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Bhasha Dam nearer but dearer by Rs10bn

The cost of acquisition of land and compensation of assets for construction of $12.7 billion Diamer-Basha dam has been hiked by almost Rs10 billion. The original estimate of Rs40 billion has been revised to Rs49.886 billion, it is learnt.

This cost has been escalated after the governmentís decision to settle land acquisition for the Diamer Basha dam in accordance with international standards by reaching consensus with displaced people as recommended by the ADB, Chairman Wapda, Shakeel Durrani said in an exclusive talk with The News here on Friday evening.

Total cost for land acquisition as well as for other required infrastructure by ensuring integrated development plan, roads, model villages at sites, social safety nets and for other required plans for construction of the Basha dam, Wapda has been estimated at Rs116.278 billion. In order to undertake due diligence, Asian Development Bankís mission will arrive in Pakistan on May 2, 2012, to validate guidelines for environmental and social safety nets finalized by Wapda.

WAPDA Chairman Durrani told The News that the cost of land acquisition was assessed at Rs26 billion in 2008, which was raised to Rs40 billion after the ADBís advice to settle this issue through negotiations with displaced people. The prime minister had constituted a ministerial committee, which recommended the increase to Rs40 billion.

Durrani said that after construction of the Diamer Basha dam, the power generation of $5 million per day would be achieved, and the cost of land acquisition would be recovered just in 82 days.

Regarding financing for the Basha dam, he said that the estimated cost would be hovering over $12 billion and the ADB would play a lead role in this regard. ìUSA and World Bank has also given indication to provide financing for Bhasha dam,î he added.

He said that Wapda also made request to Japan to shift some of its assistance towards the Basha dam as it is the priority project for them.On the issue of net hydel profit distribution share, he said that this issue would be resolved amicably as two power generation plants, having capacity of 2,250MW would be established on right bank and left bank sites.

When asked how much time was required to make shift in favour of hydel power generation instead of thermal power, he said that Wapda was implementing plan to generate 20,000MW electricity through hydel power generation which would cost a mere Rs1.50 per unit. He said that it would take 10 to 12 years to shift the mix of power generation towards hydel in the range of 60 percent and reducing the share of thermal power to 40 percent by 2025.

The acquisition of land for the Basha dam would cost Rs42 billion, compensation of assets Rs7.882 billion. For putting in place different plans, including monitoring and evaluation plan, relocation management plan, environmental management plan, gender action plan, public consultation, project NGOs, livelihood intervention and others would cost Rs7.476 billion. For different aspects of safety nets, the cost is estimated at Rs3.803 billion. The required infrastructure, such as integrated area development plan, will cost Rs6.971 billion, model villages Rs8.824 billion, right bank periphery road Rs11.863 billion and business restoration plan Rs1.177 billion.

Power ministry seeks Rs13.25bn tax exemption

The Ministry of Water and Power has decided to seek Rs13.25 billion worth of tax exemption on import of two tunnel boring machines, construction machines, and diesel generators for the Neelum-Jehlum hydropower project.

The Neelum-Jhelum hydropower project is facing huge deficit in financing to maintain the existing construction pace. The said tax exemption would provide some financial solace to the project.

“We are moving a summary to the Cabinet’s Economic Coordination Committee seeking exemption of the taxes as earlier extended for the machinery for Pat Feeder Canal in 1992 and on import of UAE gifted power plants in 2010,” an official said.

The government has imported the tunnel boring machines worth $93 million, which will start their work in July to help complete the project in 2016, he said.

If India completes its Kishanganga project on the same Neelum River on its side of Kashmir first, Pakistan will lose the water rights to the upper riparian country. Moreover, if Kishenganga project gets completed earlier, the Neelum-Jehlum Hydropower Project capacity to generate electricity will tumble by about 31 percent because of the reduction in water flow.

According to the Indus Water Treaty the country that first completes its project on Neelum tributary will have the priority rights on the water of Neelum River. China has already delayed the credit line of $ 448 million. We are also facing the too much delay of $ 100 million from Abu Dhabi Fund.

However, the ministry is in touch with Islamic Development Bank, Saudi Development Bank, Abu Dhabi Fund, Kuwait Fund for the required finding,” the official said.

