Federal Minister for Petroleum and Natural Resources on Wednesday claimed that Pakistan was proud to have become the largest CNG user in the world.

The natural gas replaced not only gasoline but also diesel since a large number of vans and mini-buses had also converted to natural gas, he added. The minister expressed these views while inaugurating the Pakistan leg of the CNG Car Rally, organized by the Asian Natural Gas Vehicles Association (ANGVA).

The minister said the rally reflected the growth and acceptance of natural gas as a standard alternative to liquid petroleum fuels not only in Pakistan but throughout the Asia-Pacific Region.

Syed Naveed Qamar launched the GHP (Green Highway Project) marathon, which entailed traveling of the torch from Islamabad to Karachi on a CNG car while traversing through all CNG cities along the Green Highway by handing over the GHP torch to the Pakistan team comprising of the oil and gas Regulatory Authority and the Hydrocarbon Development Institute of Pakistan.

The minister said that Pakistan was making strides in the CNG as the gas usage had proliferated to a point where ample CNG stations were found all across the country. He said the rally showed the world had woken up to greener fuels. He looked forward to promoting CNG in Pakistan and making it the dream fuel of Asia . He said as winter came on, despite supply demand gap in the natural gas industry, any decision in that regard would take into account the concerns of the stakeholders inclusive of the CNG dealers. He added that cleaner fuels like natural gas in its various forms as well as ethanol were being introduced in the country. He said the LPG was also being looked at and would soon be embarked upon on completion of feasibility studies.

Hilal A. Raza, Director General, Hydrocarbon Development Institute of Pakistan said the CNG had become a household name in Pakistan . The CNG had been accepted as a standard transport fuel by society, surpassing petrol as a transport fuel. It was an enviable phenomenon for energy economists to witness the acceptance of a new fuel in the energy mix of a country.

"When we introduced the CNG as motor fuel in Pakistan by starting this station as a pilot demonstration project in 1989, people considered it a wild idea. For several years, we met with immense resistance from various quarters who either had vested interests or genuinely believed that if "this and that country" had not done it, how we could do it. But we, at the HDIP did not lose heart and the result is a thriving new homegrown industry developed without foreign intervention. Pakistan was the global leader boasting the largest CNG industry of the world. This was the second CNG Station of Asia, the first being in Karachi which no more exists. Thus it can be called the oldest operating CNG Station of Asia."

Chairman OGRA, Tauqir Sadiq on the occasion said "The continued patronage and support of the government and the efficient and stringent regulatory framework had proved to be an excellent combination in bringing the CNG sector to this level where billions of rupees investment has resulted in the CNG Industry only due to the growing confidence of the investors. Pakistan had now become a role model for the contemporary countries who are also following similar models to promote CNG in their automotive sectors."

British Petroleum and Production Inc has won bids for two new exploration blocks at Digri and Sanghar South in the Sindh province.

These blocks were awarded in a government licensing round held at the Directorate of General Petroleum concessions last month.

Currently BP produces 15 per cent of Pakistan 's oil and 60 per cent of its gas. To secure access to these blocks, BP Pakistan has undertaken a work commitment of approximately US$30 million over a period of 3 years.

The Digri and Sanghar South blocks are adjacent to BP Pakistan Mirpurkhas Khipro concession areas and add another 5000 km2 to the company's existing portfolio.

The bidding of exploration blocks has been materialised as the follow up of Pakistan Petroleum Exploration Conference held in London in July where 54 exploration blocks were offered and investors were apprised of the exploration potential existing in various areas of Pakistan .

A Pakistan High Commission media release said a total of 41 blocks were offered for bidding to international and local exploration companies under the 2009 Petroleum Policy.

In Pakistan , BP focuses primarily on exploration and production through BP Pakistan Exploration and Production, Inc. All of its operations are based in the province of Sindh , with the concession boundary starting 100 km to the east of Karachi . Existing concession blocks span across eight districts in the Sindh province.

BP has also acquired significant off-shore acreage for petroleum exploration, situated 250 km south of Karachi in ultra deep waters.

This is the largest off-shore acreage given to any single exploration and production company in Pakistan so far. Results of seismic surveys on this acreage are being interpreted currently to determine exploration feasibility.

All that investment in seismic surveys during the last two years and a record high $750 million capex plan for FY10 has finally started to pay dividends for OGDC. The country's largest energy E&P firm has had a great start so far this year, with the latest good news being the testing of the upper zone of the recently discovered Napsha-1 well and the discovery in the development well of Dakni.

The upper Lockhart zone was tested at 4200 bpd of oil and 17.1/mmcfd of gas - which takes OGDC's total oil production to 7,345 bpd, making it around one-tenth of Pakistan's current oil production. This is one of the largest discoveries ever in Pakistan and the largest in NWFP.

OGDC has a post-discovery stake of 56 percent in the field, with the second biggest stakeholder being PPL which has 26 percent. Although, the firm has yet to announce the recoverable reserves of the field, the heartening fact about this discovery is that its initial pressure and well flow indicators seem quite encouraging. If history is any guide, looking at recoverable reserves of larger fields such as Makori and Mela, it can be safely assumed that Napsha-1 recoverable reserves could touch 40 to 45 millions barrels of oil, given the strong early indicators.

