Welcome to official website of PRES

Foreign investors laud governance in Punjab

Foreign Investors from the UK, Germany and United Arab Emirates have appreciated the good governance in Punjab and showed their willingness to invest in the energy, security and information technology sectors, despite the challenges they face in this regard.

This was stated by Advisor Foreign Relations to PML-N chief Mohammad Nawaz Sharif and former ambassador Javed Malik who led two separate delegations of the UAE-based companies who called on Punjab chief minister Shahbaz Sharif and gave detailed proposals about their plans for investment in Punjab in sectors of energy, IT, security and infrastructure.

Javed Malik has been working actively to promote Pakistan at an international level and had organized various initiatives, including the first Pakistan-UAE investment Conference in Dubai which was presided over by the chief minister. Subsequently, two roundtables – titled “A Positive Pakistan” and Punjab: The land of Opportunities – were also organized by the advisor in Dubai and London, respectively.

The companies representatives which met the chief minister included PanAfrica Solar and Rubenious Energy whose chairmen were invited by Javed Malik to attend the meetings personally along with their teams. The company has shown a keen interest to develop solar projects in the south of Punjab and have completed the initial requirements to start making progress towards a pilot project.

Later, the companies also met with the Energy secretary and discussed the implementation of their proposals.

Rubenius Energy presented a unique model of self-power generation, street lighting, security and CCTV facilities which would add value to community services and resolve the energy requirements for urban as well as remote areas of Pakistan. The senior officials spent a busy day after their initial meeting and undertook various surveys to prepare to start their pilot project.

Javed Malik later accompanied the potential investors for further meetings with officials of the government of Punjab, including the Energy secretary, senior officials of the Punjab Energy department. They also met with Lahore commissioner Jawad Malik and DCO Noor Mengal.

Speaking about the initiative Advisor Foreign relations, Javed Malik said that the good governance, leadership of the Punjab chief minister and vision of the former Prime Minister Nawaz Sharif were the main reasons attracting foreign investors to Punjab. He expressed the hope that many more companies would be attracted to come to Pakistan, if the PMLN formed the federal government after the elections.

$900m ADB financing for coal-based power plant

The Asian Development Bank will provide $900 million for setting up a new power plant in Jamshoro. It will be run on imported coal to produce 600MW electricity.

The bank would also provide financial assistance for conversion of the existing 800MW Jamshoro power plant into a coal-based plant, the ADB’s Director General for Central West Asia Department, Klaus Gerhaeusser, said during a meeting with Water and Power Minister Chaudhry Ahmed Mukhtar here on Thursday.

He advised the government to start the project early so that it could be completed on time. “The ADB is aware of the importance of Diamer-Bhasha dam project for Pakistan and its construction will play a major role in easing the energy crisis in the country,” he said.

Mr Gerhaeusser said the case for financing the dam was under process and more talks would be held with the Pakistani authorities for the purpose. The ADB was sending a technical team to Pakistan next week, he added.

Chaudhry Mukhtar praised the ADB for providing the financial assistance for power plants and said Diamer-Bhasha dam was an important project to generate cheap electricity and lifeline of the country’s economy.

He stressed the need for early completion of the process of providing financing for the dam and said the ADB should play its role as lead financier to complete the project without any delay.

The dam is estimated to generate 4500MW cheap, clean and green energy with live storage of 6.4MAF.

The minister said the government attached high priority to the construction of mega water and power projects to meet its future requirements and intended to produce cheap power through indigenous resources like water, coal and wind. He said the ADB had been major financier of water and power sector projects of generation, transmission and distribution. “It is resolve of the government to end the energy crisis and to provide uninterrupted supply to the people of Pakistan for progress and prosperity,” he added.

Chaudhry Mukhtar briefed the ADB official on the current power situation and steps being taken to make the sector more efficient. He said recoveries were being made, line losses reduced, reforms implemented, energy conservation measures implemented and electricity theft was being dealt with iron hands.

