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© Engro Chemical Pakistan Limited 1 | P a g e

Engro Chemicals Limited

Clean Development Mechanism

Bac k g round : Electricity demand in Pakistan exhibits certain seasonality. The maximum

power demand occurs in the summer month from May until September. A lower peak demandoccurs in the winter month of January. The summer peak demand is mainly covered by

hydropower, whereas the winter peak is covered by thermal power, not at least due to

shutdown and drainages of the artificial link canals from the end of December until midJanuary.

Currently, only about half of the population of nearly 141 Million has access to electricity.According to the Government of Pakistan, the growing pace of urbanization and

industrialization puts a premium on demand for electricity. In accordance to the Private Power& Infrastructure Board, a supply and demand forecast indicates an increasing deficit of power

starting 2006, if no additional power supply becomes available. This shows the great importantof prompt realization of measures to decrease power cuts and at the same time secure the

power supply in Pakistan.

Pro jec t Desc r ip t ion : In order to counter this trend, Engro Chemical Pakistan Limited

(ECPL) is in the process of setting up a new combined cycle power plant (CCPP) at Qadirpur inthe Ghotki district of Sindh, Pakistan, thus providing new additional electricity generation

capacity to the local grid.

The purpose of the proposed project activity is to generate 223.8 MWel (gross) of electricity

utilizing the permeate gas from the nearby located Qadirpur gas field, which is owned byPakistan oil & Gas Development Company Limited (OGDCL).

The permeate Gas contains several impurities and is the by-product of the gas purification

process. The higher heating value of the permeate gas is approximately 575 Btu/scf depending on the performance of the purification process. It consists mainly of methane

(60%), Carbon Dioxide (31%), Nitrogen (8%), Hydrogen Sulfide (320ppm), and about 1% of other hydrocarbons.

Explanation on how the proposed project activity reduces greenhouse gas emissions:In the absence of the proposed project activity, the permeate gas would be flared/vented

resulting in large amount of carbon emitted into the atmosphere without any use of theassociated energy. However, under the project activity, the permeate gas will be utilized in a

new, modern combined cycle power plant producing electricity, which is supplied to thenational grid, thus replacing electricity which would otherwise have been generated elsewhere

and most likely by means of more carbon intensive fuels such as coal or residual fuel oil.

In the project context, future greenhouse gas emissions will be reduced by means of utilizing

permeate gas for electricity production in a new combined cycle power planned instead of using more carbon intensive residual fuel in a simple thermal power plant for electricity

production. At the same time greenhouse gas emission is reduced through avoidedflaring/venting.

The combined cycle power plant will help the government in coping with the increasingdemand for electricity in the country without any increase in greenhouse gas emissions. The

erection of the combined cycle power plant will further enhance the power supply to this area,

making the supply more relied and therefore improve the quality of services. At the same time,due to the fact that the combined cycle power plant is operating on permeate gas, the limited

natural gas resources within Pakistan will not be affected.




The ‘no-action’ option, if chosen, would prevent the country from exploring the potential toincrease its power production by means of utilizing a waste product (permeate gas otherwise

flared) and instead using more carbon intensive fuels such as residual fuel oil for electricity

production.

Projec t Goals : The proposed project activity offers a chance to improve Pakistan’s energy

balance and decrease the gap between the energy demands and the energy production in the

country. The new combined cycle power plant would use permeate gas from the Qadirpur gas

field and therefore would be utilizing gas that is currently being flared/vented and would resultin generating power without affecting the countries natural gas supply.

From an environmental point of view the project will utilize an energy source which otherwise

would have been wasted (flared under business as usual scenario). At the same time theelectricity produced by utilizing this waste gas (project activity) would have been generated by

utilizing a more carbon intensive fuel (residual fuel oil) thus resulting in additional greenhousegas emission.

The project will also create additional jobs during the construction period of the new combinedcycle power plant, which will strengthen the regional development. It is expected that during

the peak construction period around 300 to 350 people will be working on site, of which morethan half are expected to be employed from the local community.

Moreover the project introduces a state of the art technology to a country with development

needs. It will strongly contribute to the local capacity building, and it will facilitate possiblereplication of this project kind.

T ime l ines : • Contract signed with the Consultant: March 2007

• Contract signed with Designated Operating Entity (DOE): February 2008•

Methodology approved by UNFCCC: November 2008.• Validation of Project activities by DOE: March 2009

• Submission of Project Design Document (PDD) to Designated National Authority (DNA):Jan. 2009

• Project registration / approval from DNA: March 2009• Submission of PDD to Executive Board (EB): March 2009

• Registration / approval from EB: June 2009• Project Commercial Operation Date: December 2009

• Verification / monitoring by DOE for CERL January 2011

• Issuance of CER in March: 2011

Ach ievements and Cha l lenges : Engro has been successful in getting its new

methodology approved (AM-0074) by EB of UNFCCC. It was an untiring effort of around seven

months by the team of owner and the consultant, which made this happen. First of all the PDDwas developed, based on which a new Baseline and Monitoring Methodology was established as

per the guideline provided by UNFCCC. The methodology was reviewed by CDM Meth Panel andultimately presented in EB which approved it on November 28, 2008.

The challenges ahead are to:

• Get the required documents from various agencies.

• Get the project registered and approved by DNA.• Get the project registered by EB.




• Have validation of project activities by DOE.

• Completion of project in time.

• Operate the plant efficiently to get maxs CERs.

• Get the CERs issued.

Lessons Learn t : • Proponent must have the knowledge of CDM methodology approval process. This saves

time.

• A lot of time is wasted in gathering the documents and data required for developing the

PDD. The data must be readily available.• Industries in Pakistan do not have much idea about CDM. Industry and country can

generate reasonable revenue from CDM projects. Industry must be educated on CDM.

Fut ur e P lans : • Engro is looking forward to have more CDM projects. Projects at fertilizer plant are

under development.

• Engro Energy Limited is exploring possibilities of alternate energy in Pakistan. This willdevelop a number of CDM projects in the country.

Contact Details:

Jahangir Piracha

Production ManagerEngro Chemical Pakistan Limited

Ph: 0723-641001Cell: 0300-2004312

Mohammad Kaleem Khan

Senior HSE Advisor

Engro Energy LimitedPh: 0723-712269

Cell: 0300-8486590

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