1. Pakistans Power Sector Need for Reforms By Kalim A. Siddiqui President-Petroleum Marketing Byco Petroleum Paksitan Limited 4 th International Power Generation Conference – January 11, 2011

2. Outline Overview of Pakistan Energy and Power Sector Reasons for Power Crisis Drivers for Reform Roadmap towards reform Action Plan and Recommendations February 14, 2014Power Gen Pak 2011, Karachi

3. Pakistan Power Sector Need for Reforms Overview of Pakistan Energy Sector & the developing Crisis February 14, 2014Power Gen Pak 2011, Karachi

4. Overview of Pakistan Energy Sector Energy Mix Electricity has a 15% share in the energy mix of the country, which is a 1.3% decrease during the last 10 years. Power Gen Pak 2011, KarachiFebruary 14, 2014 Source: Economic Survey of Pakistan 2009-10

5. Overview of Pakistan Energy Sector Power Sources Power Gen Pak 2011, KarachiFebruary 14, 2014 Source: Economic Survey of Pakistan, WAPDA Approx 20,000MW Installed generation capacity

6. Energy Sources Change in Installed Capacity Country had an installed generation capacity of about 20,000 MW (as of FY 2010 end), which was a 2.1% increase from FY 2009. Low growth in capacities aggravates supply and demand imbalance February 14, 2014 Source: Economic Survey of Pakistan 2009-10 Power Gen Pak 2011, Karachi

7. Energy Consumption & Output Power Gen Pak 2011, Karachi Average annual Consumption of electricity in the last 10 years has increased by nearly 5%, 55 Mn MWh of electricity being consumed in FY 2010 (-1.7% growth from FY 2009). February 14, 2014 Source: Economic Survey of Pakistan 2009-10, Hydrocarbon Development Institute of Pakistan

8. Supply and Demand gap Power Gen Pak 2011, KarachiFebruary 14, 2014 Source: Wapda

9. Fuel Prices Reasons for Power Crisis Power Gen Pak 2011, KarachiFebruary 14, 2014 Alternate Energy Dependency on imported oil High cost of fuel and price volatility Circular Debt Dependency on imported oil High cost of fuel and price volatility Circular Debt Technical Losses Development issues Socioeconomics Investment Crisis Uncertain law and order situation Lack of planning in viable projects such as LNG. Delays in implementation of projects e.g. QP, IPI and TAPI projects Uncertain law and order situation Lack of planning in viable projects such as LNG. Delays in implementation of projects e.g. QP, IPI and TAPI projects Lack of utilization of coal reserves Less emphasis and awareness regarding use of renewable sources of energy Depleting natural resources such as gas. Lack o f exploring alternative energy options like nuclear, hydel, coal, gas etc. Development of wind and solar options Lack of utilization of coal reserves Less emphasis and awareness regarding use of renewable sources of energy Depleting natural resources such as gas. Lack o f exploring alternative energy options like nuclear, hydel, coal, gas etc. Development of wind and solar options Ageing of equipment and poor distribution network Ineffective utilization of installed power generation capacity Wastage of energy due to line losses Ageing of equipment and poor distribution network Ineffective utilization of installed power generation capacity Wastage of energy due to line losses Slow development of Hydrocarbon energy projects Lack of exploration activities Lack of investment in Dams and reservoirs Slow development of Hydrocarbon energy projects Lack of exploration activities Lack of investment in Dams and reservoirs Increasing demand due to economic progress Power generation capacities did not match demand during previous regime when consumer financing was promoted. Increasing demand due to economic progress Power generation capacities did not match demand during previous regime when consumer financing was promoted.

10. Pakistan Power Sector Need for Reforms Drivers for reforms and recommendations February 14, 2014Power Gen Pak 2011, Karachi

11. Roadmap Towards Reform The Challenge Power Gen Pak 2011, Karachi Poor Planning Governance Crisis Efficiency Crisis Fuel Crisis Financial Discipline Investment and Financing February 14, 2014

12. Roadmap Towards Reform Global Trends Power Gen Pak 2011, Karachi Energy shortfall in developed and emerging economies. Major oil producing countries oil production is on a plateau or peaked Increasing dependence on Middle Eastern oil. Expected volatility/rise in oil prices Increasing correlation between energy use and environmental impact such as carbon emissions, conservation and protection. Energy supply and demand affecting energy safety as well as diplomatic relations. February 14, 2014

13. Action Plan and recommendations Short Term Power Gen Pak 2011, Karachi Availability of low cost power generation mix Optimize existing power generation capacities Improving efficiencies through latest technologies Reforms to strengthen good governance issues (overstaffing, mismanagement, corruption etc.) Recovery of billed amounts Decentralize WAPDA/PEPCO system and privatize distribution companies Facilitate and encourage public-private sector participation February 14, 2014

14. Action Plan and recommendations Medium Term Power Gen Pak 2011, Karachi Need for continuity in government policies and reforms Ministry of Energy be formed by consolidating MoPNR and MoWP One window operations for investors to facilitate investment in power sector. Improve law and order situation to attract foreign investment in the sector. Increase share of nuclear, hydel and gas /coal based power projects in the countrys energy mix. February 14, 2014

15. Action Plan and recommendations Long Term Power Gen Pak 2011, Karachi Integrated energy plan for the country Roadmap for nuclear, hydel, coal / gas progression Encourage energy R&D mechanism in the country Synergy between energy and environment policies Policies to establish alternate energy sources so that market potential is clearly visible to MNCs and International investors Foster niche markets for early commercialization of new technologies and development of alternative energies such as Wind, Solar, Water waves, etc Develop Global alliances for energy security February 14, 2014

16. Thank You February 14, 2014Power Gen Pak 2011, Karachi