.
Wapda Chairman expressed the hope that KfW Development Bank will come forward for better investment opportunities in other hydropower projects and well being of the people of Pakistan.
The KfW Development Bank Division Chief, appreciating the technical expertise of WAPDA, said that WAPDA is one of the best organizations in Asia. She said that the KfW Development Bank and WAPDA have a long history of mutual cooperation, adding that the Bank would continue supporting WAPDA for construction of water and hydropower projects.
We feel Pakistan’s energy sector needs more financing from Germany, she added.
Here's a GlobalPost report on coal conversion of gas-oil-fired power plants in Pakistan:
Pakistan has asked the Manila-based Asian Development Bank to help finance two coal-fired power units at the Jamshoro thermal power station in Sindh, a senior official of Pakistan's Water and Power Development Authority told Kyodo News this week.
Zafar Umar Farooqi, chief engineer at the authority, said Pakistan had initially sought a $433 million ADB loan for one 600-megawatt unit but the bank has now been asked to consider a loan for two units.
He said the size of ADB loan will be decided after consultations with the bank, but he indicated the total cost of Jamshoro project would be around $1.5 billion.
The government-owned WAPDA operates an 850-MW oil-gas fired thermal power plant at Jamshoro at less than 40 percent of its capacity because of a shortage of fuel oil and gas.
The ADB loan will be used to convert the existing plant to coal and set up an additional coal-fired plant at the site, increasing installed capacity at Jamshoro to 2,050 MW.
The government has already invited expressions of interest from consultants to oversee construction at Jamshoro, which is about 150 kilometers northeast of Karachi and uses water from the Indus River for cooling.
Pakistan has long examined setting up coal-fired power plants to use its own lignite coal, but efforts have been unsuccessful because of the high ash content in the coal.
Ismail Khan, senior external relations officer for the ADB for Pakistan, said the new units at Jamshoro would be designed to use mixed local and imported coal, most probably from Indonesia.
Farooqi said separate tenders will be invited for conversion of existing Jamshoro plant from oil-gas to coal.
Pakistan has an acute power shortage and the new government of Pakistan Muslim League (N) has given top priority to increasing power generation.
Here's an ET report on a partnership for off-shore drilling for oil in Pakistan:
State-run Pakistan Petroleum Limited (PPL) and Singapore-based oil and gas company Orion Energy are likely to form a joint venture for offshore drilling in Pakistan.
Orion Energy, an independent oil and gas company headquartered in Singapore and with offices in London, is currently exploring scores of opportunities in Latin America.
According to sources, Orion had expressed interest in investing in Pakistan at the Pakistan Exploration Bidding Round 2012, held in London in December 2012 by the Pakistan Peoples Party-led coalition government.
On the sidelines of the event, Orion Energy Director David M Thomas, and his lawyer Nadim Khan, met the PPL managing director. The interaction was followed by another meeting between representatives of PPL and Orion, chaired by the director general of petroleum concessions.
In the Petroleum Policy 2012, the government had increased the gas price for Offshore Shallow Zone to $7 per million British thermal units (mmbtu), for Offshore Deep Zone to $8 per mmbtu and for Offshore Ultra Deep Zone to $9 per mmbtu. A bonanza of $1 per mmbtu will be given to exploration companies for the first three offshore discoveries under the policy.
Orion Energy had expressed interest in exploring offshore areas in Pakistan in partnership with PPL because of the latter’s good reputation and extensive experience in exploration and production of gas.
Following extensive technical discussions and encouraging feedback from PPL, the two companies agreed to initially undertake a joint study to evaluate prospects of offshore drilling and identify prospective areas for comprehensive exploration work.
Orion Energy had also expressed a desire to come to Pakistan for technical discussions with PPL on offshore exploration and on matters pertaining to forming a joint venture to carry out the joint study. Both sides had also finalised a joint study agreement, which had been ready to be signed by officials.
However, the visit was delayed due to general elections in Pakistan. It was only later, in the first week of June, that an Orion team reached here.
Technical staff from Orion and PPL will undertake the study, based on the geological data available with the two companies and the directorate general of petroleum concessions. The study will be completed in about four months, and its main objective will be to identify potential offshore areas for detailed evaluation through an exploration work programme and the financial obligations that will entail.
Here's a report on the outline of Nawaz Sharif's govt's energy policy:
Pakistan's federal government released a new energy policy that promises new investments in the power generation sector to address power outages.
According to the new policy, Pakistan will increase its power generation capacity to a total of 26,800 MW over the next 3 years. The country currently can generate about 21,100 MW, mostly from fossil fuels and hydropower.
At the same time, Pakistani policymakers are looking to reduce the production costs of electricity.
Pakistan's rolling blackouts can last nearly a 24-hour period and affect as many as 180 million people at a time, according to reports.
Nawaz Sharif, the prime minister of Pakistan, will formally announce the implementation details of the energy policy at a joint session scheduled July 29.
The policy will consist of four key points, including reducing demand and supply differences, keeping consumer prices low, investing in the energy sector and preventing electricity theft.
Here's a Kyodo News Agency report on Pakistan's plans to build two 1100 MW nuclear power plants near Karachi:
Pakistan's Cabinet Executive Committee approved Thursday setting up two 1,100 megawatt nuclear power plants at the Karachi coast, Finance Minister Ishaq Dar said.
He told a press conference the two power plants would be set up by Pakistan Atomic Energy Commission, which is already operating a 137 megawatt nuclear power plant at Karachi known as K-1.
Budget documents had revealed the setting up of only one 1,100 megawatt coastal power plant at Karachi, with Chinese assistance.
The decision to build two plants was taken while Prime Minister Nawaz Sharif is visiting China to seek Chinese help in a number of development projects, including an energy corridor from Pakistan's Gwadar Port in Baluchistan to the border city Kasghar in China.
Here's a WSJ piece on Iran-Pakistan pipeline:
Pakistani Prime Minister Nawaz Sharif said he would proceed with a plan to build a gas pipeline from Iran, despite objections from the U.S., and said that he plans to use his speech at the United Nations on Friday to hit out against American drone strikes in his country.
In an interview in New York with The Wall Street Journal, Mr. Sharif also spelled out, for the first time, the conditions that Pakistani Taliban would have to accept if his government proceeds with a peace deal with the militant group, demanding that they lay down arms and recognize Pakistan's constitution. At the same time, he voiced fears that continued U.S. drone attacks would wreck his policy to negotiate with the Pakistani Taliban, a group closely linked to al Qaeda.
In the interview Wednesday, Mr. Sharif acknowledged frictions with the U.S. but said he believed that the issues could be overcome. "President Obama was very kind to call me up immediately after my election and express his desire to work with Pakistan. I also want to work with the United States of America," he said.
The White House said Thursday that President Barack Obama and Mr. Sharif will meet Oct. 23 at the White House, part of what officials said was a broader effort to deepen ties.
A White House statement said terrorism and the economy will be among the topics discussed, but didn't mention the controversial pipeline. "The visit will highlight the importance and resilience of the U.S.-Pakistan relationship and provide an opportunity for us to strengthen cooperation on issues of mutual concern, such as energy, trade and economic development, regional stability, and countering violent extremism," the White House said in a statement.
An inadequate supply of gas, used to produce electricity, is one of the main reasons for the crippling shortage of power in Pakistan. Mr. Sharif said Pakistan had a contractual obligation to go ahead with the agreement, or face penalties from Iran of $3 million a day if it is not completed by the end of next year. He said that in Islamabad's legal opinion, the pipeline wouldn't trigger the sanctions.
He said that Pakistan would proceed "unless you give us the gas, or the $3 million a day."
However, Pakistan still needs to find $1.5 billion to build the pipeline, which is already completed on the Iranian side, according to Tehran. Islamabad is also hoping that a change in Washington's stance on Iran after the election of Mr. Rouhani could help Pakistan avoid the sanctions.
"The more the drones, the more the terrorists get multiplied. You kill one man, his sons, his father, his brothers, they become terrorists. So this is something that is not helping at all," said Mr. Sharif.
Washington believes the drones have been highly effective in killing senior al Qaeda commanders, Pakistani Taliban leaders and Afghan insurgents who use Pakistan's tribal areas, which border Afghanistan, as a sanctuary.
In words not used in the offer of talks, Mr. Sharif, in the Journal interview, laid out the terms that would be available to the militants.
"They will have to renounce terrorism," said Mr. Sharif. "They [Pakistani Taliban] will have to abide by the constitution of Pakistan."
"It's been often said by them that they don't recognize the constitution of the country," he said. "But the constitution has to be recognized. If we agree on addressing this terrorism, they will have to be disarmed, lay down their arms."
Here's a Dawn report on UNESCAP Statistical Year Book 2013:
ISLAMABAD, Dec 3: About 1.3 billion people in the world are living without electricity; two-thirds of them being in 10 countries and four of them, including Pakistan, in the Asia Pacific region, says a report of the United Nations.
According to the Statistical Yearbook for Asia and the Pacific-2013 released by a UN commission on Tuesday, an estimated 60 per cent of capacity-addition efforts in future will be focused on mini-grids and off-grid connections in which renewable energy sources will play a vital role.
