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Neelum-Jhelum project also hits finance snags

Pakistan’s second most strategically important Rs274 billion Neelum-Jhelum Hydropower project of 969 MW, has also landed into deep financial trouble endangering its scheduled completion in 2016, as its financiers have raised a number of issues to continue funding the project, a senior official at Ministry of Finance told The News.

This shock has come from Middle Eastern donors after the World Bank and the Asian Bank refused to fund the Bhasha Dam unless a No Objections Certificate (NOC) was obtained from India because of what they claim is the disputed status of Gilgit Baltistan region. The Neelum-Jhelum project is also not being funded by both World Bank and ADB

Fully alive to the paramount importance of the project, the Middle Eastern donors who had earlier committed $100 million for Neelum-Jhelum hydropower project have linked the release of credit line with the solution of problems of other unrelated telecom projects issues.

Secretary Finance Abdul Wajid Rana told The News that under the privatization of PTCL deal, about titles of 3,000 properties of PTCL across the country were to be transferred to the Gulf investor and only 29 properties were left which will be transferred to the company as soon as the remaining issues gets resolved. Pakistan has also to receive the remaining installment of $800 million from the sale proceeds of PTCL.

The Islamic Development Bank (IDB), the official said, has also linked its funding for Neelum-Jhelum with the release of $ 448 million by the EXIM bank of China.

“The IDB had committed $ 357 million loan for the project out of which some of it has been disbursed, but linked the releases of remaining installments of the loan with the release of $ 448 million by Chinese EXIM bank saying if the main donor is reluctant then how it is possible for it to fund the project.”

The Chinese donor has delayed the credit line of $ 448 million owing to which the project is feared to get delayed and if it does not get completed by 2016, then India will be able to complete the Kishanganga project on the Neelum river in held Kashmir first and under this scenario India will have the water priority rights of Neelum river under 1960 Indus Waters Treaty.

The source said that top functionaries of the government had recently met the Chinese ambassador in Islamabad and sensitized him about the inordinate delay in the release of buyers credit of $ 448 million by the Chinese EXIM bank. The ambassador assured the authorities that he would use his influence to help expedite the process.

However, an EAD official said there are indications that Pakistan and China EXIM bank would sign the agreement in the next 10 days ensuring the release of the credit line soon.

Power sector recovery deficit rises to 35 percent

The deficit in the recovery of dues in Pakistan’s power sector has alarmingly increased to 35 percent in the last financial year 2011-12 (FY12) from 14 percent in the previous year, according to official data of the government on the power sector.

This reflects that all the electric power distribution companies failed to collect revenue amounting to Rs 337.628 billion.

According to the data, all electricity power distribution companies, including Karachi Electric Supply Company (KESC), purchased electricity worth Rs 957.451 billion from Central Power Purchase Agency (CPPA) in FY12 but collected just Rs 619.823 billion in return.

The recovery of dues by Sukkar Electric supply Company has been the lowest one at 21 percent showing a shortfall of Rs 38.221 billion. In addition, the recovery in other loss making companies such as Quetta Electric Supply Company (Qesco) remained at 36 percent with deficit of Rs 36 billion, in Hyderabad Electric Supply Company (Hesco) the recovery stood at 49 percent showing a shortfall of Rs 26.3 billion and in Peshawar Electric Supply Company (Pesco) recovery remained at 47 percent with loss of Rs 76 billion.

However, the recovery rate in Punjab’s five distribution companies has been in the range of 70 to 80 percent. The Lahore Electric Supply Company did a marvelous job as it’s recovery of dues was the highest at 80 percent, showing a deficit of Rs 38.151 billion.

Likewise, the recovery rate in Gujranwala Electric Power Company (Gepco) stood at 79 percent with loss of Rs 16 billion, Faisalabad Electric Supply Company (Fesco) 74 percent showing deficit of Rs 28 billion, Islamabad Electric Supply Company (Iesco) 70 percent with loss of Rs 27 billion and in Multan Electric Power Company (Mepco) recovery stood at 72 percent showing deficit of Rs9 billion and in KESC, the recovery of dues was 77 percent with loss of Rs 14 billion.

