Water and Power Development Authority (Wapda) Chairman Raghib Shah has said that water sector projects are vital for sustained economic development, poverty reduction and social uplift in Pakistan, particularly the remote areas of Gilgit-Baltistan. He expressed these views in a meeting on Friday with Gilgit-Baltistan Chief Minister Syed Mehdi Shah at the Wapda house.
While speaking on the occasion, the chairman said that Wapda is implementing a number of mega and medium-sized projects in Gilgit-Baltistan, including the Satpara multipurpose dam (generation capacity of 17 MW, water storage capacity 0.093 million acre feet) and Diamer-Bhasha (generation capacity of 4,500 MW, water storage capacity of 8.1 million acre feet), 7,100 MW Bunji, 34 MW Harpo, 80 MW Phandar and 40 MW Basho hydropower projects, etc.
Apprising the chief minister of the progress on the projects, he said that the Satpara dam has been completed. The construction work on 13 contracts for Wapda offices, colonies, contractors’ camps, model village for affectees, roads and infrastructure in the project area of Diamer-Bhasha dam – a priority project – is progressing at a good pace.
The process to acquire land is continuing, while expressions of interest to appoint consultants have also been called. Various financial options are being analysed for funding the project, he added.
The chairman said that detailed engineering design and tender documents of Bunji hydropower project will be completed by end March this year. He further added that two European Development Agencies, namely AFD of France and KFW of Germany have shown interest to provide funds for the Harpo hydropower project.
Dilating upon their benefits, the chairman said that these multipurpose projects will ensure availability of water for irrigated agriculture, help mitigate devastating floods and generate low-cost hydel electricity. In addition, a number of employment opportunities will also be available to the locals in Gilgit-Baltistan during construction as well as operation and maintenance phases of these projects, he said.
The government has chalked out a plan under which electricity consumers will be made to pay off the debt the government raked up to clear the circular debt and repay some Independent Power Producers (IPPs).
This amount was borrowed from commercial banks and has now reached a whopping Rs136 billion, including Rs15 billion interest component, reveals an official document available with The News.
In the last five years, not only has the government failed to ensure uninterrupted supply of gas and electricity, it has also frequently raised the prices of both. At the tail end of its tenure, the government is now making consumers to pay for the debt it has accumulated.
Circular debt arises when producers of energy are unable to arrest system losses and cannot recover dues from influential persons in the private and public sector departments.According to the official record, the Ministry of Water and Power, in consultation with the finance ministry, borrowed Rs136 billion from banks to pay the circular debt and repay
those IPPs which had invoked sovereign guarantees. Subsequently, the power ministry opened escrow accounts for each electric power distribution company (disco) and asked them to deposit their proportion of loan repayment directly into these accounts.
As per the documents, the Hyderabad Electric Supply Company is to pay Rs17.04 billion; Quetta Electric Supply Company Rs21.51 billion; Peshawar Electric Supply Company Rs39.48 billion; Sukkur Electric Power Company Rs15.73 billion; Multan Electric Power Company Rs18.46; Lahore Electric Supply Company Rs9.32 billion; Gujranwala Electric Power Company Rs3.62 billion; Faisalabad Electric Supply Company Rs6.97 billion and Islamabad Electric Supply Company Rs4.27 billion.
These discos have now been asked to petition the National Electric Power Regulatory Authority (Nepra) for an increase in power tariff so that they can repay the loan with interest. While the top Nepra officials are currently reviewing these petitions, most energy sector analysts expect the regulator and government to lock horns over the issue. A decision to punish the honest consumers with higher tariffs for the faults of the defaulters, argue these observers, is unlikely to find favour with Nepra.
The power generation plunged to a historic low and is even below the level achieved in 2009, despite the fact that over 3,000MWs were added afterwards, according to official figures. Current estimates regarding the size of the gap between demand and supply stand at 5,000MWs but the Ministry of Water and Power denies this.
Official figures show that peak power generation plunged to 9,500MWs and off-peak to 7,500MWs on January 6. Officials said that Pakistan managed to produce more electricity in 2009 as compared to the present level of generation. The idle capacity of independent producers has been estimated at over 3,000MWs, while total thermal generation capacity nosedived to less than 7,000MW due to unavailability of fuel, they said.
Owing to peculiar hydrological conditions, the hydel power generation fell to 2,000MWs during the peak demand and plummeted to just 1,000MWs during non-peak hours. Electricity supply has faltered by over one-thirds of the demand. The gap between demand and supply has widened to over 5,000MW, said the officials.
