Corridor Project importance for china and Pakistan

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2. NATIONAL INSTITUTE OF MANAGEMENT
KARACHI
“CHINA-PAK ECONOMIC CORRIDOR (CPEC) -
HYDEL, SOLAR & WIND POWER PROJECTS”
SIMULATION EXERCISE-I
PRESENTATION ON SOLUTION PAPER
SPONSOR ADS: MS. SHAGUFTA WARIS
DATE: 01-03-2016
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3. COMPOSITION OF RAG-III 3
S. NO Participants Name Group Assigned Role
1 Safdar Khan OMS CEO, Pakistan Electric and Power
Company (PEPCO) (Leader)
2 Shahid Ali PCS Sindh Board of Investment,
Karachi
3 Laiq Zaman IRS MD Solar Park, Bahawalpur
4 Kashif Rasheed PA &AS Director Alternative Energy
Energy Department
5 Ghulam Mujtaba ISI Ex-
Cadre
D.D Wind Power Project

4. SEQUENCE OF PRESENTATION
 Scope
 Methodology
 Introduction
 Role of PC, WAPDA, PPIB, MoF
 Hydel Power Projects
 Solar Power Projects
 Wind Power Projects
 Analysis
 Recommendations
 Action Plan/ Strategy
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5. SCOPE OF THE STUDY
 Economic benefits which Pakistan will get from these
projects.
 The controversies/issues attached with these projects.
 The role of Planning Commission, WAPDA, PPIB and
Ministry of Finance (MoF).
 The reservations of local communities regarding the
acquisition of land.
 Workable strategy both at short and medium term for
timely completion of the Projects
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6. METHODOLOGY
 Primary Method: The team members visited the offices of
Sindh Investment Board held discussion with the following:
( Secretary SBoI Mr. Iftikhar Shalwani)
( Director SBoI Mr. Ibrar Ahmad Sheikh )
 Telephonic conversations were also held with Mr. Awais
Sumra, Ex-JS MoF, Mr. Sajjad Haider Sajid (Technical Chief
Operations QASPP)
 Secondary Method: Official websites of national and
international financial organizations were accessed for
collection of data. Websites of daily newspapers were also
accessed during simulation exercise.
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7. MEETING WITH DIRECTOR SBoI 7

8. INTRODUCTION
 CPEC has four major components
 Transport Infrastructure
 Energy
 Gwadar Port and
 Industrial Zones
 Energy is one of the most important components.
 51 MoUs worth US $ 46 billion stand signed
 Energy share of total investment is US $ 35 billion
 Energy shortage is between 5500 MW to 7000 MW*
Source: The Express Tribune , Dated 17 Oct 2015
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9. Contd…
 Energy mix of Pakistan is based on combination of Hydro, Thermal
and alternative sources of energy (Energy Policy 2013)
 CPEC is part of 13th Five Year Plan of China’s 21st Century Silk
Route Initiative.
 Early Harvest projects are aimed at catering the energy shortage of
Pakistan within 3 to 5 year amounting US $ 28 Billion.*
 Finances for energy projects are in the shape of loans at interest rate
of 5% to 6%*
 The investment will be undertaken by private firms to ensure
production of 10,400 MW of electricity
Source :http://www.ipripak.org/wp-content/uploads/2016/01/sfecpii.pdf accessed on 25 Feb 2016
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10. Major Energy Projects of CPEC
 720 MW Karot Hydro Power Project (Punjab)
 840 MW Suki Kinari Hydro Power Project (KPK)
 100 MW Jhimpir Wind Project (Sindh)
 50 MW Sachal Wind Power Project (Sindh)
 50 MW Dawood Wind Power Project. (Sindh)
 1000 MW Quaid-e-Azam Solar Power Project Bahawalpur
 China Pakistan Joint Research Centre for Hydro Power
Islamabad
Source: MoU/www.ead.gov.pk accessed on 25-02-2016
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11. TYPES OF ENERGY PROJECTS
 HYDEL POWER PROJECTS
 SOLAR POWER PROJECTS
 WIND POWER PROJECTS
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12. ROLE OF PC, WAPDA,PPIB & MoF
Role of Planning Commission:
 Prepare the plan and review and evaluate its
implementation;
 Formulate annual plan and ADP.
