PAKISTAN POWER SECTOR. A Profile & Opportunities

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1 PAKISTAN POWER SECTOR A Profile & Opportunities February,

2 Pakistan Power Sector A Profile 2 2

3 Pakistan Power Sector a Profile Pakistan Power Sector is organized into nine Distribution Companies (DISCOs), four Generation Companies (GENCOs) and one National Transmission and Dispatch Company (NTDC), which provide service in whole of Pakistan except area around Karachi and Karachi Electric Supply Company (KESC) which provides service in area around Karachi. However, the KESC system is interconnected with the national grid company, NTDC Total installed capacity is around 20,000 MW: 33% Hydro (Public Sector), whereas out of 67% thermal, 40% is through Private Sector IPPs, 25% is Public Sector Thermal and 2% is Nuclear Transmission System comprises of 5,177 km 500 kv, 7,500 km 220 kv with NTDC whereas 31,000 km 132 kv and 7800 km 66 kv is with DISCOs. Peak demand is around 21,000 MW against availability of 15,500 MW. Almost one fourth remains unmet at peak during summer. Energy Generation has been around 90 TWh with KESC share of about 10% Total customers are 20.7 million including 2 million in KESC system Transmission and Distribution Losses are 21%, excluding KESC with 34% 3

4 G/S JACKIGOR 230kV POLAN 75km CHAB AHAR 230kV 50.7km 220kV 70.5km IRAN GWADAR 220kV IPPs ARABIAN SEA INSTALLED CAPACITY IN MW 1- KAPCO HUBCO AES PAK GEN AES LALPIR KEL SEPCO HCPC FAUJI KABIRWALA ROUSCH SABA JAPAN POWER CHASHNUPP UCH JAGRAN HYDEL ALTERN LIBERTY POWER 235 QESCO 500kV STATIONS 1- Peshawar 2- Tarbela 3- Ghazi Brotha 4- Rewat New 5- Lahore 6- Gatti ROUSCH(IPP) 7- Yousafwala 8- Multan 9- Muzaffar Garh 10- Guddu 11- Dadu New 12- Jamshoro HUBCO(IPP) QUETTA INDUS KHUZDAR 500kV IMPORTED COAL AES KARACHI (GADANI) HUBCO P/H HABIB ULLAH IPPs AL - TUWARIQI STEEL MILL MIS KESC NKI SIBBI NEW DADU UCH P/H UCH-II JAM SHORO P/H JAMSHORO NOORI ABAD KDA-33 BAL DIA CAVALIER 500MW IPP PROGAS 345MW IPP 500kV SHIKAR PUR AFGHANISTAN GUDDU P/H HYD LORALAI ROHRI NEW 220kV MORO 500kV HALA RD HESCO ENGRO AC/DC LINES TO LHR / ISD NEW (CONSULTANT) TANDO JAM 765/500kV D.G.KHAN INDUS RIVER DEHRKI CCPP AES PAK.GEN. AES INDUS RIVER INDUS RIVER INDUS RIVER LALPIR KAPCO THARCOAL 500kV RIVER KABUL PESHAWAR DOMAIL BANNU M/GARH JAMRUD IND. CHENAB RIVER R.Y.KHAN 500kV NEW DOUDKHEL PESCO WARSAK P/H MARDAN S/BAGH NEW G/BROTHA FESCO NGPS RIVER INDUS CHASNUPP SATLUJ RIVER BAHAWAL PUR NEW P/H NOWSHERA LUDEWALA ROUSCH MEPCO RIVER KABUL BURHAN TAXILA ISPR IESCO F.KBR IPPs MULTAN PATAN N.ABAD VEHARI THAH KOT RIVER INDUS NEW REWAT SR:RD I N D I A C H I N A GILGIT AGENCY BASHA RIVER INDUS MAN SEHRA TARBELA P/H CHAKWAL CHINT IND. F/ABAD IND. JHANG RD CHISHTIAN 220kV ISD UNIV: JR:RD DASU ALLAI KHWAR GATTI RIVER CHENAB RAVI RIVER SAHIWAL BUNJI DOYIAN MANGLA P/H SABA IPPs JHELUM RIVER G/WALA LAH ORE S.NAGAR LESCO SUTLEJ RIVER JAMMU & KASHMIR B.RD N.K.L PAT JAGRAN HYDEL NEELUM JHELUM KOHALA GUJRAT GHAK KAR GEPCO K.S.K SIALKOT RAVI RIVER JAPAN IPPs SEPCOL IPPs KEL NEW SUTLEJ RIVER RAVI NEW SHALIMAR GAZI RD. LEGEND EXISTING PROPOSED GRIDS LINES GRIDS LINES 500 kv 220 kv HYDEL STATION THERMAL STATION DWN: D.D DIR: C.E Shahid Mahmood M.Waseem Younus NTDC PLANNING POWER Muhammad Akhtar NATIONAL GRID 500 & 220kV SYSTEM G.M Abdul Majeed Malik DRG# GMPP/Geog/PAK DATE

