Cheap Thar Coal to End Load Shedding in Pakistan

Coal is the cheapest and the most common fuel used directly or indirectly to produce electricity and heat in the world today. Global coal consumption was about 6.7 billion tons in 2006 and is expected to increase 48% to 9.98 billion tons by 2030, according to the US Energy Information Administration (EIA). China produced 2.38 billion tons in 2006. India produced about 447.3 million tons and Pakistan mined only about 8 million tons in 2006. 68.7% of China's electricity comes from coal. The United States consumes about 14% of the world total, using 90% of it for generation of electricity. The U.S. coal-fired plants have over 300 GW of capacity.

The Thar desert region in Pakistan is endowed with one of the largest coal reserves in the world. Discovered in early 1990s, the Thar coal has not yet been developed to produce usable energy. With the devastating increases in imported oil bill and the growing shortages of gas and electricity in the country, the coal development is finally beginning to get the attention it deserves. Coal contributes about 20% of the worldwide greenhouse gas emissions but it is the cheapest fuel available, according to Pew Center on Global Climate Change. It can provide usable energy at a cost of between $1 and $2 per MMBtu compared to $6 to $12 per MMBtu for oil and natural gas, and coal prices are relatively stable. Coal is inherently higher-polluting and more carbon-intensive than other energy alternatives. However, coal is so inexpensive that one can spend quite a bit on pollution control and still maintain coal’s competitive position.



At the end of the decade of 1990s when the economy was stagnant, Pakistan had about 1200 MW excess capacity. Between 2000 and 2008, the electricity demand from industries and consumers grew dramatically with the rapid economic expansion that more than doubled the nation's GDP from $60 billion to $170 billion. The Musharraf government added about 3500 MW of capacity during this period which still left a gap of over 1500 MW by 2008. The economy has since slowed to a crawl, the electricity demand has decreased, and yet the nation is suffering the worst ever power outages in the history of Pakistan. As discussed in an earlier post, Pakistan's current installed capacity is around 18,0000 MW, of which around 20% is hydroelectric. Much of the rest is thermal, fueled primarily by gas and oil. Pakistan Electric Power Company PEPCO blames independent power producers (IPPs) for the electricity crisis, as they have only been able to give PEPCO much less than the 5,800 MW of confirmed capacity. Most of the power plants in the country are operating well below installed capacity because the operators are not being paid enough to buy fuel. Circular debt owed to the power producers and oil companies is currently believed to be largely responsible for severe load shedding affecting most of the nation.

The circular debt has assumed alarming portions since 2008, resulting in the current severe power problems. Former finance minister Saukat Tarin recently told the News that “in real terms the circular debt has swelled to Rs108 billion which mainly includes non-payment of Rs42 billion by KESC, Rs21 billion by the government of Sindh and Rs15-16 billion from commercial consumers to the Pakistan Electric Power Company (Pepco)". Just prior to leaving office, Tarin decided to raise Rs. 25 billion as a small step toward settling the swelling unpaid bills owed to power producers.



Per capita energy consumption in Pakistan is estimated at 14.2 million Btu, which is much higher than Bangladesh's 5 million BTUs per capita but slightly less than India's 15.9 million BTU per capita energy consumption. South Asia's per capita energy consumption is only a fraction of other industrializing economies in Asia region such as China (56.2 million BTU), Thailand (58 million BTU) and Malaysia (104 million BTU), according to the US Dept of Energy 2006 report. To put it in perspective, the world average per capita energy use is about 65 million BTUs and the average American consumes 352 million BTUs. With 40% of the Pakistani households that have yet to receive electricity, and only 18% of the households that have access to pipeline gas, the energy sector is expected to play a critical role in economic and social development. With this growth comes higher energy consumption and stronger pressures on the country’s energy resources. At present, natural gas and oil supply the bulk (80 percent) of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the supply. For instance, Pakistan currently produces only 18.3 percent of the oil it consumes, fostering a dependency on imports that places considerable strain on the country’s financial position. On the other hand, hydro and coal are perhaps underutilized today, as Pakistan has ample potential supplies of both.