Owing to the huge gap between the demand and supply, the people have to face over 10 hours of outages daily, while the textile industry is being provided power for just eight hours on a daily basis, said officials.
The biggest challenge being faced is the procurement of fuel for thermal plants, said officials. “On this front, we have failed miserably,” they said, adding that the present disgraceful performance of the power sector is nothing but an outcome of bad governance.
The officials said that it is obvious that reliance on thermal power increases in winter; therefore, steps should have been taken for the smooth provision of fuel for thermal units but economic managers in the federal capital failed to do so. “The lethargic attitude of the ministry of water and power has left the entire nation in a quagmire, crippled routine life and stopped the wheels of industry,” they said. As a result of the mismanagement on part of the federal government, said officials, thermal plants are also not working at full capacity. Most of the independent power projects are being run on 50 percent to one-thirds of the capacity on the back of low fuel supply. Kot Addu Power Company (Kapco) is even worse, they said, adding that power generation by Kapco remained 350MW against a capacity of 1,350MW. The Guddu thermal plant, another public sector entity, is producing just 700MW against its capacity of 1,050MW. The less than capacity generation by Guddu plant is a curse, said an official, adding that dedicated supply of over 200mmcfd gas is there but the management of Guddu plant has been unable to utilise this precious resource of generating low-cost power. When contacted, Tanvir Alam, spokesman for the Ministry of Water and Power, admitted that power generation remained stagnant during the last one year. He insisted that the present power generation level is equal to what was achieved last year.
He said 1,500MW is being produced by hydel plants, adding that overall power generation is estimated at 9,500MW, while demand is calculated at 13,000MW. Alam claimed that the maximum gap between the demand and supply is 3,500MW.
The top mandarins of the Ministry of Water and Power on Monday told the National Assembly’s Special Committee on Energy Crisis that the cost of 45 percent of total electricity generated was not recovered due to transmission and distribution losses, theft and non-recovery of bills.
Led by Additional Secretary Arshad Mirza, the officials also said prepaid metering system was being installed in all government departments and the facility of free of cost electricity currently being enjoyed by Wapda employees would also be withdrawn.
Instead, the government intends to monetize the electricity units being given free of cost. Mirza said: “We are in the process of talks with the Wapda management and its union about the plan to monetize electricity units.”
According to the plans under discussion, the government will pay employees in advance for the power units and the latter will then be liable to pay the electricity bills.
The additional secretary and joint secretary of the power ministry said in the last financial year line losses crossed the limit of permissible losses, amounting to Rs80 billion; the amount accrued under the non-recovery of electricity cost stood at Rs95 billion, while the cost of fuel worth Rs79 billion incurred on electricity generated under the head of fuel adjustment could not be recovered because of the Islamabad High Court’s verdict.
However, the government has paid the Rs225 billion subsidy in the last fiscal under the tariff differential subsidy. They said Rs120 billion was added to circular debt every year and in last four months Rs45 billion had been added, as the government was allowed to collect fuel cost incurred on electricity generation because of the IHC’s stay.
The officials said 30 percent of revenue was stuck on account of non-recovery of fuel cost and this was aggravating the cash flow situation in the power sector. If things continue like this, they said, the power sector may collapse.
To a question, Arshad Mirza said the government was paying Rs3 per unit as subsidy to power consumers. He also said the outstanding dues of the central power purchase agency (CPPA) had swollen to Rs426 billion as of November 2012. Of this, the federal government still owes Rs7 billion, the AJK government Rs19 billion, provincial governments Rs93 billion and the private sector Rs251 billion. Other consumers also owe billions.
Bushra Gohar, a member of the committee, said in the last meeting it was decided that power supply to influential tycoons not paying bills since long would be disconnected, and wanted to know any progress in this regard.
She pointed out that the spouse of Foreign Minister Hina Rabbani Khan was also found to be a huge defaulter of electricity bills and cited reports suggesting that he was being offered a ‘settlement plan’. However, Mirza rejected this report as baseless.
To a question, Mirza said recovery of electricity bills had increased by 4 percent to 94 percent in the last 4-5 months. He said the country was currently facing a power deficit of 2,500 MW. However, the members of the committee contested his claim, saying that if the power deficit was indeed 2,500 MW then why the country was facing 10-12 hours of outages on average.
Hameedullah Jan Afridi, another member of the committee, said a powerful oil lobby was resisting the government’s move to bridge the power deficit through exploitation of alternative renewable resources.
