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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.

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Presentation on theme: "IMPLICATIONS OF RENTAL POWER PROJECTS FOR PAKISTAN By Mian Muhammad Zulqarnain AAMIR DMG 91 st National Management Course Dr Imtiaz Bokhari Sponsoring."— Presentation transcript:

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

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

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

4 Energy Crises- A 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 $3 a barrel. Hydel:Others::80:20 Source: Power Policy 1994 Result of economic growth of eighties due to the US$ 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 4 Historical Perspective

5 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. 2001-2003 3000 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. 5 2003-04 Growth 7.3%. Power demand3% 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 Energy Crises- A Historical Perspective

6 Total Capacity17529 MW Dependable16192 MW Generation12551 MW Peak Demand15663 MW Source: MD Pepco Presentation to BOI Nov19,2007 & Minister's presentation to the cabinet July 2009 6 Power Scenario Today

7 Power Production Technologies CoalNuclearHydroGasF.oil 150 MW450650058009000 Source: Associated Consultant engineers 7 Power Scenario Today

8 CoalNuclearHydroGasF.oil 8 Power Scenario Today Power Production Technologies- World Averages Other Source: PEPCO Power Scenario Today

9 AgricultureCommercialIndustrialDomestic 9 Power Scenario Today Consumption Patterns-Non Productive Other Source: PEPCO Average Industrial Consumption World 42%China 80%

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

11 Shortage Wrongly Perceived Source: PEPCO 11 Power Scenario Today

12 I ndependent P ower P roducer 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. R ental P ower P lants 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. 12 Power Production Made easy

13 Facts And Figures IPPsRPPs Set up time2-5 years< one year Electricity cost11.77 cents/Kwh 14.65 / Kwh (24% exp) Cost of 100MwNew $100 millionUsed $15 million (China) Mobilization AdvNil14% of 3-5yrs rent P. Guarantee YesMostly NO Efficiency45%37 % TariffBased on Project cost N / A Disclosure of costRequiredNot required EquipmentBrand New< 10 yrs old Refurbished & < 60000 hrs Environmental costLowHigh 13 Power Production- Made easy

14 Power Means Leakage Nationwide 14% Advance. Original 7%. Unprecedented government facility was not made public when the PPIB sought letter of interests. 6% withholding tax deferment. 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. The News-Tuesday, August 11, 2009 FEDERAL Minister for Water and Power Raja Parvez Ashraf 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

15 Pakistan Power Puzzle 15

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

17 Points to Ponder 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. 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……. 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. Source: Pepco, Dr. Farrukh Saleem, Director of the Centre for Research and Security Studies 17 Analysis

18 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 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 Hurriedly Conceived 18 Analysis

19 PEPA 1997 Section 12 Initial Environmental Examination and Environmental Impact Assessment (1) 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. Analysis NO EIA 19

20 Recap Criminal neglect by Leadership Shifting from hydro to thermal, low to high cost 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 Conclusion Ignorance towards energy conservation Use of inefficient electrical equipment Decoration /showoff Implications Degradation of environment Increase in Import Bill Additional burden on consumer Stop-Gap arrangements 20

21 Simple Solutions 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. 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. Recommendations 21

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

23 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 Indias Infrastructure Development Finance Company Limited. 23 Recommendations Simple Solutions

24 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 To bridge Pakistans electricity supply and demand gap. Nutshell CARA 24 Recommendations

25 Q& A 25

26 26 Existing Generating Capacity - 2007 Type Installed (MW) Derated / Dependa ble (MW) Current Availability (MW)Demand 2007 (MW) SummerWinter Hydro6,444 100 % 2,30036% Gencos4,6753,9102,52565%3,62093% IPPs6,0975,5253,93671%5,18094% SPPs 28 100 % 28100% RENTAL 285 100 % 285100% Total 17,52916,19213,21882%11,41370%15,838 26

27 27 Hydro Power Plants Sr. No.Power Plants Installed Capacity (MW) Derated / Dependable Capacity (MW) Current Availability (MW) 1 Tarbela3478 2 Ghazi Barotha 1450 3 Mangla 1000 4 Warsak 243 5 Chashma 184 6 Rasul 22 8932 7 Dargai 20 8 Nandipur 13.80 9 Shadiwal 13.50 10 Chichoki 13.20 11 Kurram Garhi 4 12 Renala 1.10 13 Chitral 1 TOTAL6444 *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 28 Thermal Power Plants Sr. No. Power Plants Installed Capacity (MW) Derated/ Dependable Capacity (MW) Current Availability (MW) 1 Thermal Power Station Jamshoro850765485 2 FBC Lakhra Power Station 502832 3 Gas Turbine Power Station Kotri 17414054 4 Thermal Power Station Guddu 16551285841 5 Thermal Power Station Quetta 35220* 6 Thermal Power Station Muzaffargarh 13501260795 7 Natural Gas Power Station Piranghaib Multan 1306080 8 Steam Power Station Faisalabad 13210092 9 Gas Trubine Power Station Faisalabad 244210146 10 Gas Turbine Power Station Shahdara 55400* TOTAL467539102525 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 29 Thermal IPPs Sr. No. Power PlantsFuel Installed Capacity (MW Derated/ Dependable Capacity (MW) Current Availability (MW) 1 HUBCO COMPLEX RFO 12921200896 2 KAPCO LSFO/GAS/DIESEL 163813861164 3 KOHINOOR ENERGY RFO 131124107 4 AES LALPIR RFO 362350340 5 AES PAKGEN RFO 3653500* 6 SEPCOL RFO 11710395 7 HABIBULLAH COASTAL GAS 140129125 8 ROUSH POWER LTD. GAS (CONVERTED) 4503950* 9 SABA POWER CO. RFO 1341250* 10 FAUJI KABIRWALA Gas (Low BTU+Pipe Line) 15715177 11 JAPAN POWER GEN. RFO 135120103 12 UCH POWER PROJECT Gas (Low BTU) 586551555 13 Liberty Power Gas 235211207 14 Chashnupp Nuclear 325300259 15 Jagran Hydel 30 7 TOTAL609755253936 * On turnaround /annual maintenance expected on bar in next 2-3 weeks. 29

30 30 Rental Power Generation Plants Sr. # Name of Power Plant Fuel Installed Capacity (MW) Derated/ Dependable Capacity (MW) Current Availability (MW) Remarks 1 GE PowerGas150 135 2 Alstol Power (under testing) Gas 135 35 136 MW Expected by Dec, 2007 TOTAL285 170 30

31 31 Small Power Producers (SPPs) S. No.SPPDISCOCapacity (MW) 1Sitara EnergyFESCO15.00 2Crescent TextileFESCO4.00 3Kohinoor PowerFESCO4.50 4Mehmood TextileMEPCO5.00 5APTMA UNITSVARIOUS*150.00 TOTAL178.50 * APTMA collectively is working with PEPCO and SPP Task Force to complete Codal formalities to connect multiple SPPs on Network.. 31

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

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