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Nepra determines wind power upfront tariff at Rs13.19 per kWh

The National Electric Power Regulatory Authority (Nepra) has determined the wind power upfront tariff for 2013 at a levelised rate of Rs13.1998 per kWh (unit) as the tariff determined in October 2011 expired on December 31, 2012.

According to the determination issued on Friday, per unit tariff has been calculated at Rs15.5602 per unit for the first ten years of operation, which will be reduced to Rs7.0775 per unit from the 11th to 20th year of operation.

The tariff will be limited to the extent of net annual energy generation supplied to the power purchaser up to 31 percent net annual plant capacity factor.

Net annual energy generation supplied to the power purchaser in a year, in excess of 31 percent net annual plant capacity factor, will be charged at a modified tariff.

For net annual plant capacity factor ranging between 31-32 percent, 75 percent of the prevalent tariff will be applicable.

For net annual plant capacity factor ranging between 32-33 percent, 50 percent of the prevalent tariff will be applicable. For 33- 34 percent capacity factor, 25 percent of the prevalent tariff, for 34-35 percent, 20 percent of the tariff and for net annual plant capacity factor above 35 percent the tariff will be 10 percent of the prevalent tariff.

The determination adds that the power purchaser will not take the wind risk as relevant wind power generation companies will be required to account for it.

The companies eligible for the tariff will be the ones recommended by the Alternative Energy Development Board (AEDB).

In addition, those whose proposed plants and machinery are confirmed to be new and of acceptable quality by the AEDB and with an installed capacity within the range of five MW to 250 MW.

Further, companies having the power purchaser’s consent for electricity procurement, along with a certificate from the purchaser that it will have the necessary infrastructure to evacuate all the power supplied by the applicant will be eligible for the tariff.

The authority has advised that the choice to opt for the tariff will only be available up to 365 days from the date of its determination by the authority. Further, the tariff will only be valid for approvals given for the first 500 MW of companies.

The companies opting for the tariff will have to achieve financial close by September 30, 2014. The upfront tariff granted to any company will no longer remain applicable, if financial close is not achieved by the relevant company by September 30, 2014, or a generation licence is declined to that company.

Govt to release Rs45 billion for easing power crisis

Setting aside the tremendous pressure from International Financial Institutions (IFIs), the caretaker government here on Friday announced that it would provide additional Rs45 billion as subsidy to the power consumers for the current and next months to ensure smooth supply of furnace oil for substantial hike of about 3500MW to cope with the crippling loadshedding.Despite the pressure being exerted by multilaterals, the government has decided to provide Rs45 billion additional subsidy to power consumers as Rs10 billion for ongoing month and Rs35 billion for the month of May to arrange fuel for plants to overcome power outages.

SMEs save Rs61m through energy conservation steps

Small and medium sized enterprises (SMEs) mostly from textile sector saved an average nine percent of their energy costs, equaling more than Rs61 million, due to energy saving measures implemented in 22 companies since the beginning of 2012, said a statement.

These measures were taken under the project titled ESPIRE, a cooperation project of bfzgGmbH (Germany) with Pakistani business associations and small and medium enterprises development authority (Smeda).

The participating factories from Karachi, Lahore, Faisalabad and Sialkot together realised energy savings that equal a production capacity of around three megawatts and are worth more than Rs61 million per year.

“The consultants we assign help companies to identify where energy is wasted and support them to reduce the wastages,” explained Salahuddin Farrukh, national project coordinator of bfzgGmbH, a largest private provider of vocational training in Germany.

Farrukh added that the achieved savings were monitored for six months and that the factory staff was trained to identify energy wastages.

Pakistan Hosiery Manufacturers and Exporters Association (PHMA) – one of the project partners – is working hard to support their members even more and beyond the time of the partnership project.

“PHMA has established a technical support cell with help of bfzgGmbH to provide services related to environment, energy and production efficiency with latest measurement equipment and trained staff,” said PHMA Chairman Jawed Bilwani.