Prime Minister Raja Pervaiz Ashraf has declared the 969 MW Neelum-Jhelum Hydropower Project as a top strategic priority of the country and diverted Rs24 billion to it from other water projects.
The prime minister took notice of the issue after he was told that the project was facing a $1.5 billion deficit and the ongoing construction work on the project could come to a halt.
Analysts say if that happens India could get an edge to complete its Kishenganga Project on the same river before it enters Pakistan and could claim priority water rights.
Sources say Pakistan is constructing the Neelum-Jhelum project at a cost of Rs270 billion.
The prime minister had convened a high level meeting attended by Finance Minister Dr Hafeez Shaikh, Deputy Chairman Planning Dr Nadeemul Haq and Water and Power Development Authority (Wapda) Chairman Syed Raghib Abbas besides other top officials. A committee was constituted to finalise an emergency financing plan.
The project had received a big jolt when the Chinese Exim Bank refused to release $448 million loan linking it to the restoration of the Safe City Project in Islamabad which has been stopped by the Supreme Court of Pakistan.
Likewise the Abu Dhabi Fund linked its loan with the resolution of the issues pertaining to the Pakistan Telecommunication Company Limited (PTCL) properties, which are not being handed over to Etisalat, the UAE company currently running PTCL after its privatisation.
The committee formed by the PM has forwarded its proposals to the prime minister containing the plan to immediately fund the project. The Planning Commission has cut allocations earmarked for various other water projects and diverted the funds towards Neelum-Jhelum so that its completion could be ensured by December 2016.
To a question an official said around Rs24 billion earmarked for other water projects had been diverted to Neelum-Jhelum. Of this about Rs14 billion will be diverted from Bhasha Dam and Rs10 billion from other water projects. “When we get loans for Neelum-Jhelum project we would give the money to the other water projects,” the official said.
To raise funds for Neelum-Jhelum, Wapda will issue Sukuk bonds worth Rs20 billion in two stages and the government would provide Rs4 billion from Wapda’s Rs130 billion receivables that Pakistan Electric Power Company (Pepco) owes it.
The ministry of finance, meanwhile, has rejected the proposal of a credit line of $500 million from the Standard Chartered Bank as it was decided that the top leadership would continue to pursue the Chinese Exim Bank for a $448 million loan once the new Chinese leadership takes charge in March.
Water and Power Development Authority (Wapda) Chairman Ragib Shah met with USAID Director Jonathan Conly and Assistance Coordinator Richard Albright on Friday to discuss the financial plan for water and hydropower projects.
The United States is one of Wapda’s major donors. Over the past four years, USAID has provided over $300 million to support the modernisation of equipment at Tarbela and Mangla, completion of multipurpose dams and irrigation systems of Gomal Zam and Satpara. These investments were made to increase electricity generation, provide water for irrigating over 200,000 acres of land and control floods in Pakistan.
Speaking on the occasion, Wapda chairman said that Pakistan has a potential of generating about 100,000 MW of hydel electricity and to harness this potential, Pakistan would need to raise billions of dollars.
“Pakistan’s top hydel development project is Diamer Bhasha and the United States has agreed to work with us as we examine our options on how to raise billions of dollars that are needed to make Diamer Bhasha and other hydel projects a reality,” he said.
“Diamer Basha Dam could add as much as 4,500 MW to the national grid and provide critical water storage capacity – 6.7 million acre feet – for the country.”
He further added that the United States and other international donors have supported Wapda as the organisation has successfully harnessed the country’s rivers to power economic growth. “Our partnerships with these donors have been successful and we hope to continue these partnerships,” he said.
“Over the coming months, Wapda will work with international organisations to develop comprehensive and sufficient financing plans for these projects, which will require a combination of self-financing by the government of Pakistan, private sector investment and donor support. Our goal is to make these projects financially viable and environmentally sound.”
The All Pakistan CNG Association (APCNGA) has blamed Advisor to Prime Minister on Petroleum Dr Asim Hussain for the energy crisis, which has crippled the economy.
“The ongoing CNG crisis is artificial that has been engineered to boost imports of petrol, LPG and LNG to benefit certain lobbies on the cost of the country,” said Chairman Supreme Council APCNGA Ghiyas Abdullah Paracha.
“Dr Asim Hussain is behind the energy crisis, which has crippled the economy,” he said. “He is the biggest block in the resolution of the crisis and should therefore resign immediately.”
