January 2017
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The Globalization Bulletin Energy January 2017 NEWS COVERAGE PERIOD FROM JANUARY 16TH TO JANUARY 22 ND 2017 GAS CRISIS WORSENS IN PUNJAB Dawn January 16th, 2017 Khalid Hasnain LAHORE: Gas crisis worsened in Punjab on Sunday after the shortfall surged to 400MMCFD, forcing the Sui Northern Gas Pipelines (SNGPL) to divert to the domestic sector a supply of about 275MMCFD, out of over 400MMCFD liquefied natural gas (LNG) meant for the industrial, power and CNG sectors. Although the situation in Khyber Pakhtunkhwa is not as dire as in Punjab, consumers have started complaining about low gas pressure there as well. The SNGPL claimed to have launched a campaign against those using compressors to extract gas in parts of Punjab and KP, causing low gas pressure. At present, the company supplies around 1,400 to 1,500MMCFD to the domestic sector, which needs supplies ranging between 1,800 and 1,900MMCFD to meet the demand of about five million consumers in Punjab and KP? “Following severe cold, the situation appears to be tough these days. The shortfall has surged to 400MMCFD amid a demand of 1,800-1,900MMCFD, even though we have curtailed LNG supply to two major fertiliser plants, as many power plants and the CNG sector, and diverted it to the domestic sector,” SNGPL managing director Amjad Latif told Dawn. The fertiliser plants — Fatima Fertiliser (Pvt) in Sheikhupura and Pak Arab Fertilisers (Pvt) in Multan — consume 90 to 100MMCFD of gas. Likewise, gas supply to the Rousch Power Plant, the Abdul Hakim Power Plant (in Kabirwala and Khanewal respectively) and the Liberty Power Plant, in Mirpur Mathelo, has been suspended for an indefinite period. “The Rousch Power Plant was being supplied 90 to 95MMCFD while Liberty consumes 40 to 45MMCFD… However, the supply to Liberty Power Plant has been curtailed on account of non-payment of bills… and not for overcoming the gas crisis,” the MD said. He said the supply to other industries, including textiles, continued. The textile sector and other industries that have switched over to LNG are being supplied 100 to 150MMCFD. The Globalization Bulletin Energy But the supply to different industrial units in Punjab, which have not shifted to LNG despite repeated requests, was curtailed last month. “The situation is really problematic these days and we are trying hard to ensure gas supply to at least domestic consumers during winter,” Mr Latif said. To a question, he said the use of compressor by some consumers to extract gas was a headache for the company as it made it difficult to keep pressure. During the last 30 days or so, over 3,000 consumers in Punjab and KP have been caught red-handed for using compressors. The SNGPL has cut connection of such consumers for three months. “Keeping in view the situation, we have asked the federal government to amend the laws and provide judicial powers to the SNGPL to enable it to take stern legal action against those using compressors to extract gas,” the MD said. After curtailment of gas supply, power generation of over 600MW by the plants (400 by Rousch and 235 by Liberty) has been stopped, leading to an increase in the electricity shortfall and enhancing load shedding hours in parts of the country. http://www.dawn.com/news/1308749/gas-crisis-worsens-in-punjab PM BACKS LOW-TARIFF SOLAR POWER PLANTS IN PUNJAB The Express Tribune, January 18th, 2017. Zafar Bhutta Islamabad: Prime Minister Nawaz Sharif has directed the Ministry of Water and Power to facilitate Punjab in its efforts to develop 600-megawatt solar power plants with attractive tariffs, much lower than those notified by the regulator. According to an official, the directive came in a high-level meeting held some time ago where the premier was informed that a few companies had approached the Punjab government with the intention of installing solar power plants and generating electricity at 6.5 cents per unit. The proposed price was far lower than the tariff of 10.8 cents set by the National Electric Power Regulatory Authority (Nepra). Finance Minister Ishaq Dar also emphasised that proposals for the 600MW solar power plants could be pursued. The prime minister told an official of the Ministry of Water and Power to coordinate with the Punjab government and draw up proposals for the potential investors. The Globalization Bulletin Energy Earlier in a meeting, the power ministry had proposed that the share of renewable energy should be capped at 10% of the installed capacity as solar and wind power projects operated at much lower efficiency levels and created problems for the national power grid. However, attention was drawn to the increasing interest of provinces in generating renewable energy. The Sindh government has issued 51 Letters of Intent (LOIs) for the installation of wind power