He said that IDB has committed $200 million, Saudi Fund $337 million, Abu Dhabi Fund $100 million and Kuwait Fund $30 million and the government is pursing the said donors to expedite the disbursement of their credit line for the timely completion of the project.

The official said that in the current financial year Rs31 billion were allocated, but 20 billion are spent with shortfall of Rs11 billion. The project however, needs around Rs15-16 billion next year. The financial situation of the project got worse when Pakistan did not get the expected credit line of $448 million from China. “There is an impression that Chinese were delaying the credit line either on pressure from India or to exert pressure on Pakistani authorities to revise the financing rates of the project,” the official said.

He said that IDB has committed $200 million, Saudi Fund $337 million, Abu Dhabi Fund $100 million and Kuwait Fund $30 million and the government is pursing the said donors to expedite the disbursement of their credit line for the timely completion of the project.

RPPs deposit Rs825m in response to NAB notices

In response to the notices, sent by National Accountability Bureau, the Rental Power Projects (RPPs) Friday deposited Rs825 million to NAB that was given to them by the government as advance payment.

Though the notices were sent to all the RPPs on Tuesday with 48 hour deadline to deposit the outstanding amount given to them as advance money by the government with interest, but on Friday only four of them approached in NAB and deposited Rs600 million in the shape of pay orders and Rs225 million in shape of post paid cheques. The CEOs of some RPPs appeared before the investigation team and handed over these pay orders and cheques.

According to NAB officials, the three RPP companies deposited the money in shape of pay orders and one company deposited the post paid cheque of Rs225 million. They said though majority of the RPPs companies had offered NAB for using the option of voluntarily return. But the NAB officials said it is premature to say any thing either to accept or reject the RPPs offer at this stage.Senior officials of Pepco and Wapda and MDs of PPIB and Genco were also quizzed in the case and recorded their statements.

According to the officials, NAB would complete its reconciliation exercise in coming week where it would scrutinize the collected evidence and other relevant material. After this exercise the accused persons required for further examination would be summoned.

Meanwhile, Minister for Information Technology Raja Pervaiz Ashraf also appeared before the NAB investigation team, which was probing the multi-billion Rental Power Projects on Friday and was quizzed for three hours.The Bureau is proceeding against the accused persons in RPPs case rapidly under the direction of the Supreme Court.

It is to be reminded that the Minister for Information Technology was summoned last week, but he was not probed as the investigation team was in the Supreme Court, along with NAB Chairman Admiral (r) Fasih Bukhari and Prosecutor General Accountability K K Agha.

During his three hours investigation, Raja Pervaiz Ashraf was given a questionnaire for his replies and also asked questions for giving some of the RPPs permission and advance money. The investigation was conducted by the NAB officials.

APCC all set to recommend Rs20bn more for development projects

With the proposed outlay of Rs825 billion for federal and provincial development projects, the Annual Plan Coordination Committee (APCC) is all set to recommend an increased size of the federal share of development outlay by Rs20 billion from Rs350 billion to Rs370 billion in the upcoming budget 2012/13 to accommodate projects such as “Safe city” for federal capital.

According to the working paper prepared for APCC and available with The News, against the indicated size of Rs350 billion for 2012/13, the ministries and divisions have demanded Rs750 billion as the National Highway Authority (NHA) demanded Rs111 billion, Pakistan Atomic Energy Commission (PAEC) Rs53 billion, power sector and Wapda Rs191 billion, water sector Rs153 billion and the Higher Education Commission (HEC) has demanded Rs220 billion.

The recommendation of APCC would finally be approved by the National Economic Council (NEC) under chairmanship of the prime minister to finalise development outlay and macroeconomic targets for 2012/13.

The new schemes for capacity-building or for construction of houses were deleted from the public sector development programme (PSDP) list, it said.

Out of Rs350 billion share for the federal public sector development programme (PSDP) with foreign assistance of Rs90 billion, the allocation for discretionary funds in the name of undertaking development schemes by the prime minister, as well as for parliamentarians is proposed at Rs27 billion under the Peoples Work Programme I and II.

According to the document, for ministries and divisions, the PSDP size has been proposed at Rs180.252 billion, including corporations such as NHA, Wapda and the power sector Rs98 billion, special areas Rs34 billion, PWP-I and II Rs27 billion and Earthquake Reconstruction and Rehabilitation Authority (ERRA) Rs10 billion in the next budget.

