Investing in Energy Today,Our key to a brighter

tomorrow!

01 August 2013

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PRESENTATION AGENDA

• 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

• 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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THE PROBLEM

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INSTALLED CAPACITYCOMPARISON BETWEEN PAKISTAN & INDIA

Source: Regulatory Bodies 5

ELECTRICITY COST COMPARISON

Cumulative Installed Capacity: 22,797 MWAve. Annual Power Generation: 12,278 MW

Peak Generation achieved in July 2013: ~ 16,000 MW

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INSTALLED CAPACITY & POWER GENERATION

Source: Investment Guide, Punjab Power Development Board 7

PAKISTAN ENERGY CONSUMPTION 2010-2011*

* Graph based on Pakistan Yearbook 2010-2011

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

Demand growing at 8% per year

Source: Government of Punjab, Energy Department

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

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ELECTRICITY DEMAND & CONSUMPTION IN PUNJAB

Source: Government of Punjab, Energy Department

Company Distribution Losses Revenue Collection 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%

PUNJAB’S SYSTEM EFFICIENCIES COMPARED TO OTHER PROVINCES

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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

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”

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”

PUNJAB ENERGY STRATEGY

AND

INVESTMENT OPPORTUNITIES

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PUNJAB ENERGY STRATEGY

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PUNJAB’S INDIGENOUS RESOURCES

Source

Potentia

l

(MW)

Completion

Time

(Years)

Investment

(M$/MW)

Technology Leaders

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

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

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Division MillsCo- Generation 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

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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Case Study – Indicative Returns (based on NEPRA determination)

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Levelized Upfront Tariff ¢/kWh 10.6204

Tariff for first 10 Years ¢/kWh 11.97

Tariff from Year 11-30¢/kWh 8.07

RoE @ 17% ¢/kWh 0.9395

Plant size MW 20Cost/MW MUSD 1Total Cost MUSD 20Power available for sale MW 18.3

Operating Days 164 Units sold in a year 72,138,600 Net Profit/year 677,734.79 Pay Back Years 5.90

BAGASSE BASED CO-GENERATION

CropBiomass

Type

Area Under Crop

(M. Acres)

Gross Quantity of

Biomass(M. Ton)

Net Collectable Biomass(M. Ton)

Consumed Locally

(M. Ton)

Minimum Available for Power Generation

(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 Rice Straw

4.2294.869 4.382 2.191 2.191

Rice Husk 1.39 1.252 0.250 1.002

Sugarcane

Sugarcane Waste

1.897 6.88 6.44 6.44 -

Corn Stalk

1.4925.163 4.646 4.646 -

Cobs 1.721 1.549 0.620 0.929

Total (Excluding Bagasse) 43.204 38.881 27.940 10.942

CROP BIOMASS POTENTIAL IN PUNJAB

CROP BIOMASS RESOURCES IN PUNJAB (ZONE WISE)

CROP BIOMASS RESOURCES IN PUNJAB (ZONE WISE)

Crop Gross

Collectable Biomass

(M. Ton)

Cotton 11.43

Wheat 18.63

Rice 6.26

Maize 6.884

In addition, other crops also have potential resources

Zone Code District Clusters Industrial Cluster

Biomass Potential (M. Ton)

Electric Generation Potential

MW

Cotton C-1 R.Y.Khan

Industrial Estate R.Y.Khan

0.602 72

C-2Bahawalpur & Bahawalnagar

Ahmadpur East Road & Hasilpur

1.321 157

C-3 Lodhran & Multan Multan Industrial Estate

0.982 117

C-4 Vehari & Khanewal Mian Channu 1.328 158

C-5Muzaffargarh, D.G.Khan & Rajanpur

Jampur Road D.G Khan

0.911 108

Rice R-1 Sialkot & Narowal Sialkot 0.510 61

R-2 M.B.Din & Hafizabad Hafizabad 0.476 57

R-3Sheikhupura, Nankana Sahib & Lahore

Lahore Sheikhupura Road

0.488 58

R-4 Gujranwala & Gujrat Gujranwala 0.946 112

ZONES OF BIOMASS POTENTIAL

Zone Code District Clusters

Industrial Cluster

Biomass Potentia

l (M. Ton)

Electric Generation Potential

MW

Mix Cropping M-1 Okara & Kasur

Okara Depalpur Road

0.953 113

M-2Sahiwal & Pakpattan

Sahiwal 0.873 104

M-3Faisalabad & T.T.Singh

Khurrianwala, Shahkot

0.417 50

M-4Chiniot, Jhang, Khushab & Sargodha

Sargodha Industrial Estate

0.536 63

M-5Bhakkar, Layyah & Mianwali

Sikindarabad Mianwali

0.400 47

BIOMASS POTENTIAL OF ZONES

COTTON ZONECOTTON ZONE

Code Districts Clusters Biomass

Potential (M. Ton)