5 Pakistan Power Sector - Organization GOVERNMENT OF PAKISTAN Ministry of Water & Power Pakistan Atomic Energy Commission NEPRA The Regulator Private Sector Kanupp & Chashnupp WAPDA PEPCO Water Projects & Dams GENCOs (4) DISCOs (9) NTDC PPIB AEDB IPPs SPPs/ CPPs KESC CPPA 5

6 Pakistan Power Sector Players - Role & Responsibilities PEPCO Pakistan Electric Power Company Has an oversight role over operation & development activities of thermal GENCOs for generation, of NTDC & DISCOs for transmission & distribution systems. For new IPPs, NTDC liaisons with PPIB and provides interconnection points. NTDC also procures power from existing IPPs. WAPDA - Water and Power Development Authority After restructuring, its role has been confined to development of New Projects and operation & maintenance of existing hydro power stations PPIB Private Power and Infrastructure Board To arrange for required capacity additions through private investments & to provide one stop facility to eliminate unnecessary delays in finalization and approval of IPPs. The Power Sector Policy is driven by PPIB AEDB Alternative Energy Development Board It is also one stop facility for induction of generation based on wind, solar, biomass and other renewable resources. The first Wind Farm was inducted in April 2009 NEPRA National Electric Power Regulatory Authority The Regulator To regulate the Sector by issue of Licenses for generation, transmission & distribution, by tariff determination and by establishing and enforcing performance standards and codes 6

7 Supply-Demand Position 7

8 Historic Demand & Supply Position (excluding KESC) ( ) Fiscal Year Computed Peak Demand * Corresponding Supply (All Figures in MW) Surplus/ Shortfall (Jul-Dec) Villages electrified during ,868 * Includes export to KESC and unmet demand 8

9 Historic Demand & Supply Position ( ) (Jul-Nov) Computed Peak Demand * Corresponding Supply 9

10 Peak Demand Projections* (whole Country) MW *Projected demand includes captive power also. Average growth rate is expected to be about 8% Years 10 10

11 Fundamental need: Bridge present supply & demand gap and cater for future growth New Electrification: 160 million people, per capita consumption 480 units, (world average of 2650 kwh) about 25-30% have no electricity access and others need intensification Resource Potential: Pakistan Power Sector Outlook and Policy Framework Identified potential, hydropower about 54,000 MW, coal about 185 billion tons (about 100,000 MW) and alternate energy about 34,000 MW Power Policy offers for Investment i) Liberal Incentives, ii) One-Window Facility provided by PPIB for Investments, iii) Balanced risk profile for investors, lenders & government agencies, iv)independent Regulator to watch and balance the interest of consumers as well as power companies, and v) Attractive and competitive return on investment 11

12 Pakistan Power Sector Future Outlook (Medium & Long-term) To meet future demand, 54,000 MW by 2020 in the medium term, Pakistan is looking towards all sources: Large power plants based on Coal, both local & imported Big Hydro power plants, viz, Basha, Bunji, Dasu etc Alternative Energy Projects based on Wind, Solar, Biomass etc Cross border electricity import Development of Power Parks for 4000 to 5000 MW generation at strategic locations where fuel infrastructure, access to rail/road, utilities and other facilities are available Following Transmission Projects also need to be built, concurrently: Transmission Systems for evacuation of power from new generating plants Projects for Rehabilitation and reinforcement of Sub-transmission and distribution systems for absorption of power from new generating plants All the above Projects require huge Investment for which there is a competition with developing countries to attract foreign investment 12