Two new hydropower projects for KP

The government on Thursday gave go-ahead to the Private Power and Infrastructure Board (PPIB) to undertake two hydropower projects with total output of 1161MW in Kohistan valley on the basis of public-private-partnership with the Khyber-Pakhtunkhwa government.

The projects are 665MW Lower Palas Valley and 496MW Lower Spat Gah hydropower projects in Kohistan. Approval to the projects was granted at the PPIB board meeting which was chaired by Federal Minister for Water and Power Chaudhry Ahmad Mukhtar. This was the first meeting of PPIB after receiving the statutory status through an Act of the parliament.

Additionally, PPIB was allowed to undertake development of 90MW Neckeherdim-Paur and 58MW Turtonas-Uzghor hydropower projects in the Chitral region through the private sector.

The PPIB board also approved the extension of Letter of Support to 100MW Gulpur Hydropower project located at Poonch River/Gulpur in AJK and its change in shareholding structure and also the extension of Letter of Interest to 548 MW Kaigah hydropower project located near Dasu in district Kohistan to facilitate early development of these projects.

Speaking on the occasion, Mukhtar said that hydropower and power from coal are at top priority and the present government has been focusing on these areas for quite some time.

Some remarkable developments have been made in the hydropower sector whereby 84MW New Bong hydropower project on Jhelum River near Mangla dam is due to be commissioned by next month. Furthermore, 147MW Patrind hydropower on Kunhar river near Muzaffarabad has started construction at a fast pace, he said.

Mukhtar further said that in order to facilitate local coal and wind power projects all out efforts are being made including finalizing of upfront tariff for these projects which will be done with the proactive support of NEPRA.

PPIB Managing Director N A Zuberi briefed the board on achievements of PPIB under 1994 and 2002 power policies whereby PPIB has so far successfully implemented 28 private power projects of more than 8,500MW which is almost one third of the total installed capacity of the country. The current portfolio of projects which are at various stages of processing comprises of 21 hydro, coal, oil and gas-based power projects of more than 9,000MW out of which 16 hydropower projects totaling 7,032MW are expected to be on line starting this year up to 2020.

The meeting was attended by the Secretary Planning Commission, AJK Chief Secretary, WAPDA Chairman and senior officials of provinces, FBR, and the private sector.

Landmark Pak-Iran gas deal finalised

All issues pertaining to the $1.5 bn Pak-Iran gas pipeline were settled on Thursday and an initial contract will be signed between Pakistan and Iran on Friday. Under the EPC contract to be signed, Tadbir, the Iranian company, would construct the pipeline at a cost of Rs190 million per km and will lay 2 km pipeline per day inside Pakistan.

Both sides were in talks for the last four days and the Inter State Gas Systems (ISGS) on behalf of Pakistan and Tadbir from Iran would ink the landmark contract of the EPC. The agreement for purchasing gas would be for 20 years initially and could be extended for another five years, a senior official who is part of the talks confided to The News.

The gas companies – Sui Southern, Sui Northern – and FWO (Frontier Works Organization) will also take part in constructing the pipeline. The gas utilities will complete the task related to mechanical issues and FWO will do the civil works.

The laying of 781 kilometres of gas pipeline with 42 inches diameter from Gabd – a point at Pak-Iran border to Nawabshah – will be completed in 15 months. Gas will be imported from Iran at the rate of $13 per MMBTU.

Pakistan is to primarily import 750 million cubic feet per day that would be injected in the power sector to help generate 4000 MW of electricity. Later on the flow of gas will be increased to 1 billion cubic feet gas that will generate 5000 MW of electricity.

The replacement of costly furnace oil being used as fuel in powerhouses with the imported gas will help save $1 billion per annum.

Pakistan and Iran have also resolved the issue of interest on the loan Tehran would extend. It was decided that Iran would extend $500 million loan and Pakistan would pay 3 percent interest on loan against 4 percent as demanded by Tehran.

Iran will also reduce the price of gas to be imported as against the price earlier finalised in gas sales purchase agreement. There is a clause in the agreement that if Pakistan arranges import of gas from other country at lower price then Iran would also do accordingly.