The country's creaky and outdated electricity infrastructure loses over 30 percent, some of it due to rampant power theft, of generated power in transit, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south.

It does seem that Pakistan is finally getting serious about utilizing its vast coal resources to produce electricity and gas. Talking recently with GeoTV's Hamid Mir, Pepco Managing Director Tahir Basharat Cheema shared the following list of coal projects being launched:

1. The Sind Government has awarded a 1200 MW project to extract Thar coal and produce electricity to Engro Power.

2. A similar 1200 MW project is being undertaken by Pepco in Thar. The Pepco project also includes a 700 Km transmission line to connect Thar plants with the national grid.

3. An experimental project for underground coal gasification is being built by Pakistani nuclear scientist Dr. Mubarakmand to tap underground coal to produce 50 MW.

4. Another experimental 50 MW project using pressure coal gasification is planned by Pepco.

The coal and various renewable energy projects are expected to be online in the next 2 to 5 years. If these projects do succeed and more investors are attracted to the power sector, then Pakistan has the potential to produce about 100,000 MW a year for a century or longer. But these efforts will not help in the short or immediate term. What is urgently needed is decisive action to resolve the circular debt problems and restore power generation to full installed capacity immediately.

Here is a video clip of former president General Musharraf talking about the worst ever load shedding being faced by Pakistanis today:


Related Links:

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Pakistan's Load Shedding and Circular Debt

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

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Pakistan's Electricity Crisis

Pepco Increases Load Shedding By 5 Hours

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Pakistan's Energy Statistics

US Department of Energy Data

China Signs Power Plant Deals in Pakistan

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Comparing US and Pakistani Tax Evasion

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Views: 1082

Comment by Riaz Haq on November 4, 2013 at 10:03pm

Here's a Business Recorder story on Pakista MOUs with Chinese compamies to build power plants:

KARACHI: A Chinese world famed company, Chinese Power International Holding will set up ten coal fired power plants of 660 MW each, making total 6600 MW, at Thar coal fields ; with total estimated investment of dollars 7.2 billion.
A memorandum of understanding was earlier inked between China Power International Holding and the Sindh Government for these power plants. Signatory to this MOU were SECMC and Global Mining Company (GMC)/ Sino Sindh Resources (SSR).
Coal will be supplied by SECMC and GMC/SSR from Blocks I and II of Thar coal fields.
Sindh Chief Minister Syed Qaim Ali Shah, during a press conference here at the Chief Minister House on Monday on his return from his visit to China, said many Chinese companies showed their interest to invest in Pakistan especially in Sindh.
He informed the Chinese investors that his Government was creating an enabling environment for potential investors in developing infrastructure, coal mining, coal and wind power generation in the province. Thar coal fields have estimated reserves of 175 billion tons. These reserves could be utilised to produce 100,000 MW of power for many decades.
He also informed that public private partnership had been initiated through an international competitive bidding process to ensure fast track development of Thar coal.
He assured on behalf of the government of the provision of requisite infrastructure adding that the investors would find Thar as an exceptionally peaceful area.
The Chief Minister, giving the details of his 5-day visit to China-- Sichuan province's capital Chengdu and China's capital Beijing- said his Government sought Chinese investment in development of Thar Coal mining and coal- based power generation, development of Wind Corridor and technical assistance in modernising agriculture.
The Chief Minister visited Chengdu to participate in the 14th Western China International Fair on invitation of Governor Sichuan, Wei Hong.
Sichuan province has a strong economy with a GDP of dollars 383 billion. It has robust agriculture, water management, strong mining technology coupled with high tech industry in Chengdu.
Sichuan province Governor, Wei Hong assured all possible support to Sindh Government for collaboration in Thar Coal mining, coal and wind based power generation and establishment of an industrial zone in Sindh.
Sichuan Governor and Deputy Secretary General of Chinese Communist Party, Li Jiaguo accepted his invitation and assured to visit Sindh province, said Syed Qaim Ali Shah.
Syed Qaim Ali Shah witnessed the signing ceremony of 249.6 MW Engineering Procurement Construction (EPC) contract signed between NBT Wind Power Pakistan II, a subsidiary of NBT Pakistan Holding (Pvt) Ltd of Singapore (NBT) and Harbin Electric International to build the largest wind farm in Pakistan using 156 units of 1.6 MW wind turbines made in China.
NBT is developing 650 MW of wind farms in the wind corridor of Sindh.
NBT, Harbin Electric International and GE are working jointly with a bank syndicate on project financing for this wind farm. The EPC contract includes 5 years of operation and maintenance services to wind turbines......