In the generation of electricity from renewable sources, the Asian and Pacific region led the world in 2010. But this amounted to only 15.8 per cent of the region’s total electricity, which is below the world average of 19.4 per cent.
With less than 400 kilowatt-hours per capita, the annual household electricity consumption in the region is the second lowest among the world’s regions, after Africa where it is 200kwh.
About 2.6bn people in the world and 1.8bn in the region use solid fuels for cooking. The WHO estimates that more than 1.45 million people die prematurely each year from indoor air pollution caused by burning solid fuels with insufficient ventilation.
Women’s economic empowerment
The report says that despite its economic growth, the region lags behind in economic empowerment of women. It calls for targeted policy measures to facilitate women’s economic empowerment.
Women still bear the burden of unremunerated productive work, shouldering the major share of household management and care-giving responsibilities.
The report says that in Pakistan women spend 5.5 hours a day on housework and 1.2 hours on childcare whereas men spend 2.5 hours on housework and 0.9 hours on childcare.
It also says that women are overrepresented in sectors and positions that are vulnerable, poorly paid and less secure. For instance, 42 per cent of working women/girls belonged to agriculture sector in 2012 compared with 36.0 per cent of male workers.
Here's a Guardian story on possible end of CNG as fuel for cars:
When Pakistan first started promoting compressed natural gas to the nation's motorists in the 1990s, the alternative to petrol seemed like a wonder fuel.
Getting motorists to convert their cars to run on cleaner, cheaper gas would cure urban pollution and lower demand for the imported oil that was gobbling the country's foreign currency reserves.
Car owners loved it and today 80% of all cars in Pakistan run off compressed natural gas (CNG), according to the Natural and Bio Gas Vehicle Association (NGVA), a European lobby group. Only Iran has more gas cars running on the road.
But as the country struggles with a chronic gas shortage, Pakistan's 20-year CNG experiment seems to have been thrown into reverse gear.
The government has introduced strict rationing. And there have even been discussions about shutting down thousands of gas stations for the whole of thewinter. "CNG is finished in Pakistan," said Owais Qureshi, the owner of a handful of once lucrative gas stations in Rawalpindi. "I'm not going to invest any more money in it."
It has been years since he has been legally allowed to sell and install CNG conversion "kits": essentially large gas cylinders that are placed in the boot of a car to feed the engine. The system allows for cars to still be able to use petrol instead, if required.
Although CNG is popular with an estimated 2.8m motorists in Pakistan, according to the NGVA, the increasingly scarce resource is also in demand from other sectors – including the country's factories and for domestic use.
"The government has been left with little choice but to put a lid on it because there simply isn't much gas left," said Farrukh Saleem, an economist. "It has been a massive policy failure because the government actively promoted CNG knowing full well that natural gas reserves would not last beyond 25 years."
Successive governments heavily subsided CNG, ran schemes to encourage car conversions and dished out licences to political allies to build gas stations.
But abandoned stations are now a common sight around the country. So too are queues of hundreds of motorists waiting to fill their cars on Wednesdays – the last remaining day of the week in many places on which CNG is legally allowed to be sold.
This weekly ordeal for CNG users is compounded by a chronic lack of electricity, the other aspect of Pakistan's energy crisis. And because electricity is needed to run the gas compressors used by CNG stations car re-filling grinds to a halt during the many power cuts.
"All over the world countries are promoting CNG but in Pakistan they are killing it off," said Ghiyas Abdullah Paracha, chairman of All Pakistan CNG Association.
"If we don't have enough gas we should import LNG [liquid natural gas]."
Pakistan, however, has failed to build the infrastructure needed to import large amounts of gas from overseas. A legal challenge by Pakistan's activist supreme court killed off one scheme to build a massive LNG terminal in Karachi.
The other lifeline for Pakistan's CNG supply is a controversial, multi-billion dollar pipeline to import natural gas from Iran. But Pakistan lacks the cash to build its half of the pipeline and the US has warned that completing the project would be in breach of US economic sanctions imposed on Iran.
Even as natural gas is being touted elsewhere in the world as a great alternative to petrol, soon it may be a mere memory in Pakistan.
Paracha fondly recalls the grand opening of the first CNG station in Karachi, which was built with foreign aid money. "It was the start of a revolution," he said. "Before CNG came you could not see the sky in the cities because the air was so polluted."
Here's a Dawn piece on projected primary energy needs in Pakistan in tons of oil equivalent:
KARACHI: Pakistan’s energy deficit is likely to reach 110.8 million Tonnes of Oil Equivalent (TOEs) in the next 15 years if average gross domestic product remains around 4.5 per cent, according to a document issued by the Petroleum Institute of Pakistan (PIP) on Friday.
The document, Pakistan Energy Outlook (PEO) 2013-2028, predicts that country’s energy demand would grow to 147.78m TOEs by 2027-28 against the domestic resources of 36.90m TOEs in the same year.
Addressing a media briefing at the launch of PEO, PIP’s chairman and former adviser to the prime minister on petroleum and natural resources Asim Hussain said that Pakistan Energy Outlook is a flagship document of the institute, and has been prepared with the help of independent consultants taking into account energy demand-supply models based on the economic realities of the country.
“Recommendations identified in this document provide long-term energy solutions for Pakistan to secure higher GDP growth and economic development on sustainable basis,” Mr Hussain said. He maintained that mobilising and generating affordable and environment-friendly energy resources are one of the key challenges.
He urged the government to work together with the petroleum industry in framing the policies.To a question why there is so much stress on import of LNG these days when Pakistan itself has vast gas reserves and other indigenous options, Mr Asim Hussain said, “Expensive fire is better than no fire at all.”
He said that even gas producing countries, like Qatar, are now diversifying their energy mix by considering other possibilities.
He said that besides utilising indigenous resources, Pakistan should also look for import options, too.
Presenting the outline of the PEO, Mr Akhtar Raza of Enar Petrotech said that the energy deficit will have to be met through the import if coal, oil and gas as domestic production is likely to be insufficient.
The document recommends the government and other stakeholders to efficiently utilise natural gas; strengthen regulatory institutions to facilitate partnership between public and private sectors; make policy for aggressive exploration and production (E&P) to incentivise exploration of on-shore and on-shore oil, gas, tight gas and shale gas; fast-track indigenous coal projects, import of LNG and cross-border gas pipeline projects to improve the country’s energy mix, exploit renewable energy resources; cut transmission and distribution losses in the power sector; and develop a competitive market to root out pricing distortions in the energy sector.
The PIP is a non-government body established in 1963 by the oil and gas industry with a vision to establish itself as an energy advisory body.
Here's an Energy Business Review report on Chashma 3 and 4 nuclear power plants progress:
China's State Nuclear Power Technology Company (SNPTC) has installed the containment dome atop of the containment building of the unit 4 of the Chashma Nuclear Power Complex (CHASNUPP), located near Chashma city, Punjab, Pakistan.
The installation of dome, which weighs 185t, and measures 36m in diameter, and 9m in height, 72 days ahead of schedule, represents a significant milestone in the construction of the second of two reactors being constructed by Chinese companies in the country, World Nuclear News reports.
The general contractor for the third and fourth 340MWe pressurized water reactors (PWRs) is China Zhongyuan Engineering, while the reactor design was provided by the Shanghai Nuclear Engineering and Research Design Institute.
CHASNUPP's first and second 300MWe PWRs were also supplied by China.
Construction of units 3 and 4 commenced in May and December 2011, respectively, and the units are scheduled to start commercial operation in December 2016 and October 2017.
Here's a Wall Street Journal story on Pakistan in talks to acquire 3 more large nuclear power plants in addition to 2 recently announced for Karachi:
ISLAMABAD, Pakistan—Pakistan is in talks with China to acquire three large nuclear power plants for some $13 billion, Pakistani officials said, in a further blow to international efforts to restrict the trade in nuclear technology.
The deal is in addition to last year's agreement to build two Chinese reactors in Pakistan's southern port of Karachi.
The agreement, if reached, would help plug the crippling gap in Pakistan's electricity supply and cement its strategic regional alliance with China, which is aimed against mutual rival India. Alarming Washington, the China-Pakistan nuclear trade bypasses international rules against nuclear exports to countries—like Pakistan—that have not signed the Non-Proliferation Treaty.
Negotiations are going on currently with China "for three more plants," Prime Minister Nawaz Sharif told his cabinet's meeting this month, according to those present.
The three Chinese reactors would likely be located in the center of the country, in Punjab province, at a site now being prepared, officials said. Two advanced 1,100-megawatt reactors from China are already due to be built near the southern port of Karachi, under a $9 billion agreement completed last year. Mr. Sharif led the groundbreaking ceremony for the Karachi reactors in November but the discussions about the additional plants have not been made public until now.
Mark Hibbs, an expert on nuclear issues at the Carnegie Endowment for International Peace, an independent research organization based in Washington, said that the Nuclear Suppliers Group was "clearly in a crisis that has continued to escalate" as a result of the trade taking place with India and Pakistan. The rules of the group had no binding force, as it is a voluntary arrangement, he said.