 Monitor and evaluate
 Implementation of projects and programmes;
 Facilitate capacity building of agencies involved in
development
Source: www.pc.gov.pk accessed on 27th February 2016
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13. Role of PPIB
 To implement the power policies
 Award projects to sponsors or private power companies
 To recommend and facilitate development of power policies
 To coordinate with the Provincial Governments, local
governments, Azad Jammu & Kashmir
 To draft, negotiate and enter into security package
documents or agreements and guarantee the contractual
obligations of entities under the power policies
 To provide investment window
Source: www.ppib.gov.pk accessed on 27th Feb, 2016
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14. ROLE OF WAPDA
 Operation and Maintenance of the running Hydel Power
Stations
 Correspondence with NEPRA regarding proposed
modification for new & upcoming hydel projects
 Preparation and Submission of Monthly Invoice to
(NTDC) for sale of energy,
 Processing of procurement cases and finalization of O&M
budget estimates/Foreign Exchange Budgets for Hydel
Power Stations.
Source: www.wapda.gov.pk accessed on 26th Feb, 2016
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15. Role of Ministry of Finance
 Almost no role in CPEC*
 Private companies are undertaking the projects.
Source: Telephonic conversation with Awais Manzur Sumra ex-JS MoF on 27th Feb 2016
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16. HYDEL POWER PROJECTS
KAROT HPP
 Run of River project on River Jhelum
 Located between Punjab and Azad Kashmir near the village of Karot
of Kahuta, Rawalpindi.
 The project is being built at the cost of US $ 1.65 Billion
 Financed by Silk Road Fund of China
 95.5 meter high dam with 04 turbines for 720 MW generation
 Estimated Date of Project Completion: December, 2020
Source: www.karotpower.com accessed on 26th Feb 2016
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17. Contd…..
 Gated spill way structure separate from main Dam
 Overhead transmission Line of 500 KV which will be constructed by
Government of Pakistan independently
ADVANTAGES:
 Limited Water storage
 Less Flooding
 Less prone to seismic activity
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18. Contd…..
DISADVANTAGES:
 Seasonal because of limited storage
 Reduction in River Flow
 Bad for fish and marine growth
 Affects many habitat
 Less useful for agriculture
Source: www.karotpower.com accessed on 26th Feb 2016
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19. Contd….
Suki Kinari Power Project
 Located at Kunhar River, Mansehra, KPK
 The largest private sector hydro-power initiatives in Pakistan.
 Project cost US$ 1.8 billion US
 870 MW Power Generation capacity (Run of River Project)
 Reservoir’s length is 3.1 Km with 04 Turbines
 Estimated Date of Completion: June 2022
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20. Contd…..
 Financed by EXIM Bank of China, White Crystals Limited
subsidiary of Al Jomaih, Saudi Arabia is the main sponsor with
China Gezhouba Group.
ADVANTAGES:
 It is a high head scheme and will add in saving in the fuel cost.
 Predictable multi-year and long-term tariff.
 Cheaper electricity
 Environment-friendly project
 Employment opportunities
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21. Contd…..
 Income Tax Exemption
 An underground powerhouse situated 4.1 Km upstream of
Paras Village
 Initial studies were initiated in 1960.
Source: www.karotpower.com accessed on 26th Feb 2016
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22. SOLAR POWER PROJECTS
Quaid-e-Azam Solar Power Park Bahawalpur
 Located in Bahawalpur District of Punjab
 200 hectares of desert area in Quaid-e-Azam Wildlife Park
 Total capacity of the project is 1,000 MW
 100MW commissioned in May 2015 by a Chinese Company
Xinjiang Sun Oasis
 Cost of 100 MW is $131(million).
