Suzhou INVESTMENT OPPORTUNITIES IN POWER SECTOR OF PAKISTAN CHINA-PAK ECONOMIC CPRRIDOR.pdf

INVESTMENT OPPORTUNITIES IN POWER SECTOR OF PAKISTAN& CHINA-PAK ECONOMIC CORRIDORENERGY MIX OF PAKISTANDEMAND-SUPPLY SCENARIO OF PAKISTANPOLICY INCENTIVES FOR IPPsPOWER PLANTSTRANSMISION LINESPOLICY INCENTIVE FOR RENEWABLE ENERGYSPECIFIC PROJECT OPTIONSCHINA-PAKISTAN ECONOMIC CORRIDORINTRODUCTION MAJOR ENERGY PROJECTS SEQUENCEOVERVIEW OF PAKISTANS POWER SECTOR3 Atpresentthefollowingentitiesareresponsiblefordeliveryofpowertotheendconsumers: OneTransmissionandDispatchCompany TenDistributionCompanies FourPublicSectorGenerationCompanies ThirtyOne(31)IndependentPowerProducers(IPPs) TheElectricityGenerationisblendofHydelandThermalUnits. Totalinstalledcapacityisaround25,000MWwith53%and47%ShareofPublicandPrivateSectorrespectively. CurrentlyCountryisfacingdeficitofaround6,000MWinpeaksummermonthswhereasthepowerdemandhasbeengrowingby6-7%perannumresultingintoloadsheddingof8-16hours. ExpansioninTransmissionNetworkisrequiredtoevacuatepowerfromupcomingprojects. DuetoFinancialConstraintsinthePublicSector,theGOPisfocusingonprivatesectortoinvestinPPStobridgetheelectricitydemandsupplygap.Hydel31%Gas21% Oil39% LNG4% Nuclear3%Renewables2%CurrentFuelMixSolar2%Import2%Hydel26%Gas12% Oil14% LNG13% CoalLocal4%CoalImported20%Nuclear3%0% Wind4% FuelMix2019-20PAKISTAN ENERGY MIX 1758223107175822350018402251451969026905210682878812140172851417423434202132709422940281682507730803-5442 -5822 -3408 181113250126340092015JAN-16 JUL-16 JAN-17 JUL-17 JAN-18 JUL-18 JAN-19 JUL-19 JAN-20 JUL-20 PowerDemandandSuplyPeakDemand AvailableGeneration Gap Inthepeaksummermonths,electricitydemand-supplygapreachesupto6,000MWresultinginload-sheddingofupto8-16hoursperday Evenifthemaximumcapabilityof18,477MWisassumed,countrywouldneedadditional13,310MW(net)bytheyear2020,requiringaninvestmentof$15billion Thegovernmentislookingtowardsprivatesectortobringadditionalgenerationoncoal,hydroandrenewableenergyonfasttrackbasis Inordertoencourageprivatesector,thegovernmenthasbeenissuingvariouspolicies/guidelinesfromtimetotimeinthepastatbothfederalandprovinciallevelsPAKISTAN POWER SECTOR CURRENT SCENARIO6PLANS TO ENHANCE POWER GENERATION CAPACITY AND ALLIED INFRASTRUCTURE7ThePresentGovernmentisstrivinghardtoovercometheongoingpowercrisiswhichhasadverselyimpactedtheNationalEconomy.Anumberofinitiativesareinprogresstoenhancegenerationcapacityofthesystem,includingpowerplantsbasedoncoal,hydel,gasandrenewableresources,bothinpublicaswellasprivatesector.TheGoPhasrecentlyapprovedPowerGenerationPolicy2015whichprovidesattractiveincentivesforprivateinvestorsExtensivenetworksofhighvoltagetransmissionlinesandgridstationsarebeingdevelopedtoevacuatepowerfromupcomingmegacoalandhydelprojectstobelocatedsouthernandnorthernpartofcountry.TheGoPhasapprovedPrivateTransmissionLinePolicyforallocatingprivateinvestmentinhighvoltagetransmissionlinesPOWER GENERATION POLICY 2015 SALIENT FEATURES/ INCENTIVES8PPIB/relevantentitiesintheProvinces/AJK/GBwillprovideaone-windowfacilityforimplementationofprojectsunderthePolicy.ExemptionfromCorporateIncomeTax,TurnoverTax,WithholdingTaxandSalesTax, only5%concessionaryImportDutyonplant&equipmentnotmanufacturedlocallyGOPGuaranteesobligationsofpowerpurchaser&provincesGOPprovidesprotectionagainstPoliticalForceMajeure,ChangeinLawandChangeinDuties&TaxesForHydroPowerProjects;WUCwillbepaidRs.0.425/kWhtotheprovincewheretheprojectislocated.PowerPurchasertobearHydrologicalRiskforHydroprojectsPOWER GENERATION POLICY 2015 SALIENT FEATURES / INCENTIVES9AttractiveROEprovidedbytheRegulatorImportedCoal:27.3;LocalCoal:29.5;TharCoal:34.5;Hydro:23%ROE;Gas/LNG:18%ROETomitigatehighundergroundgeologicalrisk,longconstructionperiodandenvironmentalsensitivitiesfollowingtariffre-openersareprovidedbyNEPRACostEscalationinCivilandCostVariationforE&MworksResetlementCostCostvariationduetoGeologicalConditionslimitedtoTunnelAreaTariffindexationforinflation(USCPI&PakWPI)GovernmentensuresconversionofPakRupee&remitanceofforeignexchangeforproject-relatedpayments10Atpresent,variouslocalandimportedcoalbasedIPPsareunderproceswithPPIB,mostofwhicharebeingdevelopedundertheChinaPakistanEconomicCorridor(CPEC)PPIB,afterconsultationwiththestakeholders,hasfinalizedandsharedSecurity