01 August 2013

Investing in Energy Today,

Our key to a brighter
tomorrow!
PRESENTATION AGENDA

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 THE PROBLEM
• Power shortfall = 4,000 MW – 6,000 MW per day

• Power shortages estimated to cost the economy 2% of GDP

each year

• Difference in production and sale price on average Rs 5/unit -

contributing to the circular debt issue

• Approx 4.1 million jobs and employment opportunities lost

since 2008, roughly 7.5 percent of the workforce

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 INSTALLED CAPACITY
COMPARISON BETWEEN PAKISTAN & INDIA

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 ELECTRICITY COST COMPARISON

Source: Regulatory Bodies 5

 INSTALLED CAPACITY & POWER GENERATION
Cumulative Installed Capacity: 22,797 MW
Ave. Annual Power Generation: 12,278 MW
Peak Generation achieved in July 2013: ~ 16,000 MW

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 PAKISTAN ENERGY CONSUMPTION 2010-2011*

* Graph based on Pakistan Yearbook 2010-2011

Source: Investment Guide, Punjab Power Development Board 7
 ELECTRICITY DEMAND & CONSUMPTION IN PUNJAB

In Punjab, at present, there is a electricity demand-supply gap of about 3,500

MW
Demand growing at 8% per year

DISCO Demand (MW) Supply (MW) Shortfall (MW)

LESCO 2,500 1,500 1,000

FESCO 1,250 800 450

IESCO 1,468 927 541

GEPCO 1,221 789 432

MEPCO 1,678 761 917

8,117 4,774 3,340

Source: Government of Punjab, Energy Department 8

 PUNJAB’S SYSTEM EFFICIENCIES COMPARED TO OTHER PROVINCES

Revenue Collection
Company Distribution Losses
Efficiency

IESCO (Punjab) 10.51% 95.92%

LESCO (Punjab) 13.23% 91.81%
GEPCO (Punjab) 10.72% 95.97%
FESCO (Punjab) 10.59% 97.04%
MEPCO (Punjab) 18.37% 95.82%
PESCO (KP) 37.40% 85.40%
HESCO (Sindh) 34.75% 59.81%
QESCO (Balochistan) 20.12% 57.67%
KESC (Karachi) 35.86% 88.7%

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Source: Government of Punjab, Energy Department
 MAJOR REFORM OF POWER SECTOR
The Power Sector had structural issues in the past, but the newly elected
government has taken bold steps to restore confidence:
1.Clearance of circular debt of Rs. 480 billion immediately
2.Decision to increase tariff to recover cost except targeted subsidy
3.Conversion of certain oil fired plants to coal to lower cost
4.Legislation for strict legal action against power & gas theft
5.New metering systems on grids/feeders to isolate theft
6.Decision to privatize most DISCOs and GENCOs
7.Institutional Reform and capacity building initiated

With these bold decisions, subsidies will be eliminated within 2-3 years
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 SPECIFIC ACTIONS IN THE FIRST 50 DAYS
1. Formulation of New Energy Policy
2. Legal action against power & gas theft initiated
3. Inauguration of New Bong Hydroelectric Project (84 MW)
4. Revival of Nandipur Power Project (425 MW)
5. Progress on the G2G LNG Supply between Pakistan & Qatar
6. Attracting Chinese investment in Punjab Power Sector

“This is just the beginning of our journey to achieve sustainable

energy security at affordable cost”

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PUNJAB ENERGY STRATEGY
AND
INVESTMENT OPPORTUNITIES

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PUNJAB ENERGY STRATEGY

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 PUNJAB’S INDIGENOUS RESOURCES

Potentia Completion Investment

Source l Time Technology Leaders
(MW) (Years) (M$/MW)

Denmark, Sweden,
BIOMASS 1,200 1.5 - 2.0 1.5 - 2.0
Spain

BAGASSE 1,000 2.0 1.0 - 1.2 India, Brazil, China

SOLAR 1,000 1.5 - 2.0 - China, USA, Germany

HYDEL 800 2.0 - 3.0 2.8 - 3.7 China, India, USA

4,000 14
 Co- Generation
Division Mills
Potential MW
BAHAWALPUR 7 256
DG KHAN 5 122
FAISALABAD 16 306
GUJRANWALA 3 62
LAHORE 5 81
MULTAN 1 12
SARGODHA 6 109
SAHIWAL 3 53

