THREE GOLDEN INVESTMENT

OPPORTUNITIES IN
PAKISTAN POWER SECTOR

ZAFAR ALI KHAN

MANAGING DIRECTOR

PRIVATE POWER & INFRASTRUCTURE BOARD

(MINISTRY OF WATER AND POWER)

2ND MARCH 2005

 Contents

z Why Invest in Pakistan Power Sector?

z Power Demand & Firm Supply Position

z The Three ICB Projects - Location and Salient Features

z The Project Rationale, Economics and Contractual Structure

z A Synopsis of the Process

z Next Steps

2
Why Invest in Pakistan Power Sector

z Rapidly growing economy and strategic importance of

power availability

z Growing Demand: Additional 5,500 MW required by 2010

z Required investment: US$ 4-5 Billion for power

generation alone

z Government is committed to increase Private Sector

Investments
z Policy and procedures: Simplified for attracting new
investments (Power Policy 2002)

3
Why Invest in Pakistan Power Sector

z Regulatory & legal issues: Full support of the Regulator

for ICB Projects

z Process: Transparent and competitive

z One-window facility: Credible track record & experienced

professionals

z Major international energy companies already present in

Pakistan

4
Power Demand & Firm Supply Position
Firm Supply (MW) 20584
20500 Demand (MW)
19080
19500
S
E lectricity (megawatts)

H
18500 17689 O
R 5,529
17500 T MW
16548
4,025 A
16500 SURPLUS MW G
15483 2,634 MW E
15046 15082
15500 1,457 MW S
14336 411 MW
14500 15072 15091 15055 15055 15055
14642
13500
13831
13071
12500
2003 2004 2005 2006 2007 2008 2009 2010

As envisaged in the Policy Year

5
400-500 MW
Uch-II
 Sadiqabad

Rail From
Jacobabad to
Rajanpur &
DG Khan

500 kV Transmission Line

from Guddu to Multan

8 Km
Kashmore 7 Km
Site of Uch-II
22 Km

Guddu Ubaro
½ Km Barrage

Railway line Guddu

Power Plant
Daharki
Kashmore - Guddu
power plant
Road from Barrage to Guddu 5 Km
From Guddu to Kashmore 14 Km
7
Uch-II Project - Features

z Location Near WAPDA’s Power

Station at Guddu Sindh

z Capacity 400-500 MW

z Technology Combined Cycle

z Power Purchaser National Transmission

and Dispatch Company (NTDC)

8
Uch-II Project - Fuel

z Type Low BTU Gas

z Source Uch Gas Field

z Heating Value 450 btu/scf (average)

z Requirement 160 – 180 MMCFD

z Gas Availability 25 years

z Gas Supplier Oil & Gas Development Company

Limited (OGDCL)

9
Uch-II Project – Cooling Water

z Requirement 270 – 300 Cusecs

z Water Sources Three

1. Pat Feeder Canal

2. B.S. Feeder Canal

3. Indus River

10
 TERBELA
3478 MW

11
m
IESCO

0k
97 k
REWAT

m
GHAZI

18
112 km
BROTHA

17

2
km
8
3478 MW GUJRANWALA

km
286
311

85 k
Interconnection:

70 k
LESCO

km
km

m
m
FESCO km
95
LAHORE

km
Tapping of

km
GATTI

9
20

2
22
km
MULTAN
Guddu – Multan

56
+
km
MEPCO

6
25

0
31
500 kV line
GUDDU
1655 MW
km
5
28 km
6
28

HEPCO
DADU
152
155

KESC
JAMSHORO
km
km

HUBCO
1292 MW m
181 k
Uch-II Project - Rationale

Long term Availability of Gas for

Sustained Operations
Three different sources of abundant
cooling water
All Communication modes available i.e.
Road, Rail, Telephone and Internet
Proximity of a developed power plant
Reliable Transmission System Available

12
 450 MW
Faisalabad

13
 Fa
isa
lab
ad

220 kV
Transmission Line
Railway Line
to Faisalabad
Lah
ore

132 kV
Transmission Line

Proposed Site

Residential Blocks
WAPDA’s
Nishatabad
WAPDA’s
Power plant Power
Plant Residential Blocks
Faisalabad Project - Features

z Location Near existing WAPDA’s Power

Station at Faisalabad

z Capacity 450 MW

z Technology Combined Cycle

z Power Purchaser National Transmission and Dispatch

Company (NTDC)/Faisalabad Electric

Supply Company (FESCO)

