National Electric Power Regulatory Authority Islamic Republic of Pakistan

Transcription

1 National Electric Power Regulatory Authority Islamic Republic of Pakistan NEPRA Tower, Attaturk Avenue (East), G-511, Islamabad Ph: , Fax: Web: No. NEPRA/R/DL/LAG-360/ June 2, 2017 Mr. Farman Ahmed Khan Lodhi I lead of New Ventures Development, Kolachi Portgen (Private) Limited, 4th Floor, The Harbor Front Building, HC-3, Marine Drive, Block 4, Clifton, Karachi Phone Subject: Grant of Generation Licence No. IGSPL/82/2017 Licence Application No. LAG-360 Kolachi Porten (Private) Limited (KPPL) Reference: KPPL 's application vide letter dated August 08, Enclosed please find herewith Determination of the Authority in the matter of Application of Kolachi Portgen (Private) Limited (KPPL) for the Grant of Generation Licence, along with Generation Licence No. IGSPL/82/2017 annexed to this determination granted by the National Electric Power Regulatory Authority (NEPRA) to KPPL for its MW Imported RLNG based Generation Facility/Thermal Power Plant located at, Port Qasim Authority, Karachi, in the province of Sindh, pursuant to Section 15 of the Regulation of Generation, Transmission and Distribution of Electric Power Act (XL of 1997). 2. Please quote above mentioned Generation Licence No. for future correspondence. Enclosure: Generation Licence (IGSPL/82/2017) Copy to: (Syed Safeer Hussain) I. Chief Executive Officer, K Electric (KEL), KE House, 39 13, Main Sunset Boulevard, DHA, Phase-II, Karachi 2. Chief Executive Officer, CPPA-G, ENERCON Building, Sector G-5/2, Islamabad. 3. Chief Executive Officer, NTDC, 414-WAPDA House, Lahore. 4. Director General, Environment Protection Department, Government of Sindh, Complex Plot No. ST-2/1, Korangi Industrial Area, Karachi. 5. Chairman, Port Qasim Authority, Bin Qasim, Karachi Pakistan. 6. Managing Director, Private Power and Infrastructure Board (PPIB), Ground Floors, Emigration Tower, Plot No. 10, Mauve Area, Sector G-8/1, Islamabad-Pakistan

2 National Electric Power Regulatory Authority (NEPRA) Determination of the Authority in the Matter of Application of for the Grant of Generation Licence (A). Background May 29, 2017 Case No. LAG-360 (i). K-Electric Limited (KEL) is providing the electric power services in the metropolitan city of Karachi and its adjoining areas. In this regard, the Authority had granted three (03) separate licences to KEL for generation, transmission and distribution services. In order to meet with its requirements, KEL has its own generation fleet of about MW and a few other public and private generation facilities/resources which are not sufficient to meet with exponentially rising demand of the city of Karachi and its suburbs. (ii). In view of the above, KEL has planned addition of more generation capacity in its system through its own as well as other resources. In this regard, KEL has issued Letter of Intent (Lol) to Engro &pep, (Private.) LiniiteL for setting up a new MW (approximate) imported Re-Gasified Liquefied Natural Gas (RLNG) based generation facility. In order to implement the project, a Special Purpose Vehicle (SPV) in the name of (KLCHIPGPL) was incorporated. (B). Filing of Application (i). KLCHIPGPL submitted an application on August 08, 2016 [in terms of Section-15 of Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 ("the NEPRA Act") read with the relevant provisions of the NEPRA Licensing (Application and Modification Procedure) Regulations, 1999 ("the Licensing Regulations")] requesting for the grant of generation licence. Page 1 of 14

3 (ii). The Registrar examined the submitted application and found the same compliant with the Licensing Regulations. The Authority considered the matter and also found the form and content of the application in substantial compliance with Regulation-3 of the Licensing Regulations. Accordingly, the Authority admitted the application on September 20, 2016 for consideration of the grant of the generation licence as stipulated in Regulation-7 of the Licensing Regulations. The Authority approved an advertisement to be published in the matter as stipulated in Regulation-8 of the Licensing Regulations. (iii). In addition to the above, a list of the stakeholders was also approved for seeking their comments for the assistance of the Authority in the matter. Accordingly, notices were published in one (01) Urdu and one (01) English newspapers on September 23, Further, letters were sent to different stakeholders as per the approved list on September 26, 2016, soliciting their comments for the assistance of the Authority. (C). Comments of Stakeholders (i). In reply to the above, the Authority received comments from four (04) stakeholders. These included Ch. Mazhar Ali, Private Power Infrastructure Board (PPIB), Engineering Development Board (EDB) and Ministry of Petroleum & Natural Resources (MoP&NR). The salient points of the comments offered by the said stakeholders are summarized in the following paragraphs: - (a). Ch. Mazhar Ali commented that the citizens of Karachi are in great need of electric power however, it is observed that most of the proposed generation facilities are being set up in one particular area of Port Qasim. In the said area, three coal fired projects have already been planned whereas the current project is also being planned in the same area. In view of the saturation in the area of Bin Qasim, the company may consider setting up this particular project on the Hawksbay side of city or West Wharf Side. The company Page 2 of 14