“We have struck deal with Turkmenistan for import of gas under TAPI gas line at a reduced price compared to the price of Iran.” Once the EPC gets signed the groundbreaking ceremony would be held as soon as possible so that the project could be materialised by December 2014.

ADB to provide $900m for coal power plant

The Asian Development Bank (ADB) will provide $900 million to the government for a new coal-fired power plant at Jamshoro to produce 600 megawatts of electricity. The bank will also finance the conversion of existing 800mw Jamshoro power plant, which is run on imported coal.

Klaus Gerhaeusser, director general of Central West Asia Department of ADB, said this during a meeting with the federal minister for water and power Ch Ahmed Mukhtar on Thursday.

Gerhaeusser asked him to ensure early start of the project so that it may be completed on time.

He said that the bank is aware of the importance of Diamer Basha dam (DBD) project for Pakistan and its construction would play a major role to ease the energy problem in Pakistan.

The case for financing the DBD project is under process and more talks will be held with Pakistani authorities on the financing of mega projects when technical team of the bank will arrive next week, he told the meeting.

The minister thanked him for extending financial assistance for coal and other power plants. He said that DBD is very important project to generate cheaper electricity and life line of the country’s economy.

He asked the ADB to perform its role as lead financer to complete this mega project without any delay.

The minister said that the government attaches high priority for construction of mega water and power projects to meet the future requirements and intends to generate inexpensive power through indigenous resources like water, coal and wind.

The DBD will generate 4500mw cheaper, clean and green energy having live storage of 6.4 million acres feet.

He added that ADB has been major financier of water and power sector projects of generation, transmission and distribution.

It is a resolve of the government to end the energy crisis and provide uninterrupted supply to the people of Pakistan for progress and prosperity, said the minister.

He stressed the need for early completion of the process for provision of funding for the DBD project. He briefed the meeting on the current power situation and the steps being taken to make the sector more efficient.

He also stated that recoveries are improving; line losses being reduced; reforms being implemented; energy conservation measures being implemented; and electricity theft being dealt with iron hands. He said people got relief in load shedding due to the steps taken by the government to overcome the crisis.

Nepra to determine upfront tariff for solar power projects

The National Electric Power Regulatory Authority (Nepra) has finally decided to determine the upfront tariff for solar power projects on the basis of proposed 23.2934 cents per kilowatt hour (kWh) as laid down by the Alternative Energy Development Board (AEDB).

An official document said Nepra has decided to initiate suo motu proceedings for determining upfront tariff for solar power projects on the basis of proposal received from AEDB in pursuance of Upfront Tariff (Approval & Procedure) Regulations 2011.

The Nepra has also decided to hold a hearing in this regard on February 27, 2013.

The upfront tariff will be based on the cost of generation and is net of any duties, taxes, cesses or other levies payable by the generation company in relation to its separate business of generation and sale of electricity.

According to the AEDB model, the useful life of the project is taken as 25 years, which would also be the length of the contract for the electricity produced.

Independent power producers (IPPs) are exempted from all taxes and duties; exemptions are also given from taxation of profit and gains derived from electric power generation under energy purchase agreement.

Moreover, IPPs would be given guaranteed grid access along with immediate land allocation for the project.

According to the model, the minimum and maximum installed capacity of generation is one megawatts and 100mw respectively, provided the authority may allow a deviation up to 10 percent. It may be mentioned here that government has successfully put in place the upfront tariff regime for wind power producers in 2011 that is being taken up by several potential investors.

Pakistan has an enormous potential of solar energy; most parts of the country are blessed with very favourable conditions for development of solar energy for power generation.

National Renewable Energy Laboratory (NREL), Golden Colorado USA in collaboration with USAID, PMD and AEDB carried out detailed analysis to determine solar energy potential in Pakistan.

The NREL study indicates that the theoretical solar energy potential for power generation in Pakistan is approximately 2.9 million megawatts.

