China pakistan economic corridor 3

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Introduction

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National Institute of Management, Karachi

21st Mid-Career Management Course

Simulation Exercise – I

“China-Pak Economic Corridor”

RAG – II

“China-Pak Coal Based Thermal Projects”

Sponsor ADS:

Syed Aijazullah Shah

1st March, 2016

4 Composition of RAG – II

S# Participant’s Name Service Assignment

1.Mr. Muhammad Tariq Jamil Khan (Leader)

Ex-Cadre (ISI)

Secretary Energy, Sindh

2. Mr. Riaz Hussain PCSCEO, Sindh Engro Coal Mining Company.

3. Mr. Shahid Ali Seehar FSP DG, Thar Coal & Energy Board.

4. Mr. Tahir Ayub Khan PostalMD, Coal Based Power Project, Karachi.

5. Mr. Waseem Ahmed JafriEx-Cadre

(ECP)MD, Thar Coal & Energy Board (TCEB)

5 Scope of Research and Analysis Group – II

To identify and assess the economic benefits Pakistan will get from these coal-based energy projects

To highlight the major controversies that are attached with these projects

To identify the role of Planning Commission, WAPDA, PPIB and Ministry of Finance

To identify the role of Environmental Protection Agency (EPA) and the reservation of international community on these projects

To prepare effective and workable strategy both at strategic and operational level for short and medium term for the timely completion of these coal-based thermal projects

6 Sequence of the Presentation

Introduction

Methodology

Currency of the Issue

Why Coal Based Power Projects

Coal Based Energy Projects - Economic Benefits

Major Controversies Attached with these Projects

Role of Planning Commission, WAPDA, PPIB and MoF

Role of EPA and the Reservations of International Community

Measures to be taken

Conclusion

7 Methodology

Primary Sources

Meetings with concerned officials

Survey

Secondary Sources

Newspapers/journals

Reports/Reviews

Economic Survey of Pakistan 2014-15

Relevant Websites

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Meeting with Additional Secretary Energy Sindh

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Currency of the Issue

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15 Why Coal-based Power Projects?

Proven Coal Reserves of about 185 billion tons available

175 billion tons in Thar region only

Electricity demand & supply gap is rapidly growing (5000MW to 7000MW)

China has committed the much-needed investment

Out of US$ 46 bn, US$ 33.97 bn earmarked for energy sector

Availability of abundant skilled and unskilled cheap labor.

Existing political will and the pragmatic leadership

India is successfully producing coal from Neyveli Coal Field with similar geological conditions as of Thar since 1960s

16Thar Coal Field

17Country Wise Share of Coal Based

Power

South Africa 93% Poland 87%

China 79% Australia 78%

Kazakhstan 75% India 68%

Israel 58% Greece 54%

Czech Republic 51% USA 45%

Germany 41% Pakistan 0.1%

Source: http//www.worldcoal.org/resources/coal-statistics

18 Major Coal Reserves

Region Coal (Million Tons)

Sindh: Lakhra, SondaThatta, Jherruck, Thar, Others 184,123

Punjab: Eastern Salt Range, Central Salt Range, Makerwal 235

Balochistan: Khost-Sharig-Harnai, Sor Range/Degari, Duki, Mach-Kingri, Musakhel Abegum, Pir Ismail Ziarat, Chamalong 217

Khyber Pakhtunkhua 90

Azad Jammu & Kashmir 09

Total 184,674

Source: Thar Coal Energy Board (TCEB), Govt. of Sindh

19 Major Coal Based Thermal Projects

1400 MW Power Project in Thar, Sindh

660 MW Engro Power Project in Thar, Sindh.

1320 MW Power Project at Port Qasim, Sindh.

1320 MW Power Project at Hub, Baluchistan.

1200 MW Power Project at Sahiwal, Punjab.

150 MW Power Project at Arifwala, Punjab

20Coal Based Energy Projects -

Economic Benefits

Meet growing energy needs

Reduce trade deficit by less oil imports

Cut down ever-mounting circular debt

Infrastructure development & resultant economic

windfall

Several thousands of new jobs will be created

21Coal Based Energy Projects -

Economic Benefits Socio-economic indicators ( literacy, health, etc.) will

improve

Development of indigenous mining sector & related expertise in the long run

Abundant energy will help revive industry & boost exports

Attract foreign investment

Export of electricity

22Major Controversies Attached with

these Projects

Political Controversy

Environmental controversy

Regional Controversy

Economic Controversy

Feared dislocation of existing infrastructure/setups

23 Planning Commission

A financial and public policy development institution under Ministry of Planning, Development and Reforms

Undertakes development initiatives for economic growth and the expansion of state infrastructure

Works under the Chairmanship of Prime Minister, assisted by the Deputy Chairman

The current Deputy Chairman is Mr. Ahsan Iqbal who is also the Federal Minister for Planning, Development and Reforms.

24 Planning Commission

Commission’s role is pivotal to timely materialization of CPEC

Commission can play key role in following ways:

To work as Think Tank to the Govt. regarding CPEC related projects

To assess and promote capacity development for optimum utilization

To make substantive contribution to policies for Govts

To encourage foreign investment in Power Sector

25 WAPDA

Autonomous and statutory body established in 1958 through a Parliamentary Act.