4 should be asked to have their own distribution on Gaddani, Somiani Side instead of selling its power to KEL; (b). PPIB remarked that its Board in its 105th meeting held on May 03, 2016, had decided that no power projects based on imported fuel would be entertained and processed in future. In view of the fact that electric power from the proposed project of KLCHIPGPL would be supplied to KEL, it is considered appropriate that the Authority may seek comments of Ministry of Water and Power (MoW&P) in the matter; (c). EDB submitted that sponsors of the project should make all efforts to utilize the indigenous potential available for execution of the project; (d). MoP&NR submitted that the company would be required to provide a firm guarantee in the form acceptable to the R- LNG supplier. The company would be required to execute Gas Sales and Purchase Agreement (GSPA) on take or pay basis, within thirty (30) days of signing of Power Purchase Agreement (PPA) or eighteen (18) months before its Commercial Operation Date (COD), whichever is longer. The terms and conditions of the GSPA would be negotiated between the RLNG supplier and the buyer i.e. the project company. Any take or pay quantities and obligations related thereto the RLNG would be reflected in the GSPA. The price of RLNG would be as per approval of the Economic Coordination Committee (ECC) of the Cabinet for supply of RLNG to power sector and or as notified by OGRA/PSO/other nominated entity. The company would obtain/sign Lol, Letter of Support (LoS), PPA or Page 3 of 14

5 Implementation Agreement as per the policies of the Government. (ii). The Authority examined the above comments of the stakeholders and in view of the observations of Ch. Mazhar, PPIB, EDB and MoP&NR, decided seeking perspective of KLCHIPGPL. On the observations of Mr. Ch. Mazhar, the project company submitted that the proposed location of the project is best suited for imported fuel based generation. The location ensures that minimum investment is required for fuel transportation networks (pipelines, railways or road networks) which in turn reduce the cost of fuel supplied to generation facilities. Moreover, the shorter the transportation distances the lower the fuel transportation losses. All these factors ensure that the cost of power generation on imported fuel at Karachi is lower than any other city in the country. (iii). Regarding the observation of EDB, the project company/klchipgpl confirmed that maximum effort would be made to utilize the indigenous expertise available in the project implementation. About the comments of MoP&NR, the project company submitted that it would meet all the conditions mentioned in the comments of the relevant ministry. KLCHIPGPL also confirmed that it would provide a firm guarantee to the fuel supplier, execute the GSPA within the requisite timeline, incorporate relevant take-or-pay clauses, accept RLNG pricing as determined by the relevant authority and would obtain the Lol and PPA in line with applicable policies. (iv). On the comments of PPIB, the project company submitted that KEL is providing the electric power services in the city of Karachi and its suburbs and is facing power supply shortfall of around MW during summers. This is despite the fact that MW is being supplied by NTDC from the National Grid. In order to achieve self-sufficiency, KEL requires addition of MW of electric power on an immediate basis and around MW by In this regard, KEL does not have access to hydro or local coal resources for which extensive investment in transmission networks or fuel supply-chain logistics would be required to provide indigenous resource based electric power to Page 4 of 14

6 Karachi. The gas reserves of the country are declining due to which even the existing generation facilities of KEL are facing curtailment in supply of gas meaning thereby that generation on local gas is not a sustainable option for Karachi. Other Renewable Energy (RE) resources including solar and wind are not only expensive at their current prices but have very low capacity factor. Resultantly, the only options left for Karachi is to generate power on imported fuels like coal and RLNG. It was in the said scenario that the sponsors of the project and KEL decided to join hand to develop this project for power generation. In this regard, the sponsors of the project approached MoP&NR and secured an allocation of RLNG for the project in February The project company/klchipgpl clarified that the proposed project is between two private parties and does not fall under the purview of the PPIB or MoW&P. Further, company submitted that it understands that PPIB and MoW&P has imposed a. -to ban on further imported fuel projects du,/their assessment that electric power projects of sufficient capacity would be commissioned by 2018 and 2022 to not only cover for existing shortages in the matter but would also create comfortable spinning reserves in the National Grid whereas the system/area served by KEL is distinct from that of National Grid. The project company/klchipgpl stated that it is of the view that the ban on new imported fuel projects does not extend to those projects proposed to be set up in the area of KEL. The project company/klchipgpl expressed that for the projects where the power purchaser is a private entity, PPIB does not make any financial commitments nor does it offer any guarantees of the Government of Pakistan. The project company/klchipgpl submitted that in view of its explanation, the observations and objections of PPIB and MoW&P may be disregarded and itsrequest for the grant of generation licence may be considered. I-44 (v). In consideration of the above, the Authority is of the considered opinion that KEL being separate legal entity is entrusted with the responsibilities to cater the load requirements of the metropolitan city of Karachi. In this regard, KEL can either set up generation facilities from its resources or can purchase electric power from the third party power plants. The Authority is of the view that considering the location of the city of Karachi, the best option available for KEL to Page 5 of 14

