TABLE OF CONTENTS

CHAPTER 1 INTRODUCTION
1.1 FOUNDER OF THE GROUP 1
1.2 HABIBULLAH GROUP AT A GLANCE 1
1.3 HEL EXISTENCE 2
1.4 MANAGEMENT STRUCTURE 2

CHAPTER 2 COMPANY ANALYSIS

2.1 OPERATIONAL ANALYSIS 3
2.2 FINANCIAL ANALYSIS 3
2.3 HUMAN RESOURCE ANALYSIS 3
2.4 MARKETING ANALYSIS 4

CHAPTER 3 ENVIRONMENTAL ANALYSIS

3.1 GLOBAL POWER SCENARIO
5
3.2 INDUSTRY ANALYSIS
5
3.2.1 HISTORY OF ENERGY SECTOR IN PAKISTAN 5
3.2.2 ENERGY OVERVIEW 6
3.2.3 OIL OVERVIEW 7
3.2.4 ENERGY SECTOR ORGANIZATION 7

3.2.4.1 Privatization 8
3.2.5 EXPLORATION 8
3.2.5.1 Licensing rounds 9
3.2.5.2 Downstream 9
3.2.5.3 Refining 9
3.2.6 NATURAL GAS 10
 3.2.6.1 Liquefied Natural Gas (LNG) 11
3.2.7 COAL 12
3.2.8 ELECTRICITY 12
3.2.8.1 Hydroelectricity 13
3.2.8.2 Conventional Thermal 13
3.2.8.3 Other Renewable 14
3.2.8.4 Nuclear 14
3.3 MARKET ANALYSIS 14
3.4 PRESENT ENERGY SCENE IN PAKISTAN 15
3.5 PRESENT OPERATIONAL IPPS IN PAKISTAN 16

CHAPTER 4 COMPETITOR ANALYSIS

4.1 OVERVIEW 19
4.2 JAPAN POWER GENERATION LIMITED 19
4.2.1 COMPANY PROFILE 19
4.2.2 VISION 19
4.2.3 MISSION 19
4.2.4 FEATURES 20
4.3 ROUSCH (PAKISTAN) POWER LIMITED (RPPL)
20
4.3.1 RPPL PPA 21
4.4 KOHINOOR ENERGY LIMITED 22
4.4.1 COMPANY PROFILE 22
4.4.2 VISION 22

4.4.3 MISSION 22

4.5 THE COMPARATIVE ANALYSIS 23

4.6 THE STRATEGIES 24
4.7 TECHNOLOGIES BEING USED BY ENERGY SECTOR 25

CHAPTER 5 DEPARTMENT WORKED

5.1 IDENTIFICATION OF A PROBLEM 26
5.2 FINDINGS 26
5.3 CONCLUSIONS & RECOMMENDATIONS 27

REFERENCES

CHAPTER 1
INTRODUCTION

1.1 FOUNDER OF THE GROUP

Habibullah group was established by hafiz Muhammad Habibullah. He was born in 1890
and was educated in Bukhara, where he stayed from 1911 to 1919. He was engaged in
business from 1920 to 1926 and in china from 1927 to 1930. The government of Pakistan
appointed him as an ambassador to Malaysia from 1974 to 1976.
The British Indian army awarded him with a sword of honor the same year and he won
the title of “Sahib Bahadur”. The president of Pakistan awarded him “Sitara-e-Khidmat”
in 1964.

1.2 HABIBULLAH GROUP AT A GLANCE

 Habibullah Energy Group

Habibullah Coastal Power Private Company Tandianwala Sugar Mills Limited

Habibullah Mines Limited

Habibullah Energy Limited

El Paso Corporation

Figure 1.1: Affiliated companies

The following companies are affiliated ones with the Habibullah Group. Habibullah
Coastal power is a power generation company, the other one is a sugar manufacturing
company, Habibullah Energy Limited is a power project development company and
Habibullah mines is a coal mining company. El Paso is a Fortune 500 company and is a
global leader in the energy industry. It holds a primary position in the segment of natural
gas value chain. It has been a leading provider of gas services and has operations in
natural gas transportation, gas gathering and processing. The company has also been
actively participating in power projects development and power project financing. The El
Paso project portfolio in Pakistan includes 3 power projects:

 Saba Power Company Limited

 Habibullah Coastal Power Company Ltd.
 Fauji Kabirwala Power Company Ltd.

1.3 HEL EXISTENCE

HEL is one of the companies of Habibullah Group and was established in 1987. The
registered and head office of the company is at Karachi. It was established as a public
limited company with the aim of power development projects in the country. Following
are the three main directors of the company:

 Mr. Saeedullah Khan Paracha (MD)

 Mr. Hameedullah Khan Paracha
 Mr. Tariq Saifullah Paracha

1.4 MANAGEMENT STRUCTURE

Apart from these, the company has at its disposal director coordination at Karachi who is
responsible for the network and liaison between HEL and government, financial
institutions and foreign companies.

CHAPTER 2
COMPANY ANALYSIS

2.1 OPERATIONAL ANALYSIS

The registered office of the company is located at Karachi. The deputy director
coordination is responsible for all the arrangements between the company and financial
institutions and other government bodies. The company runs its operations from
Islamabad office and things are coordinated via email, phone and fax. In case of some
odd work timings, the employees are informed on time and night shift also works. The
lower staff people are hired on permanent basis for handling the faxes and mails; they are
also responsible for daily office management and draft work. The company has started
and put its operations in real estate sector as well. The “Bentley Forbes” project in Abu
Dhabi is an example which has still in its initial stage.