plants in the province whereas Punjab is in the process of issuing the LOIs. According to a senior official of the power ministry who was aware of the development, the meeting was informed that power production would be in surplus in 2022, therefore, the ministry wanted to place a cap on the consumption of imported fuels in electricity generation. “With the addition of new dams and utilisation of Thar coal, the reliance on imported fuels could be reduced,” he said. The official said total power generation capacity stood at 20,857MW in 2016 and with the addition of 12,267MW by 2018, the capacity would go up to 33,124MW. It will be enhanced further to 51,694MW by 2022. In the current 20,857MW power-generation capacity, the share of hydroelectric power was 34%, furnace oil-based electricity 29%, locally produced gas 19%, liquefied natural gas (LNG) 8%, renewable and nuclear energy 5% each. In 2018, hydroelectric power will contribute 30% of installed capacity, furnace oil 18%, LNG 16%, locally produced gas 12%, imported coal 10%, renewable energy 8%, nuclear energy 4% and locally produced coal 2%. In 2022, hydroelectric power will contribute 36% of energy, furnace oil 12%, LNG 10%, renewable and nuclear energy 9% each, locally produced gas 8%, locally produced coal 8% and imported coal 8%. http://tribune.com.pk/story/1298604/renewable-energy-pm-backs-low-tariff-solar-power-plants-punjab/ 12 ENERGY PROJECTS UNDER CPEC TO BE COMPLETED BY 2017-18 The Express Tribune, January 18th, 2017. Islamabad: The National Assembly Standing Committee on Planning, Development and Reform informed that 12 early-harvest energy generation projects under the China-Pakistan Economic Corridor (CPEC) would be completed by 2017-18. The committee, chaired by Abdul Majeed Khanan Khalil, was informed that these energy projects would produce 5,000MW of electricity and help overcome the power demand-and-supply gap in the country. The Globalization Bulletin Energy While briefing the meeting, Ministry of Planning, Development and Reform Secretary Yousuf Naseem Khokhar said that the multi-billion dollar deal comprised of three terms; short, medium and long-term. The short-term or early-harvest projects are mostly related to energy, based on coal, solar and wind and would be completed by2017-18, said Khokhar. The medium-term projects under CPEC would be completed by 2025, whereas the long-term projects would be completed by the year 2030, said the secretary, adding that development work on all the projects was gaining momentum each day. He said that different committees comprising members of parliament and Senate were closely monitoring the performance and possible outcomes of the projects. The Chinese government was also taken into confidence to include the Diamer-Bhasha Dam projects in the CPEC, which would enhance water storage capacity of the country, said the planning ministry secretary. He informed that the land acquisition process was completed by spending Rs101 billion and the project would be completed within a span of 8 to 10 years, which would also help increase the life span of Mangla and Tarbela dams. Giving an update on CPEC projects, the official said that feasibility study for Matiari-Lahore and Matiari- Faisalabad installation of transmission lines was completed and land acquisition process was in progress. While, upgrade of KKH and Havelian-Thakot phase 2 was also in progress. He apprised the committee that new projects recommended by the provinces were also included in CPEC, adding that China has assured that construction work for Gwadar Expressway would be started by the second quarter of the current financial year. The Gwadar Smart City Plane would also be finalised by the end of the current year, whereas industrial cooperation group had also been formed to promote Chinese investment for economic growth, said Khokhar. http://tribune.com.pk/story/1298608/early-harvest-12-energy-projects-cpec-completed-2017-18/ GUNVOR, ENI SUBMIT LOWEST BIDS FOR SUPPLYING LNG TO PAKISTAN Dawn, January 20th, 2017 Khaleeq Kiani ISLAMABAD: Global commodity trader Gunvor and Italian energy company Eni on Thursday emerged as the lowest bidders for supplying a total of 240 shipments of liquefied natural gas (LNG) at much lower rates than a similar government-to-government deal with Qatar. The Globalization Bulletin Energy An apple-to-apple comparison of 15 years shows that the price of LNG import from Qatar at current oil prices would be about $2.5 billion costlier than the latest bid results. According to final bid results, Gunvor has quoted the LNG price at 11.62 per cent of a barrel of crude oil (Brent) for short-term supply for five years. This will be Gunvor’s second five-year contract after the one it signed early last year. Eni came up with a bid price of 12.29pc of crude oil price for long-term 15-year contract.