He said that the government has not been trying to stop gas theft, which has gained new proportions. But it has been destroying the CNG sector to meet its unholy objectives.
He added that the CNG sector has no alternative to operate. Thus, gas outages should be stopped and gas prices and taxes should be brought at par with other gas consuming sectors, otherwise the APCNGA would start a protest movement from January 08, 2013.
Later on, another peaceful demonstration would be carried out in Islamabad in which transporters and the people would also participate.
“Transporters and consumers would also join hands with CNG operators to get their rights protected,” he underscored. The leader of the CNG sector said that politicians and the bureaucracy are directly involved in the longest CNG crisis in the country’s history. They have the 180 million people’s lives miserable for their own welfare.
Such elements are getting controversial policies approved and promoting influential sectors that would not pay proper taxes but lend support during the upcoming elections.
Since the Supreme Court took note of the CNG issue, the government delayed resolving the problem for two and a half months under the pretext of policy guidelines and later on closed CNG filling stations, banned the use of economical fuel in private vehicles and introduced costly liquid gases.
Top officials also conspired to create a gulf between CNG sector and the people, while their objectionable decision has so far resulted in losses to the tune of billions to CNG station owners, tax collection mechanism and the people, he informed.
“The ECC sub-committee formed to hammer out the issue was not allowed to work and later they were forced to announce a pricing that was not sustainable,” he said. “The government wants to divert the people’s attention from its failures by keeping them busy and confused. It also wants to promote petroleum, LPG and LNG mafias and justify the purchase of a scrap LPG terminal on inflated rates.”
A just and legal distribution of natural gas would have saved a lot of foreign exchange that is presently being wasted on petroleum imports, he added.
He further said that Hussain should come up with a clarification for forcing companies to appoint local agents of his choice for the Iran-Pakistan (IP) gas pipeline project, which has delayed the whole matter.
The energy ministry has extorted Rs500 billion from the people and spent billions over IP, Turkmenistan–Afghanistan–Pakistan–India pipeline and LNG imports with no results, which is one of the biggest scams in the nation’s history.
National Electric Power Regulatory Authority (Nepra) has rejected the KESC-government deal on supply of 350 MW power to the national grid, terming it illegal.
The Authority says that the country will be having a new elected government that will terminate the ongoing supply of electricity of 650 MW to KESC so it would be better for top management of the privatised entity to operate its idle power plants to generate 700 MW.
During the hearing held on January 1, 2013, Nepra was told that the Council of Common Interests (CCI) had accorded approval to put back 350 MWs of electricity in the NTDC system from the 650 MW electricity, which is currently being given to the KESC. Despite the CCI’s clear-cut decision, the KESC has not surrendered 350 MW electricity to the NTDC system.
An official said that KESC is getting an additional 350 MW from the NTDC at the rate of Rs9 per unit and if it surrenders this, it will have to generate the same from its own idle power plants, raising the price to Rs18 per unit.
The regulator was also told that the Ministry of Water and Power had prepared an agreement containing lucrative incentives that were extended to the KESC in 2009. As per the draft, the Ministry of Water and Power will provide 2,000 metric tons furnace oil through the NTDC for the Bin Qasim power plant for which the Ministry of Finance will release Rs4.5 billion in advance. However, the NTDC will be responsible for providing the furnace oil and making payments. The KESC will not bear any such responsibilities. Under the proposed deal with KESC, the Ministry of Finance will be responsible for ensuring the subsidy for the KESC in the first week of every month. The ministry reached an accord with the KESC in 2009 by putting aside the law of the land and extended 650MWs electricity at subsidized rates because of which the KESC closed its power plants with the capacity to generate 700MW electricity.
Member Punjab Khawaja Mohammad Naeem said that if the government is indeed going to cease any agreement, then regulator would never accept it as the taking back of 350 MW from KESC against the incentives of billion of rupees carries no legal weight. He also declared the 2009 agreement with KESC as unlawful.
Haroon Rashid, Member Balochistan, said the regulator is not bound to look after the rights of power consumers of Sindh and Balohictan only as it had to take care of the consumers of the whole country and it is high time for KESC to stand up on its own feet by abandoning the reliance on 650 MW from NTDC system. He asked KESC to generate the electricity as per the capacity it possesses. Nepra Acting Chairman Habibullah Khilji asked the KESC management to make the idle power plants operational and generate the electricity as per the capacity it has.