7 meet with its future electric power requirements is to be set up generation facilities include facilities using imported fuels like coal and RLNG. The Authority is of the considered option that if the arguments of PPIB and MoW&P are accepted then it will not be possible for KEL to meet its demand for which it is obligated under its various licences granted to it. Accordingly, the Authority determines that the ban imposed by the board of PPIB is not applicable to projects being set up in Karachi that will be supplying electric power exclusively to KEL to meet its electric power requirements. In this regard, the Authority determines that the project of KLCHIPGPL is a private venture specially meant for KEL for which it will not be availing any concessions or other benefits from the Government of Pakistan as admissible to projects set up under the different power policies therefore, the ban imposed will not be applicable to this project. In view of the said, the Authority considers that the observations of PPIB and MoW&P stands suitably addressed. (vi). In consideration of the above and having addressed the comments/objections, the Authority considered it appropriate to proceed further in the matter of application of KLCHIPGPL for the consideration of grant of generation licence as stipulated in the Licensing Regulations and NEPRA Licensing (Generation) Rules 2000 ("the Generation Rules"). (D). Findinqs/Evaluation (i). The Authority has examined the submissions of KLCHIPGPL including the information provided in its application for the grant of generation licence. The Authority has also considered the feasibility study of the project, interconnection & dispersal arrangement studies, Environmental Impact Assessment (EIA) of the project etc. and the relevant rules & regulations. (ii). In this regard, the Authority has observed that the main sponsors of the project is Engro Powergen Limited (EPGL) which is a wholly owned subsidiary of ECL (the "Parent Company") which is a subsidiary of Dawood Hercules Corporation (the "Ultimate Holding Company"). EPGL owns and operates a natural gas based Combined Cycle Power Plant (CCPP) at Page 6 of 14

8 Qadirabad, in District Ghotki. Further, EPGL is also setting a MW indigenous coal based project at Thar also in the province of the Sindh. The Parent Company as well as the "Ultimate Holding Company" has also their interests in exiting projects of HUBCO, HUBCO Narowal, Laraib as well as in other projects being set up in the country including RE. According to the information provided, ECL/the Parent Company has a total assets of around Rs billion. In view of the said, the Authority considers that the sponsors of the project have strong financial and technical expertise to develop the project. (iii). As explained in the preceding paragraphs, the sponsors have got incorporated a Private Limited Company in the name of KLCHIPGPL in terms of the requirement of the Section-24 of the NEPRA Act. The said company has been incorporated under Section-32 of the Companies Ordinance 1984 (XLVII of 1984), having Corporate Universal Identification No , dated September 17, The registered/business office of the Company is located at 4th Floor, The Harbor Front Building, HC-3, Marine Drive, Block 4, Clifton, Karachi, in the Province of Sindh. According to its memorandum of association, the objects of the company, inter alia, include electricity generation and its sale thereof. (iv). The Authority has observed that the Project will be located at Plot No. EIZ/1/P-11 Port Qasim Area, Bin Qasim Town, Karachi. The sponsors have acquired from Port Qasim Authority (PQA) around 54 acres of land for setting up the project. The site of the project is at Eastern Industrial Zone of PQA within Port Qasim Industrial Park, southeast to the city of Karachi and on the north bank of Arabian Sea. The site is about 37 km from the city centre of Karachi. The south part of the proposed generation facility borders with the Arabia Sea coast beach and seaway of Port Qasim. The north part of the proposed generation facility is in close neighbourhood with the trunk road of the industrial park. In view of the said, the Authority considers that the site of the proposed generation facility is suitable for setting up RLNG based generation facility having all the prerequisites for setting up such ventures. Page 7 of 14

9 (v). The Authority has considered the configuration of the proposed project and has observed that the proposed generation facility/thermal Power Plant will be a CCPP and will be consisting of One (01) Gas Turbine (GT), One (01) Heat Recovery Steam Generator (HRSG) and One (01) Steam Turbine (ST) and Two (02) Generators. In this regard, the sponsors have confirmed that for the Gas Turbine, either General Electric-GE (9FA.05 frame) or Siemens SGT5 (4000F frame) will be selected. The said mentioned GTs. have been in production for more than twelve (12) years and have around eight (08) million or more cumulative operating hours. The Authority has observed that each configuration is considered technically feasible and has been evaluated based on its performance, cost, and commercial delivery etc. (vi). The above combination of GT ( MW ISO Condition) and ST ( MW ISO Condition) will result in a total installed capacity of the CCPP to MW which will have an output of MW at Mean Site Condition (MSC). The net output of CCPP at MSC will be MW and will have an efficiency of 58.06% under the said condition. The company has confirmed that MoP&NR has allocated MMCFD of Imported RLNG for the project which will be sufficient to meet the requirements for gas for the proposed project. In this regard, the project company has confirmed that it is negotiating a GSPA with Pakistan LNG Limited which will act as a one-window facility for import of RLNG, arrange its storage and ultimate transportation of the same via pipeline to the site of the project. The Authority considers that the sponsors of the project have selected a very mature and efficient technology and have availability of the required fuel for its proposed project. (vii). The water requirement of a CCPP are much lesser than as compared to a Conventional Steam Turbine. In this regard, the seawater from the Gharo creek of the Arabian Sea will be used to meet with the water requirements of CCPP. The Authority considers that the site of the proposed generation facility/thermal Power Plant will have sufficient quantity of water for the proposed CCPP. Page 8 of 14