2.2 FINANCIAL ANALYSIS

Currently HEL is running many projects. Some projects are financed via 20%Equity
stake some are with 25% stake. The rest are some joint ventures with foreign companies
like El Paso. The strategic alliances are with some local companies as well. World Bank
and some foreign banks provide equity. The one very famous example is the joint venture
of HEL and El Paso for a 140 MW project at Quetta, Balochistan. The manufacturers of
the equipment include General electric USA and Fait Avio Italy. Some projects are even
financed with 10% equity stake of the company.

2.3 HUMAN RESOURCE ANALYSIS

HEL feels proud to hire the most competent labor from all over Pakistan and abroad. The
local employees are given three year training and then hired on a permanent basis. The
foreign contractors like EPC and Al barrio employees are hired for project management
and feasibility study purposes. The CFO and COO are people with a vast knowledge in
the field of finance and accounting. Therefore HEL hires people all over the world and
believes in a global or geocentric HR process. It finds out where the able work force
resides and hires on a completely unbiased basis. HEL is running its business in 4 sectors
i.e. sugar, coal, power and mining. The Diversification strategy is there and the business
line of the company is vast. It is currently operating in four segments. Some off-the job
training is also given to the employees. The employees are paid on salary which is fixed
monthly, plus some commission from a project which promises high returns. The
development comes as the employees associate an old bond with the company. There’s is
nothing as such extra or fringe benefits, but if some employee’s family person falls sick,
the company provides him/her its best (in terms of money).

2.4 MARKETING ANALYSIS

The company is not involved in any kind of marketing activities. It believes in making
good networks with government officials and financial institutions. There haven’t been
any advertisements of jobs or any other products. Since the projects are bid based, there
has been a very active competition among the power companies in Pakistan and bid
winning system.

CHAPTER 3
ENVIRONMENTAL ANALYSIS
3.1 GLOBAL POWER SCENARIO

Figure 3.1 Top ten electricity producers of world, Source IEA

Figure 3.2 Top ten power players of world, Source IEA

3.2 INDUSTRY ANALYSIS

3.2.1 HISTORY OF ENERGY SECTOR IN PAKISTAN

Pakistan has seen minimal growth in its energy sector, but the country’s economy has
experienced vital growth, in spite of the earthquake in 2005. Pakistan's economy has
recovered from years of sluggishness, caused primarily to droughts, with growth
experienced in the agriculture, industry and service sectors. In fiscal year (FY) 2004/2005
(ending in June), Pakistan achieved gross domestic product (GDP) growth of 8.4 percent
and in 2005/2006 the country had GDP growth of 6.6 percent. High inflation (9.1
percent) in 2004/2005 was attributed to escalating oil prices, higher housing rents and
food item shortages. In an effort to decrease inflation, the central bank of Pakistan
announced that it would raise interest rates. The strategy worked, with inflation
decreasing to 7.6 percent by the end of FY 2005/2006. The International Monetary Fund
(IMF), and the World Bank, both major donor organizations to Pakistan, have
acknowledged the favorable performance and progress in Pakistan’s structural reforms,
but have stressed even greater reform in the public institutions and the public energy
sector where progress has been slow. In 2004, the IMF approved a fresh loan of nearly
$250 million as part of its overall $1.5 billion aid package to Pakistan. In 2005, the
United States began the first installments of a $3 billion aid package, which will continue
through 2010. In 2006, the World Bank approved loans of $185 million for various
reform and infrastructure projects, in addition to the nearly $850 million loaned to the
country in 2005.

Figure 3.3 Sector wise electricity consumption in Pakistan, Source: Federal Bureau of Statistics of
Pakistan

3.2.2 ENERGY OVERVIEW

In recent years, the combination of rising oil consumption and flat oil production in
Pakistan has led to rising oil imports from Middle East exporters. In addition, the lack of
refining capacity leaves Pakistan heavily dependent on petroleum product imports.
Natural gas accounts for the largest share of Pakistan’s energy use, amounting to about
50 percent of total energy consumption. Pakistan currently consumes all of its domestic
natural gas production, but without higher production Pakistan will need to become a
natural gas importer. As a result, Pakistan is exploring several pipeline and LNG import
options to meet the expected growth in natural gas demand. Pakistan’s electricity demand
is rising rapidly. According to Pakistani government estimates, generating capacity needs
to grow by 50 percent by 2010 in order to meet expected demand.

3.2.3 OIL OVERVIEW

Pakistan produces some oil, but imports the majority of oil consumed in the country.
According to Oil and Gas Journal (OGJ), Pakistan had proven oil reserves of 300 million
barrels as of January 2006. The majority of produced oil comes from proven reserves
located in the southern half of the country, with the three largest oil-producing fields
located in the Southern Indus Basin. Additional producing fields are located in the
Middle and Upper Indus Basins. Since the late 1980s, Pakistan has not experienced many
new oil fields coming online. As a result, oil production has remained fairly flat, at
around 60,000 barrels per day (bbl/d). During the first eleven months of 2006, Pakistan
produced an average of 58,000 bbl/d of crude oil. However, Pakistan has ambitious plans
to increase its current output to 100,000 bbl/d by 2010. Due to Pakistan’s modest oil
production, the country is dependent on oil imports to satisfy domestic oil demand. As of
November 2006, Pakistan had consumed approximately 350 thousand barrels of oil and
various petroleum products, of which, more than 80 percent was imported. The majority
of oil imports come from the Middle East, with Saudi Arabia as the lead importer.