He said that the association planned to widen the scope of their services in the near future and asked their entire member textile units to get in contact with PHMA office to take advantage of the services provided.

Project ESPIRE was started by the vocational training and development centers of the Bavarian Employers’ Association (bfz) gGmbH.

In Pakistan, the trainer is cooperating with PHMA, Pakistan Readymade Garments Manufacturers and Exporters Association, Towel Manufacturers Association of Pakistan, Federal-B Area Association of Trade and Industry, North Karachi Association of Trade and Industry, Korangi Association of Trade and Industry, and SMEDA.

The project is funded by the German Federal Ministry for Economic Cooperation and Development (BMZ).

US firms keen to invest in Pakistan’s energy sector

American companies have shown interest in investing in the energy sector of Pakistan, considering its great potential in the power, oil and gas sectors.

This was stated by Miles Young, chairman of the US-Pakistan Business Council (UPBC), at the meeting with members of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday.

The head of the visiting delegation said that US companies, including GE, Shell and other companies have already initiated their projects in Pakistan.

The business council expressed concern over the ongoing energy crisis in Pakistan and expressed its keenness to resolve it, he said, adding that UPBC represents major multinational companies of the United States in Pakistan and the delegation is on a fact-finding mission, seeking joint ventures and bilateral trade promotion during the visit.

Young said that the lowest volume of foreign direct investment (FDI) from the US to Pakistan during the recent years was not due to any particular reason but it was due to economic meltdown across the world that also affected the US.

He said that it was a misconception that the United States had stopped FDI to Pakistan in recent times and should not be taken negatively. He said that the biggest challenge for the council was to present Pakistan positively among the US investors as foreign media was negatively presenting Pakistan.

Young said that the business council is working independently and has no links with the US government. He suggested having dialogue between the two forums on political and economic issues. By and large, it was a responsibility of the business community of the two countries to promote bilateral trade, he said.

He said that he is very much ambitious to boost trade and investment between the two sides. “We want to do business with Pakistan because it is a country of future,” Young said, adding that despite the fact that security is the main concern, the US investors and the energy crisis is another issue here but the UPBC was committed to Pakistan.

Executive Director, UBBC, Esperanza Gomez, said that Pakistani exporters should avail the GSP facility offered by the US government and the UPBC was ready to assist Pakistani exporters in utilising this facility of preferential tariff on many items.

She also said that UPBC could also help Pakistani investors to have joint venture with their US counterparts.

In his address of welcome, FPCCI acting president Shaheen Ilyas Sarwana said that the US is a major trade and investment partner of Pakistan, yet the volume of trade between the two friendly countries does not match the potential of trade.

He said that Pakistan needs trade and not aid. Sarwana appreciated the support and assistance of US AID in various projects initiated in Pakistan. He mentioned that Pakistan has remained in the forefront of war against terror, which badly hurt its economy particularly the foreign investments. He also objected on the traveling advise for the foreigners given by the US and European Union though unnecessarily sometimes. He also criticized the foreign media’s role in portraying negative image of Pakistan. He urged the US government to come forward to play an instrumental role taking out Pakistan from the crises. He pointed out that the volume of bilateral trade between the two countries is $4.728 billion as compared to $5.221 billion last year. Pakistan’s export to USA is $3.938 billion comparing to $4.102 billion last year.

President Pakistan US Business Council (PUBC) Iftikhar Ali Malik has proposed to the visiting delegation to become instrumental in setting up joint ventures in various sectors especially in textiles as big potential exists in textiles. He further said that energy sector is another big potential area of investment for the US entrepreneurs guaranteeing big returns on their investments.

President KCCI Muhammad Haroon Agar urged to formalize institutional relationship between KCCI and the council on the pattern of Pak-Afghan Joint Chamber and ICC-Pakistan-KCCI World Chambers Federation Commission. He voiced that U.S. civil assistance to Pakistan should transform to trade and market access. “We expect US to help Pakistan to address the economic challenges, energy crises, more investment, technology transfer, education and training, scientific research and infrastructural development,” Agar said.