The data also shows that all the distribution companies braved colossal loss of Rs 114.194 billion in 2011-12 because of excessive loss and low recovery. Under this head, Lesco sustained loss of Rs 8.7 billion, Gepco of Rs 1.506 billion, Pesco of Rs 1.439 billion, Iesco of Rs 3.133 billion, Mepco of Rs 6.6 billion, Hesco of Rs 12.912 billion, Sepco of Rs 20.939 billion, Qesco of Rs 23.448 billion and Pesco and Tesco of Rs 35.507 billion each.

Mukhtar hints at separate police stations to check power theft

Federal Minister for Water and Power Chaudhry Ahmed Mukhtar on Saturday hinted at setting up separate police stations to implement and expedite the process of punishment to those stealing electricity.

He was talking to mediapersons after chairing a maiden meeting of the National Finance Commission’s Committee on Energy, formed by the prime minister last week here at the Wapda House.

Chief secretaries of all the four provinces, federal Secretary Water and Power Zaffar Mahmood and other officers concerned attended the meeting, while Energy Management Cell (EMC) Chairman Tahir Basharat Cheema briefed the meeting about the power situation in the country. The meeting also discussed measures for recovery of electricity dues and payment of circular debt to power producing companies.

Mukhtar said the government was focusing on changing the strategy for power generation, citing that China and India were generating an adequate quantum of electricity through coal resources while Pakistan was utilizing only 0.46 percent of its vital coal resources for power generation. “We are striving for optimum utilization and promotion of hydel and coal resources that ensure inexpensive energy generation as compared to thermal, furnace oil and it will help provide relief to consumers,” he maintained.

To a question, he said the power shortfall shot up suddenly a few days back due to a dust-storm that severely damaged transmission lines in district Muzaffargarh, Punjab. Hhowever, Wapda and NTDC field staff repaired them in the shortest possible time and now the power situation was normal with the usual shortfall.

He said the government was making all out efforts to resolve electricity crisis.

The minister also dispelled the impression about increased loadshedding in Punjab and said that load management was being made in a fair manner. He said the top priority of the government was to balance electricity demand and supply as early as possible for which a number of initiatives were being taken to ensure maximum relief to all consumers.

To another query, Mukhtar said that under energy conservation initiatives, the government would distribute 30 million energy savers free among consumers within two to four months.

The NFC Committee on Energy will hold its next meeting in Islamabad on August 17, 2012, he told the media.

Alternate energy sources

The government has taken a number of measures to safeguard the interests of the industrial sector by promoting plugging of energy wastages and encouraging captive power generation from coal in an environmental-friendly manner, sources in the Ministry of Industries told

Daily Times on Saturday.

The government has encouraged energy efficiency and conservation through energy audits by National Productivity Organisation. Commercialisation and marketing of renewable energy products like solar stoves, solar backup batteries, inverters and reverse meters, bio gas plants and micro hydel plants in collaboration with Pakistan Council for Renewable Energy Technologies (PCRET), the sources maintained.

It has also encouraged energy efficiency and conservation through mass awareness among people to adopt off grid solutions for power generation by switching their industries to alternate energy resources or captive power generation, the sources maintained. The government is also making sincere efforts for promoting captive power for industry through surface coal gasifiers that produce coal gas giving cheap energy.

The officials in the Ministry of Industries said the government is rewarding winners, who are tackling energy issues by turning energy ‘threats’ into ‘opportunities’ by producing cheaper uninterrupted captive energy. The ministry is recognising two such private sector firms for innovative efforts turning ‘weaknesses’ into strengths; Mughal Steel turning lower energy round the clock from coal, which is cost and DG Cement, Nishat Group zero waste concept producing energy from rubbish.

Sources said that Public Sector Development Programme (PSDP) related interventions aimed at reviving the industrial sector: The objectives targeted in PSDP 2012-13 aim at rejuvenating the industrial sector through 31 projects worth Rs 3.71 billion with focus on innovation and efficiency in industrial sector, building high skilled human capacity through targeted worker skills development programmes, and provision of technology through technological upgradation; provision of sophisticated machines, equipment, tools and spares in Common Facility Centres and machine pools; CAD/CAM facilities.