Pakistan produces between 12,000 MW and 14,000 MW of electricity, while demand is at least 18,000 MW, according to the ministry of power, causing hours of power outages every day across the country. Demand is set to rise sharply with the ballooning population.
Nuclear energy provides just 750 MW of power currently, through two Chinese-built 330 MW plants at Chashma, in Punjab province, and a tiny, aged, plant outside Karachi. China is currently building two more plants of the same size at Chashma, boosting nuclear output to 1,400 MW by 2016. The plan for the future is to acquire much larger 1,100 MW plants from China, including the two new reactors for Karachi.
Ansar Parvez, chairman of the Pakistan Atomic Energy Commission, which builds and runs the country's nuclear power plants, said that the country's aim is to generate 8,800 MW of nuclear power by 2030.
That target requires Pakistan to build six to seven large nuclear power plants, including the two already scheduled for Karachi. Each such plant costs $4 billion to $4.5 billion, said Mr. Parvez.
A spokeswoman for China's Foreign Ministry, Hua Chunying, defended the countries' nuclear cooperation in December, which she said was in accordance with the countries' international obligations.
"In the future, the Chinese side wishes to continue offering help to the best of its ability to resolve the electricity-shortage issue," Ms. Hua had said.
Here's an Australian proposal to convert coal into diesel in Pakistan:
Australian mining billionaire and philanthropist, Andrew Forrest, has made an informal deal with Pakistan to free about 2.5 million slaves in return for allowing his firm to convert billions of tonnes of cheap coal into much-needed energy.
The CEO of Fortescue Metals Group (ASX:FMG), who made the announcement at the World Economic Forum in the Swiss resort of Davos, said the agreement would give the Pakistani state of Punjab access to Australian technology that converts lignite coal into diesel.
In return, he said Pakistan has agreed to bring in laws that will tackle the problem of slavery, or bonded labour, in the Punjab province, home to more than 100 million people, reported The Australian.
Forrest says the technology, developed by Curtin University, has the potential to be cost-effective.
"Turning lignite to diesel is proved – so we have no doubt it's going to happen," he was quoted as saying.
The deal earned the approval of former British Prime Minister Tony Blair, who sung its praises during a brief chance meeting with Australian Prime Minister Tony Abbott in Davos.
According to the Global Slavery Index, compiled by Forrest's Walk Free Foundation, about 16 million people are held in slave-like conditions through debt and forced labour in Pakistan and India.
Here's a Shell Pakistan press release of Asia Energy Survey 2013:
Following is the text of press release issued by Shell Pakistan Limited
Thailand, the Philippines and India top a list of nine Asian countries that say they are very concerned about future energy needs, amid increasing pressure for more energy, water and food to keep up with increased population growth.
The results emerged from a series of Shell-commissioned Future Energy surveys in which 80 percent of the respondents ranked longer-term future energy needs alongside everyday concerns like public education and cost of living as important. The surveys covered 8,446 people in 31 cities and 9 regional areas.
These concerns have arisen amid growing energy pressures globally. By 2030, the world will need 40% to 50% more energy, water and food in tandem with rising demand and increased populations. Tremendous stress will be placed on these vital resources as energy is used to move and treat water; water is required to produce energy and both energy and water are required in the production of food.
"It is encouraging to know that Asians view future energy needs as high priority, as this region will see one of the fastest growths in population and energy demand," said Jeremy Bentham, Shell's Vice President for Global Business Environment. "More than ever before, the industry, government and public all have a joint responsibility to create a better energy future, and must come together to collaborate and coordinate our efforts to meet these challenges for generations to come."
Most survey respondents expect energy shortages and higher energy prices to have a significant impact on their countries. Issues seen as most pertinent are energy shortages in Thailand (91%) and Pakistan (90%), higher energy prices in India (91%) and Singapore (79%), water shortages in Vietnam (89%) and food shortages in Indonesia (86%).
The surveys indicate that Asia is in favour of a mix of future energy sources, with solar energy and natural gas leading the way in many countries. Solar energy is the most desired future energy source across most countries, which include Singapore (86%), Thailand (83%) and India (77%). Natural gas is cited as the most preferred future energy source in Brunei (87%) and is second most preferred in Singapore (52%), Indonesia (43%) and India (43%).
Survey respondents agree that collaboration between industry, government, and the public, as well as innovation and incentives for cleaner energy, are the most important factors in shaping future energy needs. In Pakistan, over 50% of 2000 respondents, identified effective government policy as the most important factor in building future energy solutions.
Here's a news story about Byco investment in refining and petrochemical sector in Pakistan:
KARACHI: Byco has invested over $800 million on the various projects in the province of Balochistan in recent years out of which more than 50% is foreign investment, said Aatiqa Lateef, Chief of Staff, Byco Industries Incorporated.
“We have commissioned Pakistan’s largest refinery and are soon to start work on the chemical complex. Our single point mooring has ensured that we get an uninterrupted supply of crude and we will soon be implementing its capacity as a point of export as well.
Our retail network is now 242 stations and we are on the verge of launching our own lubricants line. In short Byco is fuelling a nation” said
“We continue to aggressively shun the negativity surrounding investment in Pakistan. In the current economic environment where foreign investors shy away from investments in the country.
These and other measures will make the country Pakistan more self-sufficient in meeting its petroleum requirements, greatly reducing the import burden on the government and easing the energy crisis.
Pakistan is in the grip of crippling energy crises while the government works tirelessly to ease it by enabling domestic solutions. Byco with its oil refining complex and the country’s first SPM, located in the province of Balochistan, is bringing a revolution to the domestic refining capacity, increasing it from approximately 12.5 million metric tons per annum to almost 18.5 million metric tons per annum. Full throughput is expected to produce about 1.6 million tons HSFO, 2.4 million tons HSD, 1.1 million tons of MS and 0.8 million tons of LPG on an annual basis, figures much needed for Pakistan’s consistently rising energy needs. These and other measures will make the country Pakistan more self-sufficient in meeting its petroleum requirements, greatly reducing the import burden on the government and easing the energy crisis.
Modi on petroleum exploration in Pakistan: Referring to the exploration scope in the region, he said Pakistan has started exploring the area across the border for gas and petroleum products.
"Look across the border in Pakistan, they have started massive work in gas and petroleum sector, why can't we?" he asked.
"It is the same region. There is immense scope for gas and petroleum here. I am sure we can definitely find it here as well. It can give new strength to our nation."
Addressing the youths, he said there will be opportunities in the exploration work in future and asked them to prepare themselves for it.
"We have started a petroleum university in Gujarat and this is for youngsters. I would urge the youth here to go on Internet and search about petroleum university. I invite you to make full use of it," he said.
Islamabad is striving for development of a low cost and sustainable power sector that would meet its energy needs in a sustainable manner, Musadik Malik adviser to the prime minister on water and energy told the inaugural session of conference, moderated by Robert Hathaway Director Asia Programme.
The conference held the other day was informed Pakistan’s goals include supply of inexpensively generated electricity at affordable rates for its 180 million people, which could be possible through high levels of generation, transmission and distribution efficiency.
Malik aspired to eliminate the demand supply gap, reduce true economic cost of power to single digits and eradicate pilferage in 5 years.
He identified demand supply gap, lack of affordability and inefficiency/pilferage as the three major power challenges in Pakistan.
In 2012 the average generation stood at 10,808 megawatts (MW) pushing the average demand-supply gap up to 4,608 MW.
We will encourage competition by developing energy corridors and favourable tariffs for low cost energy sources and creating a key client management system, adviser said.
In her presentation from Islamabad via a video link, Secretary Water and Power Nargis Sethi focused on a series of reforms needed to revamp the sector including efforts towards rationalisation of tariff and improved recovery.
She underscored the importance of balancing energy mix, pointing out that a high dependence on imported oil for electricity production places considerable strain on the economy as compared to that of domestic gas and hydropower.
Thus Pakistan needs to have an energy mix so it is not dependent upon expensive fuel to generate that energy. Costs can be brought under control by first shifting the generation fuel mix from the expensive residual furnace oil to coal and hydel-based generation.
Javed Akbar an energy entrepreneur called for a policy thrust on encouraging hydel, wind, and solar power growing to 50 percent of electricity generation within 10 years. He particularly advocated the use of solar energy for residential needs.
The participants spoke included Robert Lesnick, senior natural gas consultant World Bank ‘oil and gas’, Khalid Mansoor Chief Executive Officer The Hub Power Company Limited on ‘Coal’, Shannon Grewer Managing Director EMI advisers LLC ‘Coalbed methane, geothermal, and small hydro’ Chair, Ziad Alahdad former director of operations World Bank ‘energy bureaucracy’, Akhtar Ali CEO Proplan Associates ‘energy pricing and efficiency’, William B Milam former ambassador and senior scholar at the Woodrow Wilson Centre and Michael Kugelman senior associate for South Asia.
In a major development, the Board of Executive Directors of the World Bank (WB) has approved five projects pertaining to Pakistan.
These include International Finance Corporation (IFC)’s Investment in Gul Ahmed Wind Power Limited, Tenaga Generasi Limited (wind power) and Gulpur Hydro Project, Sindh Public Sector Reform Project and Acceleration of Tarbela IV Extension Project.