10 (viii). About the Interconnection Study/Arrangement, the Authority observes that the same has been carried out by well renowned consultant in the name of Sle.-hiests pex,k4s-6 cut-liftaccording to the said study, the electric power from the proposed Generation Facility of KLCHIPGPL will be dispersed to the system of KEL at 220 KV voltage level. The Interconnection/Dispersal arrangement will be consisting of a 220 kv Double Circuit (D/C) transmission line (measuring about 26-KM in length on 4 x 500 mm2 Al) directly connecting the proposed generation facility to 220 KV New Port Qasim grid station of KEL. The Authority has observed that KEL has already approved the above mentioned arrangement, confirming that the proposed interconnection study will not have any adverse impact on its system. (ix). The Authority considers environmental issues resulting from the construction and operation of the proposed generation facility/thermal Power Plant very important. In this regard, the sponsors have confirmed that the proposed generation facility/thermal Power Plant will comply with the environmental standards of the country. Further, KLCHIPGPL has provided No Objection Certificate (NOC) issued by Sindh Environmental Protection Agency, Govt. of Sindh (EPA Sindh) confirming that the project will be compliant with National Environmental Quality Standard (NEQs) and the same will be followed in letter and spirit. (x). In terms of Rule-3 of the Generation Rules, the Authority may grant a generation licence to any person to engage in the generation business. The said rule stipulates various conditions pertaining to the grant of generation licence as explained in Rule-3(2), Rule-3(3), Rule-3(4), Rule-3(5) and Rule-3(6). In the particular case under consideration, the conditions of Rule-3(2) and Rule- 3(3) stands satisfied as KLCHIPGPL has provided details of location, technology, size, net capacity, interconnection arrangements, technical limits, technical functional specifications and other details specific to the generation facilities. The provision of Rule-3(4) of the Generation Rules regarding holding a public hearing is not applicable as there is no issue which require this exercise. The Rule-3(5) of the Generation Rules stipulates that the Authority may refuse to issue a Page 9 of 14

11 licence where the site, technology, design, fuel, tariff or other relevant matters pertaining to the generation facility/thermal Power Plant proposed in an application for a generation licence are either not suitable on environmental grounds or do not satisfy the least cost option criteria. In this regard, the Rule-3 of the Generation Rules also stipulates the conditions pertaining to least cost option criteria which include (a). sustainable development or optimum utilization of the renewable or non-renewable energy resources proposed for generation of electric power; (b). the availability of indigenous fuel and other resources; (c). the comparative costs of the construction, operation and maintenance of the proposed generation facility/thermal power plant against the preferences indicated by the Authority; (d). the costs and right-of-way considerations related to the provision of transmission and interconnection facilities; (e). the constraints on the transmission system likely to result from the proposed generation facility/thermal Power Plant and the costs of the transmission system expansion required to remove such constraints; (f). the short-term and the long-term forecasts for additional capacity requirements; (g). the tariff resulting or likely to result from the construction or operation of the proposed generation facility/thermal Power Plant; and (h) the optimum utilization of various sites in the context of both the short-term and the long-term requirements of the electric power industry as a whole. (xi). In consideration of the above, it is clarified that the sponsors are developing a CCPP project for which high end GT and ST have been selected which will have an efficiency of around 58%, resulting in a very reasonable cost for the end consumer. The sponsors of the project had carried out the grid interconnection study which concludes that a 220 KV D/C transmission line (Measuring about 26-KM) will be required to connect the project with the system of KEL. Further, the study has confirmed that the project will not face any constraints in transmission system. Further, being located at reasonable distance from the thick population, the project will not result in costs and right-of-way issues for the provision of transmission and interconnection facilities. It is pertinent to mention that KEL has included the project in its medium-term and the long-term forecasts for additional capacity requirements. In view of the Page 10 of 14

12 explanation given above, the Authority considers that the project fulfils the requirements of least cost option criteria as envisaged in the Generation Rules. (E). Grant of Licence (i). Electricity is a fundamental element for the economic growth of any country. The electricity consumption per capita has a strong correlation to the social development indices (human development index, life expectancy at birth, infant mortality rate, and maternal mortality) and economic indices (such as GDP per capita). (ii). Karachi is the largest and the most populous city of Pakistan. The city maintains itself as the premier centre of banking, industry, economic activity and trade, and is home to Pakistan's largest corporations, including textiles, gems and jewellery, shipping, automotive industry, entertainment, arts, fashion, advertising, software development and medical research. This city is the centre to economy of Pakistan and contributes 42% of GDP, 70% of income tax revenue and 62% of sales tax revenue. The GDP of Karachi is around 20% of the total GDP of Pakistan. Moreover, Karachi accounts for 30% of small and medium scale manufacturing and 40% of large-scale manufacturing of the country. Further, Karachi contributes about 20% of total national output and 30% of total industrial output. Around 95% of the foreign trade of Pakistan relies on the two ports of Karachi i.e. Port Qasim and Karachi Port at Kemari. In consideration of the above, the Authority is of the considered opinion that increasing the electricity consumption in the city of Karachi can directly stimulate faster economic growth and may result in enhanced social development in the city in particular and in the country in general. In view of the said, the Authority considers that for sustainable development, all types of electric power generation resources available to the city must be developed on priority basis as these will result in adequate supply of electric power to Karachi. (iii). The existing energy mix for the city of Karachi is heavily skewed towards the generation facilities/thermal power plants, operating on furnace oil. The prices of furnace oil are very volatile and resultantly cause frequent variation Page 11 of 14