The PSDP also targeted research and development in key industrial sectors, targeted development of small and medium business entities to boost employment and reduce poverty and industrial infrastructure development through industrial parks and development of industrial estates.

The sources said that energy crises and tariff hike is causing immense problems for the industry of the country and the government should ensure uninterrupted supply of gas and electricity to run the wheel of economy.

Industrialists are confronting multiple problems in achieving production targets due to sudden gas and electricity cuts, which would certainty cast a negative impact on exports of value-added textiles, which is considered a major foreign exchange earner for the country.

An industrialist told Daily Times that the ongoing severe power crisis has resulted in shut down of 53 industrial units and also affected 1,500 units in Khyber Pakhtunkhwa only. The Punjab government has officially informed the Federal Ministry for Industries that it has shut down some industrial units but the unofficial number was much more. The textile sector is badly affected and if the ongoing process of power crises continues, there is an apprehension that it will further deteriorate the situation.

The textile industry of four districts of Faisalabad is badly affected due to load shedding and agro instrument producing industries and power looms are being closed. According to details, load shedding in Toba Tek Singh, Chiniot, Jhang and Faisalabad have resulted in shut down of 55 percent of industrial units and while all power looms are almost to be closed. Different textile mills have closed their one shift and several industries of fishing, printing, sizing and calendaring have been closed.

Performance of textile mills has also been badly affected and could not complete foreign orders, resulting in billions of rupees loss to the economy. International markets are relying on Indian traders while export of cotton yarn has already affected textile industries.

Govt to focus on coal power generation: Ahmed Mukhtar

Federal Minister for Water and Power Chaudhry Ahmed Mukhtar has said the government is focusing on the utilization and promotion of hydel and coal resources in energy generation.He said it would be inexpensive electricity as compared to thermal, furnace oil whic will help provide relief to consumers.Talking to the media here on Saturday at an Iftar dinner at a local hotel hosted by Media Advisor Ministry of Water and Power, Tahir Khaleeq, in honour of journalists, he said energy situation would be better in the next eight to ten months.To a question, he said the power shortfall shot up suddenly a few days back due to a duststorm that severely damaged transmission lines in Muzaffargarh, Punjab, however, WAPDA and NTDC field staff repaired the lines in the shortest possible time and now the power situation was normal.

CDA to launch new electricity generation projects: Chairman CDA

Chairman Capital Development Authority, Farkhand Iqbal on Saturday said that Capital Development Authority (CDA) is going to launch a new energy project besides improving transport system to facilitate the general public of the federal capital.Talking to private television channel,he said that CDA will start exclusive power projects in the capital city to meet the energy demand of the citizen. He said these projects would start with cooperation of the China, which will produce 75 mega watt energy needs of the capital city Islamabad.He said that CDA have also working on a project of transport system to facilitate the general public of the capital. CDA have working on feasibility for transport projects with the support of Asian Development Bank(ADB), he added.

Wapda can produce 20,000MW electricity

Water and Power Development Authority’s (Wapda) top functionaries here on Friday told the Senate Committee on Water and Power that Wapda can produce hydro generation of 20,000 megawatts (MW) in the next eight years, provided the required funds are ensured.

Zahid Khan, chairman of the senate committee, said that it is not possible to rectify Wapda’s complex matters as it is facing more problems with fewer resources. The committee came down heavily on the absence of Minister of Water and Power Chaudhry Mukhtar Ahmad and decided to write down a letter to chairman Senate to this effect. The committee also recommended taking actions against those officials of electric power distribution companies, where unscheduled load shedding is still underway.

In the meeting, CEO of Neelum-Jehlum Hydropower Company Lt (retired) General Zubair Ahmad said the Neelum-Jehlum hydropower project had got delayed by two years in the wake of the catastrophic earthquake that hit the country in 2005. It will now be completed in 2016 with the capacity to generate electricity of 969 MW, he said.

Ahmad said that a 24 kilometers tunnel has been excavated and about 38 percent work on the whole project has been completed. “The project will be completed with the revised cost of Rs 274 billion. The cost of the project has increased by Rs 90 billion out of which Rs 45 billion will be arranged by the federal government and the rest will be arranged from donors,” he said.