Gas to power sector the only solution to energy crisis

One decision that the caretaker government can take to resolve the prevalent power crisis in the country is to allocate sufficient gas to power sector. The present gas allocation policy dictates that power sector should be put on top of the merit order after residential customers.

However, this policy is not being followed in letter and spirit.

As a matter of fact, a handful of large businessmen are blessed with gas allocations for their power plants in blatant violation of the current and previous gas allocation policies.

According to the conservative estimates, these well-connected business tycoons are getting as much as 250 million metric cubic feet per day (mmcfd) gas for power generation, wasting a precious national resource using small scale and low efficiency generating plants.

The power utility in this area serving 20 million people including 45,000 industrial units is getting only 120 mmcfd.

As a result of this, power utility is left with the only option to burn more furnace oil and electricity, generating almost four times more expensive electricity, resulting in substantially higher tariff, additional burden on the federal government in shape of higher tariff differential subsidy and ever-growing oil import bill.

All this is happening for the benefit of a handful of influential businessmen at the cost of nation’s economic sustainability.

Prudence demands that all such allocations for captive power plants should be cancelled immediately and gas so released be supplied to power utilities.

Advantages of this simple though politically tough decisions are immense; country’s gas-fired generation capacity will be fully utilized, resulting in reduction in power outage; government’s oil import bill will go down substantially; the cost of electricity generation will go down by one fourth; government’s expense on tariff differential subsidy will decrease drastically; and consumer tariff will be stable for the foreseeable future.

The circular debt issue will be addressed largely by taking just this one step.

These tangible benefits provide enough justification to the government to move swiftly and do the right thing. After all, it is government’s responsibility to ensure such public policies that focus on whole community rather than making a few richer.

In case of gas allocation, the policy seems alright but the execution is lacking and someone has to take the bull by the horn sooner or later.

The present situation is simply not sustainable.

Government does not have the resources to fund tariff differential claims of the power sector and power plants are shutting down as a result of severe cash flow crises.

The situation is getting worse by the day and the country’s economic progress is retarded to say the least.

We are simply heading towards the worst economic and social disaster and unfortunately we don’t have the time to waste for the new elected government to take charge of the situation.

The caretaker setup has the responsibility and the opportunity to make one profound decision that would make so many things right.

Whether they act boldly or shy away from their core responsibility will determine the mettle of this so called competent caretaker setup.

LCCI urges govt to resolve energy crisis

The Lahore Chamber of Commerce and Industry (LCCI) on Tuesday urged the caretaker government to take steps to resolve Punjab’s energy crisis in order to prevent civil disobedience.

LCCI President Farooq Iftikhar was presiding over a meeting of chambers of commerce and trade and industrial associations in Punjab. A large number of trade and industry representatives were also present on the occasion.

The participants were of the view that the non-availability of electricity and gas has pushed trade and industry on the verge of collapse, while bankruptcies and capital flight have become the order of the day.

A number of industrial units have already shifted their operations abroad, while others were planning to shut down their units.

The trade and industry representatives said that the government should share short and long-term solutions of the energy crisis with the private sector, as unscheduled power outages have destroyed the production schedules.

Pakistan lags far behind India,China in wind power generation

As Pakistan grapples with energy shortages, its neighboring countries are consistently adding wind power to its national grid. China has added 62,000 megawatts since 2001 and India 11,500 MW, while Pakistan’s first 50MW wind power projects started production only this year.

Power sector expert Mohsin Syed said India and China faced even higher energy shortages than Pakistan as their economies grew at a very rapid pace, increasing their domestic and industrial power. Their economies would have been in same dire state as that of Pakistan, had their planners showed similar lethargy as exhibited by Pakistani power planners, he added.

He said according to the Global Wind Energy Council data India entered the new millennium with an installed wind power capacity of 220 MW only. He said the Indian economy was on move and their planner hurried to add 1,256 MW in 2001 and by 2006 they had an operative wind power generation capacity of 6,270 MW. He said in the next six year, they added 10,000 MW wind energy and are sitting on cumulative wind power of 1,6370 MW.