http://www.brecorder.com/pakistan/industries-a-sectors/142083-china...$-72-bln.html

Comment by Riaz Haq on December 9, 2013 at 8:51pm

Here's an ET report on ADB financing for Jamshoro coal-fired 1200 MW power plant:

Despite opposition by the United States (US), the Asian Development Bank (ADB) has approved a $900-million loan for converting the Jamshoro Power Plant to a coal-fired one, giving a boost to the government’s efforts to improve the energy mix.
According to sources, hectic diplomatic efforts, launched by Finance Minister Ishaq Dar, saved the day for Pakistan after the US had indicated its opposition to the deal to the ADB’s Board of Directors. The US cast its vote against Pakistan, the sources said.
However, Canada, Germany, Australia, New Zealand and Japan cast their votes in favour of Pakistan.
The loan was approved by the ADB Board of Directors, according to Ministry of Finance. The project will have an installed capacity of 1,320 megawatts (MW) and will add 1,200 to the national grid.
The new plant will generate electricity at a lower cost, saving about $535 million per year on fuel imports compared to oil-fired power plants.

Three-fourth of the board voted in favour of the loan, the finance ministry said. Dar also thanked the ADB and countries that supported Pakistan’s proposal, it added.
The previous government had initiated the process of converting and running the power plant on imported coal.
However, the PML-N government plans to construct coal power plants at Gadani with a total capacity of 6,600 MW as part of its policy of producing electricity on cheaper fuels like coal, Dar stated.
According to the ADB, out of the total sum of $900 million, an amount of $870 million will be at a higher interest rate while $30 million will be at a concessional one. The Islamic Development Bank will also provide $150 million, while $450 million will be arranged by the government, to meet the total estimated project cost of $1.5 billion. The ADB said that project is expected to be completed by December 2018.
While the ADB approves the loan, the Pakistani authorities have yet to sort out the actual price. After the Ministry of Water and Power overestimated it at $2 billion (Rs220 billion), the federal government had constituted a committee to review the cost, which had originally been estimated at $1.5 billion (Rs165 billion).
The ADB said that in order to address environmental concerns, it will employ state-of-the-art emission control equipment resulting in cleaner emissions than the existing heavy fuel oil-fired generators and subcritical boiler technology which is more commonly used.
Before approving the loan, the ADB had pressed Pakistan to agree to using imported bituminous coal for 80% of the plants fuel requirement, and Thar coal which is lignite and has a low heating capacity for the remaining 20%.

http://tribune.com.pk/story/643373/power-through-adb-approves-funds...

Comment by Riaz Haq on January 23, 2014 at 8:38pm

Here's an Australian proposal to convert coal into diesel in Pakistan:

Australian mining billionaire and philanthropist, Andrew Forrest, has made an informal deal with Pakistan to free about 2.5 million slaves in return for allowing his firm to convert billions of tonnes of cheap coal into much-needed energy.

The CEO of Fortescue Metals Group (ASX:FMG), who made the announcement at the World Economic Forum in the Swiss resort of Davos, said the agreement would give the Pakistani state of Punjab access to Australian technology that converts lignite coal into diesel.