Officials of the Ministry of Finance and Economic Affairs Division told The News that by far this is the largest number of projects approved by the Board in one month for any country.
They said the major thrust was on the reforms in the energy sector, which was in line with the Country Partnership Strategy for Pakistan approved in 2014. The World Bank Country Partnership Strategy is anchored in the government’s framework of 4Es: Energy, Economy, Extremism and Education, the four strategic pillars of Vision 2025.
Officials of the Economic Affairs Division and Water and Power Ministry said that the World Bank’s Energy portfolio in Pakistan was gradually turning into largest in the world. With CASA-1000 (Central Asia-South Asia transmission line project), Tarbela IV, IFC’s investments in subsidiary company of Three Gorges of China (CSAIL) and Tarbela V in the offing, the portfolio aims to augment the present generation capacity by more than 10,000 megawatts over a period of five to six years. A project to augment and upgrade the transmission system is also in the pipeline.
Last year, the officials said that World Bank disbursed more than US $1.6 billion to Pakistan and a Pakistan Day was observed on May 01, 2014. The Bank is aiming to disburse US $1.25 to 1.3 billion to the government by the end of the current fiscal year from its IDA concessional package.
This generous and expeditious funding by the World Bank is viewed by economic managers of the government as a sign of trust in the official economic reform agenda.However many development planners are of the view that the government will have to undertake a radical reform agenda in order to fully benefit from the World Bank assistance. Major touchstone of success of this reform in energy sector will be privatisation of power distribution and generation companies (DISCOs and GENCOs) and other governance reforms in energy sector including radical handling of intractable circular debt. It is said if the government does not speed up its reform agenda, the World Bank may slow down the assistance.
The recent visit of IFC head Jin-Yong Cai, which is private sector investment arm of World Bank, is also seen by experts as a major development vis-a-vis the World Bank’s interest in private sector development in energy sector.
During his visit, the IFC head met Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar and committed to helping Pakistan tackle some of its most pressing challenges from unemployment to energy shortage by catalysing new investment outside the public sector.
He said private businesses, both large and small, are the backbone of Pakistan’s economy, but they are often held back by power outages, excessive red tape, and a shortage of credit. “By tackling these issues, we can help companies unlock their potential and create the economic opportunities that Pakistanis are eager for.”
The IFC is expected to invest about $500 million annually in Pakistan in the next few years as part of a World Bank Group Country Partnership Strategy.Economists say unless Pakistan improves its business environment and addresses serious issues highlighted by the Ease of Doing Business Report of the World Bank, which has ranked Pakistan quite low due to multiple factors discouraging private business and investment, Pakistan would not be able to benefit from such assistance speedily. Almost all these factors pertain to archaic and unhelpful practices and attitudes of bureaucracy and public sector organisations.
From Wall Street Journal: "Pakistan Close to Agreement With Qatar Over LNG Supplies for Power Plants"
ISLAMABAD—Pakistan is close to striking a long-term deal worth potentially $22.5 billion or more to import liquefied natural gas to help fuel the country’s power stations and ease its crippling electricity crisis, Pakistan’s top energy official said.
“We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.”
An agreement with Qatar is expected by early March, Pakistani officials say.
The deal with Qatar would provide supplies over 15 years, Pakistani officials say. Pakistan is looking to import 3 million tons of LNG a year, beginning this year, with much or all of that coming from Qatar.
The country’s overall LNG imports are expected to rise to around 7 million tons annually within three years. It isn’t clear as yet how much of that higher total would be provided by Qatar.
Importing 3 million tons of LNG would cost around $1.5 billion annually, or some $22.5 billion over 15 years, given current global oil and gas prices, analysts say. That cost will fluctuate with the price of oil, which is also used to price LNG.
The Pakistani conglomerate Engro has built a terminal to import LNG at Port Qasim, on the edge of the southern city of Karachi, set to become operational at the end of March, officials say. Bidding is now under way to construct a second LNG terminal at Port Qasim.
Pakistani officials have been negotiating for months with state-owned Qatar Gas. The government of Qatar and Qatar Gas didn’t respond to requests for comment.
Pakistan’s electricity crisis has been caused partly by its reliance on importing furnace oil and diesel to fire its power stations, both relatively expensive fuels that will be replaced by the LNG. “LNG is more efficient and cleaner for the environment than the alternatives,” Mr. Abbasi said. “This is a major shift in our energy mix.”
According to Mr. Abbasi, LNG imports of 3 million tons would yield cost savings worth an annual $300 million. By using LNG, Pakistan will be able to between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, Mr. Abbasi said.
Pakistan’s electricity shortage results from a failure to build power stations to keep pace with demand, a dependence on burning relatively expensive fuels and the swelling of debt in the sector that has led to some plants being shut down.
The deal would mark the first time that Pakistan will import natural gas. It would be the biggest financial commitment made by Pakistan to date, analysts say.
“This would be a positive development for Pakistan’s energy security. Qatar is a reliable and credible supplier,” said Anthony Livanios, head of oil and gas consultancy Energy Stream CMG. “For Qatar, this will help it diversify its customer base. So it’s a win-win situation for both countries.”
Qatar is the world’s biggest producer and exporter of LNG.
Pakistan is also considering shorter-term deals and open-market transactions to source some of its LNG needs from other countries, including Brunei, Malaysia and China, which isn’t a producer but may have excess imports that it can resell.
Nicholas Browne, a senior manager at Wood Mackenzie, an oil and gas consultancy, said typical pricing for Qatari LNG would be 14% to 15% of the price of oil. At 14%, Pakistan would be acquiring the fuel at $7 per million BTU, an attractive price, said Mr. Browne.
“From a buyer’s perspective, it is a great time to be in the market for LNG, in terms of both price and availability,” said Mr. Browne, because the price of oil has fallen and there is a substantial increase in supply expected in the next couple of years, as Australia and the U.S. bring new output onto the market.
According to Mr. Abbasi, LNG imports of 3 million tons would yield cost savings worth an annual $300 million. By using LNG, Pakistan will be able to between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, Mr. Abbasi said.
Pakistan’s electricity shortage results from a failure to build power stations to keep pace with demand, a dependence on burning relatively expensive fuels and the swelling of debt in the sector that has led to some plants being shut down.
The deal would mark the first time that Pakistan will import natural gas. It would be the biggest financial commitment made by Pakistan to date, analysts say.
Pakistan has depended on its own natural gas fields, which have started being depleted in recent years. Longer-term plans are in the works to build pipelines to import gas from Iran and Turkmenistan.
Qatar is the world’s biggest producer and exporter of LNG.
Pakistan is also considering shorter-term deals and open-market transactions to source some of its LNG needs from other countries, including Brunei, Malaysia and China, which isn’t a producer but may have excess imports that it can resell.
Nicholas Browne, a senior manager at Wood Mackenzie, an oil and gas consultancy, said typical pricing for Qatari LNG would be 14% to 15% of the price of oil. At 14%, Pakistan would be acquiring the fuel at $7 per million BTU, an attractive price, said Mr. Browne.
“From a buyer’s perspective, it is a great time to be in the market for LNG, in terms of both price and availability,” said Mr. Browne, because the price of oil has fallen and there is a substantial increase in supply expected in the next couple of years, as Australia and the U.S. bring new output onto the market.
Mr. Browne said Qatar may also have strategic reasons for supplying Pakistan. The tiny Gulf state has run a highly ambitious foreign policy in recent years, seeking influence across the Muslim world.
Under Pakistan’s plans for the LNG, the fuel would eventually fire generation of 3,600 megawatts of power, equivalent to around a quarter of the country’s current electricity output. Pakistan also plans to build coal-fired power stations.
Michael Stoppard, head of gas at consultancy IHS, said that LNG offered environmental advantages, but “coal is hard to beat on the economics.”
Half of all new #Energy world-wide last year was Green. #Solar #Wind http://www.juancole.com/2015/04/energy-world-green.html …
Prepared by the Frankfurt School-UNEP Collaborating Centre and Bloomberg New Energy Finance, the report says that a continuing sharp decline in technology costs – particularly in solar but also in wind – means that every dollar invested in renewable energy bought significantly more generating capacity in 2014.
In what was called “a year of eye-catching steps forward for renewable energy”, the report notes that wind, solar, biomass and waste-to-power, geothermal, small hydro and marine power contributed an estimated 9.1 percent of world electricity generation in 2014, up from 8.5 percent in 2013.
This, says the report, means that the world’s electricity systems emitted 1.3 gigatonnes of CO2 – roughly twice the emissions of the world’s airline industry – less than it would have if that 9.1 percent had been produced by the same fossil-dominated mix generating the other 90.9 percent of world power.
“Once again in 2014, renewables made up nearly half of the net power capacity added worldwide,” said Achim Steiner, Executive Director of UNEP. “These climate-friendly energy technologies are now an indispensable component of the global energy mix and their importance will only increase as markets mature, technology prices continue to fall and the need to rein in carbon emissions becomes ever more urgent.”
China saw by far the biggest renewable energy investments last year – a record 83.3 billion dollars, up 39 percent from 2013. The United States was second at 38.3 billion dollars, up seven percent on the year (although below its all-time high reached in 2011). Third came Japan at 35.7 billion dollars, 10 percent higher than in 2013 and its biggest total ever.