15
 Faisalabad Project - Fuel

z Proposed Fuel Dual fuel (Pipeline Quality

Gas/Oil)

z Gas Requirement 90 MMCFD

z Gas Supplier Sui Northern Gas Pipelines

Limited (SNGPL) [Gas
Transmission and Distribution
Company]

16
Faisalabad Project- Features

z Cooling Water Canal /Tube wells

z Accessibility Existing Road / Rail Link

z Interconnection - Nishatabad-Samundari
Road 220 kV double circuit,

- Nishatabad - WAPDA’s power

station at Faisalabad 132 kV
double circuit transmission line.

17
Faisalabad Project - Rationale

z Exactly in the load centre

z Developed Urban Centre

z Lesser system losses

z All Communication modes available i.e. Road, Rail,

Telephone and Internet Proximity of a developed

power plant

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Lahore Project

350-400 MW
Lahore

19
 Gujranwala Main Railway Line
Lahore - Rawalpindi

Grand Trunk (G T) Road

Lahore - Rawalpindi

Proposed Site

Muridke

Shahdra

Lahore
Sheikhupura
Existing Small
Hydel at
Chichoki Malian
 Lahore Project

z Location Near Lahore

z Capacity 350-400 MW

z Technology Combined Cycle

z Power Purchaser National Transmission and Dispatch

Company (NTDC)/Lahore Electric

Supply Company (LESCO)

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 Lahore Project
z Proposed Fuel Pipeline Quality Gas/Oil

z Gas Requirement 70 MMCFD

z Gas Supplier Sui Northern Gas Pipelines Limited

(SNGPL) [Gas Transmission and
Distribution Company]

z Cooling Water Canal/Underground water

z Interconnection National Transmission and Dispatch

Company (NTDC)

22
Lahore Project - Rationale

z Exactly in the load centre

z Developed Urban Centre
z All Communication modes available i.e.
Road, Rail, Telephone and Internet
z Proximity of a developed power plant
z Reliable Transmission System Available

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 Projects Economics
z Good return on investment – level will be driven by competition

z Fixed long-term tariff – approved by the Regulator

z Two-part tariff (energy & capacity) to meet fixed costs

z Project company cash flow is not subject to foreign exchange

fluctuation and local inflation risk

z Project base case uses gas as fuel thus improving overall tariff

z Increase in fuel price is a pass-through in the tariff

z Shareholders and lenders are provided certainty of cash flows if

the project company performs efficiently

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 Projects Contractual Structure

z Developed to international standards

z Balanced risk profile for investors, lenders & government

agencies

z Performance obligations of the power purchaser and fuel supplier

are guaranteed by the Government

z Government will protect against specified political risk and

changes in taxes and duties regime

25
 Projects Contractual Structure (contd..)

z Governing Law will be that of a neutral country

z International Arbitration will be allowed

z Government will ensure convertibility of Pak Rupee & remittability

of foreign exchange for necessary project-related payments

z Bidders and managing sponsor will be responsible for EPC and

O&M arrangements

z Bidders will be responsible for arranging financing and achieving

financial close

26
 The Process
z Bidder or their consortium will be pre-qualified based on financial
strength and industry experience

z A bidding consortium would be required to have a main or

managing sponsor

z Projects will be developed sequentially in the interest of investors

and lenders appetite

z Each project will be tendered on a competitive basis

z GOP to hire international reputable advisors for the transactions

27
 The Process (contd..)

z RFP will provide technical details, bid evaluation criteria and draft

Project contracts

z Tentative Schedule of activities for the projects is provided in the

Preliminary Information Memorandum

z PPIB will administer the process on behalf of GOP – PPIB has

successfully facilitated IPPs of 5,577 MW capacity

28
 Next Steps

z Invitation of EOI by PPIB and pre-qualification of bidders

z Issuance of RFP to pre-qualified bidders

z Submission of bids by the pre-qualified bidders

z Evaluation of bids by PPIB and approval by NEPRA

z Notification of successful bidder

z Execution of LOS and Project contracts

z Financial Close

29
 We Welcome Private Investors
to Join Hands with Us

to Invest in Pakistan’s Power Sector

for Mutual Business Benefit