Figure 3.4 oil production & consumption

3.2.4 ENERGY SECTOR ORGANIZATION

Pakistan’s Ministry of Petroleum and Natural Resources regulates the country’s oil
sector. The Ministry grants oil concessions by open tender and by private negotiation. To
encourage oil sector investment, the Ministry has offered various tax and royalty payment
incentives to oil companies. Pakistan’s three largest national oil companies (NOCs),
include the Oil and Gas Development Corporation Limited (OGDCL), Pakistan
Petroleum Limited (PPL) and Pakistan State Oil (PSO). All three operate under joint
ventures and partnerships with various international oil companies (IOCs) and other
domestic firms. Major IOCs operating in Pakistan include BP (UK), Eni (Italy), OMV
(Austria), Orient Petroleum Inc. (OPI, Canada), Petronas (Malaysia) and Tullow
(Ireland).

3.2.4.1 Privatization

In response to conditions laid down by lenders, such as the IMF and the World Bank,
Pakistan continues to strive for privatization of its state-owned companies. For instance,
the government has on offer a 51 percent stake in PPL, as well as a 54 percent stake in
PSO. PPL owns the Sui fields in Balochistan, as well as exploration interests in 22
blocks, while PSO holds a majority share in the domestic diesel fuel market with more
than 3,800 retail outlets. In November 2006, Pakistan plans to have a share issue from
OGDCL for the equivalent of 15 percent of the NOCs capitalization. Five percent of the
company was previously divested in November 2003 in an initial public offering (IPO).
Pakistan hopes to reap significant revenues from these privatizations over the next several
years.

3.2.5 EXPLORATION

BP is the largest oil producer in Pakistan, with production averaging approximately

30,000 bbl/d. The oil major operates 43 fields and more than 100 wells throughout the
country. OGCDL is Pakistan’s second-largest oil producer, with average production at
25,000 bbl/d. While there is no prospect for Pakistan to reach self-sufficiency in oil, the
government has encouraged private (including foreign) firms to develop domestic
production capacity. In 2005, NOCs and IOCs drilled a total of 29 onshore development
wells in Pakistan. BP led the development by drilling ten wells in its Lower Indus Basin
acreage, while ODCGL drilled nine wells, with the majority being on its acreage in the
Middle Indus Basin. PPL expanded its interests in 2005, by drilling offshore at the Pasni
X2 shallow water field. It was the first time a Pakistani oil company had explored
offshore.

3.2.5.1 Licensing rounds

Historically, Pakistan has held few large licensing rounds, and instead, has conducted
private negotiations for acreage between individual companies and the Ministry of
Petroleum and Natural Resources. In February 2006, Pakistan opened a rare licensing
round offering nine onshore and offshore blocks. From the blocks offered, the Pakistani
government awarded OGDCL three exploration licenses in the southern Sindh and
Balochistan provinces. The licenses cover the Tegani, Thal and Than Beg Blocks and
OGDCL has committed to conducting geological surveys and to drilling four exploration
wells on the blocks. In June 2006, the government awarded POL an exploration license
for the Kirthar Block in southern Pakistan. In July 2006, Pakistan awarded BP three
blocks (U, V, and W) in the offshore Indus Delta region.
3.2.5.2 Downstream
Pakistan's net oil imports are projected to rise substantially in coming years as demand
growth outpaces increases in production. Demand for refined petroleum products also
exceeds domestic oil refining capacity, so nearly half of Pakistani oil imports are refined
products. Pakistan’s largest port is located at Karachi, which serves as the principle point
of entry for oil imports. PSO leads Pakistan's fuel distribution market, with its main
storage facilities located at Port Mohammed Bin Qasim.
3.2.5.3 Refining
Pakistan has five refineries, with total refining capacity of just under 270,000 bbl/d. The
largest of the refineries is the Pak-Arab Refinery Complex (PARCO), which became
operational in late 2000, with 95,000 bbl/d of refining capacity. In July 2004, Bosicor
Pakistan Limited (BPL) began commercial operations at its Mouza Kund plant, near
Karachi. The 30,000-bbl/d refinery is supplied with shipments of crude oil from Qatar.
The plant allowed Pakistan to become a supplier of naphtha, which constitutes 20 percent
of the output. The plant produces about 10,000 bbl/d of fuel oil, 6,000 bbl/d of diesel, and
5,500 bbl/d of naphtha, among other products. PSO has a supply contract to purchase the
entire output of BPL's products for the next 10 years. In June 2006, Kuwait agreed to
fund a $1.2 billion oil refinery, which would have a planned capacity of 100,000 bbl/d.
The refinery would be located at Port Qasim in Karachi.
3.2.6 NATURAL GAS

According to OGJ, Pakistan had 28 trillion cubic feet (Tcf) of proven natural gas reserves
in 2006. The bulk of these reserves are located in the southern half of Pakistan. In 2004,
Pakistan produced and consumed 968 billion cubic feet (Bcf). In light of the current
onshore exploration activities and resource outlook, the Pakistani government expects
minor increases in natural gas production in the short-term. However, natural gas
production is expected to decline over the next 15-25 year period, while natural gas
demand is expected to increase. The Pakistani government is currently developing plans
to import additional natural gas (see Proposed Pipelines below) in order to satisfy
increasing demand. According to the Pakistan Energy Yearbook, natural gas is currently
the country’s largest energy source, making up 50 percent of Pakistan’s energy mix in FY
2004/2005.
 Figure 3.5 Energy supply Mix