Works under a Chairman, who is assisted by three Members (Water, Power and Finance)

WAPDA has to play key role in CPEC in following ways:

Re-construction of existing transmission lines

Construction of Grid Stations and transmission lines adjacent to new power projects

Fixation of tariff and other ancillary jobs

26 PPIB

Private Power and Infrastructure Board (PPIB) was created in 1994

"One Window Facilitator" to promote private sector participation in power sector

Executes Implementation Agreement (IA) with Project Sponsors

Issues sovereign guarantees on behalf of Government of Pakistan

27 PPIB

Key role in CPEC related projects in following ways:

Ensure implementation of agreements made with private sector

Coordination with all the stakeholders

Meet deadlines to ensure timely completion of projects

Resolve differences through negotiations

Introduce best practices

Removing different procedural flaws and delays in documentations

Functioning as a focal department on behalf of Federal Govt and its Ministries

Executing and monitoring the power contracts and contractual obligations

28 Ministry of Finance (MoF)

Deals with the subjects related to national exchequer

Prepares annual budget statements and supplementary/excess budgets

MoF can play following roles as regard to power projects:

Timely disbursement of requisite funds for projects

Coordination with all stakeholders including provincial Ministries of Finance

Vigorously follow the policy of active pursuit of energy at all forums

29Role of Environmental Protection Agency (EPA)

and the Reservations of International Community

Role of EPA

National Impact Assessment Programme (NIAP)

Environmental Impact Assessment (EIA)

Strategic Environment Assessment (SEA)

Meeting PAK-EPA NEQS

Reinforce EIA Mechanism

Institutionalize SEA Mechanism

Formulation of Comprehensive Guidelines and Task Forces

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Strategy - Short and Medium Term Measures for the Timely Completion of

the Projects

31 Short Term Measures

Availability of Financial resources by Federal as well as Provincial Governments

Provision of Fool Proof Security

Timely execution of already approved projects/schemes

Infrastructure Development in project areas

Cut down in Technical and Bureaucratic rigmarole to ensure speedy accomplishment of assigned projects

32 Short Term Measures

Simplification and Streamlining of Regulatory Mechanisms

Environmental Impact Assessment of all the projects to be carried out according to international standards

Community Participation

Mass Awareness Campaigns

33 Medium Term Measures

Facilitation of Investor, Lender and Power Producer

Removal of differences between Centre and Provinces & amongst Provinces.

Equitable distribution of economic returns from CPEC – related projects among provinces

Strengthening of Environmental regimes in Pakistan through reforms in PEPA and NIAP in order to comply by international environmental standards

34 Medium Term Measures

Community Development in the project area should be

prioritized in order to avoid any displacement

Drainage of the effluent water from project area into the

sea after thorough scientific treatment in order to save our

Marine Eco System and to avoid any objection from

international marine watchdogs

35 SHORT TERM PLAN (1 – 2 YEARS)

S. No. Activity ResponsibilityResources

TimePeriod

OutcomeFinancial HR

Technical

 1.Provision of Fool Proof Security

Federal & Provincial Govts

Rs. 600 Mn

1000  100  Six Months

Project Secure

 2.Infrastructure Development

Provincial Govts  --  --  --  Six Months

Timely Completion of Project

 3.End to Red Tapism

Provincial Govts  --   -- --  Six Months

Timely Completion of Project

 4.Simplification of Regulatory Mechanisms

Provincial Govts --  --  -- 

 Six Months

It will attract further investment

36 SHORT TERM PLAN (1 – 2 YEARS)

S.No. Activity Responsibility

ResourcesTime

PeriodOutcome

Financial HRTechnic

al

 5. Commyunity Participation

 Provincial Govts  Rs.100 Mn 

--  -- 

  Six Monrths

  It will minimize controversies.

 6. Mass Awareness Campaigns

 Provincial Govts  Rs.100Mn 

 -- -- 

  Six Monrths

 It will minimize controversies

 7.

 Initial Envirenmental Examination (IEE)

 Respective EPAs --  --   -- Immediate

 Environmental Protection

37MEDIUM TERM PLAN (2 – 5

YEARS)S.No

.Activity Responsibility

ResourcesTime

PeriodOutcomeFinan

cial HR

Technical

 1.Facilitation of Stakeholders

Federal/Provincial Govts

--  --   --Two Years

It will attract further investment

 2.

Removal of differences b/w Centre and Provinces &among Provinces

Federal/Provincial Govts

--  --   --Three Years

Controversies Removed

 3.Strengthening Environmental Regimes

Provincial Govts --  --  -- Three Years

Environmental Protection

 4.Proper Disposal of effluent water

Provincial Govts Rs. 200 Mn 

--   --Three Years

Environmental Protection

38 LONG TERM PLAN (5 – 10 YEARS)

S.No. Activity ResponsibilityResources Time

Period OutcomeFinancial HR Techni

cal

 1.  Equitable Distribution of Resources

 Federal Govt

--  --  -- 

 Five/Six Years

 Economic Prosperity & Provincial Harmony

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CONCLUSION

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