According to the report, a prominent feature of 2014 was the rapid expansion of renewables into new markets in developing countries, where investments jumped 36 percent to 131.3 billion dollars. China with 83.3 billion, Brazil (7.6 billion), India (7.4 billion) and South Africa (5.5 billion) were all in the top 10 investing countries, while more than one billion dollars was invested in Indonesia, Chile, Mexico, Kenya and Turkey.
Below is Pakistan energy report published by Oilprice.com
Pakistan is the sixth most populous country in the world. Due to a variety of factors there is a major gulf between Pakistan’s energy potential and its ability to achieve that potential. And that is clearly illustrated in the country’s natural gas sector.
While Pakistan’s conventional natural gas reserves – 24 trillion cubic feet – are declining, the country is sitting on an estimated 105 trillion cubic feet of shale gas. For now, there are too many obstacles to expect much development in Pakistan’s unconventional sector, but there are still opportunities for gas drillers in the country.
One of the largest gas producers is OMV (VIE: OMV). And OMV just announced a major new natural gas discovery on October 12 from its Latif South-1 well, located in the Latif block of Sindh Province. The test well posted some promising figures, with flows of 2,500 barrels of oil equivalent per day (boe/d). OMV believes that the discovery opens up new opportunities in the region. The Austrian company will continue to appraise the well and assess its holdings to confirm the size of the gas discovery. The well drilled by OMV is located just 25 kilometers south of the Latif gas field, and as such, it is well positioned to tie into existing infrastructure, such as gas processing facilities.
OMV holds a 33.4 percent stake in the project, along with its joint venture partners Pakistan Petroleum Limited (OTCMKTS: PKKKY) with a 33.3 percent stake, and a subsidiary of Italian oil giant Eni (NYSE: ENI), controlling the remaining 33.3 percent position.
OMV is also processing 2D and 3D seismic surveys in the Kalat block this year.
OMV is one of the larger operators in Pakistan, producing from several gas fields, including Sawan, Miano, Latif, Tajjal, and Mehar. The company produces around 400 million cubic feet per day (mmcf/d) (or 65,000 boe/d) from its processing plants in Sawan, Kadanwari and Rehmat, which OMV says is about equal to 10 percent of Pakistan’s total gas supply.
OMV also has a stake in eight exploration licenses (five of which it is the operator) and six licenses in the development and production phase.
One of the other most important gas operators in Pakistan is Eni. Eni’s holdings are mostly south of OMV, also in Sindh Province. Eni produced 248 million cubic feet of natural gas per day in Pakistan at the end of 2014.
Eni made several key natural gas discoveries in recent years, including the Lundali in the Sukhpur Block, about 270 miles north of Karachi. In 2013, Eni’s Lundali-1 well had an impressive flow rate of 33 million cubic feet per day (mmcf/d). That followed a previous discovery made a year earlier in the Badhra Block. That discovery held an estimated 300 to 400 billion cubic feet of natural gas. The bulk of Eni’s focus is on the Bhit/Bhadra block (40 percent stake), Sawan (23.68 percent stake), and Zamzama (17.75 percent stake). Eni is also partnered with Pakistan’s state-owned oil company, as well as a subsidiary of Kuwait’s state-owned oil company. Premier Oil (LON: PMO) holds small stakes in these fields as well.
Below is Pakistan energy report published by Oilprice.com Contd
Problems and Opportunities
For companies like OMV and Eni, Pakistan offers an interesting opportunity. The demand for natural gas is huge. In fact, the country is starved for new sources of gas, creating a captive market for operators.
But Pakistan is riddled with problems and is a tough place to do business. Energy is one area where the country faces a serious crisis. Pakistan is woefully deficient in reliable electricity, and power outages shave 2 percent off of GDP. It pays a dear price for imported energy. Millions of Pakistanis resort to wood for heat and fuel, plaguing the country with a massive deforestation problem.
The Pakistani government has implemented some measures to incentivize shale development. However there are several problems holding back investment. First, the geography is complex and infrastructure is inadequate. That raises the cost of development. Second, Pakistan regulates the price of natural gas in order to insulate the public, but that discourages investment as producers can’t realize adequate compensation.
To make up for the shortfall in natural gas, Pakistan constructed an LNG import terminal in Karachi, and the country signed a deal with Qatar to import 200 mmcf/d of LNG.
Pakistan is desperately trying to solve its energy shortfall, which creates opportunities for drillers. But it is also looking abroad with the help of some outside entities, not all of which are primarily concerned with Pakistan’s wellbeing.
Pakistan is at the crossroads of some geopolitical jockeying. Two competing pipeline projects have been on the drawing board for years but are inching forward. The U.S. backed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline would connect Caspian Sea natural gas through Southeast Asia. There is also the Iran-Pakistan pipeline, which, following the nuclear deal with Iran and the pending removal of sanctions, is also in the works. The U.S. opposes the Iran-Pakistan project, but China is helping push it forward. Both projects would help ease the natural gas deficit in Pakistan, but the country will have to navigate competing pressure from China, the U.S., and Iran.
The government of Pakistan appears to prefer the Iranian route, due to its lower cost. The project could provide enough gas to erase the country’s electricity generation deficit. Also, Pakistan has a close alliance with China, making the project the obvious choice. China is planning an array of infrastructure projects, including roads, rail networks, deepwater ports, and pipelines.
The Asian Development Bank (ADB) is supporting infrastructure development in Pakistan, providing the country with $1.2 billion in financial assistance each year between 2015 and 2019. The investment will focus on energy, transport, agriculture, natural resources, water, and urban infrastructure.
Pakistan has large natural gas reserves, albeit reserves that are in decline. The pent up demand in the country is massive. With millions of people without access to modern forms of energy, natural gas is sorely needed. Pakistan is also the second largest market in the world for natural gas vehicles, so demand for gas is not just for electricity and industrial purposes. Right now, blackouts are a regular occurrence, and shortfalls are made up from imports of LNG. But if the country can help E&P companies to develop domestic gas resources, the demand is a certainty.
Still, infrastructure constraints are real, and will hold back development. So will the high cost of production, coupled with regulated prices that cap returns on investment. This report did not even touch on the security concerns facing Pakistan, which throw up yet more red flags.
But a lot is about to change. New pipelines are in the works. Pakistan has no choice but to move rapidly to try to expand access to energy, as the security of the country depends on it.
#Pakistan Seals Major Deal for 75,000 tons of #LPG with #Iran | http://OilPrice.com http://oilprice.com/Latest-Energy-News/World-News/Pakistan-Seals-Major-LPG-Deal-with-Iran.html … #oilprice
By Charles Kennedy
Posted on Wed, 04 May 2016 18:26 | 0
Pakistan and Iran have signed a deal under which the former will import 75,000 tons of liquefied petroleum gas within a year, months after a similar agreement was inked with Qatar.
According to the deal, signed by the All Pakistan Liquefied Petroleum Gas Distributors Association and a national Iranian company, at least 6,000 tons of LPG will be imported from Iran every month over the course of a year.
In February, Pakistan and Qatar signed a $16-billion liquefied natural gas (LNG) deal which provides imports for 16 years, throwing the authorities in energy-crisis ridden Pakistan a life-line for supplies.
Related: A 4.5-Million-Barrel Per Day Oil Shortage Looms: Wood Mackenzie
The deal signed in Doha by Pakistani Prime Minister Nawaz Sharif and Emir of Qatar Sheikh Tamim bin Hamad bin Khalifa will see Qatar export 3.75 million tons of LNG to Pakistan. This is significant for Pakistan, which faces a 50% supply gap in relation to demand.
As concerns the deal with Iran, the price of the imported LPG will be in line with local market prices, according to All Pakistan Liquefied Petroleum Gas Distributors Association president Irfan Khokhar.
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In the meantime, Pakistan’s only LNG terminal at Port Qasim has converted 1.7 million tons of imported LNG and pumped more than 77 billion cubic feet of gas into the national gas distribution network. Over the course of last 13 months, some 29 LNG shipments from Qatar, Australia, Nigeria and Spain have docked at this port.
Related: The Last Great Frontier For Cheap Oil And Gas?
“This terminal alone will save up to $600 million for Pakistan through fuel substitution and will generate up to 2,000MW of electricity. The step to set up LNG import infrastructure is in the right direction and the country needs another three to four LNG import terminals to curtail the ongoing crisis,” Pakistani media quoted terminal manager Amir Mahmud as saying.
#Pakistan’s discoveries add 50 million cubic ft per day (mmcfd) of #gas, 2,359 barrels per day (bpd) of #oil levels.
Pakistan has made the highest number of oil and gas discoveries in the current month as exploration companies found fresh hydrocarbon deposits in six wells that will add 50.1 million cubic feet per day (mmcfd) of gas and 2,359 barrels per day (bpd) of oil to the existing production levels.
Of these, major discoveries have been made in Sindh that already has a big share in total gas output in the country.
Gas utilities: World Bank recommends single transmission firm
Petroleum and Natural Resources Minister Shahid Khaqan Abbasi, while speaking during a meeting of the National Assembly Standing Committee on Petroleum and Natural Resources chaired by Bilal Ahmed Virk on Tuesday, said four discoveries were made in Sindh and the remaining two in Khyber-Pakhtunkhwa.