Pakistan’s state-owned PPL and OGDCL produce around 30 percent and 25 percent,
respectively, of the country’s natural gas. The two companies are the country’s largest
natural gas producers. OMV is the largest foreign natural gas producer (17 percent of
total country’s production) in Pakistan. Additional foreign operators include BP, Eni, and
BHP Billiton. The Pakistani government has enacted numerous policies to encourage
private sector leadership of natural gas development, including privatization of state-run
businesses, regulation that encourages competition and tax incentives geared towards
increasing exploration and production. A second natural gas import possibility that has
been considered is an eventual link to the Dolphin Project in Qatar. This plan would
supply natural gas from Qatar's North Dome field to Pakistan via a sub sea pipeline from
Oman. Even though Pakistan has signed a preliminary agreement to eventually purchase
natural gas from Qatar, it remains to be seen if further action on the project will be taken.
A third natural gas pipeline option that has been discussed is a line from Turkmenistan to
Pakistan via Afghanistan. Pakistan faces various hurdles with this option, which include
the security situation in Afghanistan and the price Turkmenistan would charge for the
natural gas. In addition, completed feasibility studies on the project, funded by the Asian
Development Bank (ADB), indicate that the Turkmenistan field of Daulatabad will only
be able to supply a portion of the natural gas needed by Pakistan.
 Figure 3.6: Gas Pipe line Routes

3.2.6.1 Liquefied Natural Gas (LNG)

In addition to natural gas import pipelines, Pakistan is pursuing LNG import options to
meet energy needs. In October 2006, UAE-based Dana Gas and its partners, Single Buoy
Moorings and the Granada Group signed a MoU to build an LNG import facility, with
3.5 million tons per year capacity. The facility would be completed in 2010 and would be
located at Port Qasim, near Karachi.

3.2.7 COAL
Coal currently plays a minor role in Pakistan’s energy mix, currently plays a minor role
in Pakistan’s energy mix, although the country contains an estimated 3,362 million short
tons (Mmst) of proven recoverable reserves. Pakistan produces small amounts of coal,
3.5 Mmst in 2004, and imports additional coal, 1.7 Mmst in 2004, to satisfy demand.
Recently, the discovery of low-ash, low-sulfur lignite coal reserves in the Tharparkar
(Thar) Desert in Sindh province, estimated at 1,929 Mmst, has increased both domestic
and foreign development interest. China, which began developing various electric power
plants in tandem with the coal mines in 1994 in Pakistan, has shown the most interest in
the Thar region. However, several factors have hindered development of the Thar coal
reserves, including the depth and moisture level of the lignite reserves, a scarcity of fresh
water, and lack of road and power infrastructure.

Figure 3.7 Coal production & consumption

3.2.8 ELECTRICITY

Pakistan had 20.4 gigawatts (GW) of installed electric generating capacity in 2004.
Conventional thermal plants using oil, natural gas, and coal account for about 66 percent
of Pakistan’s capacity, with hydroelectricity making up 32 percent and nuclear 2 percent.
The Pakistani government estimates that by 2010, Pakistan will have to increase its
generating capacity by more than 50 percent to meet increasing demand. In 2004,
Pakistan generated 80.2 billion kilowatt-hours (Bkwh) of electricity while consuming
74.6 Bkwh. Pakistan's total power generating capacity has increased rapidly in recent
years, due largely to foreign investment, leading to a partial alleviation of the power
shortages Pakistan often faces in peak seasons. However, much of Pakistan’s rural areas
do not have access to electric power and about half the population is not connected to the
national grid. Rotating blackouts ("load shedding") are also necessary in some areas. In
addition, transmission losses are about 30 percent, due to poor quality infrastructure and a
significant amount of power theft.
3.2.8.1 Hydroelectricity

Hydroelectric power represents a third of Pakistan’s power source, however, periodic

droughts affect the availability of hydropower production. WAPDA controls the
country’s major hydroelectric plants; with the largest being the Tabela plant at 3,046
megawatts (MW) installed capacity. The Tabela plant was the largest hydroelectric plant
in Asia until China began building the Three Gorges project, which will have 18,000 MW
of installed capacity. Additional hydroelectric plants in operation include Mangla (1,000
MW), Warsak (240 MW), and Chashma (184 MW).
Although Pakistan has plans to develop additional hydroelectric generating capacity,
infrastructure constraints, such as access roads in mountainous regions and resettlement
costs of affected populations have stalled progress. Nevertheless, Eden Enterprises is
going ahead with its Suki Kinari (655 MW) hydropower project. Eden Enterprises, along
with Pakistani partners own 95 percent of S.K. Hydro, which was given a 35-50 year
concession period for the power plant. Construction is expected to begin in 2009, with the
plant coming online in 2011. The Private Power and Infrastructure Board (PPIB) is
currently reviewing six additional hydropower projects for the Swat River. If approved,
the projects would provide several hundred MW of additional hydroelectric power
capacity to the country.

3.2.8.2 Conventional Thermal

WAPDA operates the majority of thermal power plants in Pakistan, with over 5,000 MW
of installed capacity in its control. The Guddu plant is the largest plant operated by
WAPDA, with a capacity of 1,650 MW. In recent years, growth in Pakistan’s thermal
power generation has come primarily from new independent power producers (IPPs),
some of which have been funded by foreign investors. The two largest IPPs in Pakistan
are Kot Addu (1,600 MW) and Hubb River (1,300 MW), both of which supply power to
WAPDA. The Kot Addu plant was privatized in 1996 (from WAPDA). International
Power holds a 36 percent equity stake in the Kot Addu plant. The Pakistani government
has recognized that the majorities of thermal plants in the country are run on fuel oil and
produce considerable amounts of pollution. In an effort to reduce pollution, the
government would like to see fuel oil-power plants converted to natural gas in the future.