PackageDocumentswith theSponsors(ImplementationandPowerPurchaseAgreements)Moreover,thetotalpotentialofTharisestimatedat175billiontonsoflignitecoalwhichmaybesufficienttoproduce100,000MWelectricityfor200yearsNPERAhasalreadyannouncedUpfrontTariffforIndigenousCoalbasedProjectsInvestorsareencouragedtoparticipateasequitypartnerwithexistingSponsorsindevelopmentofpowerprojectsbasedonTharCoaland/orproposenewprojectsbasedonTharCoal.INVESTMENT INITIATIVES (Coal based Power Projects)11TransmissionLineandAlliedInfrastructureProjectsundertheproposedTransmissionLinePolicy(tobeannouncedshortly)ListofTransmissionSystemprojectstobeofferedtoPrivateSectorwillbepreparedbyGOPAwardofProjectsthroughICBandUpfrontTariffonBOOTbasisPolicytocoverTransmissionLine&GridStationprojectsof220kVvoltagelevelandabove(EHVAC&HVDC)Land&LegalRightofwaytobeprovidedbyNTDCProjectTerm:25yearsTransmissionutility(NTDC)topayafixedTransmissionServiceCharge,regardlessofthequantumofenergytransmittedExemptionfromCorporateIncomeTaxforfirsttenyearsincludingturnoverratetaxandwitholdingtaxonimportsStandardizedSecurityPackage(IA&TSA)OneWindowfacilitybyPPIBINVESTMENT INITIATIVES (Transmision Line Projects)NEW INVESTMENT INITIATIVES (RLNG Projects)123,600(3x1200)MWPowerGenerationProjectsbasedonR-LNG,tobecommissioned2400MWhasopencycleinMay2017;completionof3600MWearly2018Tenderingforallplantshasbeencompletedandcontractorshavemobilized02projectsbeingdevelopedbyFederalgovernmentwhile01bygovernmentofPunjabEquityparticipationintheseplantsisavailableforRussianinvestors02similarprojectshavebeeninitiatedatJamshoro(600MW)andGuddu(1200MW)These02plantscanbeimplementedonG-to-GbasiswithRussiancompaniesNocustomsdutyorsalestaxonimportofequipmentNoIncomeTax/withholdingtax/turnovertaxRepatriationofEquityalongwithdividendsfreelyallowedConvertibilityofPKRintoUSDMandatory purchase of electricity by power purchaserGovernments Sovereign GuaranteeGrid evacuation responsibility of power purchaserRenewable Energy Policy 2006WindEnergyFive(05)windpowerprojectsof255.4MWoperational.Nine(09)windpowerprojectsof477MWareunderconstruction.14windprojectsof664MWindifferentstagesofdevelopment.SolarEnergyOne(01)solarprojectof100MWinstalled.Three(03)solarprojectsof300MWunderconstruction.31solarprojectsof711.44MWindifferentstagesofdevelopment.BiomasEnergyThree(03)biomascogenerationprojectsof82.7MWoperational.Eleven(11)biomascogenerationprojectsof333.4MWindevelopmentstages.Renewable Energy ProjectsWind: 340,000 MW (Theoretical)*1396 MW in pipelineSolar:2,900,000 MW (Theoretical)*Hydro (small/mini) 3,000 MW (Approx.)Bagase Cogen: 2,000 MW (Approx.)Waste to Energy: 1,000 MW (Approx.)GeothermalPotential yet to be determinedAlternative Fuels Potential being determinedInitial macro level resource maps for wind and solar developed by NREL (USA).Resource mapping and spatial planning of solar , wind and biomas energy resources has been initiated with the support of the World Bank and ESMAPs 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 -92C BudelasGeothermal springsT: 36 -46C.Geothermal springNear the snout of Pechus GlacierYasin District Hot Sulphourus springGeothermal springs located Within Reshun and Ayun fault domain.Mushkin geothermal springT: 57 CTatta Pani geothermal springT: 65,5 -83 C.Bakkur thermal spring.Taunsa thermal springZinda Pir thermal spring.Uch thermal spring.Khashkeli thermal gradient3-3,5 C/100 m.Mangho Pir geothermal springT: 50,3 CKarsaz 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 springKharan region (potential) geothermal system.Geothermal springs at West of Dhadar, near Sanni.Geothermal springs at the northof Zhob valley.Geothermal springs at Harnai valleyGiandari Hot Spot.GEOTHERMAL SPRINGSOF PAKISTAN.Seismo-Tectonic & Suture Related