The APPC, scheduled to meet on May 2, with deputy chairman Planning Commission in the chair, is all set to recommend an outlay of Rs825 billion, including federal share of Rs350 billion and provincial development programmes of Rs475 billion for the budget 2012/13, according to the document.

To justify increased demand of Rs20 billion, the working paper said that the Defence Production Division requires additional funding of Rs1.7 billion for ship-lifting project, Ministry of Interior Rs2 billion to accommodate foreign aid of safe city project, Planning and Development Division Rs2 billion for block allocation for devolved and priority projects, Ministry of Railways Rs12 billion for new essential projects, AJK Rs2 billion and Gilgit-Baltistan Rs1 billion for their annual development programmes.

The working paper said that the ministries and divisions were pressed during the priorities committees meeting to remain within the indicative budget ceiling (IBC) and allocate sufficient funds to some priority areas for accomplishing projects on time.

For Diamer-Bhasha Dam, at least Rs22 billion has been proposed during 2012/13 for land acquisition. The Ministry of Water and Power, however, has demanded Rs42 billion for this purpose and the balance may be provided by Wapda from its own resources, it said.

To complete Mangla raising project and impound water during next rainy season, Rs6 billion has been proposed, Rs32 billion is proposed for Chashma nuclear (C-3 and C-4) of PAEC.

The working paper revealed that there are certain new projects proposed to be initiated during 2012/13 as in Balochistan, Zhob-Mughalbot (N-50) and Qilla Saifullah-Loralai-Wagum (N-70) will be started at a cost of Rs13 billion. Pakistan Railways will start mechanisation of tract maintenance projects, costing Rs48 billion and doubling of new tracks will start from Shahdara to Lalamusa and from Shahdara to Faisalabad at a cost of Rs25 billion.

Keeping in view the experience of 2011/12, it was ensured that the foreign assistance is not underestimated. In total the PSDP size of Rs350 billion, foreign assistance has been estimated at Rs90.8 billion. New unapproved schemes were deleted. The development schemes of capacity-building, which were reviewed by the deputy chairman Planning Commission and decided to close by June 2012 were deleted.

The Planning and Development Division had already deleted 14 such projects from the PSDP. A new PC-1 on capacity-building is in the process of approval, which will cater to the requirements of other ministries and divisions also. The schemes, which were devolved to provinces and included by sponsoring ministries’ were also deleted.

Foreigners receive negative investment advisory

The ever-accumulating circular debt and non-payment to independent power producers (IPPs) by the government has started taking its toll as potential foreign investors are receiving negative investment advisory for the country’s energy sector, industry sources said.

It was learnt that MMC Corp of Malaysia has received an advisory by OSK Research – a leading investment advisor based in Kuala Lumpur – that their possible venture into Pakistan’s power generation industry may be a risky investment.

It may be mentioned here that MMC via its 51 percent-owned subsidiary, Malakoff Corp Bhd, is looking to venture into the energy sector in Pakistan.

It has proposed to the Pakistani government to set up two power plants, which include a 1,200 megawatt imported coal-fired project and a 250 megawatt wind power project.

According to a report, high oil prices, electricity theft and loss imply that the distribution companies have been unable to pay the independent power producers (IPPs) in Pakistan.

The government has to pay Rs42 billion to the IPPs, while the IPP association has threatened to shut down 1,800 megawatt of power generation if that amount was not paid.

Malakoff has completed the feasibility study of the 1,200 megawatt plant and is awaiting notification of feed-in-tariff for the coal power project by Pakistan’s National Electric Power Regulatory Authority (NEPRA), expected to be finalised next month.

It may be mentioned here that as many as eight IPPs have submitted their final 10-day notice to the government seeking clearance of their outstanding dues of Rs34 billion.

This notice of sovereign guarantee is to end on May 2nd, 2012, after which they will shut down their plants as they will not be in a position to buy more fuel to run the plants.

Earlier, these eight IPPS served the initial notice to the government for their payments of Rs34 billion, which PEPCO had failed to pay within the prescribed time.