3.2.8.3 Other Renewable

Pakistan is working to expand the use of renewable energy to help bridge the gap of
energy deficiency in the country. In 2003, the Pakistani government created the
Alternative Energy Development Board (AEDB). AEDB’s primary objective is to help
Pakistan achieve a 10 percent renewable energy share in the country’s energy mix.
AEDB is working to create an environment in Pakistan that is conducive to investment
from the private sector in renewable energy. In July 2006, Turkish-based Zorlu Energji
Grubu signed a letter of intent to install a 50-MW wind farm. Zorlu would operate the
wind farm for 20 years once the project is completed in 2008. Zorlu has indicated that it
would like to install an additional 2,000 MW of renewable energy capacity in Pakistan by
2015.

3.2.8.4 Nuclear
Pakistan has two nuclear power plants, Chashma-1 and Kanupp, with 300 MW and 125
MW respectively, of installed capacity. The Pakistan Atomic Energy Commission
operates both nuclear plants. Pakistan is currently working on a third nuclear power plant
(Chashma-2), with the help of China National Nuclear Corporation. The plant will have
325 MW of installed capacity and could be completed by 2009.

3.3 MARKET ANALYSIS

High levels of toxic emissions and a lack of energy efficiency standards are two of the
environmental issues facing Pakistan. In Pakistani cities, widespread consumption of
low-quality fuel, combined with a dramatic expansion in the number of vehicles on the
roads, has led to significant air pollution problems. Lead and carbon emissions are major
air pollutants in urban centers such as Karachi, Lahore, and Islamabad. A lack of energy
efficiency standards has contributed to Pakistan’s high carbon dioxide intensity. One
hopeful trend is that Pakistan has increasingly been using compressed natural gas (CNG)
to fuel vehicles. Currently, government vehicles and taxis that have been using liquefied
petroleum gas (LPG) are being converted to CNG.
Global energy giant Chevron has made its entry into Pakistan’s petroleum market in
2006.
Caltex informed that it had changed its corporate name from Caltex Oil Pakistan to
Chevron Pakistan Ltd. When contacted the General Manager Public Affairs Irfan Qureshi
confirmed the news and added that the brand Caltex would remain unchanged.
Chevron is one of the biggest energy companies in the world, operating in 180 countries.
Pakistan now has three of the world’s top companies operating in the petroleum sector.
The other two are Shell and Total. This move by Chevron should signal the government
of confidence of international companies taking interest in Pakistan’s economic growth.
The government can attract huge investment by these foreign investors by pursuing
policies that will keep such international giants tied into Pakistan’s petroleum sector.

3.4 PRESENT ENERGY SCENE IN PAKISTAN

ECC on Wednesday approved 5.89 cents as an up front tariff for hydel projects. This is a
revolutionary step taken by Pakistan Government to promote and encourage the investors
in Hydel Sector. In fact this is the most logical and wise step adopted by the government
for energy sector. This will encourage investors to come forward in hydel sector.
The Pakistan is blessed with high mountains covered by glaciers and the rivers flowing
across the country. PPIB so far processed 19 hydel power projects to produce 4900 MW
energy.
October was a month to be remembered when world oil prices shot up at record level and
at the end of the month it was staying at 94$ level. It was almost certain that OGRA will
allow the price hike for petrol and diesel from 1st November. However a cabinet meeting
in the chairman ship of Prime Minister Shaukat Aziz overruled this decision and kept the
prices same.
However furnace prices were raised all time high by Rs. 4210 /ton for domestic market.
The price now stands on 34000 Rs. /ton. This price hike can be justified in the light of
rising crude oil prices but for domestic market the fuel tariffs now are not so realistic.
The diesel and furnace prices are now standing at almost same level. A little intelligent
power house manager can start using diesel instead of furnace which is much more clean
and easy to burn or even can mix the diesel with furnace lowering its viscosity and, make
it more comfortable to burn.
Those diesel genets which were running as stand bye generators and are less efficient will
be more attractive for end users and the furnace power plants will be shut down.
 For those IPP which run their plants on furnace this increase will be shifted to utility
company which is purchasing the power and hence to WAPDA, which is already deep in
trouble.
Mean time power shortage in whole country remained forcing the utility companies for
load shedding. Presently there are three different critical problems in energy sectors
which all need immediate attention.
1. Current short fall in production and availability of no stand bye power to meet any
emergency    
2. Long term increase of short fall with increased energy demands
3. Rising fuel prices making the production cost high

The projects in pipe line will start commissioning from 2014. All planning of hydro and
alternate energy is for next five years.