SystemsGeopresurised Geothermal Systems Neogene-Quaternary volcanism related Systems Project Under Study DiamirBashaDam Project (450 MW) PatanHydropower Project (230 MW) ThakotHydropower Project (400 MW)Future Projects YulboHydropower Project (280 MW) TangusHydropower Project (20 MW) Skardu Hydropower Project (120 MW)HydelPower PotentialTharDesertcontainstheworlds7thlargestcoalreserves:175BillionTon=50BillionTOE=2000TCFTotalTharCoalReserve MorethanSaudiArabia 68timeshigherthan&IranianOilReserves PakistanstotalgasreservesSindh186biliontonsPunjab235miliontonsBalochistan217miliontonsKP90miliontonsAzadKashmir9miliontonsTharCoal Potential of Pakistan TharCoalfieldisdeclaredasSpecialEconomicZone,andprojectsofdevelopmentofThardeclaredasProjectsofNationalSecurity 20%($Based)IRRtofirmswhichachieveFinancialClosebeforeDec2015forMine&PowerPlantsbasedonindigenouscoal. Zeropercentcustomsdutiesonimportofcoalminingequipmentandmachineryincludingvehiclesforsiteuse. Exemptiononwithholdingtaxondividendforinitial30years. Exemptiononwithholdingtaxonprocurementofgoodsandservicesduringprojectconstructionandoperations. Exemptionfor30yearsonotherleviesincludingspecialexciseduty,federalexciseduty,WPPFandWWF.19Fiscal Incentives for Coal ProjectsPakistans Power Sector is Ready For Investments in:Generation Transmission through wheelingTransmission LinesDistribution through PrivatisationEquipment and MaterialsOpportunitiesChina-Pak Economic Corridor(CPEC)May2013byChinaPresident3000KMNetworkOfRoad,Rail,PipelineandOpticalFibers.LinkingKashgar northwest ChinasXinxiangUyghurautonomousregionandsouthwestPakistansGawadarPort.Introduction 1+4 Corporation structure Transport infrastructure Energy ProjectsIndustrial Corporations Gawadar PortIntroduction ChinaIsProviding$45.6Bilion$11.8ForInfrastructure$33.8BilionForPowerProjectsMajorityOfProjectsWillCompletedAtTheEndof2017Introduction Energy($33.8billion)Infrastructure($1.8billion)Comunication($4Million)CottonbiotechresearchMajor Projects ZonergySolar Power PlantKarothydro Power plantSukiKunarihydro Power PlantPort Qasim Coal-Fired Power PlantWind Power ProjectsPower Projects ZonergySolar Power Plant Located At BhawalpurWorld Largest solar Power Plant$1.5 Bilion Project900 MV Production ExpectedBuild In 3 PhasesComplete At The end Of 2016By Zonergy CompanyZonergySolar Power Plant KoratHydro Power Plant By Three GoregesCorporationProduce 720 MW$1.65 Bilion Project Complete in 2020KoratHydro Power Plant SukiKinariHydro Power Plant In KPK870 MW ProduceStarted In 2014End In 2020SukiKinariHydro Power Plant Port QasimCoal-Fired Power Plant $2.085 Bilion ProjectBy China Resource LimitedComplete By The End Of 20172*660 MW = 1320MWPort QasimCoal-Fired Power Plant Wind Power Projects Thatta Project (100 MW)SachalProject (50 MW)Hydro China Project (50 MW)Wind Power Projects Karachi-Lahore MotorwayKarakorum Highway RealignmentGwadar-RatoderoMotorwayRailway ProjectsTransportation Infrastructure Projects China Easy trade Between Midle east And AfricaChina Direct Access To the Indian OceanChineseindustriesarefacingproblemstocompeteinglobalmarketduetohightransportationcostanddeliverytime.It would decrease 10,000 kmtravel distance and cost greatly from China to Gulf.Even if China uses PCEC for 50% of its Oil suplies then it wil save $6 Milion every day, almost $2 bilion every year.Independent path from India and USAs interference.New business market in another country.Benefits of China Benefits of China Pakistan economy wil BostPakistancanavailgreatoportunitiesfromchinesexpertinvarioussectorslikeenergy,TechnologyandEducationsector.Development of Infrastructure.Conect al the Province.Development of Fata, KPK and Baluchistan.Create new employment oportunitiesPakistanandChinabothcolectivelytargetthehalfofthepopulationoftheworld,itwillprovidegreatoportunityforbothcountriestoexpendtheirmarket.Benefits of Pakistan Investors are welcome to avail investor friendly profitable business opportunities in Pakistans Power & Energy Sector ThankYou