PAKISTAN ENERGY FORUM-2015
Oil, Gas, Power
MEGA-PROJECTS
MEGA-INVESTMENT
LEVERAGING to SUCCESS
19-Feb-2015
1
Leveraging Case Study from Khyber
Pakhtunkhwa
Objectives
1. Fast Track Hydel Projects (shrink time to COD)
2. Cheap Indigenous Power
3. Economic Change
4. Fast Track P1 Oil & Gas Projects and
Equipment
5. Release ADP for Social projects
6. Leverage Liquid Gold (30,000 MW) & Black
Gold
2
Definition of Leverage
• Mechanical advantage gained by being
in a position to use a lever
• Ability to influence a system in a way
that multiplies the outcome of the
efforts without the corresponding
increase in the consumption of
resources.
• A small amount of cost to yield high
returns.
3
Lever
4
Leveraging Case Study from Khyber
Pakhtunkhwa
Leveraging Operational Hydro Power Plants
1. Malakand 81 MW
2. Pehur 18 MW
3. Total 99 MW
4. Both 100% owned by the Government of Khyber
Pakhtunkhwa
5. Zero Debt
Leveraging Under Construction Hydro Power Plants
1. Daral Khwar 36.6 MW 100% GoKP Equity
2. Ranolia 17 MW 80/20 Debt/Equity Ratio ADB/ADP
3. Machi 2.6 MW 80/20 Debt/Equity Ratio ADB/ADP
4. Total 56.6 MW
5
Leveraging Case Study from Khyber
Pakhtunkhwa
1.
2.
3.
4.
IPO 25% of Malakand & Pehur (IPPs)
Refinancing of Malakand & Pehur (IPPs)
IPO 25% of All IPPs
Plough back NEPRA allowed ROE back into
Hydro Projects
5. Net Hydel Funds from Tarbela
6. Oil, Gas & LPG Royalty, Windfall Levy &
Production Bonus
6
Leveraging Case Study from Khyber
Pakhtunkhwa
Resultant Public Sector:
1.
2.
3.
4.
5.
COD IPP 270 MW HPP by 2018
COD IPP 800 MW GTCC by 2018
COD IPP 5,000 MW HPP by 2022
COD IPP 10,000 MW HPP by 2025
Raising/Investment $ 25 Billion (100
time KP annual Budget)
6. Double Oil & Gas Production by 2025
7
Next to be Leveraged (not selling)
1.
2.
3.
4.
5.
6.
Tarbela, Mangla……
Gencos
Govt Share in companies like KAPCO
Transmission System
DISCOs
Oil/Gas Fields of OGDCL, PPL, Mari &
GHPL
7. Surface Facilities of Oil/Gas
8
Leveraging Process Action
1. Concept cleared by the Energy Apex Committee of
Government of Khyber Pakhtunkhwa – Feb-2014
2. Interacted with international and national Financial
Advisers, Fund Arrangers, Banks, Lawyers etc.
3. RFP Floated to raise $ 800 Million (Sept-2014) for
Fund Arranger
4. Two Strong Consortia Bid (others wanted but late) –
One winner
5. Next RFP End-March US$ 1 Billion
6. Valuation
7. Hiring Advisers: Legal, Owners Engineer, Insurance,
Risk Management, Audit
9
Leveraging Investment Process Action
1. Pakhtunkhwa Energy Development
Organization PEDO has independent BOD
2. Establishing a KP Power Holding Company Ltd.
3. Establishing a SPV for each Hydro Power plant
or a cluster
4. Infrastructure Bonds
5. Listing KSE, AIM, LSE
6. Establishing a Company in Jersey Island
7. Market based Salaries
10
Thousand of Micro/Small Hydro
Financial Leveraging
1.
2.
3.
4.
5.
A few Pilot Projects
Generation License, Tariff, by Govt of KP
Upfront Tariff
PPA by SPV 100% owned by Govt KP
PEDO facilitating Planning, Financing and
EPC – Cook Book/Conferences
6. Community Participation
7. Prepaid Meters
11
Oil & Gas Sector Financial Leveraging
Revenue from Security
• Government of Khyber Pakhtunkhwa has
created a ‘Fulcrum/pivot’ namely, KP Oil &
Gas Company Ltd. to assist Exploration &
Production companies. With small funds and
large assistance from Government of Khyber
Pakhtunkhwa millions of barrels oil and
millions of cubic feet of gas to be explored.
• Government of Khyber Pakhtunkhwa eyeing
on billions of Royalty, Windfall Levy,
Production Bonus, economic activities, tax etc.
12
Oil & Gas Sector
• OGDCL, PPL, MPCL, GHPL
• Instead of 100% Equity into P1 (Surface
facilities). They may sell Share/borrow money
to construct the Surface Facilities. Saved
money to be invested in Exploration.
• A number of international investing
companies are willing to invest at
Development stage taking risk as well.
• Leverage GIDC
13
Recommendation
1. Capacity Building at provincial and federal levels
and academia
2. Re-visit Policies, Rules & Acts
3. Finance Division, Planning Commission, NEPRA,
PPIB, NTDCL, PESCO, M/O Water & Power, DG
PC, MPNR to facilitate
4. Fast Track PPA, IA, Tariff Determination (LRMC)
5. Crack Team of Federal and Provinces, PEPCO
System, NEPRA, SECP, SBP, FBR,
6. Technical Assistance from ADB, WB, USAID etc.
14
Thanks
Q&A
RAZIUDDIN (RAZI)
CEO
KP Oil & Gas Company Ltd. (KPOGCL)
Cell +92 300 500 1038, +92 333 538 0240
Phone: +92 91 5615142-8 Fax: +92 91 5615149
Email: razi.ceo@kpogcl.com.pk
Peshawar, PAKISTAN
15
KHYBER PAKHTUNKHWA OIL & GAS COMPANY LIMITED (KPOGCL)