PRESENT OPERATIONAL IPPS IN PAKISTAN

 Figure 3.8 Present IPP Pakistan, Source: PPIB

The ADB has announced provision of two million dollars in technical assistance that
would support optimal energy sector development in Pakistan that would facilitate
economic growth. The outcome of the technical assistance would be a functioning
energy-planning unit, producing regular integrated analysis of strategic energy options. A
trained energy planning team would be established. It will operate and maintain the
model and propose strategies for meeting energy requirements at the least cost and in a
manner that is technically and financially sustainable and environmentally acceptable, for
consideration by national policy makers.
Pakistan’s energy planning is unlikely to be optimal, or at least it is not demonstrated to
be so. Pakistan is a net energy importer, with energy needs supplied from multiple
sources. As such, country energy analysts believe there is scope for optimisation through
integrated planning. This view is consistent with the approach of other developing and
developed countries where least-cost energy plans are developed through a rigorous
integrated process. Sophisticated computer software applications currently available in
the international marketplace can model a country’s overall energy demand and supply
situation. These integrated energy models can help planners to assess the impact of
various policy scenarios and support good decision-making within defined constraints.
Pakistan currently does not use such an integrated energy-modeling tool. Pakistan’s
Medium-Term Development Framework (MTDF) 2005–2010 sets out a challenging
program to achieve eight percent annual growth in GDP. Associated growth in energy
consumption is forecast at 12 percent a year, which can be compared with an ACGR of
6.1 percent from 2000 to 2006. This expected growth will put pressure on all sectors of
Pakistan’s primary energy supplies.
Pakistan’s primary energy supplies totaled 58 million tones of oil equivalent (toe) in
2005–2006. The supplies comprise natural gas (50 percent), oil (28 percent), hydro-
electricity (13 percent), coal (7 percent), and nuclear energy (1 percent) and liquefied
petroleum gas (less than 1 percent). All domestic natural gas production is consumed and,
without higher production, growth will need to be met through imports. The combination
of rising oil consumption and flat oil production has led to rising oil imports. In addition,
a lack of refining capacity leaves Pakistan heavily dependent on petroleum product
imports. Electricity supply is limited due to insufficient generation availability, with an
estimated 1,500 megawatts (MW) of demand unmet. Meanwhile, electricity demand is
forecast to grow by 8 percent a year during 2005–2015.
Pakistan is responding to this energy development challenge by pursuing a wide range of
domestic and imported energy projects. Growth in domestic gas production is not
forecast to meet demand. Several international gas pipeline projects are under
development while liquid natural gas import options are being investigated. Development
of the significant but challenging coal reserves in Tharparkar desert is being studied by
the government. Consideration is also being given to 2,000 MW of power-generation
projects in the private sector, using imported coal.
Further, the government intends to proceed with a large multipurpose dam project on the
Indus River to cater for irrigation needs and to supply about 8,000 MW of electric
generating capacity, and investigations are being conducted currently into the Central
Asia South Asia Regional Electricity Market (CASAREM) project to import more than
2,000 MW of electricity from Tajikistan and Kyrgyz Republic via Afghanistan.
Renewable energy projects are being promoted, with a target of 10 percent of energy mix
to be met from such sources by 2015. Several energy efficiency projects are at an early
stage of development. Meanwhile, a lack of energy efficiency standards has contributed
to high carbon dioxide intensity.

CHAPTER 4
COMPETITOR ANALYSIS

4.1 OVERVIEW
Out of these registered IPP only three are taken as competitors. Since the data for all the
power companies and their strategies wasn’t available, only those are taken into account
whose data and information was available.

4.2 JAPAN POWER GENERATION LIMITED

Japan Power Generation Limited engages in the generation and supply of electric power
to Water and Power Development Authority in Pakistan. It owns, operates, and maintains
an oil-fired power station with an installed capacity of 135 megawatts, located at Jia
Bagga Railway Station, Raiwind Road, Lahore. The company was incorporated in 1994
and is based in Lahore, Pakistan.

4.2.1 COMPANY PROFILE

Japan Power Generation Limited is a public limited company, incorporated on September

29, 1994 under the Companies Ordinance, 1984 and its shares are quoted on Lahore and
Karachi Stock Exchange.  The principal business of the company is to generate and
supply electric power to WAPDA.  The company commenced actual commercial
operations w.e.f. March 14, 2000. Power plant is located at Jia Bagga Railway Station,
Raiwind Road, and District Lahore-Pakistan, has an installed capacity of 135 MW,
comprises of 24 diesel power generator sets of 5.65 MW each and is designed for
operation using heavy furnace oil (HFO) while startup and shutdown operations are on
high speed diesel oil (HSD).

4.2.2 VISION

To become partner in progress of the country

4.2.3 MISSION

۞ To be a company that endeavors to set the highest standards in corporate

ethics, to achieve leadership through the use of technology and contribute to
the development of the society.
۞ To transform the company into a modern corporate entity by achieving high
standards of good governance.
۞ To earn better relationship with WAPDA by achieving production at
optimum level and efficiency by lowering operating cost.
۞ To provide congenial working atmosphere to the employees by taking care of
their career planning and adequately rewarding them for their contribution.
 To honor social and cultural obligations towards the society as a patriotic and
conscientious corporate entity.

4.2.4 FEATURES

Company Japan Power Generation Limited

Installed Capacity 135.6 MW
Dependable Capacity 107 MW
Location Office Raiwind Road, Near Jia Bagga
Railway Station
Fuel Heavy Furnace Oil (HFO)
Technology Diesel Engines
Plant Manufacture Mitsubishi Heavy Industries (Japan)
Plant Operation & Maintenance Siemens Pakistan Engineering Co. Ltd.
Power Purchaser WAPDA
Table4.1 Features of JPGL

4.3 ROUSCH (PAKISTAN) POWER LIMITED (RPPL)

It is a public limited company, registered in 1995 in Pakistan. The Company being an

Independent Power Producer (IPP) has installed a thermal power plant on Build, Own,
Operate (BOO) basis using the combined cycle technology, fired (initially) with residual
furnace oil, having a gross (ISO) capacity of 412 MW at Sidhnai Barrage near Abdul
Hakim, district Khanewal, Punjab, Pakistan.
In March 1994, Government of Pakistan (GOP) introduced a new policy framework for
the Private Sector Power Generation Projects for attracting foreign and domestic
investments.
In pursuance to GOP Bulk Power Tariff (BPT) Policy, the Sponsors submitted their
proposal for the establishment of the said power plant to the Private Power &
Infrastructure Board (PPIB) of GOP. Based on this proposal, PPIB awarded a Letter of
Support (LOS) on June 22, 1994 to Sponsors. The Project sponsored by group of Rousch
Companies of British Virgin Islands, Siemens Project Ventures of Germany, and ESBI
Ireland. The Project was further financed by Commercial lenders (ANZ London led
consortium), Hermes, DEG, and the funds contributed by the World Bank along with J-
EXIM Bank.
4.3.1 RPPL PPA

