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INVESTMENT OPPORTUNITIES IN POWER SECTOR OF PAKISTAN
ENERGY MIX OF PAKISTAN
DEMAND-SUPPLY SCENARIO OF PAKISTAN
POLICY INCENTIVES FOR IPPs
POWER PLANTS
TRANSMISSION LINES
POLICY INCENTIVE FOR RENEWABLE ENERGY
SPECIFIC PROJECT OPTIONS
Sequence
OVERVIEW OF PAKISTAN’S POWER SECTOR
3
At present the following entities are responsible for delivery of power to the end
consumers:
One Transmission and Dispatch Company (NTDCL)
Ten Distribution Companies (DISCOs)
Four Public Sector Generation Companies (GENCOs)
Thirty One (31) IPPs
The Electricity Generation is blend of Hydel and Thermal Units.
Total installed capacity is around 25,000 MW with 53% and 47% Share of Public
and Private Sector respectively.
Currently Country is facing deficit of around 6,000 MW in peak summer months
whereas the power demand has been growing by 6-7% per annum resulting into
load shedding of 8-16 hours.
Expansion in Transmission Network is required to evacuate power from
upcoming projects.
Due to Financial Constraints in the Public Sector, the GOP is focusing on private
sector to invest in PPS to bridge the electricity demand supply gap.
Hydel31%
Gas21%
Oil39%
LNG4%
Nuclear3%
Renewables2%
Current Fuel Mix
Solar2%
Import2%
Hy-del
26%Gas12%Oil
14%
LNG13%
Coal Local3%
Coal Im-
ported
20%
Nuclear3%
Wind4%
Fuel Mix 2019-20
PAKISTAN ENERGY MIX
Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20
17582
23107
17582
23500
18402
25145
19690
26905
21068
28788
12140
1728514174
2343420213
2709422940
28168 25077
30803
-5442-5822-3408
1811 1949 32501263
4009 2015
Power Demand and Supply
Peak Demand Available Generation Gap
In the peak summer months, electricity demand-supply gap reaches
up to 6,000 MW resulting in load-shedding of up to 8-16 hours per
day
Even if the maximum capability of 18,477 MW is assumed, country
would need additional 13,310 MW (net) by the year 2020, requiring an
investment of $15 billion
The government is looking towards private sector to bring additional
generation on coal, hydro and renewable energy on fast track basis
In order to encourage private sector, the government has been
issuing various policies/ guidelines from time to time in the past at
both federal and provincial levels
PAKISTAN POWER SECTOR – CURRENT SCENARIO
6
PLANS TO ENHANCE POWER GENERATION CAPACITY AND ALLIED INFRASTRUCTURE
7
The Present Government is striving hard to overcome the ongoing power
crisis which has adversely impacted the National Economy.
A number of initiatives are in progress to enhance generation capacity of the
system, including power plants based on coal, hydel, gas and renewable
resources, both in public as well as private sector.
The GoP has recently approved Power Generation Policy 2015 which
provides attractive incentives for private investors
Extensive networks of high voltage transmission lines and grid stations are
being developed to evacuate power from upcoming mega coal and hydel
projects to be located southern and northern part of country.
The GoP has approved Private Transmission Line Policy for allocating
private investment in high voltage transmission lines
POWER GENERATION POLICY 2015 SALIENT FEATURES/ INCENTIVES
8
PPIB /relevant entities in the Provinces / AJK / GB will provide a one-
window facility for implementation of projects under the Policy.
Exemption from Corporate Income Tax, Turnover Tax, Withholding Tax
and Sales Tax, only 5% concessionary Import Duty on plant & equipment
not manufactured locally
GOP Guarantees obligations of power purchaser & provinces
GOP provides protection against Political Force Majeure, Change in Law
and Change in Duties & Taxes
For Hydro Power Projects; WUC will be paid @ Rs. 0.425/kWh to the
province where the project is located.