Sources in the advisory council of IPPs informed that they would also serve the final notice for recovery of another Rs9 billion to the government, for which they had already served the initial notice on April 2. Moreover, IPPs will also serve a final notice for the recovery of another Rs4 billion in May.

Ironically, the government instead of clearing such outstanding dues kept asking the IPPs to withdraw their notices.

Despite a number of meetings between the representatives of IPPs and the Ministry of Water and Power along with the Finance Division before submitting the final notice, the government was still nonchalant towards the financial woes of the IPPs.

Water, power sector to get highest allocation of Rs93bn

The government is likely to allocate the highest share of Rs94.82 billion to the ministry of water and power in development budget 2012/13, a senior official told The News on Wednesday.

It is expected that the water sector will get an allocation of Rs44.82 billion, out of the total development budget of Rs180 billion for the federal ministries, said the official.

However, another Rs50 billion is likely to be allocated for the power sector projects, out of the total federal share of Rs350 billion.

Pakistan Atomic Energy Commission (PAEC) is likely to get Rs37 billion, the official said, adding that the Planning Commission, which has reduced the number of its projects from 25 to seven only, may be allocated Rs25 billion for the projects under devolved subjects.

The official said that the Pakistan Railways is being proposed to get Rs21 billion.

It is proposed that the Earthquake Reconstruction and Rehabilitation Authority (ERRA) to be provided Rs10 billion.

However, the Annual Plan Coordination Committee (APCC) that was earlier scheduled on April 30 will now meet on May 2 with deputy chairman Planning Commission in the chair to approve the proposed allocations for forwarding to the National Economic Council (NEC) that is likely to take place on May 14.

However, on May 23, the Planning Commission will send the copies of the finalised development budget to all members of the parliament, as in the National Assembly, Dr Hafeez A Shaikh, federal finance minister, will announce the budget 2012/13 on May 25, the official said.

To a question, the official said that the macroeconomic outlook for the current and the next financial year would also be presented in the National Economic Council (NEC) meeting.

Meanwhile, the National Accounts Committee (NAC) will meet on April 26, Thursday, to finalise the size of GDP and growth in various sectors of the economy not only for the current financial year, but also the projections about the growth in all sectors of the economy in the next budgetary year 2012/13.

Punjab can produce 5,000MW from biomass: report

Punjab has the potential to produce 3,000-5,000 MW of electricity from biomass the province generates annually as agricultural waste states a report “Identification of Biomass Potential in Punjab,” prepared by German NGO GIZ.

Most of the 35 million ton biomass generated annually in Punjab goes waste through inefficient burning, the report said.

The main contributors to biomass are bagasse, rice straw and husk, cotton waste, barley residue, maize stalks and leaves, and millet and sorghum stalks.

Sugarcane provides two major crop wastes; barbojo – the leaves and stalks of the cane and bagasse – the dry pulpy residue left after the extraction of juice from sugarcane. The cotton crop also gives significant residue in the form of stalks and husks.

“We carried out detailed survey of all the36 districts of the province to find out the amount of biomass that is available,” said Amir Butt of GIZ who was member of the team that prepared the report after painstaking research. He said the currently available power potential by using biomass as fuel is around 3,000 MW. This could increase to 5,000 MW if the sugar mills consume 97 percent of the available bagasse in highly efficient boilers.

Sugar mills produce around 30-32 million tons of bagasse each year during the sugar cane crushing season. The mills sell only 30,000 tons of bagasse in the market and consume the rest for power generation, Butt said.

Total production of each crop contributing to biomass was calculated in each district of Punjab and the biomass residue generated from the crop was also evaluated. The findings showed that the energy deficient province has enough potential of generating electricity trough biomass.

Most of the sugar mills consume bagasse in heating inefficient boilers of 12 to 20 bar. The Indian sugar mills have installed 50 bar or above boilers that produce many times more electricity, he said.

Punjab could produce 203 MW of electricity from 30,000 ton bagasse provided to the market which could increase manifold with increase in supply of bagasse that could be spared if mills use high bar efficient boilers, Butt said.

According to the report rice husk that contains 10.4 percent moisture content and 64.25 percent volatile matter has caloric value of 3,826 kacl/kg. Moisture content in cotton stalk is 20.86 percent, volatile matter 60.66 percent, and it has gross calorific value of 3,296 kcal/kg. Wheat straw has calorific value of 3,712 kacl/kg with only 6.34 percent water content and 61.73 percent volatile matter. Bagasse contains 25.25 percent moisture, 48.98 percent volatile matter and its caloric value is 3,673 kcal/kg.

