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2. Presentation to Energy Task Force Khyber Pakhtunkhwa 13 th April 2012 GOVERNMENT OF KHYBER PAKHTUNKHWA ENERGY & POWER DEPARTMENT 2

3. Aim The entire country is facing acute Energy shortage which is likely to increase during summer. National Energy Conference was held in Lahore on 9-04-2012, hosted by Punjab Government chaired by the Prime Minister of Pakistan to address the issue. The Conference made certain recommendations which are to be shared with the stake holders and to enable implementation. For this the Provincial Government has notified an Energy Task Force.(ETF) 3

4. COMPOSITION OF ENERGY TASK FORCE 1. Senior Minister for P & D/ E & P Chairman 2.Senior Minister, Local Govt:, Election Member & Rural Develop 3.Minister for Information & Public Relations IPC Member & Transport 4.Minister for Industries, Commerce, Member Mineral Develop 5.Minister for Health Member 6.Minister for Law Parliamentary Affairs Member & Human Rights 7. Minister for Labour Member 4

5. ROLE OF ENERGY TASK FORCE IN KHYBER PAKHTUNKHWA The Task Force is assigned the work for engaging in a consultative process with the stakeholders for successful implementation of recommendations of the Energy Conference. The Task Force shall also periodically review the progress on implementation. 5

6. Sequence of presentation: a) Present situation and extent of problems b) Recommendations of Energy Conference c) Way forward 6

7. Present situation and extent of problems 7

8. Pakistan Energy Sector Overview Summer and Winter 8 Supply- Demand Gap Summer Projected (Peak) 3500 to 4500 MW 7 - 9 hrs load shedding Supply- Demand Gap Winter (Peak) 3500 to 6000 MW 8-16 hrs load shedding

9. Historical Supply & Demand 9

10. Power Sector – Generation Addition 10 Power Sector – Generation Addition (2008-2011) Malakand - III 81 Nishat Power 200 Hubco 225 Khan Khawar 72 Nishat Chunian 200 Foundation Power 202 Attock Gen 163 Sapphire Power 225 Halmore Power 225 Atlas Power 219 Techno Power (R) 60 Chashnup-II 300 Engro Power 227 Liberty Tech 200 Karkey - Rental (R ) 232 Saif Power 225 Gulf – Rental (R) 62 Walter Naudero (R) 51 Orient Power 225 (Excluding Rentals of 405 MW = 2995 MW) Total 3,400

11. Sector DescriptionCapacity (MW) A. Gas/RFO/HSD3237 B. Hydel Projects153 C. Wind Power Projects 312 D. GENCO Rehabilitation636 Total (A+B+C+D) 4338 Generation Additions (2008-2012) 11

12. Power Sector – Load Growth Demand Increase per year = 7.31% Actual number of consumer increase 2002 – 2011 Total = 5.38% (average per year growth) 12

13. Key reasons for shortfalls 13 1. Liquidity crunch resulting in under-utilization of installed capacity 2. Diminishing gas supply 3. Low priority to conservation and efficiency 4. Stalled progress on reforms

14. Key reasons for shortfalls – Liquidity Crunch 1. Tariff Differential – (Rs 9.56/unit average cost vs Rs 7.84 /units sale price = Rs 1.72/unit) 2. Fuel Price Adjustment Rs. 101 b unrecovered a) 1- 350 units court stay in Punjab and Sindh and all FPA collection stopped in KPK b) Late NEPRA determination from fuel consumed from Sept 2011 to Jan 2012 3. Equalization surcharge (no raise in tariff in FY12) Court Stay – Rs 80 b 4 Low recoveries from DISCOs (83%) of current bills 5 Higher than NEPRA allowed system losses – Rs 24 b 6 Total Receivables Rs 354 b (Private 169 b, KESC 54 b, Provincial 85 b, Federal 6 b) 7 AJ&K tariff Rs 14 b 8 AGRI TUBEWELL GOP SHARE @ 40% IN BALOCHISTAN = 5 B Rs Support in Payment of PUNJAB SHARE @ 12.5% = 6 B Rs Support in Payment of BALOCHISTAN SHARE @ 30% = 7 B Rs 14

