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Presentation to Energy Task Force Khyber Pakhtunkhwa

13th April 2012

GOVERNMENT OF KHYBER PAKHTUNKHWA

ENERGY & POWER DEPARTMENT

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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)

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COMPOSITION OF ENERGY TASK FORCE1. Senior Minister for P & D/ E & P

Chairman2. 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 Member6. Minister for Law Parliamentary Affairs

Member& Human Rights

7. Minister for Labour Member4

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.

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Sequence of presentation:

a)Present situation and extent of problems

b)Recommendations of Energy Conference

c)Way forward

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Present situation and extent of problems

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Pakistan Energy Sector Overview Summer and Winter

Pakistan Energy Sector Overview Summer and Winter

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Supply- Demand GapSummer 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

Historical Supply & DemandHistorical Supply & Demand

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Power Sector – Generation AdditionPower Sector – Generation Addition

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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

Sector DescriptionCapacity

(MW)

A. Gas/RFO/HSD 3237

B. Hydel Projects 153

C. Wind Power Projects 312

D. GENCO Rehabilitation 636

Total (A+B+C+D) 4338

Generation Additions (2008-2012)Generation Additions (2008-2012)

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Power Sector – Load GrowthPower Sector – Load Growth

Demand Increase per year = 7.31%

Actual number of consumer increase 2002 – 2011

•Total = 5.38% (average per year growth) 12

Key reasons for shortfallsKey reasons for shortfalls

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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

Key reasons for shortfalls – Liquidity CrunchKey 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 bills5 Higher than NEPRA allowed system losses – Rs 24 b6 Total Receivables Rs 354 b (Private 169 b, KESC 54 b, Provincial 85 b, Federal 6 b)7 AJ&K tariff Rs 14 b8 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

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AVERAGE GAS REQUIREMENT VS. ACTUAL GAS SUPPLIED TO GENCOS POWER STATIONS (MMCF

D)

DESCRIPTION

Required Gas

Gas Available Gap Required

Gas Gas Available Gap Total Gap

Availability (%age)(GENCOs) (GENCOs) (GENCOs) (IPPs) (IPPs) (IPPs) (GENCOs +

IPPs)

             

2005-06 750 583 167 671 524 147 314 78%

2006-07 750 451 299 671 523 148 447 69%

2007-08 750 438 312 671 491 180 492 65%

2008-09 750 405 345 671 408 263 608 57%

2009-10 750 361 389 671 391 280 669 53%

2010-11 750 267 483 671 358 313 796 44%

2011-12 750 265 485 955 466 489 974 43%

• KESC supply (182 MMCFD) not included

IPPSPRESENT

REQUIREMENTPRESENT

ALLOCATION

955 466

GENCOSPRESENT

REQUIREMENTPRESENT

ALLOCATION

750 265

Projected DemandProjected Demand & Supply Position & Supply Position April to August 2012April to August 2012

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MonthsSupplied

(MW)

Supplied Breakup (MW)ComputedDemand

(MW)

Shortfall(MW)

Hydel Nuclear Gas RFO/HSD

April 12,992 2,305 615 2,761 7,311 16,492 -3,500

May 14,660 5,019 615 2,761 6,265 18,383 -3,723

June 15,451 5,036 615 2,761 7,039 19,564 -4,113

July 15,200 5,854 615 2,761 7,023 19,300 -4,100

August 15,210 5,992 615 2,761 7,021 19,322 -4,112

RECOMMENDATIONS OF ENERGY CONFERENCE

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GENERATION – Immediate Sr. # Measures

1. Reallocation of gas to power sectorAllocation of gas to:

•4 IPPS (@38MMCFD PER PLANT = 152 MMCFD)

•KAPCO 55 MMCFD

•Ideally 310 MINIMUM 207 MMCFD giving 1000MW

2 Release of receivables and subsidies

3 The borrowing limits of Provinces to be set by NEC

4 Directive to NEPRA for early determination of upfront tariff

5 Once stay on FPA vacated, power prices will jump to reflect correct cost of power. Provinces’ understanding required. 18

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…CONTD 2- Release of Receivables and Subsidies

Description Bln. Rs. Bln. Rs.

GOP SHARE @ 40% IN AGRI. BALOCH RECEIVABLES 5.08

5.08 PROVINCIAL GOVT. DEPTT/AGENCIES

a) PUNJAB 9.24

c) SINDH 49.13

d) BALOCHISTAN 6.83 65.21

PROVINCIAL GOVT. AGRI. T/WELL SUBSIDY

a) PUNJAB (12.5%) 5.00

e) BALOCHISTAN (30%) 7.00 12.00 KESC 49.66 Payable by KPK Consumers for delayed tariff increase due to Court Case 18.10

Sub Total 150.05

GENERATION – Medium Term

Sr. #

Measures Status

1. Rehabilitation of public sector power plantsUSAID = 636 MWADB = 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

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DISTRIBUTION – ImmediateSr. #

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.

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DISTRIBUTION – Medium Term

Sr. #

Measures

1. To bring in predictability and end unscheduled load shedding in the system automation of SCADA system in DISCOs

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CONSERVATION – Short TermSr. #

Measures Action Effects

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 implement

700 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

CONSERVATION – Short TermSr. #

Measures Action Effects

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

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CONSERVATION – Medium TermSr. #

Measures Status

1. Mandatory Energy Audits

After 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

THE WAY FORWARD

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WAY FORWARD: Action by Provincial Government (GENERATION /DISTRIBUTION)

Sr.#

Measures Actions/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 NEPRA NEPRA

3. Revision of Electricity Act 1910: Provinces to expedite

Ministry 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

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WAY FORWARD: Action by Provincial Government ( TARIFF & INSTITUTIONAL REFORMS)

Sr.#

Measures Actions/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 forReconciliation & 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

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…CONT

Sr.# Measures Actions/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

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WAY FORWARD: Action by Provincial Government(CONSERVATION)

Sr.#

Measures Actions/way forward Effects

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 governments Recommendations of Energy Task Force

700 MW

4. Subsidy for Solar Agri Tubewells Agriculture 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/PESCO 125 MW

7. Phasing out of Incandescent bulbs Industries Department 1200 MW

8. Overall Supervision of Energy Conservation & Issues

Energy Task Force through EMC of Finance Department 30

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