However, a KESC official warned if it happens, then KESC will be closed in two months triggering a law and order situation in Karachi. He said if the power plants are operated, then the power tariff will increase by Rs 3 per unit. However, the KESC is investing a lot to generate electricity through coal and biogas techniques.
Wapda Chairman Syed Raghib Shah here on Thursday formally admitted that the international financial institutions (IFI) had refused to fund the $14.5 billion Diamer-Bhasha Dam mainly under the Indian influence.
“No doubt, such a large dam cannot be constructed without the cooperation of donor agencies, but they (agencies) are not showing interest and, therefore, we have started hammering out alternative financial plans for the project which include securitisation of the assets of Wapda such as the Ghazi Barotha Hydropower Project, Mangla and Tarbela dams to raise the needed funds,” he said.
The Wapda chief came up with these revelations in a meeting of the Senate Committee on Water and Power, which met here on Thursday with Zahid Khan in the chair. Raghib Shah said that 478MWs of hydro generation will be injected in the national grid by June 2013. However, Wapda officials said that the USAID had shown willingness to provide $93 million for the Kurum Tangi Dam.
About the Neelum-Jhelum Hydropower Project, the Senate committee chairman said that the government had collected Rs70 billion in the shape of Neelum-Jhelum Surcharge on electricity bills from the masses to complete this project, but Wapda officials said that it was wrong. They said the Neelum-Jhelum surcharge was enforced in 2007-08 and the amount of Rs25 billion had been collected till Nov 2012.
The Senate committee chairman said it needed to be probed and asked the relevant authorities to come up with the exact collection figures of the revenue in the shape of Neelum-Jhelum surcharge in the next 10 days.
The Wapda official said that the four units of 22MW Jaban powerhouse would be made operational in March this year. The powerhouse was burnt and the government sustained a loss of Rs3.75 billion. For the Kurrum Tangi Dam, the USA will provide $93 million after the completion ofenvironment study. To a question, the Wapda chairman said that the working paper of Dasu Dam had been dispatched to the Economic Affairs Division (EAD) so that it could market it to potential donor agencies for arranging the finances. “The study for the 7,000MW Bunji Hydropower Project has been completed,” he disclosed.
On the occasion, Special Secretary Water and Power Hamayiat Ullah Khan said that in the last 45 years, no big project got completed except the 1,450MW Ghazi Barotha Hydropower Project.
He said that 40 years had been wasted in the water project disputes. He said that masses should think over why they could not develop a consensus on major dams. “Pakistan is generating most costly thermal electricity and in the world maximum electricity is being generated on coal and the cost of electricity based on coal is Rs4-5 per unit,” he said.
Mr Khan said that 80 sugar mills had the capacity to generate 3,000MW of electricity and to this effect the Ministry of Water and Power had convened a meeting of representatives of 80 sugar mills to carve out a plan. He also disclosed that the Nepra Act was being amended so that regulator could determine the power tariff in 45 days instead of five months.
Despite various challenges, the Ministry of Petroleum and Natural Resources is working on several fronts to meet the country’s growing energy requirements.
As part of such efforts, the government recently announced a new exploration bid round offering 60 exploration blocks along with road shows in Houston and London in early December to showcase the Petroleum Policy 2012 and lure the multinational companies to participate in this bid round, an official of the Ministry of Petroleum said Thursday.
He said policy was as one of the best in the world since it offers level playing field to E&P companies, both local and international ones. He said the policy offers price up to a maximum of $6.5 per MMBTU for onshore and up to a maximum of$9 per MMBTU for offshore oil and gas discoveries.
He also informed the government for the first time in its history has formulated policies on Tight Gas and Low BTU Gas. As regards the prospects of oil and gas exploration in the country, he pointed out that Pakistan is endowed with vast sedimentary area of over 800,000 square kilo-meters of which over 70 percent is yet to be explored. The success ratio of oil and gas discoveries is one of the best in the world.
Similarly, the ECC of the Cabinet has approved the LPG (Production and Distribution) Policy Guidelines, 2012 which would help end cartelization in LPG market and promoting its utilization in the automotive sector.
In addition, the Sui Southern Gas Company (SSGC) and United Energy of USA recently signed a Memorandum of Understanding (MoU) pertaining to supply of LNG in Houston.
He said according to the MoU signed between SSGC and United LNG of USA, the later will supply 4 Million metric tons of Liquefied Natural Gas (LNG) per year to SSGC, supplementing the government’s efforts to ensure energy security of the country.