Being a new field, it has a potential of an increased productivity going forward as new wells are drilled. If three new wells in the field are discovered as planned, it could add up to 13,000 bpd from this block alone - of course, provided the reserves are sufficient enough. The discovery, which will take around 9 to 12 months before optimal commercial production begins, is expected to boost the earnings by Rs 1/share.

OGDC's future lies with more discoveries and enhanced production - and the efforts taken in this regard make a good case for the firm's healthy future. Although, many wells in the fields spudded so far are yet to be tested, the firm is currently working on 7 to 8 fields across the country and more discoveries, albeit not this large, may just be around the corner.

The Pakistan Petroleum Limited (PPL) is planning to increase gas production from Manzalai to 250mcfd (million cubic feet per day). Talking to media after the Annual General Meeting (AGM) here on Tuesday, the company's CEO, Khalid Rehman, said that the PPL management has chalked out a comprehensive strategy with key performance objectives to counter operating challenges and fast track exploration efforts, optimising hydrocarbon reserve replacement and production.

He said that the multi-pronged approach, based on forging strategic local and international partnerships through a variety of means including farm-ins/farm-outs, joint bidding and swap agreements, had also been adopted to meet the company targets.

He said that PPL would participate in the bidding for exploration blocks under new petroleum policy. The bidding is scheduled for Wednesday. He said the fire broke at the well No 38 in the Sui field would be controlled by the end of October 2009. Different teams are working to control the fire and expect to succeed by the end of next month, he said.

The 58th AGM of PPL approved the financial statements together with the auditors' report for the financial year ending June 30, 2009. The AGM further approved payment of final cash dividend of 30 percent on ordinary share capital and issue of bonus shares in proportion of two ordinary shares for every 10 ordinary shares and an increase in the company's authorised ordinary share capital from of one billion shares of Rs 10 each to 1.5 billion shares of Rs 10 each.

Canadian High Commissioner to Pakistan , Randolph Mank paid a courtesy call on the Federal Minister for Petroleum and Natural Resources and Privatization, Syed Naveed Qamar and discussed matters pertaining to bilateral interest and mutual co-operation between the two countries.

The discussion during the meeting revolved around matters pertaining to bilateral interest and mutual co-operation between the two countries while focusing on the investment opportunities in Pakistan in the oil, gas and mineral sector. Qamar appreciated the successful operations of a number of Canadian companies working in petroleum sector of Pakistan and termed them as ambassadors of Pakistan to the rest of the world.

e also apprised the High Commissioner of the efforts being made for finding the right energy mix for the country's demands, for seamless availability of energy and towards ensuring an atmosphere conducive for investors. The prospects of Canadian investments through joint-ventures and involving sustainable mining practices for developing mineral resources in Pakistan also came under discussion.

Copyright Associated Press of Pakistan, 2009

Prime Minister Syed Yousuf Raza Gilani on Wednesday invited Chinese businessmen to invest in Pakistan 's Hydropower sector by building small and medium-sized dams. "Our energy requirements have increased rapidly and we are offering investment opportunities in oil and gas exploration and power generation sectors," Gilani said while addressing a gathering of Pakistani and Chinese businessmen at the round-table conference on Pakistan-China trade and investment co-operation here.

Gilani said Pakistan 's energy sector was in dire need of improvement and there was an immense scope for co-operation between the corporate sectors of Pakistan and China . He mentioned that Pakistan also had the world's second largest coal reserves, and said it looked towards Chinese help and expertise to turn this reservoir into energy.

He said the government had taken a number of initiatives to promote and facilitate Chinese investment in Pakistan , including special preferential policies for Chinese investors, exemptions from duties and taxes and the development of special economic zones.

Gilani said Pakistan also offered vast investment opportunities in sectors like mining, engineering, automobiles, infrastructure development, health, education, telecommunications, agri-business and small and medium-sized enterprises. He said there were at present 120 Chinese companies working in Pakistan . He said Pakistan drew inspiration from China that presented for developing countries a model of economic and social development with a vision for a better world.

"We believe that by forging close co-operation, private and state-owned enterprises of our countries will be able to cement further the traditional friendship between Pakistan and China ," he said. He congratulated the Chinese nation on the occasion of the 60th anniversary of its founding, and mentioned that Chinese economic miracle had a profound and positive impact on the world, particularly on Asia .

Gilani said China could help accelerate development, bringing about economic integration within Asia and it was well placed to assume a key role in ensuring peace and development. He said Pakistan-China partnership, spanning over five decades, was a model of harmonious relations and a living example of the Confucian philosophy of "Harmony without uniformity."

Gilani said China had always been a generous partner in Pakistan's development efforts, and mentioned monumental projects such as Karakorum Highway, Chashma power plant, Heavy Mechanical and Electrical Complexes, Gwadar Deep Seaport, as examples of outstanding co-operation between the two countries.

e said the government was committed to reinforcing Pakistan-China friendship by enhancing economic, defence, trade and cultural relations for the mutual benefit of the two countries. Director of China Council for Promotion of International Trade Jang also spoke on the need to strengthen Pak-China trade relations.

Copyright Associated Press of Pakistan, 2009

Prime Minister Yousuf Raza Gilani has said that the government plans to generate electricity from Thar coal reserves, and within a span of three years more than 3500 megawatt electricity would be generated from this project. "Thar Coal has reserves of over 185 billion tons; besides electricity. It will also be a source of diesel and help reduce POL import bill", the Prime Minister said in a policy statement on energy crisis in the Senate on Friday.