15. 15 AVERAGE GAS REQUIREMENT VS. ACTUAL GAS SUPPLIED TO GENCOS POWER STATIONS ( MMCFD ) DESCRIPTION Required Gas Gas Available Gap Required Gas Gas AvailableGapTotal Gap Availability (%age) (GENCOs) (IPPs) (GENCOs + IPPs) 2005-0675058316767152414731478% 2006-0775045129967152314844769% 2007-0875043831267149118049265% 2008-0975040534567140826360857% 2009-1075036138967139128066953% 2010-1175026748367135831379644% 2011-1275026548595546648997443% KESC supply (182 MMCFD) not included IPPS PRESENT REQUIREMENT PRESENT ALLOCATION 955466 GENCOS PRESENT REQUIREMENT PRESENT ALLOCATION 750265

16. Projected Demand& Supply Position April to August 2012 Projected Demand & Supply Position April to August 2012 16 Months Supplied (MW) Supplied Breakup (MW) Computed Demand (MW) Shortfall (MW) HydelNuclearGasRFO/HSD April 12,9922,3056152,7617,31116,492-3,500 May 14,6605,0196152,7616,26518,383-3,723 June 15,4515,0366152,7617,03919,564-4,113 July 15,2005,8546152,7617,02319,300-4,100 August 15,2105,9926152,7617,02119,322-4,112

17. RECOMMENDATIONS OF ENERGY CONFERENCE 17

18. GENERATION – Immediate Sr. #Measures 1.Reallocation of gas to power sector Allocation of gas to: 4 IPPS (@38MMCFD PER PLANT = 152 MMCFD) KAPCO 55 MMCFD Ideally 310 MINIMUM 207 MMCFD giving 1000MW 2Release of receivables and subsidies 3The borrowing limits of Provinces to be set by NEC 4Directive to NEPRA for early determination of upfront tariff 5Once stay on FPA vacated, power prices will jump to reflect correct cost of power. Provinces’ understanding required. 18

19. 19 …CONTD 2 - Release of Receivables and Subsidies

20. GENERATION – Medium Term Sr. # MeasuresStatus 1.Rehabilitation of public sector power plants USAID = 636 MW ADB = 800MW 2.Out sourcing management, O&M, rehabilitation and conversion of public sector power plants onto cheaper fuels Contracts for three plants by December 2012 20

21. DISTRIBUTION – Immediate Sr. #Measures 1.Introduction of Pre-paid meters 2.Revision of Electricity Act 1910: Provinces to expedite endorsement for presentation to CCI 3.To create deterrence regarding electricity theft, Provinces to help in registration of FIRs, designating special magistrates and nominating focal persons e.g. home secretary at provincial and DCO at district level for expeditious disposal of cases. 21

22. DISTRIBUTION – Medium Term Sr. #Measures 1.To bring in predictability and end unscheduled load shedding in the system automation of SCADA system in DISCOs 22

23. CONSERVATION – Short Term Sr. # MeasuresActionEffects 1.Commercial establishments to close by 8 pm or power supply to be cut Same decision in 2010. Provinces to implement 250 MW at Peak 2.Street Lighting Conservation: Alternate lights Replacement with efficient lights Provinces to implement 250 MW 3.Five days week for government departments and affiliated institutions Provinces to implement700 MW 4.Installation of Solar Geysers in government housing Federal and provincial governments 5.Easy financing for installation of solar water heater, solar water pumping, solar lighting Directive to SBP for interest free financing 23

24. CONSERVATION – Short Term Sr. #MeasuresActionEffects 6.Enactment of Energy Conservation Bill Pakistan Energy Efficiency & Conservation Bill is being finalized in consultation with Provincial Governments Legal cover for implementation of energy conservation measures 7.Mass Awareness Campaigns Provision of Rs 50 m to ENERCON for launching of awareness campaign for promotion of energy efficiency culture 8.Launching of Pilot Projects on Energy Efficiency & Capacity Building under Public –Private Partnership EAD to approach donors for provision of funds for pilot projects 24