13 in the consumer end tariff not only resulting in higher inflation but also affects the competitiveness of the local industry with its foreign peers. In order to address the said issues, the Authority considers it imperative that efforts must be made to change the energy mix of KEL towards cheaper fuels. In this regard, the Authority considers that generation facilities based on imported/local coal and gas are considered the best option for KEL in the medium and long term. Therefore, to reduce the demand-supply gap in the area of KEL and to achieve sustainable development for the city of Karachi, it is vital that indigenous as well as imported coal and gas based projects are given priority for power generation and their development is encouraged. In consideration of the said, the Authority is of the view that the proposed project of KLCHIPGPL will be helpful in mitigating the demand-supply gap in the city of Karachi. (iv). As explained above, KLCHIPGPL has provided the details of location, technology, size, net capacity, interconnection arrangements, technical details and other related information for the proposed generation facility/thermal Power Plant. The sponsors of the project have acquired the required land for setting up the generation facility/thermal Power Plant. The details of the land coordinates have been incorporated in Schedule-I of the proposed generation licence. Accordingly, the Authority directs KLCHIPGPL to utilize the allocated land for the specific purpose of setting up the proposed generation facility/thermal Power Plant and not to change its use except with its prior approval. (v). The term of a generation licence under Rule-5(1) of the Generation Rules is required to match with the maximum expected life of the units comprised in a generating facility. According to the information provided by KLCHIPGPL, the COD of the proposed generation facility/thermal Power plant will be of September 30, 2019 and it will have a useful life of more than thirty (30) years from its COD. In this regard, KLCHIPGPL has requested that the term of the proposed generation licence may be fixed to thirty (30) years, consistent with the term of the proposed Power Purchase Agreement (PPA) to be signed with KEL. Page 12 of 14

14 In this regard, the Authority considers that as per international benchmark/standards the life of a brand new steam turbine is taken as at least thirty (30) years. The Authority considers that the information provided by KLCHIPGPL about the useful life of its generation facility/thermal Power Plant is consistent with international benchmarks and other similar cases. Therefore, the Authority fixes the term of the generation licence as thirty (30) years from COD of the project. (vi). Regarding tariff, it is hereby clarified that under Section-7(3)(a) of the NEPRA Act, determination of tariff, rate and charges etc. is the sole prerogative of the Authority. In the particular case, the sponsors of the project have already filed a tariff petition for determination of cost plus tariff in terms of NEPRA (Tariff Standard and Procedures) Rules, The Authority has admitted the said petition and the same will be decided in terms of the said rules in the due course of time. Notwithstanding the aforementioned, the Authority directs KLCHIPGPL to charge the power purchaser only such tariff which has been determined, approved or specified by the Authority. In this regard, the Authority has made explicit provision in the Article-6 of the generation licence for KLCHIPGPL. The Authority directs KLCHIPGPL to adhere to the provision of the said article of the generation licence in letter and spirit without any exception. (vii). Regarding compliance with the environmental standards, as stated in the preceding paragraphs, KLCHIPGPL has provided the NOC from EPA Sindh and has confirmed that project will comply with the required standards during the term of the generation licence. In view of the importance of the issue, the Authority has decided to include a separate article (i.e. Article-10) in the generation licence along with other terms and conditions making it obligatory for KLCHIPGPL to comply with relevant environmental standards at all times. Further, the Authority directs KLCHIPGPL to submit a report on a bi-annual basis, confirming that operation of its generation facility/thermal Power Plant is compliance with the required environmental standards as prescribed by the concerned environmental protection agency. Page 13 of 14

15 (viii). In view of the above, the Authority hereby approves the grant of generation licence to KLCHIPGPL on the terms and conditions set out in the generation licence annexed to this determination. The grant of generation licence will be subject to the provisions of the NEPRA Act, relevant rules, regulations framed thereunder and other applicable documents. Authority: Maj. (R) Haroon Rashid (Member) Syed Masood-ul-Hassan Naqvi (Member) Himayat Ullah Khan (Member) Saif Ullah Chattha (Member)/(Vice Chairman) Brig. (R) Tariq Saddozai (Chairman) a. REGISTRAR ti Page 14 of 14

16 National Electric Power Regulatory Authority (NEPRA) Islamabad - Pakistan GENERATION LICENCE No. IGSPL/82/2017 In exercise of the powers conferred upon under Section-15 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, the Authority hereby grants the Generation Licence to: KOLACHI PORTGEN (PVT.) LIMITED Incorporated Under Section-32 of the Companies Ordinance 1984 (XLVII of 1984) Having Corporate Universal Identification No , dated September 17, 2015 for its Imported Re-Gasified Liquefied Natural Gas (RLNG) based Generation Facility/Thermal Power Plant Located at Plot No. EIZ/1/P-11, Eastern Industrial Zone, Port Qasim Authority, Karachi (Total Installed Capacity: MW Gross) to engage in generation business subject to and in accordance with the Articles of this Licence. Given under my hand this on Z n4:2- day of June Two Thousand & Seventeen and expires on 29th day of September Two Thousand & Fort Nine. Registrar \/k