This important natural resource has been completely ignored during the last 62 years and the nation was deprived of an opportunity to develop it, he said. He said that the present government has constituted Thar Energy Development Board (TEDB) for one-window operation for investors, with Chief Minister of Sindh as its chairman.

The Prime Minister stressed the need of national consensus for resolving energy and all other issues facing the country, saying that energy crisis is not an issue related to the government but is a national issue. "We have to give up the tradition of blaming all outgoing governments for flawed policies and take unanimous decisions on all national issues", he added. The Prime Minister said that consensus should be developed on all issues as is evident on the issue of Kashmir and nuclear assets.

He said that the coalition government, after last year's general elections, in which PML-N was a component, set its priorities giving economy the top priority. "At that time, our country was about to default and it was difficult for the government to run the day-to-day affairs and after taking some harsh economic decisions we are now in a position where things have become relatively smoother", he added.

"I will not say that the economy is back on track but, due to harsh economic decisions, the government has set the direction of the economy right and these decisions have started paying dividends", Gilani told the house, adding that at present foreign exchange reserves are to the tune of $14.7 billion.

He said that the second priority of the government was maintenance of law and order and restoration of the government's writ in certain parts of the country. "We took harsh decision by taking whole nation along, and a military operation in Swat and other parts helped eliminate terrorism", he added.

Malakand operation was not a decision of any individual or any party, but the whole nation supported the armed forces, he said, adding that winning a war without popular support is not possible. He said that as a result of successful operation about 3,000 terrorists have surrendered in Malakand and almost the same number of militants is expected to surrender in the days to come.

The government may face a problem to accommodate such a huge number of terrorists in jails due to insufficient space, he added. Terming the energy crisis the third top priority of his government, Gilani said that the entire world has shown interest in supporting Pakistan in resolving the energy crisis. "World leaders whom I met abroad or they came here to meet me have assured their help to Pakistan in overcoming the energy crisis", he added.

There are short-term, medium-term and long-term solutions to resolve the energy crisis, Gilani said, adding that instead of adopting only mid- or long-term measures, the government went for short-term solution to give immediate relief to the people as well as the industries.

He assured the nation that there would be no load shedding in the days ahead. The whole nation is concerned about the load shedding but the gap between the demand and supply would reduce in winter. He said more projects of independent power producers (IPPs) are in the pipeline, which would help meet the energy demand of the country. He reiterated government's commitment to utilise all available resources to overcome the power crisis and to give immediate relief to the people.

Canadian High Commissioner to Pakistan, Randolph Mank paid a courtesy call on the Federal Minister for Petroleum and Natural Resources and Privatization, Syed Naveed Qamar and discussed matters pertaining to bilateral interest and mutual co-operation between the two countries.

The discussion during the meeting revolved around matters pertaining to bilateral interest and mutual co-operation between the two countries while focusing on the investment opportunities in Pakistan in the oil, gas and mineral sector. Qamar appreciated the successful operations of a number of Canadian companies working in petroleum sector of Pakistan and termed them as ambassadors of Pakistan to the rest of the world.

The phenomenal progress achieved by Republic of Korea in the economic field is a source of pride for its friends. Pakistan can benefit from Korean expertise in power generation, especially in solar and wind energy, in addition to hydel.

The Punjab Chief Minister, Muhammad Shahbaz Sharif, has said that Punjab government is working on alternate sources of power generation and investors are being fully encouraged for this purpose. He said that there were large reserves of high-grade coal in the province and special attention was being paid to generate energy from coal.

He said that Punjab Coal Mining Company had also been set up in this regard. He said that all projects of power generation with coal would be completed expeditiously and transparently. He was talking to foreign investors with regard to co-operation in coal gasification projects, here Thursday. Additional Chief Secretary, Secretary Mines, Managing Director Pepco, Vice Chairman Punjab Investment Board, experts and officers concerned were present on the occasion.

Talking to the foreign investors, the Chief Minister said that Punjab had coal reserves of about 235 million metric tons and plants could be set up for generation of energy from coal. He said that Punjab government would set up projects of generation of power from coal in Dera Ghazi Khan and Chakwal. He said that coal would be acquired for D.G. Khan project from Balochistan while there were coal reserves in Chakwal.

Prime Minister Syed Yusuf Raza Gilani on Tuesday said progress on Thar Coal project was a milestone in the country's history and hoped that China 's Sino Coal company would complete the task at the earliest. The Prime Minister was talking to Wang Jinhua, President of China Coal Technology and Engineering Corporation Group (CCTEG) here, whose Sino Coal company has shown interest in the Thar Coal Project.

The Prime Minister welcomed Sino Coal to carry forward the project and assured that the government would remove all impediments related to its execution. He said Pakistan was currently facing grave energy crisis and hoped that with Chinese technical assistance and expertise, Pakistan would be able to overcome the power issue.

He said progress on Thar Coal was an important milestone in the development of country's indigenous energy resources, and hoped that Chinese company would complete the work at the earliest. Gilani said the government was focusing on coal-based power generation in addition to hydro and thermal power for overcoming the energy deficit, adding Thar coal reserves would be utilized in ridding the country of load-shedding within shortest possible time.