 It has installed 400,000 solar panels
 Expected Date of Completion December 2016
Source: http://www.dawn.com/news/1224548
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23. Contd….
ADVANTAGES
 Environmental friendly and would reduce Pakistan’s carbon
emissions by 90,750 tons every year.
 Local Job creation up to 33,000
DISADVANTAGES
 Desert climate is not suitable for the project. High Temp up to 45C-
decreases power production up to 20 %
 High labor cost for maintenance of 400,000 cells.
Source: http://www.dawn.com/news/1224548
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24. ISSUES
 The 100 MW installed project only produces 18-20 MW instead of
full capacity.
 Bahawalpur’s climate is not suitable for the project. The temperature
rises above 45 degrees Celsius which does not produce the required
amount of electricity
 It is constructed on a wildlife park, which has disturbed the bio-
diversity of the area
 The Govt of Punjab is going to privatize the project to avoid the cost
of production and maintenance.
Published in Dawn, April 23rd, 2015
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25. Contd…
 High cost per unit of electricity (Rs.22 per unit)
 Huge operational and maintenance costs.
 Solar Panel will require cleanliness for which 400,000
liters of water @ 1 liter per panel will be required which
will be colossal amount in already arid condition of the
desert.
Source: www.sdpi.org. accessed on 27-02-2016
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26. WIND POWER PROJECTS
SACHAL POWER PROJECT
 Located in Jhimpir, District Thatta
 50 MW Production Capacity
 Stretched on 680 acre of land
 Estimated Cost around US$ 133 million
 Contractor is Hydro China Xiebi,
 Financed by The Industrial and Commercial Bank of China (ICBC)
 Expected Date of Completion October 2016
Source: http://sedlpk.com. Accessed on 28-02-2016
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27. Contd…
ADVANTAGES
 Environmental friendly as it generates no waste
 Barren tract of land and the human settlement is far away
 No endangered habitats, parks, forests, wildlife, sanctuaries,
historical or cultural resources in the vicinity
 Job opportunities to the local people.
DISADVANTAGES
 Noise of installed wind turbine
 High Risk for migratory birds
Source: http://sedlpk.com. Accessed on 28-02-2016
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28. Contd…
Sunnec Wind Farm Project Jhimpir
 located in Jhimpir, Sindh in the Gharo-Keti Bandar wind corridor.
 Generation Capacity is 50 MW
 Govt of Sindh has allocated approximately 1,250 acres of land
 Estimated Cost around US$ 134 million
 Estimated Date of Completion October 2016
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29. Contd...
ADVANTAGES
 Environmental friendly as it generates no waste
 Barren tract of land and the human settlement is far away
 No bad impact on local ecology and nearby historical or cultural
resources
 Job opportunities for the local people.
 No impact on groundwater resources.
DISADVANTAGES
 Noise of installed wind turbine
 |High risk of collision for migratory birds
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30. Contd…
Hydro China Dawood Power (Pvt) Limited
 A 50-megawatt wind power project near Near Port Qasim, Bhambore, Gharo
Creek District Thatta, Sindh *
 Joint venture by Hydro China and Dawood Power Limited
 Project cost: US $ 130 million*
 Sindh government has allocated 1,720 acres of land
 The project is expected to be operational by 30th June 2016
ADVANTAGES
 Environmental friendly as it generates no waste
 Barren tract of land and the human settlement is far away
Source-http://www.nepra.org.pk accessed on Feb 26, 2016
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31. Contd..
 No endangered habitats, parks, forests, wildlife,
sanctuaries, historical or cultural resources in the
vicinity
 Job opportunities to the local people.