Of these, Oil and Gas Development Company made two finds, MOL Pakistan two and Petroleum Exploration Limited and United Energy Pakistan one each. The discoveries have shown presence of 31.6 mmcfd of gas and 339 bpd of crude oil in Sindh and 18.5 mmcfd of gas and 2,020 bpd of oil in K-P.
Sui Northern Gas Pipelines Limited (SNGPL) Managing Director Amjad Latif warned that the country’s gas reserves were depleting and no gas was available for the domestic consumers in Punjab. He pointed out that the purchasing cost of gas for domestic consumers stood at Rs510 per million British thermal units (mmbtu) but the consumers coming under the first slab were receiving it at Rs110 per mmbtu.
Eighty-five per cent of domestic consumers were paying less than 50% of the cost of gas and the industrial and commercial consumers were cross-subsiding the domestic consumers, he said.
However, now industrial and commercial consumers were being provided imported liquefied natural gas (LNG), so the burden of cross-subsidy had been shifted to SNGPL that was feeling the strain on its finances.
Though the gas production was declining, Latif told the committee that the company would lay pipelines over 8,000 km in the current year. At present, 1.5 million applications for new gas connections are awaiting approval of the company.
The country was facing gas shortages as politicians were using it as a tool to win elections.
During the meeting, National Assembly member Mian Tariq Mehmood, who belonged to the ruling PML-N, alleged that SNGPL had provided 100 gas meters in his constituency to please his political rival Imtiaz Safdar Warraich, though his requests for new meters were turned down repeatedly.
He insisted that the provision of gas meters to his opponent had damaged his political image. NA Standing Committee Chairman Bilal Ahmed Virk accused Director General Petroleum Concession Saeedullah Shah of not responding to the committee for the last two years.
Sui lease extension: PPL to pay 10% bonus to Balochistan
Describing Shah’s attitude as non-sense, he said he was not cooperating with the committee and sought the record of past meetings to show response of the director general of petroleum concession.
The committee also took up for review the issuance of licences for liquefied petroleum gas (LPG) stations to the defaulters that were previously running CNG stations.
It recommended that rules of Oil and Gas Regulatory Authority (Ogra) should be amended to ensure the clearance of outstanding bills of SNGPL, Water and Power Development Authority and banks before issuing licences for setting up LPG stations.
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.
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.
Tapping #Pakistan’s wealth of #oil and #gas. #energy #LNG #pipelines #CPEC @GlobalCapNews http://www.globalcapital.com/article/b100v25p7rkjmc/tapping-pakistans-wealth-of-oil-and-gas …
Energy has long been Pakistan’s curse. This is a country whose large and rising population (the
country had 195 million people as of October 2016, according to government data, making it the
world’s sixth most populous country) has long presented its government with a complex challenge:
to tap new sources of hugely valuable energy where little, if any, had historically existed.
There is carbon here in spades. Pakistan boasts 754 billion cubic metres’ worth of gas, placing it
28th in the list of the world’s largest sovereign producers of natural gas. It has rather less oil, at
least in comparison to other countries in the region, placing it 52th on the global list.
Coal, though, is another matter. A recent find in the desert district of Tharparkar, hard by the border
with the Indian province of Rajasthan, may ultimately generate up to 185 billion tonnes of
anthracite and lignite coal. If that find yields anything near its earliest estimates, it would vault
Pakistan overnight from a ‘resourcepoor’ nation into the energyproducing major leagues.
Coal would help diversify the
country’s energy mix. Pakistan is
heavily reliant on natural gas and
oil to meet its primary energy
requirements. The country’s gas
deficit currently runs at between 2
billion and 4 billion cubic feet per
day, depending on the season and
the time of day. Total local crude oil
production, meanwhile, has long
lagged: Pakistan currently has to
import around 87% of its oil needs,
mostly from the United Arab
Emirates and Saudi Arabia
In September 2016, Shahid Khaqan Abbasi, Minister of Petroleum and Natural Resources, told
Pakistan’s National Assembly that the oil and gas sector had received investments totaling
$15.3bn since the start of 2013, adding that the country had made 82 oil and gas discoveries over
the same period.
Analysts are impressed by what they are seeing. “Lucrative policies on gas pricing, stability
resulting from improving law and order, and vast arrays of unexplored territory, have created
attractive propositions for exploration and production companies, who are well positioned to deploy
the excess cash on their books,” notes Farrukh Sabzwaria, director of regional equities sales at
Credit Suisse in Singapore. “Oil & gas exploration has made up 30%40% of foreign direct
investment over the past few years — and four multinationals are firmly entrenched, and should
continue to bring in FDI for exploration and development activities.” In other words, Pakistan, once
a minnow in the fields of energy production and exploration, is well on its way to becoming a major
player in the field, thanks to farsighted government policy
In September 2016, Finance Minister Ishaq Dar said that three southnorth pipelines, stretching
from Gwadar to western China, were under construction, with the first set for completion by the
end of 2016. “The second,” the finance minister added, “would be a parallel northsouth pipeline
built [with] Russian investment, while the third pipeline is planned between the towns of Gwadar
and Nawabshah” in the easterly province of Sindh.
Then there are the country’s untapped reserves of carbon. In November 2015, petroleum ministry
advisor Zahid Muzaffar said Pakistan’s total oil and gas reserves, including unexplored offshore
wells and fields, were greater than all Central Asian states combined. If true — and given that
Central Asia includes one major gas producer, in Turkmenistan, and one major oil produce, in
Kazakhstan — it would place Pakistan’s energy sector and the wider economy in a highly
Joint #US-#Pakistan #energy collaboration at #ASU energizes entrepreneurial aspirations 4 #Pakistani scholars
A second cohort of Pakistani engineering scholars has completed their entrepreneurship course of study at Arizona State University as part of the USPCAS-E program. In addition to entrepreneurship, the students are also studying engineering and policy in an effort to improve their country’s energy prospects.
U.S.-Pakistan Centers for Advanced Studies in Energy is a U.S. Agency for International Development project focused on applied research relevant to Pakistan’s energy needs. The project, which is a partnership between Arizona State University and two leading Pakistani universities, aims to produce skilled graduates in the field of energy.
ASU entrepreneurship professor Kenneth Mulligan said: “The intention of the program is to improve availability of clean, reliable power in Pakistan. Strategic innovation and entrepreneurship provides a pathway for widespread implementation of their innovative technical solutions.
“Pakistan is subject to rolling blackouts that impede stability, progress and business. The problems faced in Pakistan are not easy problems, which is why coming up with solutions that reside outside the box are so critical,” said Mulligan, who has taught and mentored both cohorts so far.
“They get to use causative thinking, systems analysis and technical feasibility to solve complex technical problems in energy generation and distribution. However, this problem-solving approach and skillset is insufficient in the development of innovative and disruptive products and technologies.”
#Pakistan's new PM charges ahead with reforms. #energy, #economy, #civil #military ties, - Nikkei Asian Review
As soon as he became chairman of the Economic Coordination Committee, or ECC, the government's highest decision-making body for economic policies, Abbasi founded Ministry of Energy by merging of Ministry of Petroleum and Natural Resources and the Ministry of Water and Power to accelerate construction of the power infrastructure so essential for economic growth.
The new prime minister appointed former Minister of Planning and Development Ahsan Iqbal, one of his most able cabinet members in the area of economic reform, as minister of interior. Abbasi is also keeping a close eye on security, especially in preventing terrorism and deterring organized crime.
The business sector has welcomed the new prime minister. If he follows the previous government's policies that proved moderately successful in implementing reforms and achieving high economic growth, the ruling Pakistan Muslim League (Nawaz), or PML-N, could likely overcome the Sharif scandal and do relatively well in next summer's general election.
Key ministries merge
Merging government offices in charge of energy policy had been discussed in order to deal with the massive power shortage, which has exceeded 5000 megawatts. But the merger failed to materialize due to lack of political will within the ruling party and the government.
Since his days as minister of petroleum and natural resources, Abbasi has been pushing for construction of liquefied natural gas terminals and development of gas fields. The creation of the ministry of energy jibes with his long-held view that the country should expand gas-based power generation to address energy shortages.
Finance Minister Ishaq Dar, who oversaw economic and fiscal policies, was the key player in the previous cabinet. But he gave up ECC chairmanship to Abbasi because of a Supreme Court order to investigate allegations that he illicitly amassed personal wealth. This clearly shows that the power center has shifted within Pakistan.
In mid-August, Abbasi met prominent business leaders in the country's commercial hub of Karachi, where he personally answered their questions and addressed concerns. "[We are] really impressed they are overcoming the damage by the disqualification of the former PM and [are] much more united," said one of the participants. "[Abbasi's] business practice is much better than his predecessor."
Pakistan's economy is projected to achieve growth of more than 5% in the fiscal year that ended in June, due in large part to support from the International Monetary Fund, projects related to the China-Pakistan Economic Corridor, expansion of foreign investment, and a recovery in personal spending. This would be the highest growth rate in 9 years.