Later talking to newsmen, Pakistan's Ambassador to China Masood Khan said the meeting decided that CCTEG Vice President would be visiting Pakistan next week to finalize the arrangements on Thar Coal Project. He said Sindh Thar Coal Energy Board and Engro Power had contacted CCETG for the survey of Block 2 of Thar fields and soon the two sides would prepare a feasibility report in this regard.

He said the Prime Minister assured the Sino Coal that federal and provincial governments would fully support the joint collaboration of Pakistani and Chinese companies. Masood Khan said the Chinese side offered full support for the economic development of Pakistan and discussed future co-operation and investment opportunities in the country.

China Development Bank (CDB), a top-ranking financial institution on Tuesday agreed to support Pakistan on undertaking major energy projects, to help it overcome the energy crisis. CDB Chairman Chen Yuan, who called on Prime Minister Syed Yusuf Raza Gilani here, evinced his bank's keen interest in providing funding for several development projects in Pakistan , particularly for the renewable and alternative energy sectors.

The Prime Minister, who is in Beijing to attend the summit of Shanghai Co-operation Organization, also invited CDB to finance and establish consortiums for mega projects in energy, telecommunications, infrastructure and minerals, with the help of Chinese corporations.

He said Pakistan government had offered free land for the construction of Joint Investment Company facilities in Islamabad and welcomed opening of its branches in major cities. Gilani said Pakistan-China joint development ventures would not only strengthen ties between the two countries, but would also help bring stability and prosperity to the region by ensuring transit trade and greater interaction among the states.

Prime Minister Syed Yousuf Raza Gilani on Wednesday invited Chinese businessmen to invest in Pakistan 's Hydropower sector by building small and medium-sized dams. "Our energy requirements have increased rapidly and we are offering investment opportunities in oil and gas exploration and power generation sectors," Gilani said while addressing a gathering of Pakistani and Chinese businessmen at the round-table conference on Pakistan-China trade and investment co-operation here.

Gilani said Pakistan's energy sector was in dire need of improvement and there was an immense scope for co-operation between the corporate sectors of Pakistan and China . He mentioned that Pakistan also had the world's second largest coal reserves, and said it looked towards Chinese help and expertise to turn this reservoir into energy.

He said the government had taken a number of initiatives to promote and facilitate Chinese investment in Pakistan , including special preferential policies for Chinese investors, exemptions from duties and taxes and the development of special economic zones.

Gilani said Pakistan also offered vast investment opportunities in sectors like mining, engineering, automobiles, infrastructure development, health, education, telecommunications, agri-business and small and medium-sized enterprises. He said there were at present 120 Chinese companies working in Pakistan . He said Pakistan drew inspiration from China that presented for developing countries a model of economic and social development with a vision for a better world.

"We believe that by forging close co-operation, private and state-owned enterprises of our countries will be able to cement further the traditional friendship between Pakistan and China," he said. He congratulated the Chinese nation on the occasion of the 60th anniversary of its founding, and mentioned that Chinese economic miracle had a profound and positive impact on the world, particularly on Asia.

Gilani said China could help accelerate development, bringing about economic integration within Asia and it was well placed to assume a key role in ensuring peace and development. He said Pakistan-China partnership, spanning over five decades, was a model of harmonious relations and a living example of the Confucian philosophy of "Harmony without uniformity."

Gilani said China had always been a generous partner in Pakistan's development efforts, and mentioned monumental projects such as Karakorum Highway, Chashma power plant, Heavy Mechanical and Electrical Complexes, Gwadar Deep Seaport, as examples of outstanding co-operation between the two countries.

Norwegian Ambassador to Pakistan Robert Kvile has said Norway and Pakistan enjoy very cordial relations and these ties will further strengthen with the passage of time. Speaking to the members of the Sialkot Chamber of Commerce and Industry (SCCI) here, he said efforts were being made to promote trade between the two countries.

The Norwegian Ambassador told the members that his country was considering investing in energy sector in Pakistan. He stressed the need for enhancing the volume of export of surgical instruments from the existing level of around 7,00,000 dollars. Norway had invested two billion dollars in telecom sector and there were wide opportunities of expanding co-operation in other sectors in Pakistan, he said.

The Ambassador further said Norway was considering starting garment production in Pakistan and work on this project would be initiated in near future. SCCI President Muhammad Ishaq Butt, in his welcome address, said there was huge scope to set up joint ventures and for business co-operation between Sialkot based companies and Norway, especially in the fields of sports goods, surgical instruments, leather products and information technology.

Butt said besides liberal investment policy, equal treatment was given to local and foreign investors and all the economic sectors were open to Foreign Direct Investment, and foreign equity was allowed up to 100 percent.

Pakistan and China on Thursday signed two agreements and Memoranda of Understanding (MoUs) on Space concessional loan, space technology and alternative energy. Prime Minister Yousuf Raza Gilani witnessed the signing ceremonies as the respective officials of the companies inked the documents. The concessional loan agreement for Paksat was signed between Pakistan's Economic Affairs Division and Export Import Bank of China.

Under the agreement, China will provide an amount of 190 million dollars for the supply of Paksat-1R which will replace the Paksat-1 that has a life span till 2011. The loan will cover 85 percent cost of the project. Another agreement was signed between Space and Upper Atmosphere Research Commission (Suparco) and China Great Wall Industry Corporation for Pakistan-1R Satellite Ground Control Segment.