In past, the federal government had asked the authority to finalise upfront tariffs for coal, sugar and solar power projects without delay to attract investment and bring into use over 12,000mw of generation capacity on the emergency basis.

Nepra came under criticism at a recent meeting of the Council of Common Interests (CCI) for not encouraging alternative sources of energy in view of the country facing over 40 percent electricity shortage throughout the year, affecting industry and economic activity.

The federal government also circulated minutes of the CCI meeting to put on record their opinions with directives to the cabinet division to pursue the power regulator to immediately finalise upfront tariffs for coal, solar and bagasse-based power projects.

PSO to curtail supplies to power sector

The Pakistan State Oil (PSO) on Thursday announced gradual curtailment of supplies on credit to the power sector.

The independent power producers (IPPs), which pay in cash, will not be affected, the PSO said in a statement.

An emergency meeting was convened at the PSO House by the chief executive officer and managing director of PSO to discuss the financial situation currently being faced by the national oil giant.

This situation has arisen due to the lack of payments by the power sector for the furnace oil, which is being supplied to them on credit.

The PSO requires at least Rs51 billion to retire its letter of credit this month; however, despite various promises by the Ministry of water and power, only Rs13 billion have so far been paid, leaving a whopping deficit of Rs37 billion for the current month only.

“This lack of payment has brought the nation’s largest and most profitable public company to its knees and may consequently lead to a breakdown in the oil supply chain, which will result in increased blackouts and power outages across the country,” the statement said.

Businesses look for alternative energy sources

Realising that power and gas supply continues to remain uncertain at least in the medium term, apparel sector is tapping into alternative sources of energy, revealed an interaction with various knitwear and garment exporters.

They are trying to generate energy from different fuels which suit them most both in terms of recurring cost and upfront investment. Some are burning coal directly to generate steam from their existing boilers; others have replaced low pressure with higher pressure boilers. Some entrepreneurs are using wood and a few agricultural wastes.

“We are facing acute shortage of electricity and natural gas,” said Adil Butt, chairman of Pakistan Hosiery Manufacturers Association. He said textile value added sector is aware of some very lucrative opportunities coming Pakistan’s way in coming years. He said GSP Plus (generalised system of preferences) status that is likely to be granted by European Union in 2014 would be a huge opening. “The sector would have to be fully prepared to accept that chance,” he said adding that technically the sector is ready but its productivity is badly hampered by power and energy shortages.

“We cannot let this opportunity go and are planning self-generation even if cost is higher than power and gas supplied by public sector,” he said adding that his company is producing gas from coal gasification plant that has recently been installed. This has enabled us to run our processing plants that run on gas only, he further added.

Former chairman Pakistan Readymade Garments Manufacturers and Exporters Association said his company generates power from diesel generators that produce expensive electricity but foreign buyers do compensate nominal increase in production cost. He said the garmenting sector consumes far less electricity than basic textile sector.

He said the global demand for Pakistani garments is on the rise. “The industry would have to overcome all deficiencies before 2014 to benefit from expected unlimited access to European Union. He said for socially compliant garment producers inflation is a larger worry than power shortages. “We have to keep the wages in line with the inflation and our workers get almost double the minimum wage set by the government.

A leading knitwear exporter M I Khurram said that he has replaced his low pressure boiler with a high pressure container at an additional cost of Rs100 million. “Now instead of gas I am using coal to generate steam that operates my turbines,” he said adding that coal gasification plant is very expensive and its efficiency is very low.

“There is no dearth of orders,” he said adding that prudent entrepreneurs accepted orders keeping in view the ongoing power and energy crisis. He said any default by Pakistani exporters on export shipments because of energy shortages bring bad name for the country and huge losses to the exporters. He said it would be unwise to go after orders until the enterprises develop alternate energy production capacities.

Former chairman PHMA Shahzad Azam Khan said that it is unfortunate that there is no public institution to guide entrepreneurs in acquiring most suitable alternate energy technology.

“The companies tried different technologies from liquefied petroleum gas (LPG) to wood or rice husk to produce power and energy before settling for one that suits them most,” he added. He said survival of value added sector is extremely crucial for industry and country; as there is likelihood of opening of US and EU markets for Pakistani textiles in coming years.