The fiscal deficit is moderately expanding due to pork-barrel projects ahead of the general election, and exports aren't growing as expected. But investors at home and abroad are showing more faith in the government because of the improved energy and security situations.
"The new prime minister is a businessman turned politician, having run the state airline and set up a low-cost carrier," says Ehsan Malik, CEO of the Pakistan Business Council, a leading think tank on economic policies. "He has deep understanding of business and economic priorities. He is also a good listener and a quick decision-maker."
Malik is also optimistic about the ruling party's recovery from the Sharif scandal. "Notwithstanding the change of leadership, the PML-N government will complete its five-year term," he says.
Electricity Prices Plummet as Gas, Wind Gain Traction and Demand Stalls
Texas is a microcosm of pressures facing power generators; ‘It’s too late’ for coal
The rapid rise of wind and natural gas as sources of electricity is roiling U.S. power markets, forcing more companies to close older generating plants.
Wholesale electricity prices are falling near historic lows in parts of the country with competitive power markets, as demand for electricity remains stagnant while newer, less-expensive generating facilities continue to come online.
SHORT-TERM ENERGY OUTLOOK
Release Date: November 7, 2017 | Next Release Date: December 12, 2017
EIA expects the share of U.S. total utility-scale electricity generation from natural gas will fall from an average of 34% in 2016 to about 31% in 2017 as a result of higher natural gas prices and increased generation from renewables and coal. Coal's forecast generation share rises from 30% last year to 31% in 2017. The projected annual generation shares for natural gas and coal in 2018 are 32% and 31%, respectively. Generation from renewable energy sources other than hydropower grows from 8% in 2016 to a forecast share of about 9% in 2017 and 10% in 2018. Generation from nuclear energy accounts for almost 20% of total generation in each year from 2016 through 2018.
Wind electricity generating capacity at the end of 2016 was 82 gigawatts (GW). EIA expects wind capacity additions in the forecast to bring total wind capacity to 88 GW by the end of 2017 and to 96 GW by the end of 2018.
Total utility-scale solar electricity generating capacity at the end of 2016 was 22 GW. EIA expects solar capacity additions in the forecast will bring total utility-scale solar capacity to 27 GW by the end of 2017 and to 31 GW by the end of 2018.
'Spectacular' drop in renewable energy costs leads to record global boost
Falling solar and wind prices have led to new power deals across the world despite investment in renewables falling
Renewable energy capacity around the world was boosted by a record amount in 2016 and delivered at a markedly lower cost, according to new global data – although the total financial investment in renewables actually fell.
The greater “bang-for-buck” resulted from plummeting prices for solar and wind power and led to new power deals in countries including Denmark, Egypt, India, Mexico and the United Arab Emirates all being priced well below fossil fuel or nuclear options.
Analysts warned that the US’s withdrawal from the Paris climate change agreement, announced last week by Donald Trump, risked the US being left behind in the fast-moving transition to a low-carbon economy. But they also warned that the green transition was still not happening fast enough to avoid the worst impacts of global warming, especially in the transport and heating sectors.
The new renewable energy capacity installed worldwide in 2016 was 161GW, a 10% rise on 2015 and a new record, according to REN21, a network of public and private sector groups covering 155 nations and 96% of the world’s population.
The new record capacity cost $242bn, a 23% reduction in investment compared to 2015, and renewables investment remained larger than for all fossil fuels. Subsidies for green energy, however, are still much lower than those for coal, oil and gas.
New solar power provided the biggest boost – half of all new capacity – followed by wind power at a third and hydropower at 15%. It is the first year that the new solar capacity added has been greater than any other electricity-producing technology.
“A global energy transition [is] well under way, with record new additions of installed renewable energy capacity, rapidly falling costs and the decoupling of economic growth and energy-related carbon dioxide emissions for the third year running,” said Arthouros Zervos, chair of REN21.
Pakistan Energy Mix: Overview of Gas Sector (Upstream)
Pakistan imports almost 80% of its energy sources (oil, gas and LNG). GVS brings out a detailed report on Pakistan’s upstream sector to analyze country’s mammoth challenges. It examines how innovative policy making, better management and vision can still make a difference.
The country used 28.1 million TOE of petroleum products in FY18, with 85 percent imported. Currently, Pakistan has a total of 9 million gas consumers in the country, with an annual addition of 0.5 million consumers. Sindh by far has the country’s largest gas production at 943,644 MCFt (65%), Balochistan at 310,535 MCFt (22%), KPK at 151,178 MCFt (10%), and Punjab 53,580 MCFt (3%).
Sindh also has three of the current largest fields producing gas, Mari, Qadirpur, and Kandhkot. Sui gas field in Balochistan, discovered in 1952, was Pakistan’s first and largest gas field found so far, had around 13 TCF of gas. It currently only has one TCF remaining and is nearing the completion of its life. These five fields represent over 50 percent of Pakistan’s recoverable reserves.
Pakistan has experienced major energy crises in the past decade as a result of expensive fuel sources, suffering from chronic natural gas shortages in the winter and electricity shortages in the summer, all exacerbated by the circular debt, and insufficient transmission and distribution systems over the past several years.
Roughly, 50 percent (about 105 million people) of Pakistan’s population still use biomass for cooking because of low electricity and gas supply. Natural gas plays a significant role in the energy matrix of Pakistan. In 2018, natural gas accounted for an estimated 30 percent of Pakistan’s primary energy consumption, petroleum at 35 percent, and coal at 16 percent.
Pakistan is the 20th largest gas consumer of the world, with an established natural gas industry since the 1950s. However, ironically Pakistan’s gas consumption is nearly the same as in France, which is a developed and industrialized country [with a GDP ten times bigger than Pakistan].
Natural gas consumption has increased from 1,377,307 MMCFt to 1,454,697 MMCFt. RLNG imports have increased to 313,902,345 MMBtu. There was a time when Pakistan was self-sufficient in gas. However, increased domestic demand over time, fueled by cheap mispricing of the natural resource, creation of the CNG motor vehicle industry, lack of alternative fuels, and diminishing production have resulted in increased amounts of imported gas.
In FY18, approximately 7.7 million TOE LNG gas was imported. Currently, Pakistan has over 9 million domestic consumers of gas, and these are growing by over 8% each year. The majority of domestic consumers, around 5.4 million, are based in Punjab; that account for 60 percent of the total domestic gas consumers, Sindh has 35 percent of the country’s domestic consumers at 2.6 million.
#Pakistan’s installed #power capacity soars. With the addition of 3,933 Megawatt (MW) in 2019-20, installed capacity has jumped from 37,402MW to 41,335MW. #Fuel mix is 49.1% from indigenous resources and 50.9% from imported fuels. #electricity #energy https://tribune.com.pk/story/2242155/2-pakistans-installed-power-capacity-soars/
With a slump in demand on account of Covid-19, Pakistan’s installed capacity of electricity would jump to 41,335 Megawatt (MW), adding more woes on account of power tariff increase due to higher capacity payments and lower plant utilisation factors.
According to energy experts, most of the power plants would remain idle due to low demand of electricity in Pakistan following coronavirus-fuelled economic recession. This situation would lead to additional burden of capacity payments in the form of hike in electricity rates.
According to Covid-19 Responsive Annual Plan 2020-21, Pakistan’s power sector may face an unusual situation because of decreased demand of electric power consumption due to the outbreak. The energy demand could be suppressed for all primary energy sources like electricity, natural gas, LNG and petroleum products during the next financial year 2020-21.
In the power sector, plant utilisation factors for power generation stations will be low, increasing the cost of electricity, reveals the Annual Plan. According to it the power sector reforms would be accelerated to improve the energy transmission and distribution performance and overall management of the power sector. Special attention would be given to reduce the power losses to bring down the cost of electricity, it added.
During fiscal year 2020-21, the power generation capacity of 3,933 Megawatt (MW) including 447MW from renewable energy will be added, which will increase the existing installed capacity from 37,402MW to 41,335MW.
An amount of Rs204.54 billion has been proposed in the PSDP 2020-21 for power sector projects of generation, transmission and distribution including government budgeted, self-finance of power sector corporations excluding IPPs.
In year 2019-20, 1,441MW power will be added to the national grid. As a result, the installed capacity would be enhanced from 35,961MW to 37,402MW. As on June 2020, overall generation mix will consist of 49.1% indigenous resources and 50.9% imported fuels.
With a commitment to continue work, Pakistan has allocated Rs3 billion funds to execute Central Asia South Asia (CASA) power import project to import electricity from Central Asian States.
According to the budget document, an amount of Rs3 billion has been proposed in the Public Sector Development Programme (PSDP) 2020-21 for the project. The implementation of CASA will continue in 2020-21. The transmission capacity will be enhanced by 4,445MVA on 660Kv network to June 2021. Furthermore, about 94 kilometres and 880km transmission lines would be constructed on 500kv and 600kv, respectively.
An amount of Rs7.8 billion was allocated in PSDP 2019-20 for Central Asia South Asia (CASA) transmission project. Significant progress has been made on the transmission project envisaging laying 1,200km transmission lines for import of 1,300MW from hydel power generation from Tajikistan and Kyrgyz Republic through Afghanistan to Pakistan. The parties have signed core power agreements, including power purchase agreements (PPAs). Meanwhile, land possession has also been taken and security clearance at site is in progress.