The Ground Control Segment will comprise the establishment of stations at Lahore and Karachi . The stations will be used to monitor the satellite and control its operation for the duration of its 15-year life. Pakistan 's Alternative Energy Board signed MoUs with China 's Wuxi Suntech Power Company and China Electric Equipment Group Solar Energy Research Institute Co Ltd (CEEG SI) respectively for co-operation in alternate energy projects in Pakistan.

Gilgit-Baltistan has a potential to produce 40,000-mega watt hydro electricity and thus offers a huge opportunity to the local investors. This was the upshot of the briefing given by Chief Secretary Gilgit-Baltistan Baber Yaqoob to 16-member delegation of the Lahore Chamber of Commerce and Industry (LCCI) headed by its President Zafar Iqbal Chaudhry, says LCCI spokesman.

Gilgit-Baltistan has also marvelous and matchless potential for tourism, minerals and mines, communication and food industry that needs to be tapped, the Chief Secretary said. The Chinese investors were already working on various hydropower projects, but there was a need to motivate the local investors as well. This would not only be fulfilling gap between demand and supply, but would also be available for export, he added.

The briefing was also attended by the secretaries of all the government departments. Giving the details on infrastructure development in the area, the LCCI team was briefed that a three-lane road from Gilgit to Sust Border was being constructed that would be completed by the year 2011. The new road would also help expedite business activity in the region, besides opening up of new avenues for potential investors.

"The government is also setting up an industrial zone on an area of 10,000-12,000 kanals, which would provide all industrial related infrastructure and facilities to investors. Uplift of the area and generation of new jobs is linked with this venture, which would prove win-win situation for both investors and local population", he added.

The LCCI President Zafar Iqbal Chaudhry promised to hold an exhibition of precious stones at the Lahore Chamber of Commerce and Industry to highlight the potential of the area. The objective of visiting the area was to have first hand knowledge about the available opportunities for future investments.

He was surprised to find out that potential of Gilgit-Baltistan for the food industry was matchless and any investment in this particular sector could earn rich dividends for the investors, he added. In the Northern Areas, the production of varied dry fruits is in abundance. Unfortunately, a great quantity of the fruits grown goes wasted due to lack of post-harvest preserving technology. There is an urgent need to set up a processing and packaging system as well food storage to avoid the losses and increase the exports of Dry Fruit treasures.

"Tourism, mining and hydel-power potential of Gilgit-Baltistan would change the fate of the region, if it is properly harnessed and local and foreign investors are invited and offered incentives", he said. More importantly, the development of human resource is a key to successful tapping of the rich resource-base present in the Northern Areas on faster pace, he added.

The US-based Energy Market Group has shown interest to invest in Lakhra power plant and Thar coalfields to help the country overcome the prevailing energy crisis, it is learnt. Sources told Business Recorder on Wednesday that a delegation of Energy Market Group recently held a meeting with Sindh government officials, with Additional Chief Secretary (Development) Munawar Opel in the chair.

The representatives of the Group showed interest to provide technical assistance and funding for the energy sector, particularly in the coalfields, they added. They said that the ACS (Dev) directed the Mines and Minerals Department of Sindh government to indicate energy projects which could be offered to Energy Market Group in the next meeting to be held shortly for the support and funding.

They said that roughly two-thirds of the world's coal deposits are being used to generate electricity while in this country coal is used only for 150MW at Lakhra power plant, in Jamshoro district. Sources said that maximum power demand of the country, according to Private Power Infrastructure Board (PPIB), is expected to increase from 16,484 MW in 2008 to 41,132MW by 2020.

The supply/demand balance indicates a shortage of around 3,500 MW in 2009, which would reach 9,000MW by 2019 unless adequate power generations are added into the system. The actual position is even worse and the country is facing acute deficit of around 4,000MW, they said.

The energy import bill of the country is expected to exceed $11 billion mark in the current financial year as it has already crossed $9 billion mark last year, they said, adding that the Energy Market Group would be offered Thar coalfields, which have been developed into eight blocks.

Out of these developed blocks at Thar coal, Blocks I, II, III, IV and VI have been reserved/allocated to the World Bank, joint venture with Engro Energy, Couger Energy, Bin Daen Group and Oracle Fields of England, respectively. However, block V is vacant.

Moreover, sources said, the assistance of Energy Market Group would enable the Sindh government to further explore an area 200 sq km comprising Thar coal's blocks XI and XII and an amount of Rs 260 million would be required for undertaking the feasibility study. They said that the Sindh government would also seek technical assistance and funding for many important schemes with the Mission in the next meeting.

The US has urged Pakistan to fully comply with the power sector agreements reached with the International Monetary Fund (IMF), with the schedule of full cost recovery and elimination of cross subsidies to be agreed with the World Bank.

In the face of a perceptible increase in fuel and non-fuel cost components, Pakistan government reached an agreement with the World Bank/Asian Development Bank on May 21 to increase average base tariff according to a schedule. The government requested that the schedule be delayed due to political constraints.

According to the sources, a proposal would be discussed in a two-day energy dialogue between Pakistan and US, starting on Friday on setting up a separate fund for the payment of subsidy to ensure a transparent payment mechanism and complement the agreement with the WB/ADB.