17 Generation Licence Port Qasim Authority, Karachi Article-1 Definitions 1.1 In this licence (a). "Act" means the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 as amended or replaced from time to time; (b). "Applicable Documents" mean the Act, the rules and regulations framed by the Authority under the Act, any documents or instruments issued or determinations made by the Authority under any of the foregoing or pursuant to the exercise of its powers under the Act, the Grid Code, the applicable Distribution Code, if any, or the documents or instruments made by the Licensee pursuant to its generation licence, in each case of a binding nature applicable to the Licensee or, where applicable, to its affiliates and to which the Licensee or any of its affiliates may be subject; (c). "Applicable Law" means the Act, relevant rules and regulations made there under and all the Applicable Documents; (d). "Authority" means the National Electric Power Regulatory Authority constituted under Section-3 of the Act; (e). "Bus Bar" means a system of conductors in the generation facility/thermal Power Plant of the Licensee on which the electric power from all the generators is collected for supplying to the Power Purchaser; (f). "Commercial Operations Date (COD)" means the day immediately following the date on which the generation facility/thermal Power Plant of the Licensee is commissioned; \i'\iefr REGISTRAR Page 2 of 7 of the Articles of Generation Licence NEPRN

18 Generation Licence Port Qasim Authority, Karachi (g). "Distribution Code" means the distribution code prepared by the distribution licensee and approved by the Authority, as it may be revised from time to time with necessary approval of the Authority; (h). "Generation Rules" mean the National Electric Power Regulatory Authority Licensing (Generation) Rules, 2000 as amended or replaced from time to time; (0. "Grid Code" means the grid code prepared by NTDC and approved by the Authority, as it may be revised from time to time by NTDC with any necessary approval by the Authority; (j). "IEC" means the International Electrotechnical Commission or its successors or permitted assigns; (k). "IEEE" means the Institute of Electrical and Electronics Engineers or its successors or permitted assigns; (I). "KEL" means K-Electric Limited or its successors or permitted assigns as a Power Purchaser; (m). "Licensee" means " " or its successors or permitted assigns; (n). "Licensing Regulations" mean the National Electric Power Regulatory Authority Licensing (Application & Modification Procedure) Regulations, 1999 as amended or replaced from time to time; (o). "NTDC" means National Transmission and Despatch Company Limited or its successors or permitted assigns; Page 3 of 7 of the Articles of Generation Licence

19 Generation Licence Port Qasim Authority, Karachi "Power Purchase Agreement (PPA)" means the power purchase agreement, entered or to be entered into by and between the Power Purchaser and the Licensee, for the purchase and sale of electric power generated by the generation facility/thermal Power Plant, as may be amended by the parties thereto from time to time; (q) "Power Purchaser" means KEL which will be purchasing electric power from the Licensee, pursuant to the PPA for procurement of electric power; (r). "Thermal Power Plant" means a generation facility using fossil fuel for generation of electric power; 1.2 Words and expressions used but not defined herein bear the meaning given thereto in the Act or rules and regulations issued under the Act. Article-2 Applicability of Law This licence is issued subject to the provisions of the Applicable Law, as amended from time to time. Article-3 Generation Facilities 3.1 The location, size (capacity in MW), technology, interconnection arrangements, technical limits, technical functional specifications and other details specific to the generation facility/thermal Power Plant of the Licensee are set out in Schedule-I of this licence. 3.2 The net capacity of the generation facility/thermal Power Plant of the Licensee is set out in Schedule-II hereto. The Licensee shall provide the final arrangement, technical and financial specifications and other specific details pertaining to its generation facility/thermal Power Plant before its COD. Page 4 of 7 of the Articles of Generation Licence

20 Generation Licence Port Qasim Authority, Karachi Article-4 Term of Licence 4.1 This Licence shall become effective from the date of its issuance and will have a term of thirty (30) years from the COD of the generation facility/thermal Power Plant of the Licensee. 4.2 Unless suspended or revoked earlier, the Licensee may apply for renewal of this Licence ninety (90) days prior to the expiry of the above term, as stipulated in the Licensing Regulations. Article-5 Licence fee The Licensee shall pay to the Authority the licence fee as stipulated in the National Electric Power Regulatory Authority (Fees) Rules, 2002 as amended or replaced from time to time. Article-6 Tariff The Licensee shall charge the Power Purchaser only such tariff which has been determined, approved or specified by the Authority. Article-7 Competitive Trading Arrangement 7.1 The Licensee shall participate in such manner as may be directed by the Authority from time to time for development of a Competitive Trading Arrangement. The Licensee shall in good faith work towards implementation and operation of the aforesaid Competitive Trading Arrangement in the manner and time period specified by the Authority. Provided that any such participation shall be subject to any contract entered into between the Licensee and another party with the approval of the Authority. Page 5 of 7 of the Articles of Generation Licence