15 TOTAL 46 1,000
• India – 158 plants generating 2,666MW another 70 in
pipeline
• High Pressure Co-generation key to tapping the potential
– 67/110 Bar

• Conversion to high pressure boilers (67/87 kg/cm2) reduces

power consumption by ~25-27%
– Enhances Bagasse availability
– Extends power generation beyond crushing season – 2
months

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 BAGASSE BASED CO-GENERATION
Case Study – Indicative Returns
(based on NEPRA determination)

Levelized Upfront Tariff Plant size MW 20

10.6204
¢/kWh Cost/MW MUSD 1
Tariff for first 10 Years Total Cost MUSD 20
11.97
¢/kWh Power available for sale
Tariff from Year 11-30 18.3
8.07 MW
¢/kWh Operating Days 164
RoE @ 17% ¢/kWh 0.9395 Units sold in a year 72,138,600
Net Profit/year 677,734.79
Pay Back Years 5.90

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 CROP BIOMASS POTENTIAL IN PUNJAB
Minimum
Gross Net
Area Under Consumed Available for
Biomass Quantity of Collectable
Crop Crop Locally Power
Type Biomass Biomass
(M. Acres) (M. Ton) Generation
(M. Ton) (M. Ton)
(M. Ton)

Cotton Cotton Stalk 5.705 11.43 10.288 5.144 5.144

Wheat Wheat Straw 16.154 18.63 16.764 15.088 1.676

Rice Straw 4.869 4.382 2.191 2.191

Rice 4.229
Rice Husk 1.39 1.252 0.250 1.002
Sugarcane
Sugarcane 1.897 6.88 6.44 6.44 -
Waste
Stalk 5.163 4.646 4.646 -
Corn 1.492
Cobs 1.721 1.549 0.620 0.929

Total (Excluding Bagasse) 43.204 38.881 27.940 10.942

 CROP BIOMASS RESOURCES IN PUNJAB
(ZONE WISE)
Gross Collectable
Crop Biomass
(M. Ton)

Cotton 11.43

Wheat 18.63

Rice 6.26

Maize 6.884

In addition, other crops also have

potential resources
 ZONES OF BIOMASS POTENTIAL
Biomass Electric
Generation
Zone Code District Clusters Industrial Cluster Potential Potential
(M. Ton) MW
Cotton Industrial Estate
C-1 R.Y.Khan 0.602 72
R.Y.Khan
Bahawalpur & Ahmadpur East Road
C-2 1.321 157
Bahawalnagar & Hasilpur
Multan Industrial
C-3 Lodhran & Multan 0.982 117
Estate
C-4 Vehari & Khanewal Mian Channu 1.328 158

Muzaffargarh, Jampur Road D.G

C-5 0.911 108
D.G.Khan & Rajanpur Khan
Rice R-1 Sialkot & Narowal Sialkot 0.510 61
R-2 M.B.Din & Hafizabad Hafizabad 0.476 57

Sheikhupura, Nankana Lahore Sheikhupura

R-3 0.488 58
Sahib & Lahore Road

R-4 Gujranwala & Gujrat Gujranwala 0.946 112

 BIOMASS POTENTIAL OF ZONES

Electric
Biomass
Industrial Generation
Zone Code District Clusters Potential
Cluster Potential MW
(M. Ton)

Mix Okara Depalpur

Cropping M-1 Okara & Kasur 0.953 113
Road

M-2 Sahiwal & Pakpattan Sahiwal 0.873 104

Faisalabad & Khurrianwala,

M-3 0.417 50
T.T.Singh Shahkot
Chiniot, Jhang,
Sargodha
M-4 Khushab & 0.536 63
Industrial Estate
Sargodha

Bhakkar, Layyah & Sikindarabad

M-5 0.400 47
Mianwali Mianwali
 COTTON ZONE

Biomass
Code Districts Clusters Potential
(M. Ton)