The proposal would target all government agencies/departments to make prompt payment for electricity and failure to do so must lead to disconnection. This would automatically increase billing collections. It has been noted that the tariff determination by the National Electric Power Regulator Authority (Nepra) has done on a cost plus basis, based on embedded cost. The tariff consists of a power purchase price adjusted for losses plus distribution margin.

A previous year adjustment has also been done by the Nepra to cover any shortfall, occurring due to late notification by the government of Pakistan . The US urged the government and the Nepra to review all tariff structures and subsidy programmes and re-target them gradually to improve the social safety net for the lifeline consumers by reducing inefficient subsidies in other sectors.

"Political intervention should be minimized to strengthen the independence of the Nepra that will provide more transparent decision-making on tariffs, including the screening and contract negotiating of projects based on tariffs," the US said in guidelines submitted to Pakistan.

The US proposed short-term and long-term steps to address the Nepra issues, and maintained that in the near term, management needed to be improved that might be accomplished through eliminating across-the-board appointments and bringing in technical, not political appointees.

As a long-term measure, it has been proposed that power distribution companies (Discos) must be fully independent and accountable to Pakistan Electric Power Company (Pepco) with no interference in the Discos operations. "To achieve the above a sustained government of Pakistan political will and strong legal enforcement is required," the US said.

Germany has expressed his interest to invest in solar energy projects in Pakistan as it has a lot of potential to generate energy by installing Photovoltaic Solar Systems. This was said by Sikander Mir-Kohler, Honorary Investment Counselor of Pakistan to Germany while addressing the business community at Islamabad Chamber of Commerce and Industry.

To meet its rising energy needs, Pakistan is in dire need of foreign investment in energy sector. He said that he had convinced the German Company M/s. AZUR Solar to explore Pakistani market and come up with optimum solar energy solutions for Pakistani customers. He asked the businessmen to look for joint ventures with AZUR Solar to start production of solar energy in the country.

He expressed the hope that entry of Germany's investors in Pakistan 's energy sector would send a positive signal to foreign investors and would improve the image of the country as well.

On this occasion, Uwe Stoermer of M/s. AZUR Solar of Germany gave a comprehensive presentation on his company's products and services and said that their solar energy products provided 20 years service with 98 percent efficiency. He said the AZUR Solar had presence in UK, USA, Belgium, Spain, Italy, France and Greece and now they were eying Pakistan as a potential market.

The United States has expressed dissatisfaction over investment climate in Pakistan , but assured its full support in dealing with the energy crisis through short-term solutions, including the much criticized rental power plants (RPPs) and the fast track power projects, initiated by the American investors, well-informed sources told Business Recorder on Saturday.

This was the outcome of the two-day parleys between Pakistan and the US team meeting referred to as Pakistan-US bilateral energy dialogue, which commenced on Friday, and was held at the Prime Minister's Secretariat.

Pakistan team was headed by Minister for Water and Power Raja Parvaiz Ashraf, while the US delegation comprised US Department of State's team, including International Energy Co-ordinator David Goldwyn, Economic Advisor to the Special Envoy for Afghanistan and Pakistan Mary Beth Goodman, Senior Economic Advisor Robert Deutsch and other officials from the US Department of Energy, and Overseas Private Investment Corporation (OPIC).

The purpose of sending a team to Islamabad was to immediately assess the energy needs which, it was feared, was contributing to political instability, said a power sector entrepreneur, who telephoned this scribe from New York on Saturday.

"The US delegation confirmed its intent to assist Pakistan in addressing the hardships experienced by all Pakistanis due to energy shortfalls. The United States appreciated Pakistan's proposals to address the short-term energy shortfalls and pledges to assist in their implementation,"says an official statement. According to official sources, involved in co-ordination of the meeting, the US has asked the government to "do more" to stabilize the energy sector and its own political position.

Source said that in the short-term, the US wanted to assist public and private sector energy projects, which could be implemented on a fast-track basis to achieve financial close either through equity placement or through confirmation of banking instruments that could allow these projects to raise cheaper debt financing in foreign markets.

With specific attention on ways for Pakistan to move beyond its energy crisis, the delegation reviewed the full range of energy policies. During the two days, the talks also focused on ways to transform Pakistan 's energy economy on a sustainable long-term basis.

They discussed measures needed to craft a climate conducive to attract private capital investments, the official statement added. The Pakistani delegation presented the government's integrated vision for meeting the energy needs of a growing economy through development of domestic resources, including oil, gas, coal, hydro and renewable energy. They also presented operational, efficiency and organizational improvements that would allow the production and delivery of more reliable energy supplies, as well as the more efficient use of imported energy.

The US delegation reiterated the interest of numerous US private sector firms in investing in energy projects in Pakistan . The two sides agreed that they would work jointly to ensure progress towards a balanced energy market in Pakistan and to review specific project proposals for increased energy capacity. They agreed to meet again in the spring of 2010.

China, Bangladesh, India, Sri Lanka, Egypt, the US, Britain, UAE, Puerto Rico, Guatemala, Mexico and the West Indies have all set up rental power plants to meet emergency electricity needs, according to the ministry of water and power.

The ministry said that 706 megawatts would be added to the national grid in three months after the commissioning of six rental power plants. According to sources, three power plants of 405MW are in the planning phase. Two projects, on the other hand, have passed the initial phase and will start production soon.