Khan advised apparel exporters not to depend on single buyer. “It looks convenient to work with one company but it is risky in the long run,” he said adding that all small and even large apparel sector companies that closed in past four years were supplying to a single brand only. When they withheld their orders these companies crumbled, he added. He said all companies doing business with four or more brands have survived in most adverse circumstances.

Wapda to start construction of Keyal Khwar hydropower project in April

The Water and Power Development Authority (Wapda) is to start construction of the 122 MW-Keyal Khwar hydropower project in April this year, said a Wapda spokesperson.

“Following the fulfillment of all prerequisites, including detailed engineering design, the prequalification of firms for civil and electro-mechanical works of the project is under process and is likely to be completed very soon,” he said.

Along with the Keyal Khwar project, Wapda is to start 14 projects in water and hydropower sectors, most of which are at an advanced stage of their completion.

The Keyal Khwar hydropower project is located on Keyal Khwar, a right tributary of Indus river in Dasu district of Khyber Pakhtunkhwa province. The estimated cost of the project is 180 million euros. German financial institution KfW is providing 97 million euros for the implementation of the project.

The consultants for Keyal Khwar hydropower project have already been appointed, while work on eight contracts for construction of offices, residential colonies, hostels, roads and other infrastructure in the project area has also been started.

Upon completion the Keyal Khwar hydropower project will contribute 426 million units of low-cost electricity to the national grid.

The project’s annual benefits have been estimated at Rs3.5 billion.

The spokesperson added that Wapda was implementing a least-cost energy generation and water storage plan to cope with the increasing needs of electricity and water in the country. Under the plan, as many as 26 projects of more than 21,000 MW power generation and 13 million acre feet water storage capacity are in various phases of their implementation.

Talks on $1.5 bn Pak-Iran gas pipeline begin

Pakistan and Iran on Monday initiated the critical dialogue on the engineering, procurement and construction (EPC) contract for the $1.5 billion gas pipeline and agreed Iran would construct two kilometres of pipeline per day, completing the 781 kilometres pipeline in 15-16 months.

The Iranian delegation, headed by deputy chief of Tadbir Company, took part in the talks while Pakistan’s side was led by secretary Ministry of Petroleum and Natural Resources and aided by Managing Director of Inter State Gas Systems (ISGS) Mobin Saulat and senior officials of finance and law ministries.

The talks will fine-tune the terms of references, scope of work, and cost of laying the pipeline per kilometre under the EPC contract. The pipeline will be laid from Gabd — a point at the Pakistan-Iran border — to Nawabshah. The pipeline that will be completed by December 2014 will first bring 750 million cubic feet gas per day and later on the gas flow will increase up to 1 billion cubic feet gas per day. The 750mmcfd gas will be injected to the power sector to generate 4,000MW of electricity and when the gas import will reach up to 1 bcfd, the electricity generation will increase to 5,000MW of electricity.

When this gas will replace the costly furnace oil being used by the power plants, the country will save about $1 billion a year. According to one of the top officials who attended the daylong talks, Pakistan has handed over the design of the pipeline to the officials of Tadbir Company, which has already started the process of constructing the pipeline in Iran.

“We have discussed the scope of work and the engineering methodology under which the Iranian company will lay the pipeline in the territory of Pakistan.” There are many bridges, compressors stations and many related things which are to be constructed while laying the pipeline, the official said.

Both sides will discuss today (Tuesday) the finances involved in the project and the loan of $500 million Iran has offered to help complete the project.

The official said the Pakistan side would take up the issue of interest rate at which Iran will offer the loan and its repayment schedule would also be finalised and on the third day of talks, both Pakistan and Iran would finalise the per kilometre price of the pipeline.

According to the officials concerned, the cost of laying the pipeline in Pakistan’s territory stands at $1.5 billion. Of this, 500 million dollars will be provided by Iran whereas the remaining amount would be arranged by Pakistan itself.