Power Purchaser to bear Hydrological Risk for Hydro projects
POWER GENERATION POLICY 2015 SALIENT FEATURES / INCENTIVES
9
Attractive ROE provided by the Regulator – Imported Coal: 27.3 ; Local
Coal: 29.5; Thar Coal: 34.5; Hydro: 23% ROE ; Gas/LNG: 18% ROE
To mitigate high underground geological risk, long construction period
and environmental sensitivities following tariff re-openers are provided
by NEPRA
Cost Escalation in Civil and Cost Variation for E&M works
Resettlement Cost
Cost variation due to Geological Conditions limited to Tunnel Area
Tariff indexation for inflation (US CPI & Pak WPI)
Government ensures conversion of Pak Rupee & remittance of foreign
exchange for project-related payments
10
At present, various local and imported coal based IPPs are under
process with PPIB, most of which are being developed under the
China Pakistan Economic Corridor (CPEC)
PPIB, after consultation with the stakeholders, has finalized and
shared Security Package Documents with the Sponsors
(Implementation and Power Purchase Agreements)
Moreover, the total potential of Thar is estimated at 175 billion tons of
lignite coal which may be sufficient to produce 100,000 MW electricity
for 200 years
NPERA has already announced Upfront Tariff for Indigenous Coal
based Projects
Investors are encouraged to participate as equity partner with existing
Sponsors in development of power projects based on Thar Coal and/
or propose new projects based on Thar Coal.
INVESTMENT INITIATIVES (Coal based Power Projects)
11
Transmission Line and Allied Infrastructure Projects under the proposed Transmission Line Policy (to be announced shortly)
List of Transmission System projects to be offered to Private
Sector will be prepared by GOP
Award of Projects through ICB and Upfront Tariff on BOOT basis
Policy to cover Transmission Line & Grid Station projects of 220
kV voltage level and above (EHVAC & HVDC)
Land & Legal Right of way to be provided by NTDC
Project Term: 25 years
Transmission utility (NTDC) to pay a fixed Transmission Service
Charge, regardless of the quantum of energy transmitted
Exemption from Corporate Income Tax for first ten years including
turnover rate tax and withholding tax on imports
Standardized Security Package (IA & TSA)
One Window facility by PPIB
INVESTMENT INITIATIVES (Transmission Line Projects)
NEW INVESTMENT INITIATIVES (RLNG Projects)
12
3,600 (3 x 1200) MW Power Generation Projects based on R-LNG, to be
commissioned 2400 MW open cycle by May 2017; completion of 3600
MW early 2018
Tendering for all plants has been completed and contractors have
mobilized
02 projects being developed by Federal government while 01 by
government of Punjab
Equity participation in these plants is available for Russian investors
02 similar projects have been initiated at Jamshoro (600 MW) and
Guddu (1200 MW)
These 02 plants can be implemented on G-to-G basis with Russian
companies
• No customs duty or sales tax on import of equipment
• No Income Tax / withholding tax / turnover tax
• Repatriation of Equity along with dividends freely allowed
• Convertibility of PKR into USD
• Non-Muslims and non-residents exempted from payment of Zakat on dividends
Mandatory purchase of electricity by power purchaser
17-18% ROE
Government’s Sovereign Guarantee
Grid evacuation responsibility of power purchaser
Renewable Energy Policy 2006
Wind Energy
Five (05) wind power projects of 255.4 MW operational.
Nine (09) wind power projects of 477 MW are under construction.
14 wind projects of 664 MW in different stages of development.
Solar Energy
One (01) solar project of 100 MW installed.
Three (03) solar projects of 300 MW under construction.
31 solar projects of 711.44 MW in different stages of development.
Biomass Energy
Three (03) biomass cogeneration projects of 82.7 MW operational.
Eleven (11) biomass cogeneration projects of 333.4 MW in development stages.
Renewable Energy Projects
Wind: 340,000 MW (Theoretical)*
1396 MW in pipeline
Solar: 2,900,000 MW (Theoretical)*
Hydro (small/mini) 3,000 MW (Approx.)
Bagasse Cogen: 2,000 MW (Approx.)
Waste to Energy: 1,000 MW (Approx.)
Geothermal Potential yet to be determined
Alternative Fuels Potential being determined
• Initial macro level resource maps for wind and solar developed by NREL (USA).
• Resource mapping and spatial planning of solar , wind and biomass energy resources has been initiated with the support of the World Bank and ESMAP’s Renewable Energy Resource Mapping Initiative.