They said rental projects were being set up for five years and their funding was the responsibility of private investors. The contract period for the projects ranged from three to five years, after which the authorities would have no obligation.

The government is likely to extend more concessions to power sector projects on imported machinery worth $50 million or above despite the fact that this facility was misused in the past, sources in Industries Ministry told Business Recorder.

"Industries Ministry supports the investment, provided it is not at the cost of local industry. In the 2007-08 budget the condition 'if not manufactured locally' was excluded from the SRO to the extent of imported plant, machinery and equipment for value above $50 million. This facility was provided to encourage investment, but it was reportedly massively misused," sources said.

Prior to the 2008-09 budget, there were apprehensions that import of plant, machinery, equipment and capital goods at concessionary rate of 5 percent customs duty and free of sales tax could harm the local industry.

However, these concessions were restricted to such machinery, which was not manufactured locally. In the 2008-09 budget, under a conscientious policy to attract, incentivize and facilitate investment, the condition of local manufacturing was de-linked for such new industrial projects which would import plant, machinery, equipment and other capital goods worth $50 million and above. The said measure was implemented through SRO 554(1)/2008 by amending SRO 575(1)12006.

While implementing the measures, due to the expression "setting up of new industrial projects", an issue has arisen as to whether the announced concession can also be applied to the import of plant, machinery and other capital goods for such on-going new industrial projects for which LCs were established prior to the issuance of SRO 554(1)/2008, on June 11, 2008 but shipments for such projects were made prior as well as after the said date.

The approval of the Cabinet through which the said measure was implemented does not reflect whether these concessions can also be availed by the on-going new industrial projects for which LCs were established prior to the issuance of the SRO and whose shipments were continuing.

Certain power projects (Atlas Power, Foundation Power, Sapphire Electric) have approached the FBR for extending the benefits of concessions on their partial shipments made after the issuance of SRO 5 54(1)/2008.

Supporting the proposals of the three power sector projects, the FBR stated that as the government encourages investment, particularly in the power sector, FBR has proposed that scope of concession should also be extended to the ongoing new projects where the LC was opened prior to the issuance of SRO 554(I)/2008, and the LC value of the partial shipment of machinery and equipment arriving after the issuance of the said SRO is $50 million or above.

This value does not include the value of shipments which had already arrived prior to the issuance of this notification. The proposal has been circulated to Ministry of Finance, Ministry of Industries, Ministry of Commerce, Ministry of Investment and Ministry of Water & Power.

To minimize the energy crisis in Pakistan , Iran is ready to supply at least 1,100 megawatts of electricity. This was stated by Masood Muhammad Zamani, Consul General of Islamic Republic of Iran, while addressing the members of City Council on Wednesday, during its general session, held at City Council Hall at Old KMC Building with Naib Nazim Nasrin Jalil in the chair.

The agreement for the additional supply of power, which was signed by President Asif Ali Zardari with his counterpart Mehmud Ahmadinejad, in his recent visit to Iran, would not only help Pakistan come out of the severe power crisis but also boost the existing friendly relations.

While offering his country's support for cultural promotion in Karachi , Zamani said in this city, which is mostly seen as a place for trade and economic activities, the preservation and promotion of its rich culture was also needed along with other developments.

Appreciating the roles of Chief Minister Syed Qaim Ali Shah, Governor Ishratul Ibad and City Nazim Syed Mustafa Kamal for their due shares in the infrastructural development of the metropolis, Zamani said Karachi and Tehran were the most important cities for Muslim Ummah.

Earlier, the Convenor who welcomed the guest in the House, said the people of past generation here in Karachi, which is now the first and 7th largest city of Muslim Ummah and the world respectively, were used to speak Persian as their language, showing the historic relations between Persian and other dialects in the subcontinent.

While proposing a delegation of the Council members to visit Tehran to see the infrastructure development there, she expressed her gratitude to the Iranian engineers who played vital role in some development projects of the city. Asif Siddiqui, leader of the House, while greeting the consul general, said the historic ties between the two countries would not be affected by terrorist attacks.

"We salute the role of Khomeini, the pioneer of the Islamic revolution in Iran, who brought democracy in the country at a time when the dictatorship was all around in his homeland," said Shamim Mumtaz Wasi, a member from Awam Dost Group.

She also praised the Iranian contribution in the infrastructural development projects such as Fatima Jinnah Bridge and Shaheed-e-Millat Road , constructed during the regime of Zulfiqar Ali Bhutto who, as she said, worked closely with Iran in technology and industrial fields.

"The ruling party of Pakistan Peoples Party (PPP) gives importance to Iran as the Quaid-e-Awam (Zulfiqar Ali Bhutto) and his wife Nusrat Bhutto, an Iranian, had strong relations with Iran and both the countries worked closely in all sectors," Jumman Darwan, deputy parliamentary leader said, adding that no one could separate the two countries who have lots of commonalties, through terrorist attacks.

US Secretary of State Hillary Clinton on Wednesday unveiled a 125-million-dollar programme to improve the country's inadequate electricity supply. Hillary also announced the first phase of the energy programme, which would help repair power facilities and promote energy efficiency. The projects, she said, have been designed in close collaboration and consultations with Pakistan government.

Under the energy programme, key power stations across the country would be upgraded and repaired, which are currently operating below capacity. She said the US would help install better equipment at Tarbela power station and help repair or replace more than 10,000 tubewells across the country, which would save energy and increase agricultural productivity.

