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IFC Supports Super Six Wind Projects to Spur Renewable...

November 15, 2019:  IFC, a member of the World Bank Group, has led the financing of a first-of-its-kind program to build six wind power projects in Pakistan, named the Super Six, with a total investment of US$450 million, to help deliver cleaner, cheaper power to meet the country’s critical demand for energy and reduce reliance on expensive imported fossil fuels.

Financing agreements for the landmark wind power program were signed by IFC’s Senior Manager, Nadeem Siddiqui and private sector power developers at a special ceremony witnessed by Pakistan’s Prime Minister, Imran Khan and Federal Minister for Energy, Omar Ayub.

The Super Six plants, with a combined capacity of 310 megawatts, will deliver among the lowest-cost power generation in the country to date. They will be built in the Jhimpir wind corridor in Sindh province and will generate more than 1,000 gigawatt-hours of electricity annually, enough to power 450,000 homes. The program is also expected to lead to emission reductions of about 650,000 tons of CO2 per year.

All Super Six projects are being developed by domestic companies: ACT Group, Artistic Milliners (Private) Limited, Din Group, Gul Ahmed Group and Younus Brothers Group.

“The government is aiming to increase the non-hydro renewable energy share in the overall generation mix from 4 per cent to 20 per cent by 2025 and it is welcoming to see Pakistan’s local private sector behind these Super Six wind projects, supporting the government’s long-term objective to see more wind and solar in the country’s energy mix,” Omar Ayub said.

“This additional clean power will help meet growing demand, reduce the average cost of electricity, and improve both reliability and security of supply,” IFC’s Vice President for Asia and Pacific, Nena Stoiljkovic said. “We hope this will send a strong signal to the private sector that the renewable energy market in Pakistan is viable and sustainable, as well as beneficial to the Pakistani people.”

As part of the program, IFC is providing a financing package of US$320 million, comprising US$86 million from its own account and US$234 million mobilized from other lenders, which include Deutsche Investitions- und Entwicklungsgesellschaft (DEG, part of KfW Group of Germany), and local banks Bank Alfalah, Bank Al Habib and Meezan Bank.

The program is in line with the joint energy strategy of the World Bank Group, which includes IFC, the World Bank and the Multilateral Investment Guarantee Agency (MIGA), to help address Pakistan’s structural issues in the energy sector, through policy reforms and increases in private investments to expand clean energy generation and bring down the cost of power.  

The cost of power from the Super Six projects is expected to be more than 40 per cent lower than the current average cost of generation, a move that is expected to spur more investments in renewable energy in the country. IFC, one of the largest investors in Pakistan’s power sector, financed the first wind power project in the country in 2011 and helped created the framework for financing hydro and wind Independent Power Producers.

With this program, IFC will have made investments in 11 wind power projects in Pakistan. The World Bank is supporting the government on policy reforms to enhance the energy sector’s sustainability and the implementation of the upcoming new renewable energy policy framework.

Midday Report: KSE-100 index up by 155 points

November 15, 2019 (MLN): The KSE-100 index gained around 155 points in the first session of Friday, and closed at 37,398-level.

Commercial Banks and Automobile Sector have captured the maximum gained so far, as they have collectively contributed 65 points to the benchmark index. Company wise, the scrips of DAWH, MTL, UBL, NBP and THALL have gathered the maximum points.

The index has traded in a range of 200 points, and has touched an intraday high of 37,425 and intraday low of 37,225 points.                                                                                                                                                                                                 

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OMO Result: SBP Injects Rs.575.85 Billion for 7 Days

Nov 15, 2019 (MLN): The State Bank of Pakistan (SBP) conducted an Open Market Operation on Friday in which it injected Rs.575.85 Billion into the market for 7 Days.

Summary of OMO Result

  Amount*RateBids
TenorTypeOfferedAcceptedHigh - LowAcceptedOfferedAccepted
7DReverse Repo (Injection)580.850575.85013.34 - 13.2513.291817
 
OMO Settlement: same day November 15, 2019
*Amount in Billions

 

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Pakistan’s Refinery Sector in hot water yet again!

November 15, 2019 (MLN): The refinery sector of Pakistan has found itself in hot water yet again, considering the changes that have been made to international laws with respect to environmental sustainability.

Sharing some insight on the same, a research report by JS Global says that the International Maritime Organization (IMO) has directed marine sector to curtail their emission of Sulphur to at least 0.5% by the beginning of next year.

With all due respect to the cause and purpose of this move, it is likely that the outcome of this plan shall be devastating for Pakistan’s refinery sector. In case the sector doesn’t, or fails to comply with the new IMO policy, the relevant authorities will retort by taking serious measures, such as heavy fines, penalties, or even detainment of ships of non-complying countries.

Now here comes the worst part, if and when these changes are implemented, the price of Furnace Oil in both international as well as domestic markets will fall substantially, owing to a decline in demand. According to JS Global’s report, the price for FO in Pakistan has fallen by 33% in November alone, and might fall even further when the new IMO policy comes into action.

It goes without saying that to bring the Sulphur emission down to such level, the refinery sector will have to make some significant changes to its operations, such as installing scrubbers or by switching to Low Sulphur Furnace Oil instead of High Sulphur Furnace Oil.   

The report also points out that the refinery sectors across the globe have prepared themselves enough for this inevitable change, whereas Pakistan continues to lag way behind due to its continued reliance on outdated hydro-skimming technology.

Now the good part is that there is a solution for abovementioned complications, but the bad part is that for Pakistan, this solution comes with an unaffordable cost. To successfully comply with IMO policy, Pakistan will have to invest substantially in new technology to catch up with the rest of the nations. However, looking at the current fiscal challenges of the country, it is highly unlikely that the government of Pakistan will even consider this as an issue, let alone investing a colossal amount of money into it.

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SBP to Conduct 7 Day OMO

Nov 15, 2019 (MLN): The State Bank of Pakistan (SBP) announced that it will conduct a 7 day OMO to inject funds into the market.

Quotes timing is: 10:45 PST while result will be announced at: 11:15 PST

Settlement is same day - November 15, 2019

 

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