C-1 R.Y.Khan 0.602

Bahawalpur &
C-2 1.321
Bahawalnagar
C-3 Lodhran & Multan 0.982

C-4 Vehari & Khanewal 1.328

Muzaffargarh, D.G.Khan &

C-5 0.911
Rajanpur
 MIXED CROP ZONE

Biomass
Code Districts Clusters Potential
(M. Ton)

M-1 Okara & Kasur 0.953

M-2 Sahiwal & Pakpattan 0.873

M-3 Faisalabad & T.T.Singh 0.417

Chniot, Jhang, Khushab &

M-4 0.536
Sargodha

M-5 Bhakkar, Layyah & Mianwali 0.400

 RICE ZONE

Biomass Potential
Code Districts Clusters
(M. Ton)

R-1 Sialkot & Narowal 0.510

R-2 M.B.Din & Hafizabad 0.476

Sheikhupura, Nankana Sahib

R-3 0.488
& Lahore

R-4 Gujranwala & Gujrat 0.946

SEASONAL AVAILABILITY (MAJOR CROPS )
 Product JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Wheat
 

Cotton
         

Straw              
Rice

Husk        

Stalk          
Corn
Cobs        
SEASONAL AVAILABILITY (MINOR CROPS)

 Product JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Mustard
 

Millet          

Barley              

Groundnut        

Gram          

Potato
       

Sunflower
 • Generation of at least 300 MW from this source
• Stand alone biomass or biomass-coal mix plants
• Proposed plant sizes is 5 MW to 30 MW across
the crop zones ideally in industrial clusters
• Detailed survey of agriculture waste resource
resource
• Regulatory framework to establish zones and
enforce territorial restrictions
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 REGULATORY FRAMEWORK
• Punjab Industries (Control on Establishment and Enlargement)
Ordinance 1963
– Sec. 3 & 4: Territorial restrictions on industrial undertakings
(biomass plants)
– Sec. 8: Penalty of imprisonment up to 1 year or fine or both
• Punjab Environmental Protection Act 1997
– Sec. 11: Burning of crop residue in field can be prohibited
– Sec 17: Penalty of up to Rs. 5 million fine
• New biomass specific regulatory framework as well
 BIOMASS POWER GENERATION
Case Study – Indicative Returns
(based on estimates)

Levelized Upfront Tariff Plant size MW 10

12.86
¢/kWh Cost/MW MUSD 1.8
Tariff for first 10 Years Total Cost MUSD 18
13.7744
¢/kWh Power available for sale
Tariff from Year 11-30 8.8
9.5730 MW
¢/kWh Operating Days 292
RoE @ 17% ¢/kWh 1.18 Units sold in a season 61,670,400
Net Profit/season 729,976.16
Pay Back Years 4.93

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INVESTMENT OPPORTUNITIES IN
HYDEL & SOLAR

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 HYDEL POWER POTENTIAL IN
PUNJAB
Head works/ Barrages 14

Main Canals 24

Small Dams 49

Hydro Potential: On Rivers 325 MW

Hydro Potential: On Canal 475 MW

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33
 SMALL HYDEL POWER GENERATION
Case Study – Indicative Returns
(based on feasibility study tariff ) run of canal distt. sahiwal

Levelized Upfront Tariff Plant size MW 4.8

7.2085
¢/kWh Cost/MW MUSD 2.57
Tariff for first 10 Years Total Cost MUSD 12.32
9.4895
¢/kWh Power available for sale
Tariff from Year 11-30 4.8
2.9385 MW
¢/kWh Operating Days 365
RoE @ 17% ¢/kWh 1.1040 Units sold in a year 42,048,000
Net Revenue/year 463,386.12
Pay Back Years 5.32

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35
 • One of the best Solar Irradiation in South Punjab 5.6 to
6.4 KwH/Sqm/Day
• Effective utilization hours per year >2,000
• 10,000 acre of land allocated for Solar Park at Cholistan
• Named “Quaid-e-Azam Solar Park”
• 2,500 acre in Maroot district Bhawalnagar and 7,500
acre at Deengarh road tehsil Yazman
• 220KV line 45 Km from Yazman
• 5 projects (~300MW) currently parked in Cholistan
• Interest from Chinese Investors
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 40 Km 5.6
• One of the best Solar Irradiation in South Punjab fromto
BWP
6.4
kW/Sqm/Day 140 KM from Multan