Syed said China increased awesome wind power capacity in less than eight years. He said in 2001, total installed wind power in China was 404 MW that at the end of 2012 stood at 6,2364 MW.

In other words, he added the Chinese only through wind power have added three times more power generation capacity than the entire power generation capacity of Pakistan. Now, they are producing huge zero cost electricity (excluding initial financial cost that would be paid off in few years).

He said it is worth noting that till 2007 India was far ahead of China in wind power generation when it was producing only 5,871 MW of wind power against India’s 7,845 MW. The Chinese, however, continued multiplying its capacities in next three years, adding over 6,000 MW in 2008, 12,000 MW in 2009 and 20,000 MW in 2009. They exploited every wind corridor easily accessible in China and are now targeting difficult terrains, he added.

Energy expert Mian Fazal said that Pakistan’s first wind power plant of 50 MW was inaugurated in December 2012 and started full production this year. He said wind power potential of the country has long been identified but the regulators never bothered to remove the bottlenecks that irritate investors.

He said official documents reveal that the wind power potential in the coastal belt of Sindh and Balochistan is more than 50,000 MW, while Punjab at Kalan Kahar has a wind corridor capable of producing 1,000 MW.

Engineering entrepreneur Almas Hyder said that five years back he negotiated a piece of land near Pakistan Steel Mill, and was talking to an Iranian supplier for the equipments needed for 6.5 MW plant.

He said he then requested the authorities to wheel the power produced to his industries located in Lahore. He said that the authorities said that there are no rules for wheeling. The National Electric Power Regulatory Authority, he added, has not fully spelled the tariff for wind power project.

He said numerous private sector investors from power-starved Punjab will line up to invest in wind power if the wheeling of power is allowed. He said this simply means that the power produced at coastal area is provided to the National Transmission and Distribution Company that should be guaranteed to be available to the investors’ manufacturing facility from supplies in upcountry.

Energy experts point out that increasing power capacity is a capital intensive and time consuming job. The hydroelectric projects take between 5 to 15 years for completion and the costs are high.

The thermal projects could be made operational in 3 to 4 years. The project cost is relatively much lower but if the fuel used is furnace oil or diesel the operational cost is prohibitive.

Coal-based power plants are relatively cheaper, which could be operational in 3,048 months at half the cost of furnace oil.

The wind power plants can be installed in shortest period of 12 to 18 months and the major cost is the price of the land. The running cost of these power generation plants is almost zero as they are run on wind.

IBRD to give Pakistan access to Clean Technologies Fund

The World Bank has shown its consent to support Pakistan in order to access the Clean Technologies Fund (CTF) of the total $4.9 billion for the developing countries of the world.

According to an official document, the newly-created ministry of climate informed the ministry of industries about the World Bank’s support to the country to get fund. The fund is disbursed as grant highly concessional loans and risk mitigation instruments.

However, to get this loan, Pakistan needs to prepare an investment plan under which the country has to cover the environment-related issues of the industries. The investment plan include the indicative technologies, including low carbon actions, addressing the power sector, including renewable energy as well as increased efficiency in generation and transmission distribution. This will also help the country overcome the electricity crisis, it revealed.

In transportation, in particular, model shifts to public transportation, improved fuel energy, fuel switching and large-scale adoption of the energy-efficient technologies and other demand management techniques in the industrial and residential building sectors.

The CTF fund is provided to those developing countries with positive incentives to scale up the demonstration, deployment and transfer of technologies, which have a high potential for long-term greenhouse gas emissions whose presence in the atmosphere prevent heat to escape from earth and cause greenhouse effect.

The CTF investment plan for Pakistan may be tailored to the country’s needs and requirements for integration into the overall national development objectives. The following areas are likely to be included in the CTF investment plan for Pakistan.