21 Generation Licence Port Qasim Authority, Karachi 7.2 Any variation or modification in the above-mentioned contracts for allowing the parties thereto to participate wholly or partially in the Competitive Trading Arrangement shall be subject to mutual agreement of the parties thereto and such terms and conditions as may be approved by the Authority. Article-8 Maintenance of Records For the purpose of sub-rule (1) of Rule-19 of the Generation Rules, copies of records and data shall be retained in standard and electronic form and all such records and data shall, subject to just claims of confidentiality, be accessible by authorized officers of the Authority. Article-9 Compliance with Performance Standards The Licensee shall comply with the relevant provisions of the National Electric Power Regulatory Authority Performance Standards (Generation) Rules, 2009 as amended or replaced from time to time. Article-10 Compliance with Environmental & Safety Standards 10.1 The generation facility/thermal Power Plant of the Licensee shall comply with the environmental and safety standards as may be prescribed by the relevant competent authority from time to time The Licensee shall provide a certificate on a bi-annual basis, confirming that the operation of its generation facility/thermal Power Plant is in conformity with required environmental standards as prescribed by the relevant competent authority. Page 6 of 7 of the Articles of Generation Licence

22 Article-11 Power off take Point and Voltage Generation Licence Port Qasim Authority, Karachi The Licensee shall deliver the electric power to the Power Purchaser at the outgoing Bus Bar of its generation facility/thermal Power Plant. The Licensee shall be responsible for the up-gradation (step up) of generation voltage up to the required dispersal voltage level. Article-12 Provision of Information In accordance with provisions of Section-44 of the Act, the Licensee shall be obligated to provide the required information in any form as desired by the Authority without any exception. Article-13 Design & Manufacturing Standards The generation facility/thermal Power Plant of the Licensee shall be designed, manufactured and tested according to the latest IEC, IEEE or other equivalent standards. All the plant and equipment of the generation facility/thermal Power Plant shall be unused and brand new. Page 7 of 7 of the Articles of Generation Licence

23 Generation Licence Port Qasim Authority, Karachi SCHEDULE-I The Location, Size (i.e. Capacity in MW), Type of Technology, Interconnection Arrangements, Technical Limits, Technical/Functional Specifications and other details specific to the Generation Facilities of the Licensee are described in this Schedule Page 1 of 10 of Schedule -I

24 Generation Licence Port Qasim.Authority, Karachi Location of the Generation Facility/Thermal Power Plant of the Licensee OCHISTAN Gableani Hub achl Proposed Location for 450 MW ALSO CCPP Lotto Pakistan Ar3I33, Sr t: IMINCi Nd Engro Lithos Mangroves Kadiro Creek ASO Metals Ltd. Lewd Blacktop Road Railway Track I km 6.1= Mangroves Project Location y. Hagler Rainy The coordinates of the Generation Facility/Thermal Power Plant plant are 24 47' " N and 67 22' " E Page 2 of 10 of Schedule -I

25 Generation Licence Port Qasim Authority, Karachi Location of the Generation Facility/Thermal Power Plant of the Licensee - [Outfall Channel Option 1 L. RING Pipeline Custody Transfer Station 1 A Land Owned by Engle Steel Ms ro Port a3siql Road. RING Pipeline Option 2 Outfall Channel Option 2 K-Electric Power Station Empty Plot for Pod Oasis Electric Power Company Empty Plot for Trans Asia Refinery Intalie han I Legend Road Protect Component Existing Industrial Unit Empty Industrial Land Water Body Nullah Bndge =IMMIII 1 Glee Project Layout 2C, Hagler Baill The coordinates of the Generation Facility/Thermal Power Plant plant are 24 47' " N and 67 22' " E Page 3 of 10 of Schedule -I

26 Generation Licence Port Qasim Authority, Karachi Lay Out of the Generation Facility/Thermal Power Plant of the Licensee L.I.usuo[ I mo. OK NW.7D PVT SI' :MAW lit, 11,11.34, le y Yll1+7 'An.NEP, PEI, no:. lit vfa Page 4 of 10 of Schedule -I

27 Generation Licence Port Qasim Authority, Karachi Single Line Diagram (Electrical) of the Generation Facility/Thermal Power Plant of the Licensee., IIIIIIIIIIEMIMIIIIMIIIIIIEMIIIIIIINIIIIIIZIIIINMMIII MMIIUIIIIIMIMMIZMIIIIMMIIIIIIIEIIIIIMMIIIIIIMIIII -emo--., -ito..:a.u... ti... N, c * x 3"' ' EN Iv f f... f, 7 - i Miff,....,... % :"7 e... 0 _ - - r...v. ' nil: A Pa.,. :,, a ;,.., '4.±:: a...:... ' t I I c It - L r: a.,, 6 % ---,. VA 2., rel 0 tatuioa,', El ial3l,9w6 El, X U 10 TIVE Ka --5. cina NUNN --,_ ,1,E1111,, ,, krf Ili -f.,.1.1,41n 0,tt 1E, v x -1 WO. -Ea- i.se MIS X WWII IMP If L t J UM II I, I, Ill NU 1 I, I I. I f. ' MC= sam UM lam am 0. NMI I yaw. Page 5 of 10 of Schedule -1