• Average sunlight availability 6-8 Hrs/day

• over 2,000 effective utilization hours/yr
• 5,000 acre of land allocated for Cholistan Solar Park
• 2,500 acre each in Maroot district Bhawalnagar and
Deengarh road tehsil Yazman
• 220KV line 45 Km from Yazman
• 5 projects (~300MW) currently parked in Cholistan
• Interest from Chinese Investors
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38
• Snowden Study indicates reserves of 596 MT – 443 MT
assured. Currently mined ~ 1.0 MT
– Jhelum, Chakwal, Khushab & Mianwali

• Rank-D, Bituminous category as against Sub-bituminous

ascertained earlier
• Can produce 3,700 MW for 30 Years
• Punjab Minerals Company (PMC) to develop and manage
local coal resources
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 LOCAL COAL BASED POWER GENERATION
Case Study – Indicative Returns 200 MW
(based on NEPRA determination)

Levelized Upfront Tariff Plant size MW 219

9.64
¢/kWh Cost/MW MUSD 1.16
Tariff for first 10 Years Total Cost MUSD 254.8
11.155
¢/kWh Power available for sale
Tariff from Year 11-30 MW 199.29
6.818
¢/kWh
RoE @ 17% ¢/kWh 0.85 Units sold in a year
1,745,780,400
Net Profit/year
14,874,049.01
Pay Back Years 5.17

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 BRIDGING THE ENERGY GAP – THE PLAN

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 BRIDGING THE ENERGY GAP – THE PLAN

Link

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ENABLING POLICIES AND INCENTIVES

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ENABLING POLICIES & INCENTIVES
REGULATORY STRUCTURE

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 ENABLING POLICIES & INCENTIVES
REGULATORY STRUCTURE

CONTRACTUAL MECHANISM

• Guaranteed power purchase for IPPs

• Upfront tariffs
• Sovereign Guarantees
• Standardized IA, PPAs
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 ENABLING POLICIES & INCENTIVES
FINANCIAL & FISCAL INCENTIVES

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 ENABLING POLICIES & INCENTIVES
FINANCIAL & FISCAL INCENTIVES

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 POLICY INTERVENTIONS PLANNED - PUNJAB

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 POLICY INTERVENTIONS PLANNED - PUNJAB

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 ADDITIONAL INTERVENTIONS BEING PROPOSED

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 INDICATIVE WHEELING CHARGES CALCULATION

NTDC
LESCO Charges Charges TOTAL Charges
  Rs/unit Rs/unit Rs/unit
If only 132KV
involved 0.58 0.173 0.753
If both 132
KV&11KV
involved 0.62 0.173 0.793

NTDC WHEELING
CHARGES  
Fixed -
Rs/Kw/Month 102
Variable -
Rs/KwH 0.233

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 ADDITIONAL INTERVENTIONS BEING PROPOSED

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 PUNJAB ENERGY – A SMART INVESTMENT

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54
 Figures are Approximations.
 Not drawn to scale.
 Land ownership, public /
private, might have changed..
t an
k is
Pa wer
Po rk
Pa
1,800 Acres

Link
 Common Water Supply
Cooling Water Intake
Future
Expansions

Future
Shipping and
Common Coal

Ash Disposal and Recycling it into Useful By Products

Expansions

660 MW IPP
Supplier

Separate Coal Storages (Live) for each IPP

Common Housing &

660 MW IPP

Common Coal Storage (Dead Stock)

(maintained by each IPP separately)

(maintained by Coal Supplier)
660 MW IPP

Common Switchyard
660 MW IPP
Breakwater

660 MW IPP
Jetty

660 MW IPP

Amenities
660 MW IPP

660 MW IPP
Pakistan Power
Park: Typical
Configuration
Subject to
Consultant’s
review.
Link