It includes waste management in the overall investment plan for project financing for Pakistan as this issue needs to be addressed. Private sector to be looped in, to seek ideas on energy efficiency for industrial technologies, industrial energy efficiency to be tackled by conducting energy audits on the pattern NPO is presently doing for many industries like steel and fertilisers.

Technical capacity building of all stakeholders will be conduct for the best utilisation of the CTF through local conferences / workshops. Proper institutional mechanism should be defined with a CTF steering committee on the top and sectoral technical committees to analyse the request before taking a decision for disbursement of the funds, it said.

The ministry of industries prioritise, sugar, cement, fertiliser, textile, leather, paper and pulp, steel and bricks in industrial sectors. In the energy sector, the industry recommended renewable / alternative energy, energy efficiency, energy distribution and cogeneration as priority areas, while in the waste management, recycling / composting, energy from solid waste are the main areas where work should be started on priority basis.

A similar kind of project called “Clean Development Mechanism (CDM)” was carried out by UNIDO in collaboration with the ministry of environment in January 2005 when Pakistan deposited its instrument of accession to the Kyoto Protocol.

2.36MW power house starts operation

The Power House No. 3 of Satpara Dam project with an installed capacity of 2,360 kilowatts on Friday started power generation, said an official statement.

The under-construction power house no. 4 with an installed capacity of 1.40 megawatts is also scheduled to go into operation by the end of this month.

With completion of these two power houses, Satpara Dam Power Complex will attain the installed capacity of 17.36 megawatts.

Power House No. 3 and 4 utilise the water used for running the power house no. 2, as a cascade system for electricity generation.

It may be mentioned that power house no. 1 and 2 of Satpara dam project have been in operation since October 2007 and December 2008, respectively, and have contributed over 140 million units of low-cost hydroelectricity, providing much-needed relief to the local population.

Satpara dam – the first-ever mega water and power project in Gilgit Baltistan – is located in the vicinity of Skardu town. The project consists of three components including a dam, irrigation system and a power complex comprising four power houses.

The dam was completed in July 2010 and the irrigation system in 2012. The United States Agency for International Development provided a grant of $26 million to help complete Satpara dam project.

The dam has a water storage capacity of 93,000 acre feet to irrigate more than 15,000 acres of land. The project is also providing 3.1 million gallons of potable water per day.

FPCCI concerned over growing energy shortage

The country’s apex trade body has expressed concerns over growing energy shortfall in summer and further hampering of industrial production.

In a statement issued on Friday, Shaheen Ilyas Sarwana, acting president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), expressed concern over the worsening energy situation in all parts of the country – in particular the city of Karachi – with the onset of summer, and the effects on trade and industry.

Meanwhile, KESC has refuted the allegations of industrialists and termed it baseless.

A statement of the power utility said that all the power units of the utility being run on the furnace oil have been provided furnace oil on a regular basis.

Sarwana said that it is no secret that Pakistan has been suffering from a serious energy shortage over the past few years, which has inflicted colossal damage on production and business activities throughout the country.

“However, in the past one week, the energy situation has worsened visibly, which has led to further problems for the business community in meeting export orders and fulfilling their trade commitments,” he said.

In particular, Karachi is witnessing a surge in power outage, which has led to unfortunate interruption in business activity, he said. The industrial areas of Karachi are now facing six to eight hours of power outage, which is extremely counterproductive, since Karachi is the hub of business activity for the country, and the biggest port of Pakistan.

“Industrialists are always the first to settle their utility dues, and this sector has not indulged in power theft,” the acting president said.

Sarwana said that the government must take urgent notice of the situation, and urged all stakeholders, including Karachi Electric Supply Company and Sui Southern Gas Company to resolve the matter of gas supply amicably, so that the problems confronting trade and industry could be averted.

He said that the business community was already functioning under severely problematic conditions, such as bad law and order, cutthroat competition in international markets and a general state of political and social instability. The added strain of deterioration in the energy situation will deal a further blow to these conditions, and cause further discontent among the businessmen of the country, he added.