Losses of power distribution companies are still higher than the global average of around 8%. Higher losses will be curtailed through power distribution companies’ enhancement projects. The government has given targets to distribution companies to reduce losses in the next financial year.
(Bloomberg) — As developed nations turn away from coal-fired power, Chinese funding has helped the dirtiest fossil fuel take off in Pakistan.
Coal’s surge in the South Asian nation is symbolic of the difficult choice that the region’s developing countries face as they seek affordable energy to support economic growth while trying to limit chronic air pollution. Asian demand is expected to support the commodity as its usage drops in most of the developed world in a transition to cleaner or renewable energy sources.
Is Canada's real estate forecast too optimistic?
Pakistan’s coal-fired power generation jumped 57% to a record in the fiscal year through June, according to data from the government’s National Electric Power Regulatory Authority. Coal accounted for about a fifth of total output, backed by supplies from the country’s first coal mine in its Thar region, developed as part of China’s Belt and Road plan.
Coal is set to expand further as China pushes funds into building more power plants in the country and mines to feed them. Pakistan is one of the flagship markets for China’s Belt and Road initiative, with more than $70 billion of projects including coal and liquefied natural gas fired power plants helping the nation end decades of electricity shortfalls.
“China has been cutting back on coal at home but it has no compunction about using coal in things that it funds outside of China,” said James Dorsey, a senior fellow at the S. Rajaratnam School of International Studies in Singapore. “Chinese can be willing but they need a partner to go along with them. In this case it’s the Pakistani government.”
Belt and Road progress has slowed recently with overseas energy spending last year dropping to the lowest in a decade, dogged by accusations that China is luring poor countries into debt traps for its own political and strategic gain. China’s President Xi Jinping has publicly urged more clean energy as part of the program, and the plan found new life in Pakistan recently with an agreement to build two hydro-power generation projects.
Until 2016, Pakistan had just one coal-burning power plant. It now has at least nine and more are in the making. The first target of these plants has been to replace expensive fuel oil-based generation facilities that burdened the nation’s economy with heavy costs and pollution.
The rise in coal power has come because of supplies from the Thar coal mine, Power Ministry spokesman Zafar Yab Khan said. The country will balance rising coal use with more renewable energy and its coal plants will use low-emissions technology, he said.
With the shift to coal, average generation costs dropped 11% during the fiscal year, according to data from Karachi-based brokerage Arif Habib.
“Pakistan has increased coal-based generation to make it its new base to replace its previous expensive fuel oil-powered power plants,” said Tahir Abbas, head of research at Arif Habib. “This has also helped bring down the power prices, energy import bill and increase the share of an indigenous energy source.”
Power generation in Pakistan declined by 1% year-on-year to 121,867 gigawatt-hours (GWh), or 23,618 megawatts (MW) during fiscal year 2020. In 2019, power generation stoof at 122,708 GWh, or 23,781 MW. Most of this decline can be attributed to the overall slower economic activity during fiscal year 2020, leading to less usage of power, but also the specific time period between March and May 2020, when the Covid-19 necessitated lockdowns and restrictions.
The lockdown’s effect can also be seen in the monthly data from this year. In March 2020, power generation fell 9% year-on-year to 6,911 GWh, compared to the 7,621 GWh recorded in March 2019. This was also the lowest generation recorded in 2020. Though power generation picked up in subsequent months, on a yearly basis it was still falling, such as in April 2020, where power generation fell 14% year-on-year, and in May 2020, where power generation fell by 5% year-on-year.
However, starting in June 2020, power generation was recorded at 13,288 GWh, which is a 1% year-on-year increase from the 13,157 GWh recorded in June 2019. Even better, it was almost double that of the figure in March 2020 (at 92%). The sector itself is also doing better, with the installed Capacity in the country touching 34,157MW in June 2020, compared to the 30,590 MW of installed capacity in June 2019.
In fact, these factors together mean that the power sector is well positioned in the future for any increase in demand. And demand will increase, as industries have opened up after the lockdowns imposed due to the Covid-19 pandemic, and there has been a pick up in economic activity in the country. The summer and monsoon seasons also typically see an uptick in demand for power, which will help the sector at least until October 2020.
The fiscal year 2020 was marked by a move towards hydropower and coal based power generation, over gas and furnace oil. Hydel power made up 32% of total power in fiscal year 2020, compared to 26% in 2019, while coal’s share went up from 13% in 2019 to 21% in 2020. Gas generated power’s share however, fell from 18% in fiscal year 2019 to 12% in fiscal year 2020, while furnace oil’s share fell from 7% last year to 3% this year. RLNG, or regasified liquefied natural gas, contributed 20% to the overall power mix, nuclear generation took up 8%, wind-based power took up 2%, while ‘other’ (solar, bagasse) took up 2%.
In terms of power generation, hydel generation went from 32,356 GWh in fiscal year 2019, to 38,000 GWh in fiscal year 2020, or a 20% year-on-year jump. According to Kumar, hydel power generation increased because there was more water available this year compared to previous years. Incidentally, this particular statistic was recently picked up by Asad Umar, the Minister for Planning, Development and Special Initiatives, who tweeted: “Massive hydel capacity increase taking place with Dasu, Mohmand and Diamir Basha being built. We need to rely on local renewable energy instead of expensive imported thermal fuels.”
Coal power generation went up from 16,312 GWh in 2019 to 25,553 GWh in 2020, a massive jump of 57% year-on-year. This section has increased because of two new projects finally commencing this fiscal year: the China Hub Power Generation, with production of around 1,220 MW, and Engro Powergen Thar, which can produce 660 MW.
Meanwhile, furnace oil generation went from 9,092 GWh in fiscal 2019 to 4,178 GWh, or a fall of 54% year-on-year. Similarly, gas generated power went from 22,034 GWh last year to 15,064 GWh this year, or a decline of 15%. According to Kumar, the demand for both fell because of their higher costs of producing power demand.
A European think tank has blamed the World Bank for a role in Pakistan’s energy sector problems over the decades and for rushing through a long-term power generation plan based on dirty and expensive fuels under its ‘prior actions’ of loan programmes.
Recourse — an Amsterdam-based non-profit organisation — claims it holds financial institutions to account for harms to people and the environment and is funded by foundations and organisations working for environment and development under the European Union.
In its report “World Bank’s Development Policy Finance (DPF) 2015-21: Stuck in a carbon rut”, the European think tank said its studies in Indonesia and Pakistan showed the WB was “accelerating the use of natural gas and supporting fragile energy sectors that are heavily invested in coal”.
“In Pakistan the case study observes how DPF can have unintended consequences, even when ostensibly it is seeking to support a renewable energy transition,” the report said, adding the $400 million Programme for Affordable and Clean Energy (PACE) 2021/22 focused on measures to support the country’s transition to low-carbon energy. This loan disbursement was dependent on a prior action that required a commitment from the Pakistan government to transition to 66pc renewable energy by 2030 through the adoption of Indicative Generation Capacity Expansion Plan (IGCEP), a least-cost generation plan. However, targets on renewable energy sources were slashed from 30-33pc of the energy mix to 17pc.
The energy plan includes the “commissioning of a portfolio of new generation projects including many hydropower projects, Thar coal-based projects, K-3 nuclear power plant, and over 4,000MW of solar- and wind-based renewable energy projects,” the report said, adding that the DPF was not subject to proper checks and balances in terms of transparency and accountability.
The report said the World Bank’s Prior Actions were opening a Pandora’s Box for unsustainable energy in Pakistan. The report said that despite the Paris Climate Agreement of 2015, the World Bank committed $1.1 billion between 2014 and 2016 to energy sector reform in Pakistan that had an emphasis on tariff reform as “Prior Actions” to the disbursement of funds. “This tariff reform paved the way for Pakistan’s National Electric Power Regulatory Authority (Nepra) to offer the most attractive upfront tariff for coal-fired power projects in the world”, thereby setting the stage for massive expansion of coal in the Thar region and beyond.
In 2021, Pakistan is completing its second year of foundational reforms to comply with ‘Prior Actions’ for three DPF operations amounting to $1.4bn. “In our analysis, the Prior Actions required by this DPF operation have had a destabilising effect on Pakistan’s ability to transition to a sustainable renewable energy pathway,” the report claimed.
On August 26, 2021, it said, Pakistan’s cabinet committee on energy under immense pressure to meet its Prior Actions towards the World Bank gave its hasty approval to the controversial IGCEP, which was approved a month later by Nepra with a strong dissenting note from Nepra’s vice-chairman who refused to sign it. The political pressure to fast-track the IGCEP came in August when WB Vice President Hartwig Schafer visited Pakistan and urged the government to accelerate the pace of power sector reforms.
The generation mix in the new IGCEP is now dominated by expensive and dirty fossil fuels, with additions of around 8.5GW of coal, and 10GW of LNG and gas to be made in the next 10 years. The IGCEP itself confirms that renewable energy is quickly becoming cheapest forms of new electricity generation, yet the IGCEP contradicts itself with the recommendation to rely less on these sources.
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