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IMPLICATIONS OF RENTAL POWER PROJECTS FOR PAKISTAN

By Mian Muhammad Zulqarnain AAMIR DMG 91 st National Management Course. Dr Imtiaz Bokhari. Sponsoring DS. IMPLICATIONS OF RENTAL POWER PROJECTS FOR PAKISTAN. 6 th Oct 09. Talk of the Town Energy crises-Historical perspective Power Scenario- Today Power production - Made easy

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IMPLICATIONS OF RENTAL POWER PROJECTS FOR PAKISTAN

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  1. By Mian Muhammad Zulqarnain AAMIR DMG 91st National Management Course Dr ImtiazBokhari Sponsoring DS IMPLICATIONS OF RENTAL POWER PROJECTS FOR PAKISTAN 6th Oct 09

  2. Talk of the Town • Energy crises-Historical perspective • Power Scenario-Today • Power production-Made easy • PMLN & PPP • Analysis • Conclusions • Recommendations Sequence

  3. Talk of the Town Hue & Cry Screaming & Shouting

  4. Historical Perspective “Policy makers have a tendency to act in the field of Energy during extreme crises when serious shortage appears.” Soon after 1947 India switched off Power to Lahore. Warsak Dam and few others on Canals in Punjab emerge as a result. Terbela & Mangla were proposed viable & economical when Oil was selling at $3 a barrel. Hydel:Others::80:20Source: www.wtrg.com/prices.htm Energy Crises- A Historical Perspective Power Policy 1994 Result of economic growth of eighties due to the US$ Afghan war brought. Huge incentives; electric Results. Tilt away from Hydel. Power Policy 1998Blurred Vision and Approach. Power Policy 2002Enhanced growth due to inflow of US$ as result of “U turn” under BUSH Doctrine “With us or Against us”

  5. 2003-04 Growth 7.3%. Power demand 3% 6% 9% Break even reached in 2005 instead of projected 2007. 50 new power projects totaling 12,141 MW launched from Feb 2004 to June 2007. Operation from Oct 2008 to Dec 2015. Ghazi Barotha Dam 1450 MW Historical Perspective “Not a single unit of power was added in the last regime or why the generation capacity was not increased to keep up with demand” Pre 1994 era Shortage of up to 2000MW 1994 Power Policy incentive: Capacity Payment. Government paid the investors 60 percent of the capacity irrespective of use, 6.1 cents/KWh upfront tariff. 2001-20033000 MW surplus with all financial implications. WAPDA went RED. Power, once generated, cannot be stored; it has to be consumed. Attempt to sell to India failed due to 2002 stand-off. Energy Crises- A Historical Perspective

  6. Total Capacity 17529 MW Dependable 16192 MW Generation 12551 MW Peak Demand 15663 MW Power Scenario Today Source: MD Pepco Presentation to BOI Nov19,2007 & Minister's presentation to the cabinet July 2009

  7. Power Scenario Today Power Production Technologies Power Scenario Today F.oil Hydro Gas Nuclear Coal Source: Associated Consultant engineers 9000 6500 5800 450 150 MW

  8. Power Scenario Today Power Production Technologies-World Averages Power Scenario Today F.oil Hydro Gas Nuclear Coal Other 8 Source: PEPCO

  9. Power Scenario Today ConsumptionPatterns-Non Productive Power Scenario Today Average Industrial Consumption World 42%China 80% Domestic Commercial Industrial Agriculture Other 9 Source: PEPCO

  10. Power Scenario Today Load shedding Power rationing OR Fuel rationing Source: PEPCO

  11. Power Scenario Today ShortageWrongly Perceived Source: PEPCO

  12. RentalPowerPlants An RPP is a moveable structure consisting of Large generators which may be hooked with Distribution or Transmission of national Grid. They produce power anywhere between 50 to 200 MW. Power Production Made easy IndependentPowerProducer An IPP is an independently owned company with electricity generating assets (power plants). The company generates power which is purchased by an electric grid operator or a large industrial consumer.

  13. Power Production-Made easy Facts And Figures

  14. The News-Tuesday, August 11, 2009 “FEDERAL Minister for Water and Power Raja ParvezAshraf has angrily rejected allegations of corruption and kickbacks involving rental power projects in Pakistan and claimed he is prepared to be hanged if any of the allegations are proved”. 14% Advance. Original 7%. Unprecedented government facility was not made public when the PPIB sought letter of interests. 6% withholding tax deferment. Power Means Leakage Nationwide Additional Burden on Import Bill. Pakistan would be forced to pay US $9.6 billion for oil import next year, if oil stays at US $60 per barrel. Pressure on Local Banks to Fund the Project. RPPs generally funded by International financial institutions. In this case only Turkish company is funded internationally.