DISADVANTAGES
 Noise of installed wind turbine
 High Risk for migratory birds
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32. GROUP ANALYSIS
 CPEC projects (Early Harvest)
 Best investment opportunity for hydel generation which is cheap and
environment friendly
 Employment opportunities/ Creation of business activity
 Relocation of population/ in the light of past experiences
 Transmission cost to be borne by Government of Pakistan
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33. Contd…
 This would further open up avenues for setting up of hydro
power projects on Indus
 Issues of consensus on CPEC energy projects the role of inter
provincial coordination is not visible
 The mega hydel power projects like Diamer: Basha hydro
Project, Bunji dam are not covered in early energy harvest
projects
 Coverage of National Grid of Pakistan is 60% area of Pakistan
 Mismanagement/Faulty distribution/line losses system cause a
loss of Rs.256 billion to Rs140 billions as per NEPRA
Source: http://archive.thenews.com.pk/TodaysPrintDetail.aspx?ID=64386&Cat=3&dt=8/24/2011
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34. RECOMMENDATIONS
 Timely completion of energy projects/ war footing
 Redressal of the grievances of the local population and stakeholders
 Speedy land acquisition be undertaken to avoid price hike factor.
 Issues surrounding the projects are being resolved through
Provincial Coordination Committees.
 Transportation of machinery to the project sites should start without
further delay
 Standardization in procurement of machinery and material be
ensured.
 Security of foreign labor and technical staff needs to be beefed up.
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35. Contd….
 Timely release of funds by MoF
 Conflict Resolution Mechanism has been devised
 Construction of access roads / bridges be started before
initiation of a particular project
 Formation of a task force for regular monitoring of the
work by PC
 SWOT analysis of the projects must be carried out
beforehand.
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36. Contd…
 Economic and environmental aspects also be taken into
consideration.
 Energy crises has hit Pakistani economy hard 2% less GDP, so war
footing energy strategy is needed.
 Project details are opaque and surrounded in controversies so
transparency is essential.
 Negotiated Tarrif Rate should be publicized.
 Provincialization of Grid Stations like India
Source: Governor SBP, Jan, 2016
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ACTION PLAN
SHORT TERM PLAN (1-3 YEARS)
S.N ACTIVITY RESPONSIBILITY RESOURCES TIME
PERIOD
KPI
Financial HR Technical
1. Investment Security/
Financial Incentives
EAD/MoF/CGA/
SBP/PPIB/PDs
FDI Firms
Executing
Projects
Projects
Executing
Firms
3YEAR 15% increase in
energy sector
2. Stabilization of
Pricing Mechanism
NEPRA N/A N/A N/A 1 YEAR All the new
investment
contracts in
renewable sector
to be provided
with tariff as per
agreement.
3. Recovery Measures Provincializing of
National Grid and
recovery through
Provincial authority
N/A Police/Ra
ngers/Dist
Managem
ent
N/A 1 Year 5-8% increase in
recoveries

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MEDIUM TERM PLAN (3-5 YEARS)
S.N ACTIVITY RESPONSIBILITY RESOURCES
TIME
PERIOD
KPI
Financial HR Technical
1. Electricity generation
by Hydel-Wind- Solar
IPPs under CPEC
Umbrella/Federal
Government
Chinese
Government
/ Govt of
Pakistan
Firms Executing
Projects
/WAPDA
Chinese Govt
/WAPDA
3-4
YEARS
3,000 MW to
be added in
system
2. Infrastructure
Development
Govt. of Pakistan Chinese
Government/
Govt. of
Pakistan
Govt. of
Pakistan/
IPPs
Govt of
China/
Govt of
Pakistan/
IPPs
4-5
YEARS
Land
acquisition
/relocation/
compensatio
n by Govt of
Pakistan

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CONTIGENCY PLAN
1. A brief overview of Pakistan’s execution of mega projects transpires one lesson i.e
never in the history of Pakistan a mega project has been completed in the given time
and resources.
2. As far as discipline in time management is concerned, an expertise-based steering
mechanism will be introduced in Planning Commission to meet the time line.
Monthly and quarterly reviews are part and parcel of it.
3. Secondly in order to ensure smooth financing it is proposed that a revolving fund
may be established by MoF to meet financial emergencies and to continue ongoing
projects.

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