RPPL has entered into a 30 years Power Purchase Agreement (PPA) with WAPDA and
Fuel Supply Agreement (FSA) with Pakistan State Oil (PSO). The role of WAPDA and
PSO has been guaranteed by the GOP under the Implementation Agreement. Siemens
AG, Germany and Siemens Pakistan Engineering limited were the Construction
Contractors and ESBI Ireland is the Operation and Maintenance (O&M) Contractor of the
Plant.
The Financial Close of the Project took place on March 31, 1996 at a total cost and
funding of around USD 455 million. Construction started in September 1996 and the
Plant was ready for interconnection on the 500 kV main grids in March 1998, the first
proposed Commercial Operation Date. However, a protracted dispute with the
GOP/WAPDA over tariff to be charged to WAPDA resulted in a commissioning delay
and a cost overrun of around USD 105 million.
Project has since been completed over a period of 39 months with a total cost of around
US$ 560 million, funded with a debt equity ratio of 67:33.
The dispute which led to Project delay was finally resolved when the Company executed
a Memorandum of Understanding (MoU) with WAPDA in January 2000, thereby
agreeing to reduce the tariff. Accordingly, WAPDA recognized the Commercial
Operation Date (COD) with effect from December 11, 1999. The Plant is in operation
since then with Initial Dependable Capacity (IDC) of 355 MW.
In support of declared policy of the GOP to convert residual fuel oil power plants to
natural gas; the Company had submitted a proposal for the conversion of its Complex to
gas fired facility. GOP allocated the required natural gas to the Company. The conversion
works at the plant started from September 29, 2003 and the Complex was fully converted
to gas in January 2004. Accordingly, the Gas Operation Date was declared with effect
from January 24, 2004 and the Dependable Capacity was achieved at 403.83 MW. With
conversion of plant on gas, the gross (ISO) capacity of the Plant has enhanced to 450
MW.
On 7th November 2006, Rousch Companies have disposed off all its remaining shares to
Power Management Company (Pvt.) Ltd. (PMCL), whereas, Siemens Project Ventures
have sold out 33.98% of their shareholding to PMCL. Through acquisition of these
shares, PMCL now owns 59.98% of Company’s shares. PMCL is 100% owned
subsidiary of Altern Energy Limited.

4.4 KOHINOOR ENERGY LIMITED

4.4.1 COMPANY PROFILE

Kohinoor Energy Limited was incorporated in April 1994 with the aim and objective to
take part in the prosperity of the country through power generation. KEL having paid-up
capital of Rupees 1,695 million and is a joint venture of Saigols Group of Companies (a
well-known multi-industrial group of Pakistan) and Toyota Tsusho Corporation (an
eminent consortium of multi-industrial undertakings of Japan.)
KEL is situated at 35-KM Link Manga Raiwind Road Lahore. It is one of the pioneer
projects of Independent Power Producers in Pakistan. The principle activities of the
company is to own, operate and maintain a furnace oil power station with the net capacity
of 124 MW (gross capacity 131.44 MW). WAPDA is the sole customer of KEL.
The main equipment at power complex includes three ABB 63 MVA Step-Up
Transformers converting the Electrical Output from 11 kV to 132 kV, Eight WARTSILA
Diesel 18V46 Type Diesel Generators having rated capacity of 15.68 MW each and a
Combined Cycle Heat Recovery System capable of delivering an output of 8 MW
through Peter Brotherhood Steam Turbine.

4.4.2 VISION

To lead as an independent power producer (IPP) serving the nation through the power
industry

4.4.3 MISSION

To set the standards in the power industry in terms of:              

 ۞ Reliability in responding to the customer’s dispatch for electrical power
۞ Responsiveness to the attendant social and environmental responsibilities
۞ Efficient management of processes and resources
۞ Human resource development and empowerment
۞ Commitment to quality systems and effective leadership

4.5 THE COMPARATIVE ANALYSIS

Company Capacity Technology Power Fuel PPA term
purchaser supplier
Habibullah 140 MW Natural gas WAPDA SSGC 30 years
Coastal
Power
Japan 120 MW Residual WAPDA PSO 30 years
Power Furnace Oil
Genaration
Rousch 412 MW Residual WAPDA PSO 30 years
Power Fuel Oil
Limited
Kohinoor 131.5 Residual WAPDA PSO 22 years
Energy MW Furnace Oil
Limited
Table4.2 Analysis Summary of HEL and competitors

Out of these four companies, only Kohinoor Energy Limited is maintaining a quality and
EHS policy. It fully recognizes and realizes the importance of achieving satisfaction and
confidence of its customer(s) by providing uninterrupted Electricity through National
Grid under relevant contractual obligations.
Their commitment to quality is driven by the following guiding principles:

۞    Meeting or exceeding customer need & expectations:

Customer requirements and expectations is determined, reviewed and
incorporated in power   plant operations and customer satisfaction is regularly
monitored.
 ۞  Compliance with legal & regulatory requirements:
Strict adherence is ensured to any legal and regulatory requirements that
subscribe to power      plant operations and relevant activities.