C-1 R.Y.Khan 0.602

C-2Bahawalpur & Bahawalnagar

1.321

C-3 Lodhran & Multan 0.982

C-4 Vehari & Khanewal 1.328

C-5Muzaffargarh, D.G.Khan & Rajanpur

0.911

MIXED CROP ZONEMIXED CROP ZONE

Code Districts Clusters Biomass

Potential (M. Ton)

M-1 Okara & Kasur 0.953

M-2 Sahiwal & Pakpattan 0.873

M-3 Faisalabad & T.T.Singh 0.417

M-4Chniot, Jhang, Khushab & Sargodha

0.536

M-5 Bhakkar, Layyah & Mianwali 0.400

RICE ZONERICE ZONE

Code Districts Clusters Biomass Potential

(M. Ton)

R-1 Sialkot & Narowal 0.510

R-2 M.B.Din & Hafizabad 0.476

R-3Sheikhupura, Nankana Sahib & Lahore

0.488

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          

Rice

Straw              

Husk        

CornStalk          

Cobs        

SEASONAL AVAILABILITY (MINOR CROPS)

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 restrictions28

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

Case Study – Indicative Returns (based on estimates)

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Levelized Upfront Tariff ¢/kWh 12.86

Tariff for first 10 Years ¢/kWh 13.7744

Tariff from Year 11-30¢/kWh 9.5730

RoE @ 17% ¢/kWh 1.18

Plant size MW 10Cost/MW MUSD 1.8Total Cost MUSD 18Power available for sale MW 8.8

Operating Days 292 Units sold in a season 61,670,400 Net Profit/season 729,976.16 Pay Back Years 4.93

BIOMASS POWER GENERATION

INVESTMENT OPPORTUNITIES IN

HYDEL & SOLAR

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HYDEL POWER POTENTIAL IN PUNJAB

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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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Case Study – Indicative Returns(based on feasibility study tariff ) run of canal distt. sahiwal

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Levelized Upfront Tariff ¢/kWh 7.2085

Tariff for first 10 Years ¢/kWh 9.4895

Tariff from Year 11-30 ¢/kWh 2.9385

RoE @ 17% ¢/kWh 1.1040

Plant size MW 4.8Cost/MW MUSD 2.57Total Cost MUSD 12.32Power available for sale MW 4.8

Operating Days 365 Units sold in a year 42,048,000 Net Revenue/year 463,386.12 Pay Back Years 5.32

SMALL HYDEL POWER GENERATION

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• 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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• One of the best Solar Irradiation in South Punjab 5.6 to 6.4

kW/Sqm/Day

• 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

40 Km from BWP

140 KM from Multan

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• 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 39

Case Study – Indicative Returns 200 MW(based on NEPRA determination)

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Levelized Upfront Tariff ¢/kWh 9.64

Tariff for first 10 Years ¢/kWh 11.155

Tariff from Year 11-30 ¢/kWh 6.818

RoE @ 17% ¢/kWh 0.85

Plant size MW 219Cost/MW MUSD 1.16Total Cost MUSD 254.8Power available for sale MW 199.29

Units sold in a year 1,745,780,400

Net Profit/year 14,874,049.01

Pay Back Years 5.17

LOCAL COAL BASED POWER GENERATION

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BRIDGING THE ENERGY GAP – THE PLAN

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BRIDGING THE ENERGY GAP – THE PLAN

LinkLink

ENABLING POLICIES AND INCENTIVES

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REGULATORY STRUCTURE

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ENABLING POLICIES & INCENTIVES

REGULATORY STRUCTURE

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ENABLING POLICIES & INCENTIVES

CONTRACTUAL MECHANISM

• Guaranteed power purchase for IPPs• Upfront tariffs • Sovereign Guarantees• Standardized IA, PPAs

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FINANCIAL & FISCAL INCENTIVES

ENABLING POLICIES & INCENTIVES

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FINANCIAL & FISCAL INCENTIVES

ENABLING POLICIES & 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

LESCO Charges Rs/unit

NTDC Charges Rs/unit

TOTAL Charges Rs/unit

If only 132KV involved 0.58 0.173 0.753If both 132 KV&11KV involved 0.62 0.173 0.793

NTDC WHEELING CHARGES Fixed - Rs/Kw/Month 102Variable - 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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1,800 Acres

Pakistan

Pakistan

Power

Power

Park Park

Figures are Approximations. Not drawn to scale. Land ownership, public /

private, might have changed..

LinkLink

Future

Expansions

Future

Expansions

Jetty

660 MW IPP

Comm

on Housing &

Amenities

Comm

on Switchyard

660 MW IPP

660 MW IPP

660 MW IPP

660 MW IPP

660 MW IPP

Common Water SupplyAsh D

isposal and Recycling it into Useful By Products

Cooling Water Intake

Comm

on Coal Storage (Dead Stock)

(maintained by Coal Supplier)

660 MW IPP

660 MW IPP

Shipping and Common Coal

Supplier Separate Coal Storages (Live) for each IPP(m

aintained by each IPP separately)

Pakistan Power Park: Typical ConfigurationSubject to Consultant’s review.

Brea

kwat

er

LinkLink