  15. PakistanPowerPuzzle

  16. Analysis Import Bill Uncertain due to Fluctuating Oil prices Higher Energy cost for Consumers Expensive units Negative Growth Decreased export Implications for Pakistan Blurred Future Hurriedly conceived – 3-5 Years life span Environmental Compromise No Environmental Impact Assessment

  17. Analysis Annual Fuel payment for a typical 200 MW unit RPP = $211 million IPP = $174 million A difference of $37 million a year or Rs 3 billion a year per RPP. Annual capacity payment for a typical 200 MW RPP = $79 million IPP = $60 million A difference of $19 million a year or Rs1.5 billion a year per RPP. Points to Ponder Annual Payments for 1,900 MW of Rental Power Fuel = $2 billion Capacity = $750 million RPPs: A US$ 2.75 Billion question a year Suo Moto ….?????.....Steel Mills……. Source: Pepco, Dr. FarrukhSaleem, Director of the Centre for Research and Security Studies

  18. Analysis 15,900 MW of electricity in December 2009 against a projected peak demand of around 16,064 MW in summer next year without RPPs.Source: Pepco,PPIB websites Hurriedly Conceived Power projects completed by the end of 2009 would add 3,500 MW to the national grid, about 2,000 MW more than domestic consumption.Source: Pepco,PPIB websites

  19. Analysis • PEPA 1997 Section 12 • Initial Environmental Examination and Environmental Impact Assessment • No proponent of a project shall commence construction or operation unless he has filed with the Federal Agency an initial environmental examination or, where the project is likely to cause an adverse environmental effect, an environmental impact assessment, and has obtained from the Federal Agency approval in respect thereof. NO EIA

  20. Conclusion Implications Degradation of environment Increase in Import Bill Additional burden on consumer Stop-Gap arrangements Criminal neglect by Leadership Shifting from hydro to thermal, low to high cost Recap High claims-Low performance Nuclear, Coal, Renewable Sufficient installed capacity Warrants no more RPPs Ineffective Power administration About 30% energy lost /stolen Burden on law abiding citizens Ignorance towards energy conservation Use of inefficient electrical equipment Decoration /showoff

  21. Recommendations Government may put into operation shutdown IPP plants to obtain 390 MW. Around 500 MW can be plugged into the national grid from captive power plants installed in textile, cement and sugar mills etc. Sugar mills should get soft loans to install high pressure boiler plants for producing 1000 MW. Simple Solutions Reduction in line losses and theft by 10-12% may save energy around 1500MW. Current losses 30%. Promotion of use of Energy Savers (CFL) and Light Emitting Diodes (LED) lighting in household. EU has already banned incandescent light bulbs of 60&100Watts from Sep1, 2009 and so has Canada.

  22. Recommendations Install LED Street lights and Traffic signals (Mean Time Between Failures MTBF 10,000hrs) to save 80% electricity. Simple Solutions Make installation of affordable solar water heaters mandatory to free large quantity of gas for generation.

  23. Recommendations • Pakistan should go for renewable energy sources: • Hydel Power • Wind Power • Solar Thermal Power • Small Hydro Plants • Thermal Power Plants using • rice husk ,waste wood, municipal waste • or agriculture residue as fuel. • The Long Term Credit Fund administered by the National Bank of Pakistan may be upgraded into an energy and infrastructure bank, possibly on the pattern of India’s Infrastructure Development Finance Company Limited. Simple Solutions

  24. Recommendations • Conservation Demand side management through conservation of power • Acceleration IPPs currently in the finishing stage • Reactivation Already installed power generation capacity • Accommodation Captive and SPPs into main energy buying orbit Nutshell CARA To bridge Pakistan’s electricity supply and demand gap.

  25. Q& A

  26. Existing Generating Capacity - 2007 26

  27. Hydro Power Plants *Jabban (Malakand) Hydel Power Station has been de-commissioned due to fire incident on 12.11.2006 and will be re-commissioned after rehabilitation. 27

  28. Thermal Power Plants Note:- WAPDA all steam units are duel fuel based (Gas & Furnace Oil), except Unit No.1 of TPS Jamshoro which is oil based. Whereas Gas Turbines are operated on Gas. * Would be available after March 15, 2008 on Gas restoration. 28

  29. Thermal IPPs • * On turnaround /annual maintenance expected on bar in next 2-3 weeks. 29

  30. Rental Power Generation Plants 30

  31. Small Power Producers (SPPs) * APTMA collectively is working with PEPCO and SPP Task Force to complete Codal formalities to connect multiple SPPs on Network.. 31

  32. Power Scenario Today Power Production Technologies-World Averages Power Scenario Today 32 Source: Associated Consultant engineers

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