۞ Continual improvement:
Continual efforts are made to minimize our rejections and wastage, and improve
the efficiency      and effectiveness of relevant processes and services.    
EHS policy:                 
At Kohinoor Energy Limited, their commitment to environment, health & safety (EHS)
performance is an integral part of business and achieving cost-effective EHS solutions is
essential to long-term success.
EHS program is based on the following principles:
۞ Eliminate accidents & incidents
۞ Reduce wastes and prevent environmental pollution
۞ Use energy and natural resources efficiently
۞ Educate & train our employees and contractors to understand how their actions
influence EHS    performance.
۞ Comply with applicable standards/regulations related to Environment, Health &
Safety
۞ Communicate with our neighboring communities about our EHS program and
performance
۞ Improve EHS performance continually through effective management system.

4.6 THE STRATEGIES

The Kohinoor Energy limited is the only company which believes in environmental
protection and human rights. The corporate governance concept is driven by the
company. HEL is another one which offers great to its employees. Though, all these are
following different financing techniques. The Rousch and HEL have financed their
projects with some portion of equity and debt. The loan arrangements and agreements are
taken as well. The Japan Company stock is traded and daily stock is listed as well.
The authorized share capital of all these companies is different. The Rousch, Kohinoor
and Japan Power company have developed their websites where investors can find out
different information regarding the investment opportunities in the energy sector. HEL
doesn’t have any website of its own, and investors often find it difficult to find the
appropriate information about the company. They have to get the information from the
specific people of the company. The technology is almost the same for these four
companies, but operational strategies differ. At HEL, the deputy director coordination
and director operations are responsible for all the operational work. They keep directing
the lower staff office personnel for further assistance. The capital structures of these
companies even differ.

4.7 TECHNOLOGIES BEING USED BY ENERGY SECTORS

The energy sector in Pakistan is currently using nine types of technologies. They are:

 Gas
 Residual fuel oil
 Residual furnace oil
 Natural gas
 Low BTU
 Gas pipeline data
 Low BTU gas
 Low sulphur furnace oil
 Furnace oil
Some companies are using a hybrid (combined) technology as well.
 CHAPTER 5
DEPARTMENT WORKED

The internship was a two months training period with in all the departments of the
company. The main work done was in the area of accounting and finance, with some
basic accounting standards techniques adopted. The financial statements preparation was
a major task in the period. Also, some legal issues regarding the contracts and agreements
were also handled, which would be discussed in greater detail. The main work came from
the finance and coordination department, where certain issues were handled on mails and
faxes. The communication kept going and the some new projects were undertaken during
the period.
The company entered into a main agreement with a foreign company El Paso. Due to
some conditions, the contract was breached, as per specified in the “Articles of
Memorandum” of the company. The contract had already become void, which some of
the company lawyers did not agree to. The clash went on and they were convinced that
the contract has breached.

5.1 IDENTIFICATION OF A PROBLEM

The main problem with the company is the lack of marketing department. Also it is a
pubic limited company with no shares on any stock exchange. The comparative analysis
becomes difficult in terms of daily stock price and quote. Some energy sector companies
have maintained their websites. HEL doesn’t have nay website or URL. Also there are
lot of people working in accounting and finance departments, but there is not any proper
HR system. The CEO selects the people according to their potential and caliber. He
doesn’t believe in an HR system.

5.2 FINDINGS

Due to lack of an HR system, there are no advertisements in local daily news papers. The
other energy sector companies have ads and job vacancies. In case a job vacancy exists,
the knowledge is kept confidential and the post is filled by either local or international
employee. In absence of a website, there is no online registration system and the
company at times finds it difficult to manage selection and recruitment of people. Also
the accounting standards differ. The El Paso Company follows a different set of
accounting standards, and HEL follows different. There is a clash or dispute over certain
accounting book figures and details. The GAAP are followed by El Paso. The dispute
settlement at times takes too long to settle. Also the court costs and consultant’s fees are
higher in case of accounting disputes.

5.3 CONCLUSIONS & RECOMMENDATIONS

The following is recommended:
۞ The company should a common set of accounting techniques and train its
accountants and finance people to manage both.
۞ HEL should have a proper marketing department, and hire fresh talent, HEL
doesn’t hire new talent but encourages work force with a double digit experience
in years.
۞ HEL should have a proper HR department. The selection and recruitment process
would be even faster and more efficient.
 ۞ HEL accountants should be trained to study and visualize a variety of accounting
standards. The standards differ across the globe. Especially when it enters into
agreements with foreign companies, their accounting laws must be studied.

REFERENCES

Habibullah Energy Limited, 2006, Statement of Qualifications 2005-2006, Karachi,

Pakistan
Japan Power Generation Limited, 2007, Annual Report 2006-2007, Lahore, Pakistan.
Kohinoor Energy Limited, 2007, Annual Report 2006-2007, Lahore, Pakistan.
Rousch (Pakistan) Power Limited, 2007, Annual Report 2006-2007, Pakistan.
IGI Securities, 2008, Power Generation Sector of Pakistan-Initiating Coverage, Karachi,
Pakistan.
Trancik , J 2006, ‘Scale and innovation in the energy sector’, doi:10.1088/1748-
9326/1/1/014009,pp 1-19, Retrieved July 16, 2008, from IOP electronic journals.
Business Recorder, 2008, “Power Generation & Distribution”, Business Recorder, 19
July, p.3.
Chaudhry S, 2008, “Complex regulatory structure mars Pakistan’s energy sector: ADB”,
Daily Times, 19 July, p.3.
Shah M, 2002, ‘Private Sector Investment in the Energy Sector -Case of Pakistan’,
proceedings from meeting at ADB, Karachi, Pak, 7-8 Feb, pp 1-7.