28 Generation Licence Port Qasim Authority, Karachi Interconnection Facilities/ Transmission Arrangements for Dispersal of Electric Power from the Generation Facility/Thermal Power Plant The electric power from the imported R1.44 based generation facility/thermal Power Plant of the Licensee will be dispersed to the load center of K-Electric Limited (KEL). 2. The interconnection facilities/transmission arrangements for supplying to national grid from the above mentioned generation facility/thermal Power Plant shall be at 220kV level. The dispersal/interconnection arrangement for supplying to KEL will be consisting of a 220kV Double Circuit (D/C) Transmission line (measuring about 26- KM in length on 4 x 500 mm2 Al conductor) connecting generation facility/thermal Power Plant of the Licensee to the new 220kV Port Qasim grid station of KEL. 3. Any change in the above mentioned interconnection facilities/transmission arrangements for dispersal of electric power as agreed by the Licensee and the Power Purchaser/KEL shall be communicated to the Authority in due course of time. Page 6 of 10 of Schedule -I

29 Generation Licence Port Qasim Authority, Karachi Single Line Diagram of the Interconnection Facilities/ Transmission Arrangements for Dispersal of Power from the Generation Facility/Thermal Power Plant of the Licensee NKI Plpol Wuxi Page 7 of 10 of Schedule -I

30 Generation Licence Port Qasim Authority, Karachi Detail of Generation Facility/Thermal Power Plant (A). General Information (i). (ii). Name of Company/ Licensee Registered Office 4th Floor, The Harbor Front Building, HC-3, Marine Drive, Block 4, Clifton, Karachi (iii). Business Office -Do- (iv). (v). Location of the Generation Facility/ Power Plant Type of Generation Facility/ Power Plant, Port Qasim Authority, Karachi, Thermal Generation Facility (B). Configuration of Generation Facility (i). Type of Technology Combined Cycle Power Plant having One (01) Gas Turbines, One (01) Heat Recovery Steam Generator-(HRSG) and One (01) Steam Turbine In 'I' Number of Units/Size (MW) 1 x MW Gas Turbine + 1 x MW Steam Turbine (ISO conditions) ii ) (i. Unit Make/Model/Type & Year of Manufacture Etc. Gas Turbine Steam Turbine General Electric (GE) 9FA.05 frame or Siemens SGT5-4000F frame or Equivalent GE/Siemens/Shanghai Electric/Harbin China/Alstom or Equivalent \ (iv' COD of the Generation Facility/ Power Plant (Anticipated) September er 30, 2019 Page 8 of 10 of Schedule -1

31 Expected Useful Life of the Generation (v). Facility/ 30 years Power Plant from COD Generation Licence Port Qasim Authority, Karachi (C). Fuel/Raw Material Details (i). Primary Fuel Re-Gasified Liquefied Natural Gas (RLNG) (ii). Back-Up Fuel High Speed Diesel (HSD) (iii). Fuel Source Primary Fuel Imported Back-Up Fuel Imported/Indigenous Primary Fuel Back-Up Fuel (iv). Fuel Supplier Pakistan LNG Limited PLL / Sui Southern Gas Pipeline Limited-SSGC / Private Terminal Pakistan State Oil- PSO/Total Parco/Shell Pakistan/Attock Petroleum Limited Primary Fuel Back-Up Fuel (v). Supply Arrangement Pipeline Through Oil Tankers/Bowsers (vi). No of Storage Tanks Primary Fuel Back-Up Fuel Not applicable 2 (vii). ag.ank ecsapacity of each Primary Fuel Not applicable Back-Up Fuel 10,000 M3 (viii). Gross Storage Primary Fuel Not applicable Back-Up Fuel 20, 000 M3 Page 9 of 10 of Schedule -I

32 (D). Emission Values Generation Licence Port Qasim Authority, Karachi Primary Fuel Back-Up Fuel (i). SOX (mg/nm3) Negligible As per the NEQS (ii). NOx (mg/nm3) 41 mg/nm3 -Do- (iii). CO (mg/nm3) 49 mg/nm3 -Do- (iv). PMio Not Emitted -Do- (E). Cooling System Cooling Water Source/Cycle Water from Gharo Creek with closed loop cooling tower operations (F). Plant Characteristics (i). Generation Voltage Gas Turbine Steam Turbine 20 KV 18KV or 15 KV (ii). Frequency 50 Hz (iii). Power Factor 0.80 (lagging)-0.90 (leading) (v). Automatic Generation Control (AGC) Yes (vo. TReanteta(tmivwe Raping MW/min with holding time (vii). Tentative Time required to Synchronize to Grid Minutes Page 10 of 10 of Schedule -I

33 Generation Licence Port Qasim Authority, Karachi SCHEDULE-II The Installed/ISO Capacity (MW), De-Rated Capacity At Mean Site Conditions (MW), Auxiliary Consumption (MW) and the Net Capacity At Mean Site Conditions (MW) of the Generation Facilities of Licensee are given in this Schedule Page 1 of 2 of Schedule-II

34 Generation Licence Port Qasim Authority, Karachi SCHEDULE-II (1). Total/Gross Installed Capacity (ISO) of the Generation Facility/Thermal Power Plant MW (2). De-rated Capacity of Generation Facility/ Thermal Power Plant at Mean Site Conditions MW (3). Auxiliary Consumption of the Generation Facility/Thermal Power Plant at Mean Site Conditions MW (4). Total Net Capacity of Generation Facility/ Thermal Power Plant at Mean Site Conditions MW Note All the above figures are indicative as provided by the Licensee. The net capacity available to Power Purchaser for dispatch will be determined through procedure(s) contained in the Power Purchase Agreement or any other Applicable Document(s). Page 2 of 2 of Schedule-II