25. CONSERVATION – Medium Term Sr. # MeasuresStatus 1.Mandatory Energy AuditsAfter Energy Efficiency Bill 2.Cell Tower conversion to solar 3.Mandatory Vehicle Tune ups 4. Non-supply of power to billboards and neon signs 5.Target Private Steel Mill E.E. Pulp & Paper Textile Industry For energy efficiency improvements 6.Phasing out of manufacturing and import of Incandescent bulbs in two years Announcement. Also replacements by CFLs and LEDs 2800 MW 25

26. THE WAY FORWARD 26

27. WAY FORWARD: Action by Provincial Government (GENERATION /DISTRIBUTION) Sr.#MeasuresActions/way forward 1. Re-allocation of additional gas to power sector 4 IPPS (@38MMCFD PER PLANT = 152 MMCFD) KAPCO 55 MMCFD Ideally 300 MINIMUM 207 MMCFD giving 1000MW Ministry of Oil & Gas 2. Upfront tariff for all types of fuels by NEPRANEPRA 3. Revision of Electricity Act 1910: Provinces to expediteMinistry of Water & Power /Energy & Power Department 4. Expedite conversion of steam based Independent Power Plants/GENCOs to coal. Ministry of Water & Power 5. Provinces to help in prompt registration of FIRs, designating special magistrates and nominating focal persons e.g. home secretary at provincial and DCO at district level for expeditious disposal of electricity theft cases. Home Department to devise the mechanism 6. Release of receivables and subsidies. Possibility of at source deduction Ministry of Finance/ Finance Department 27

28. WAY FORWARD: Action by Provincial Government ( TARIFF & INSTITUTIONAL REFORMS) Sr.#MeasuresActions/way forward 1. Implement the tariff increase of 12% Ministry of Finance / Ministry of Water & Power/ NEPRA/FD 2. Uniform tariff & Revised Tariff Differential Mechanism to be implemented NEPRA/ FD 3. Increase the lifeline slab to 100. Balance to pay NEPRA Determined Tariff in full Ministry of Finance / Ministry of Water & Power/ FD 4. Strengthening of NEPRA Ministry of Water & Power/ E&P Department 5. Fully empowered institutional mechanism for Reconciliation & settlement of all power sector disputes, billing etc. Finance Department /EMC 6. Installation of Pre-paid meters for all federal and provincial government connections Ministry of Water & Power/ Finance Department /PESCO 7. Ensure equitable load shedding in the country Ministry of Water & Power 8. KESC to voluntarily reduce its import of power from NTDC from 650MW to 300MW. Ministry of Water & Power/KESC 28

29. …CONT Sr.#MeasuresActions/way forward 9. Gas to be priced closer to relevant alternative fuel prices. Ministry of Finance / Ministry of Oil & Gas/Provinces/CCI 10 Sources of subsidy and magnitude to be determined by the governments. Ministry of Finance/ Finance Department 29

30. WAY FORWARD: Action by Provincial Government (CONSERVATION) Sr.#MeasuresActions/way forwardEffects 1.Street Lighting Conservation: Alternate lights Replacement with efficient lights Local Government Department/ Commissioners 250 MW 2.Commercial establishments to close by 8 pm. chamber, of Com & Inds: Home Department 250 MW at Peak 3.Five day week for all governmentsRecommendations of Energy Task Force 700 MW 4.Subsidy for Solar Agri TubewellsAgriculture Department/IFI’s 5.Daylight savings from April 15th, 2012 Recommendations of Energy Task Force/E & A Department 800-1200 MW 6.Non-supply of power to billboards and neon signs LG Department/PESCO125 MW 7.Phasing out of Incandescent bulbsIndustries Department1200 MW 8.Overall Supervision of Energy Conservation & Issues Energy Task Force through EMC of Finance Department 30

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