* Based on NREL study conducted in 2006.
Renewable Energy Potential
. . Dassu area Skardu districtGeothermal springsT: max: 71 °C
MurtazabadGeothermal springsT: 26 - 92°C
BudelasGeothermal springsT: 36 - 46°C
..Geothermal springNear the snout of Pechus Glacier
.Yasin District Hot Sulphourus spring
Geothermal springs located Within Reshun and Ayun fault domain
. ..Mushkin geothermal springT: 57 °C
Tatta Pani geothermal springT: 65,5 - 83 °C
.Bakkur thermal spring..Taunsa thermal spring
Zinda Pir thermal spring.Uch thermal spring
. Khashkeli thermal gradient3-3,5 °C/100 m.. Mangho Pir geothermal spring
T: 50,3 °C
Karsaz geothermal springT: 39 °C
.Talhar thermal gradient3-3,5 °C/100 m
.
Lakhra thermal gradient3,3 °C/100 m
.Koh-e Sultan thermal springsT: 25,6 – 34,8 °C
.Garm ab thermal spring
Kharan region (potential) geothermal system
.Geothermal springs at West of Dhadar, near Sanni
.Geothermal springs at the northof Zhob valley
.Geothermal springs at Harnai valley
Giandari Hot Spot .
GEOTHERMAL SPRINGSOF PAKISTAN
...
Seismo-Tectonic & Suture Related Systems
Geopressurised Geothermal Systems
Neogene-Quaternary volcanism related Systems
Project Under Study
• Diamir Basha Dam Project (4500 MW)
• Patan Hydropower Project (2300 MW)
• Thakot Hydropower Project (4000 MW)
Future Projects
• Yulbo Hydropower Project (2800 MW)
• Tangus Hydropower Project (2200 MW)
• Skardu Hydropower Project (1200 MW)
Hydel Power Potential
Thar Desert contains the world’s 7th largest coal reserves: 175 Billion Ton = 50 Billion TOE = 2000 TCF
Total Thar Coal Reserve More than Saudi Arabia 68 times higher than & Iranian Oil Reserves Pakistan’s total gas reserves
Sindh186 billion tons
Punjab235 million tons
Balochistan217 million tons
KP90 million tons
Azad Kashmir9 million tons
Thar
Coal Potential of Pakistan
• Thar Coalfield is declared as Special Economic Zone, and projects
of development of Thar declared as ‘Projects of National Security’
• 20% ($ Based) IRR to firms which achieve Financial Close before
Dec 2015 for Mine & Power Plants based on indigenous coal.
• Zero percent customs duties on import of coal mining equipment
and machinery including vehicles for site use.
• Exemption on withholding tax on dividend for initial 30 years.
• Exemption on withholding tax on procurement of goods and
services during project construction and operations.
• Exemption for 30 years on other levies including special excise
duty, federal excise duty, WPPF and WWF.20
Fiscal Incentives for Coal Projects
Scope of Work
• 500 kV Double Circuit Transmission Line from Hubco Coal Power Plant to Matiari (200km).
• Extension at 500 kV Matiari Switching Station (Two line bays with Shunt Reactor Banks)
Estimated EPC Cost
134MUS$
Expected Commissioning of Power Plant
December 2017
Financing Financing will be done through IFIs
PC-I Approval Status
PC-I submitted to MoW&P on 08.07.2015 and is under process with Planning Commission for approval of ECNEC
Completion 2017-18
Power evacuation from 1320 MW Hubco Project
Scope of Work
•+ 600 kV Bi-Polar HVDC T/L from Thar to Lahore (960km)
•HVDC Converter & Switching /Control Stations at Thar & Lahore
•Grounding Stations at Thar and Lahore
Estimated EPC Cost
1700 MUS$
Financing Financing will be done through IFIs
Approval Status
Not yet prepared
Completion 2020-21
Power Evacuation from Thar Power Plants
23
•Pakistan’s Power Sector is Ready For
Investments in:
•Generation
•Transmission through wheeling
•Transmission Lines
•Distribution – through Privatisation
•Equipment and Materials
Investors are welcome
to avail investor friendly
profitable business
opportunities in
Pakistan’s Power
Sector
25