Addressing a joint press conference with Foreign Minister Shah Mehmood Qureshi, she said her country wants to open a new chapter in relations for a strong and stable Pakistan . Hillary said Pakistan and the United States are facing common problems and the US wants to help out Pakistan in defeating terrorism and extremism as well as resolving its energy and economic crisis.

The top US diplomat praised the role of Pakistani government, its army and security forces for the commitment and determination to fight the menace of terrorism and extremism. She also informed the media that during her meetings with the Pakistani authorities, they have also agreed to resume strategic dialogue between the two countries, which would be result- oriented.

"The relations between the US and Pakistan are not limited to security alone and we look beyond this. Both the countries have a united and shared vision for the future of our children," she added. Hillary also sought an end to the anti-America sentiment in Pakistan , saying that Obama Administration wants to reverse the misperceptions prevailing about the US in Pakistan.

Urging the importance of people-to-people contacts between the two countries, she said, "Partnership should not be limited only to the two governments. There should be a strong partnership among the people of the two countries," she said. She added that Obama Administration intends to extend more support to Pakistan on a wide range of issues, including economic development, energy generation, education and the environmental issues for the betterment of the people of Pakistan . She said there are many areas where both countries can work together such as universities, religious institutions and civil society.

She termed the ongoing war against militants in South Waziristan as crucial for Pakistan , saying that she gives Pakistani government and its military high marks for their intense engagement with the militants.

" Pakistan is in fight with terrorists and this is not war of Pakistan alone. We are also equally partner with the people of this country," she said. She believed that al Qaeda is helping the militants, which are operating in Pakistan , adding that her country would chase terrorists wherever they are. "These are coward people, who take lives of many innocent people," she said while condemning the suicide attacks.

"Majority of the militants are not committed ideologically. But they are acting by following their leaders. We are determined to defeat them," she said. To a question, she said, a stable Afghanistan is in favor of both Pakistan and the United States .

Foreign Minister Shah Mehmood Qureshi said there are some reservations between Pakistan and the US about each other's policies, which need to be addressed. He said Pakistan has entered a crucial stage of war against terrorism and the visit of the US Foreign Secretary is very important in this regard.

At present, he said the US wants to shift its focus from assisting individuals to the people of Pakistan and wants to work with the democratic government. "The US wants to be in touch with Pakistani people instead of individuals. US and Pakistan relationship will be strengthened due to Clinton 's visit," he added.

He informed the media that Pakistan seeks more market access from the US as Pakistan needs more trade than aid to overcome the economic challenges it faces today. "Today we discussed how to reinforce the trust and how to understand sensitivities of each other's concerns and identify and design our objectives and strategic interests," Qureshi said.

He said the relations between the two countries are moving in the right direction and the visit of the Secretary State would boost the co-operation between the two important countries. The Foreign Minister underlined the importance of mutual objectives and mutual trust to go forward in future. Qureshi said Pakistan wants to have good relations with the United States for a better future. "We need relations based on mutual respect and trust to pursue our common objectives," he added.

He said the United States is a democracy and it has supported transition to democracy in Pakistan . He said democracies have to re-draw terms of engagement. "The terrorists want to shake our resolve to peace and stability. But we are committed to defeating the menace of terrorism, extremism and militancy from our soil," he added.

The Sindh government has sought an extension from the World Bank till June 2010 to ensure proper utilization of two million dollars for the Thar Coal and Power Technical Assistance Project, it is learnt. According to sources, the Sindh government had signed an agreement of 30 million dollars with the bank in May this year for the technical assistance in Thar Coalfields. Under the agreement, it would provide 30 million dollars loan within four years with a ten-year payback time.

Out of total amount, 25.8 million dollars would be provided to the provincial Mining Board, while the remaining 4.2 million dollars would be given to the federal government's Private Power and Infrastructure Board (PPIB) to provide technical assistance for the development of Thar Coal, they said.

The bank's assistance was meant for geographical survey and data interpretation related to Thar Coalfields and in greater detail for Thar Block No 1, supervision/technical assistance with the interpretation of the regional hydro-geological study, developing overarching coal and coal bed methane power sector/legal/regulatory/safeguards, including those related to mineral licensing and tendering procedures, and setting up operational, environmental and social management framework for coal-to-power sector, they added.

They said the bank had provided project preparation advance of 2 million dollars in the month of September with a condition to utilise these funds until December 31, 2009. Out of these funds, an amount of 1.177 million dollars was being utilized for different activities of the project.

Recently, the mines and minerals department of the Sindh government had forwarded a letter to the Economic Affairs Division requesting it to seek an extension of six months ending June 2010 for the utilization of the funds, a copy of the letter is exclusively made available with the Business Recorder.

According to the letter, there were certain factors that warrant the Sindh government to send a request to the World Bank for an extension of six months in the period for utilization of the Project Preparation Advance (PPA). It said the PPA was only made available in the account during last week of September, which left a very limited time to utilize it.

The productive and efficient utilization of PPA would require an extension in time and the project was yet to be placed before the World Bank's Board of Directors for approval, it added. The extension in PPA could be a useful risk mitigating measure, which would provide the required space to carry out the project activities even if the Board approval was delayed for sometime, it said.