Report points out that the efficient use of biomass as fuel would reduce carbon print in the environment. Currently, most of these biomass products are treated as biomass waste and usually burned in the fields. Biomass burning has a significant impact on global atmosphere chemistry since it provides large sources of carbon monoxide, nitrogen oxides and hydrocarbons.

Govt considering shifting power plants to imported coal

Pakistan government is working on a plan to shift furnace oil based power plants to imported coal for bringing down electricity generation cost, senior officials said.

They said that the government is also seeking a loan from the Asian Development Bank (ADB).

“We are in touch with the ADB for a loan to covert furnace oil based plants and in the first phase we have asked the bank to extend a loan for converting two plants one each at Faisalabad and Multan,” a senior government official told The News.

The dependence on furnace oil for power generation increased significantly in recent years that is not sustainable in the long-term due to rising international oil prices. Per unit cost of electricity on furnace oil stands at Rs18.72 per unit. As current energy mix which is heavily tilted to residual furnace oil (RFO) based plants, National Electric Power Regulatory Authority (NEPRA) has determined power tariff of Rs11.91 per unit which will be implemented on May 1.

In case the government manages to switch power plants to imported coal as a fuel then the determined tariff would reduce to Rs9 per unit.

When the official was asked about environmental aspects of the move, he said that the government intends to first use clean coal as fuel with high-tech plants that would be environmentally friendly. But with the use of imported coal in power plants, the country would be in a position to generate cheaper electricity, he added.

The official said that the ADB has promised to consider the government’s proposal for credit lines.

“We have reduced furnace oil demand from 32,000 metric tons to 26000 tones per day to reduce the impact of fuel cost on power tariff.” The cost of furnace oil has swelled to Rs90,000 per ton at the maximum from Rs 45000 per ton, which is why the option to run power plants on furnace oil is being considered more seriously.

The other option to bring down power tariff is to ensure proper allocation of gas to the power plants. The power sector requires 210 mmcfd gas per day and if it is ensured to the power sector then the energy mix will further improve in favour of consumers in terms of affordability. The electricity generation cost on gas stands at Rs5 per unit. If 210 mmcfd gas is provided then system will produce 1,100 megawatt at Rs5 per unit.

The rise of energy efficient Pakistanis

Pakistan faces an energy shortfall of 5000 MW and there is much debate within the country about how to rectify this situation. The focus of is generally directed towards generation which is a costly long term solution.On the other hand, energy efficient practices are often underestimated even though they offer budget friendly immediate relief. While energy efficiency is a relatively new concept and many people in the developed world have yet to understand let alone adopt it, attention should be drawn to the positive contribution of Pakistani farmers who are a testament to the efficacy of energy efficient practices. They have understood and embraced the concept of energy efficiency and should be lauded as pioneers.

It takes a staggering $1.5 Million to generate 1 MW of energy, but by replacing old inefficient tubewells with efficient ones (with a generous 50% cost-share from USAID), it only takes 140 responsible farmers to save 1 MW. 1700 such pioneering farmers have already participated in the program and increasing that number exponentially will produce the sort of results that will have a positive impact on the life of every Pakistani. Large scale implementation of this plan could help save 1000 MW through the agricultural sector alone.

‘Developing solar energy sector to help cut power outages’

Pakistan has a potential for alternative energy market as the people need solar energy systems because of the high cost of diesel and petrol, a statement said.

With the progress in solar energy sector, power outages could also be minimised, said Rahi Tajzadeh, Chief Executive Officer of BB Solar, during his visit to Pakistan, it said.

BB Solar will establish local market and distribution channels to assist in sales, import, support, installation, and maintenance, which will allow it to operate efficiently and effectively in this burgeoning market, he said.

Tajzadeh said that most residents, farmers, commercial and industrial markets are looking for higher quality Western products, while more economical and Chinese alternatives will be made available to those who are more budget conscious.

The potential market size here for one kilowatt to 25kW system ranges from 300 to 3,000 systems annually, depending upon the price and distribution and support channels, he said.