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INTERVIEW WITH ZUBAIR TUFAIL, FORMER VP FPCCI.

Byline: KHALIL AHMED

PAGE: TELL US SOMETHING ABOUT YOURSELF AND YOUR BUSINESS.

ZUBAIR TUFAIL: I was born in Karachi in 1951 and had my all studies of school and college in Karachi. I joined family business in 1972, which was trading of chemicals and polymers and importing from different countries for distribution in the country. In 1995, I entered into manufacturing of industrial chemicals. Manufacturing business is growing and our latest detergent plant will start production in the fourth quarter of 2012, which will save foreign exchange on imports as well as provide new jobs.

PAGE: YOUR VIEWS ON ALTERNATIVE ENERGY DEVELOPMENT BOARD (AEDB).

ZUBAIR TUFAIL: It is good to know that the government has simplified the procedures in order to achieve the target of producing 1,500MW of electricity through wind power units by 2013. Investors have been assured that they will get land lease in the wind corridor without delay after completion of formalities. We have been told that in order to attract investors, a new incentive-based alternative energy policy is being finalized. The draft policy would be sent to the council of common interest soon for approval. The AEDB has been directed to complete the work on the new policy at the earliest. The government has announced upfront tariff for wind power projects and for coal and solar power generation projects, the tariff would be announced shortly.

We must use all resources to reduce power shortages. Our country has wind power generation potential of more than 300,000MW, which needs to be explored, but investors have been reluctant to enter the field because of lengthy procedures. The procedures must be simplified to attract investment in alternate energy generation. China Three Gorges Corporation (CTGPC) has started construction of 50MW wind power project while Zorlu Energy of Turkey has completed all formalities for the project.

I remember in May 2011, it was announced that AEDB had cancelled all the allotments of land of those wind energy projects, which failed to meet deadlines and these lands were re-allotted to 13 potential investors who had deposited guarantees. About 17, out of 20 allotments were cancelled for not meeting deadlines and 13 of them were restored upon the payment of $250,000 for a new deadline of August 31, 2011. We came to know that 7 to 8 wind projects would be having a financial close the same year and about 20 more wind energy projects were in the pipeline. Similarly, China Wind Electric (CWE) had signed production contract to start manufacturing of turbines in Pakistan.

We know India started renewable energy project in 1982 and they developed a full fledged manufacturing facility for wind and solar technology long ago. We need to expedite our efforts.

PAGE: YOUR COMMENTS ON ONGOING SOLAR, COAL AND WIND PROJECTS.

ZUBAIR TUFAIL: At present, solar projects are still in initial stages and very little progress has been made by small private companies. As to wind projects, some progress is reported recently and it appears that in the province of Sindh, few wind projects will be in operation in next 2-3 years with capacity of 10-50 MW.

Coal is our real strength and can meet entire shortage of 5000 to 6000 MW. Infrastructure is being developed by government of Sindh at Thar field and we expect 3-4 projects of 1000 MW each can start production in about 3-4 years.

If foreign investment is secured from China/Australia etc. this step can change the scenario. If government announces suitable incentives, we can expect several projects, which will meet entire shortfall of electricity in the country. On the other hand, government cannot afford to produce electricity on expensive furnace oil in near future due to shortage of foreign exchange.

Political support and public support was vital for the takeoff of renewable energy in the country.

The government this year declared the Thar coal fields as a special economic zone with tax breaks and incentives to lure investors to develop coal gasification and mining as part of its strategy to fill the energy gulf. In five years, coal's contribution to the energy mix should reach 10 to 12 per cent.

The sixth most heavily-populated country globally, with over 170 million people, Pakistan has been plagued for years by power cuts and unless new sources of generation can be developed, we will see power demand outstrip supply for years to come. Yet, it has one of the biggest, barely-touched, single coal reserves on the planet - the massive Thar coalfield in the northern Sindh province with 175 billion tonnes of extremely high water-content, low energy coal. This kind of low-grade, watery coal is found in abundance in other countries such as Indonesia, the world's biggest exporter, but it has not been economic to exploit in the past.

Pakistan has been a relatively small but steady importer of thermal coal for several years which, like India, shifted to South African and Indonesian materials after China slashed exports in 2007, but imports will start rising next year.

Thermal coal imports are likely to increase by one million tonnes to 4.5 million tonnes in 2013 and 6-7 million by 2017, most of which will be consumed by the cement industry but a rising portion by independent power producers.

There are several large coal-fired power plants under construction and more being converted from fuel oil, such as Karachi Electric Supply Company's (KESC) joint venture with Hong Kong-based Bright Eagle Enterprises (BEE). Conversion to coal is the only sustainable option.

Imports of low-grade coal are likely to be part of the near-term solution with the development of Thar a longer-term prospect.

Pakistan has a pressing need for energy and low grade coal will do in place of higher price furnace oil, but who may import this and at what price, and also on what terms will be interesting to watch. Some converted plants are co-firing coal with biomass from rice husks or waste car tyres and blending imports with local coal but the need for more imports will remain as more independent power plants spring up and sugar, textile, and steel mills switch to coal at their captive plants.

There are also a handful of private, coal power plants under construction, which will increase the country's need for imports and once Karachi and Gwadar ports are expanded larger vessels can be berthed which will make importing more economic. Gwadar port in Balochistan is more suitable. Karachi port is also possible but it is fully used.

PAGE: COULD YOU GIVE YOUR INPUT ABOUT IMPORT OF LIQUEFIED NATURAL GAS (LNG)?

ZUBAIR TUFAIL: To meet the current shortage of energy in the country, LNG is the most suitable and promptly available solution. Ministry of petroleum is actively working on LNG supplies and contracts are under negotiation with Qatar and other sources. Infrastructure at Port Qasim is expected to be ready in next 18-24 months to receive the large LNG ships. But, international price of LNG is quite high so LNG may only be suitable for industrial sector.

PAGE: BADLY HIT BY GROWING ELECTRICITY AND GAS SHORTAGES, MANY BUSINESSPERSONS ARE TRYING TO SWITCH OVER TO ALTERNATIVE ENERGY SOLUTIONS TO OPERATE THEIR FACTORIES EVEN IF IT MEANS HEAVY INVESTMENT AND INCREASED RUNNING COSTS. YOUR VIEWS.

ZUBAIR TUFAIL: Of course, industry is suffering from acute shortages of electricity and gas, but alternate energy is not the solution to meet the huge shortage, as no groundwork is done for the same. Industries can only be run through electricity produced by gas including LNG.

PAGE: ACCORDING TO THE ECONOMIC SURVEY OF PAKISTAN, THE GROWING ENERGY SHORTAGES ARE WIPING OUT TWO TO THREE PER CENT OF GROSS DOMESTIC PRODUCT GROWTH EVERY YEAR. THIS MEANS LOSS OF HUNDREDS OF THOUSANDS OF JOBS, INCREASE IN POVERTY, AND EROSION OF BUSINESS CONFIDENCE AND INVESTMENT.

HOW WOULD YOU COMMENT ON IT?

ZUBAIR TUFAIL: Yes, several industries are closed or operating partially due to shortage of energy and it is quite possible that we are having low GDP by 2-3 per cent every year for this reason.

Unemployment is very high. There are energy crises, increasing poverty, and worsening law and order situation. As such, no new investment is seen in the recent years in manufacturing sector.
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Publication:Pakistan & Gulf Economist
Geographic Code:9PAKI
Date:May 27, 2012
Words:1367
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