13 Opportunities 13

14 Power Sector Investment Plans Capacity Addition thru o Private Sector IPPs o Rehabilitation of existing Public Sector GENCOs Plants. USAID has picked up the Projects o Extension/additional units in the existing Public Sector GENCOs Power Stations o Replacement of the Existing Power Stations Using the Existing Infrastructure o Installation of new Combined Cycle Power Plant in the premises where an existing Power Station abandoned or is replaced o Development of Power Parks New Power Stations based on Gas / Oil New Power Stations based on Coal (Imported / Local) Transmission and Distribution Infrastructure Upgradation and Development Development mode can be public, private or public-private partnerships 14

15 Capacity Additions IPPs Currently, the quantum of capacity additions through IPPs is limited to MW for each plant, whereas the demand is going to double by 2015 and treble by 2020 There is a need for investment for larger plants under Private Sector IPPs based on Coal, Imported or Local, Gas, Imported or local when developed Since the present generation is heavily tilted towards oil fired IPPs, no more generation can be afforded on oil 15

16 No. of units Capacity/ Unit MW Total Additional Capacity MW Capacity Addition Extension /Additional Units in the Existing Power Stations Approx Cost U$ Million Year of Commissioning Advantages Jamshoro Thermal Power Station ( (Located in Sindh Province, about 20 KM from Hyderabad and 160 KM from Karachi) Land is available Feasibility & Environmental Impact studies already carried Dec 2013 out Jan 2014 Basic infrastructure available Close proximity to the load center Railway siding available Muzaffargarh Thermal Power Station (Located in Punjab Province near Multan City) Total Dec 2013 Mar 2014 Land is available Basic infrastructure available Close proximity to the load center Railway siding available 16

17 Capacity Addition Replacement of the Existing Power Stations Using the Existing Infrastructure No. of units Capacity/ Unit MW Total Capacity MW Approx Cost U$ Million Year of Commissioning Advantages Multan Power Station (Located in Punjab Province in Multan City) Jan 2014 Land is available Basic infrastructure available Close proximity to the load center Railway siding available 17

18 Capacity Addition Installation of new Combined Cycle Power Plant in the premises where an existing Power Station abandoned or is replaced Approx No. Capacity/ Total Cost of Unit Year of Capacity units MW MW U$ Commissioning Million Sukkur Power Station (Located in Sindh Province in the City of Sukkur) Land is available 3 2x40+1x Oct 2012 Basic infrastructure available Close proximity to the load center Quetta Power Station (Located in Balochistan Province in the city of Quetta) 3 2x75+1x July Total Land is available Basic infrastructure available Close proximity to the load center 18

19 Development of Power Parks To facilitate investment on fast track basis, there is a need to establish Power Parks These will be located at 4-5 strategic locations near river or canal head for availability of water, and near main highway or rail link for transportation of fuel in addition to the availability of utilities These Parks will house MW capacity plants which serve as base load plants These will be based on coal, local or imported, on gas, local or imported 19

20 No. of units Capacity/ Unit MW Total Capacity MW Capacity Addition New Power Stations based on Gas / Oil Approx Cost U$ Million Year of Commissioning Advantages Combined Cycle with Aero derivatives turbines at Dadu (About 350 KM from Karachi) 5 2x x Jul 2012 Jul 2013 Combined Cycle at Sahiwal (About 100 KM from Lahore) Land is available To be located in existing 500 kv Sub Station 9 6x200+3x Oct 2013 Apr 2014 Combined Cycle at Chichokemallian (About 25 KM from Lahore) 3 2x175x1 x Dec Total Land is available Close proximity to the load center 20

21 Capacity Addition New Power Stations based on Coal (Imported / Local) Sr. No Power Station Coal Power Station at Islamkot Thar Thermal Power Station near Karachi on imported coal No. of units Capacity / Unit MW Total Capacity MW Approx Cost U$ Million Year of Commissioning Total

22 Transmission There are a number of Transmission Projects which need to be developed for evacuation of power from new large hydro projects in the north and from large thermal projects in the south. A very large investment is required in transmission concurrently with the establishment of the thermal and hydro power stations. 22

