punjab energy investment opportunities
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Investing in Energy Today,Our key to a brighter
tomorrow!
01 August 2013
2
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
3
THE PROBLEM
4
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
6
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
8
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
9
10
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
11
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
12
PUNJAB ENERGY STRATEGY
13
14
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
15
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
16
Case Study – Indicative Returns (based on NEPRA determination)
17
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)
30
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
31
HYDEL POWER POTENTIAL IN PUNJAB
32
Head works/ Barrages 14
Main Canals 24
Small Dams 49
Hydro Potential: On Rivers 325 MW
Hydro Potential: On Canal 475 MW
33
Case Study – Indicative Returns(based on feasibility study tariff ) run of canal distt. sahiwal
34
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
35
36
• 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
37
• 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
38
• 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)
40
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
41
BRIDGING THE ENERGY GAP – THE PLAN
42
BRIDGING THE ENERGY GAP – THE PLAN
LinkLink
ENABLING POLICIES AND INCENTIVES
43
REGULATORY STRUCTURE
44
ENABLING POLICIES & INCENTIVES
REGULATORY STRUCTURE
45
ENABLING POLICIES & INCENTIVES
CONTRACTUAL MECHANISM
• Guaranteed power purchase for IPPs• Upfront tariffs • Sovereign Guarantees• Standardized IA, PPAs
46
FINANCIAL & FISCAL INCENTIVES
ENABLING POLICIES & INCENTIVES
47
FINANCIAL & FISCAL INCENTIVES
ENABLING POLICIES & INCENTIVES
48
POLICY INTERVENTIONS PLANNED - PUNJAB
49
POLICY INTERVENTIONS PLANNED - PUNJAB
50
ADDITIONAL INTERVENTIONS BEING PROPOSED
51
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
52
ADDITIONAL INTERVENTIONS BEING PROPOSED
53
PUNJAB ENERGY – A SMART INVESTMENT
54
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
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