Wapda chairman Shakeel Ahmad Durrani said that China’s EXIM bank will soon release the loan of $448 million. However, he said that there are some hurdles in getting $100 million from Abu Dhabi Fund.

He also said the country will start getting electricity of 17 MW in 2013 from Kurram Tungi dam. The dam will help irrigate 16,000 acres land in North Waziristan, he added.

Work on Neelum-Jhelum Hydropower Project halted

Work on Neelum-Jhelum Hydropower Project (NJHP) has suffered a big blow due to lack of funding, sources said on Friday. The Chinese contractor has started suspending work on various sections of the project with the passing of the deadline that had been given for the release of Rs7.8 billion in funds.

The contractor has told the Ministry of Water and Power about its inability to continue work on the 969MW project beyond August 10, 2012, sources added. “It is indeed a setback for the project,” said an official. He hastened to add that the federal finance ministry had said that a review committee was being set up for the release of funds. A delay in the release of funds would virtually defeat the purpose of inducting sophisticated tunnel boring machines (TBMs) that were inaugurated by the prime minister himself a few days back.

The TBMs had been acquired with a view to speeding up work on the project. The use of TBMs for the main diversion tunnels has been aimed at enhancing the pace of work, thereby reducing the construction period by a year and a half, resulting in an estimated benefit of Rs60 billion.

More importantly, the early completion of NJHP assumes immense importance in order to neutralise Indian designs of utilising Jhelum water for the under construction Kishanganga Hydropower Project being built upstream in Indian occupied Kashmir.

The completion of NJHP should be done as per schedule to safeguard Pakistan’s water rights over the Neelum River, a major tributary of Jhelum River, sources said.

KESC, Hong Kong firm sign MoU for coal-fired power

As part of its drive to enhance electricity power generation capacity, the Karachi Electric Supply Company on Friday signed a Memorandum of Understanding for setting up coal power plants up to 1, 000 MWs with Bright Eagle Enterprise Group Limited— a Hong Kong based company sponsored by Chinese and Korean investors.

As per the memo, coal-based power plants from China would be established, commissioned and energised in Karachi on a fast-track basis. KESC Executive Director Syed Naveed Ahmad and Bright Eagle Enterprises Chairman Chen Ping signed the memo on behalf of their companies in Hong Kong.

The enterprise is also collaborating for the conversion of KESC’s 1, 260 MW Bin Qasim Power Plant-I from residual fuel oil to coal under a joint development agreement. The power company is also actively pursuing Thar-coal-reserves based power generation, under a joint development agreement with Oracle Coalfields of UK and Sindh Carbon Energy.

Ogra reverses raise in gas tariff for Dewan Petroleum

In line with the directives of the National Accountability Bureau (NAB), the Oil and Gas Regulatory Authority (Ogra) has taken back the increase of $1.07 per MMBTU in gas tariff from Salsabil gas field that was extended to Dewan Petroleum Company in July 2010.

The decision will save the countryÕs gas consumers from a whopping Rs23 billion, which would have been the impact of the raise. This swift action has been taken by the regulator in the wake of Supreme Court orders. NAB has started initiating stern action with respect to the Rs80 billion Ogra corruption case.

As per the Ogra notification, the increase of $1.07 per MMBTU in gas tariff of Salsabil field of Dewan Petroleum Company has been taken back on the orders of NAB. The regulator has suspended the earlier notification and issued a new one. Under the new notification, the gas tariff of Dewan Petroleum Company from its Salsabil field has been reduced from $3.89 to $2.82 per MMBTU. This decision will be effective from July 2012.

According to officials at the Ministry of Petroleum and Natural Resources, NAB has proven corruption of Rs80 billion on the directives of the Supreme Court, after which NAB arrested the Ogra gas member Mansoor Muzzafar.

However, the then Ogra chairman Mr Tauqir Sadiq and the then member finance Mir Kamal Mari are still at large. They are facing charges for increasing the gas tariff of Salsabil field. The Supreme Court had come down heavily on NAB in the last hearing over the Ogra corruption case and direc