23 Transmission Main Transmission Projects Sr. No. Name of Project Transmission Lines Cost US$ in mill Expected Commissioning 1. Dispersal of Power from 969 MW Neelum Jhelum Hydro Power Project to Rawat and Gujranwala km 500kV Transmission Line Dispersal of Power from 4500 MW Diamer Basha Hydro Power Project to Gujarkhan and to Lahore Three 765kV Transmission Lines from Basha to Gujarkhan (407 km each) Two 765kV Transmission Lines from Gujarkhan to Lahore (260 km each) Dispersal of Power from 3000 MW Thar Coal Power Project Two 765kV 1340 km long Transmission Lines from Thar Coal to Lahore

24 Distribution Distribution system needs to be modernized on war footing not only to provide quality service to the consumers but also to improve the performance in terms of reduction in losses and improvement in recovery One area which can bring immediate relief both to the customers and the utility is the introduction of smart meters and smart metering systems in a big way 24

25 Smart Metering for High-End Customers 250,000 high-end customers Present average line losses of these customers 15% Pilot Projects proved average reduction of line losses by 8% Benefit Saving in demand 100 MW US 120 million (As cost of installation of Plant(s) Reduction in line losses due to lesser load 2% Reduction in loss due to elimination of theft 6% Total 8% Benefit thru reduction in losses per year Total cost of the Project US$ 40 million $250 million 25

26 Pakistan Power Sector Cross Border Electricity Trade & CASA Project 26 26

27 IMPORT OF POWER FROM IRAN Existing Arrangement Agreement Signed Nov 2002 Contract Period 30 years Interconnection Voltage and Max. Power Allowed (As per Contract) Jackigur (Iran) Mand (Pakistan) section Taftan Mushkhel 132 kv (35 MW) 20 kv (2 MW) 20 kv (2 MW) Plan for import of 100 MW more power for Gwadar Port Establishment of 220kV Line between Polan (Iran) & Gwadar Establishment of two 220kV substations each at Polan (Iran) & Gwadar An agreement signed with M/s TAVANIR of Iran in February 07 for a tariff of US cent 6.25/kWh. Contracts have been awarded and construction will start soon. Plan for import of 1000 MW more power for Quetta An MOU has been signed with Govt of Iran for import of 1000 MW power for Quetta, Baluchistan area. Feasibility will be carried out soon

28 PAKISTAN IRAN 28 28

29 IMPORT OF POWER FROM TAJIKISTAN CASA-1000 Project The Project Tajikistan & Kyrgyz Republic have significant hydropower & coal resources Wish to export electricity from potential projects: looking for export markets Pakistan & Afghanistan are potential import markets; wish to import electricity to meet their growing demands Export Potential 1000MW for Pakistan & 300MW for Afghanistan (about 4000 GWh) in the Ist stage Infrastructure Requirement A 477km 500kV AC line between Kyrgyz Republic & Tajikistan and 750km 500kV DC line between Tajikistan & Pakistan(Peshawar) via Afghanistan(Kabul) with 3 substations Way Forward An Energy Ministers & IFIs Conference was held in Islamabad on 1-2 Aug 08, & an Inter Governmental Agreement was signed. An IGC (Inter Govt Council) office has been established at Kabul. IBRD/ADB/IDB/IFC 29 have offered to support the Project. Approx cost is $865 million without interest during construction 29

30 Financial Stability 30

31 Financial Stability of the Power Sector Moving towards Full Cost Recovery Due to difference in cost of unit generated (cost of service) and the tariff charged to the consumers especially during , coupled with heavy borrowing from the banks for payment to IPPs and others and due to unpaid committed subsidies, a huge circular debt was created. The cost of generation increased due to heavy dependence on oil (35% in ), further adding on to the Circular Debt. Government of Pakistan has taken care of this Circular Debt upto June 2009, by creating a Holding Company, where the same is parked for eventual resolution. The present Subsidy is duly budgeted. National Electric Power Regulatory Authority (NEPRA) Act has been amended. o The determination by NEPRA shall be considered as Notification o Provisions of Quarterly Tariff Determinations and Monthly Fuel Price Adjustments The difference between cost of supply and tariff is programmed to be bridged through tariff increase in shape of Monthly Fuel Price Adjustment and Quarterly Tariff Determinations, and Targeted Subsidies 31

32 32

Experiences with Electricity Tariff Reforms

Experiences with Electricity Tariff Reforms Presented by: Muhammad Safdar NEPRA, Pakistan ERRA Tariff / Pricing Committee meeting October 19, 2016 Bratislava, Slovakia 1 Experiences with electricity Tariff