In return, he said Pakistan has agreed to bring in laws that will tackle the problem of slavery, or bonded labour, in the Punjab province, home to more than 100 million people, reported The Australian.

Forrest says the technology, developed by Curtin University, has the potential to be cost-effective.

"Turning lignite to diesel is proved – so we have no doubt it's going to happen," he was quoted as saying.

The deal earned the approval of former British Prime Minister Tony Blair, who sung its praises during a brief chance meeting with Australian Prime Minister Tony Abbott in Davos.

According to the Global Slavery Index, compiled by Forrest's Walk Free Foundation, about 16 million people are held in slave-like conditions through debt and forced labour in Pakistan and India.

http://www.mining.com/aussie-mining-billionaire-forrest-signs-coal-...

Comment by Riaz Haq on February 19, 2014 at 10:27pm

Here's an AFP story on coal power for Pakistan:

....Late last month, Prime Minister Nawaz Sharif and his former rival, ex-president Asif Ali Zardari jointly inaugurated the construction of a $1.6 billion coal plant the southern town of Thar, hailing their shared goal of ending the nation’s power crisis. The government has also green-lighted the construction of a pilot 660 megawatt coal-fired plant in Gadani, a small, serene town on the Arabian Sea known as Pakistan’s ship-breaking hub. A 600 megawatt plant has also been given the go-ahead in the southern city of Jamshoro......
“This is a major and historic fuel switching plan as we generate zero from coal compared to India which generates 69 percent of its electricity from coal-fired power plants,” Pakistan’s minister for power and water Khwaja Asif told AFP.

Pakistan has struggled with scheduled power cuts for decades. But the problems have been particularly acute since 2008, with regular outages of up to 22 hours a day for many domestic users and even longer for industries — costing about two percent of GDP per year.
In the hot summer, when temperatures soar to 50C in the country’s centre, Pakistan produces around 18,000 MW of power, with an average deficit of 4,000 MW. A lack of capacity together with huge debt cycles exacerbated by poor rates of tax collection are seen as some of the major factors contributing to the country’s dismal power shortages.
The issue was also a central campaign theme in last year’s general elections, which saw Nawaz Sharif elected to the top post. Faced with a growing bill for imported oil that currently stands at $14 billion and a rapidly depleting supply of natural gas, the country’s private and public plants are switching their oil-plants over to coal. “Pakistan has been facing rising oil prices and declining gas reserves as well as tight foreign account situation, rendering the reliance on the import of oil to fuel power plants increasingly unaffordable,” the Asian Development Bank said in a statement. Pakistan’s largest private sector power utility Karachi Electric Supply Company (KESC), which provides electricity to the country’s biggest city, has taken the lead in plans for the coal switch.
The company has recently granted engineering, procurement and construction contracts to Chinese company Harbin Electric International to convert two units of the Bin Qasim thermal power stations with 420 megawatt capacity.
The $400 million project is expected to be completed by 2016. Alongside the conversions, Pakistan is also upgrading its port facilities to increase its ability to import coal.
“Ports are the lifeline of the country,” says Haleem Siddiqui, a veteran seaman who pioneered the first state-of-the art container terminal at Karachi Port and whose company is building a “dirty cargo terminal” at Port Qasim along Arabian Sea.
The fully-mechanised terminal would be able to handle four to eight million tons of coal in the first phase to be completed by 2015, growing to 20 million tons in the extended phase in 2020, at a cost of $200 million.

----- Which is why Pakistan is determined to find some of its energy needs under its own soil. Some experts have pointed to the Thar Desert in southern Sindh province, which sits on top a vast potential source of 175 billion tons of coal.
“It is very huge reserve and is equivalent to combined oil reserves of Iran and Saudi Arab in terms of heating value,” Agha Wasif, chief of the provincial energy department told AFP. Engro Powergen Limited, a joint venture of public and private sectors, is developing a block of the Thar coal field with $800 million dollars investment which is set to open by 2016....

http://www.nation.com.pk/business/20-Feb-2014/energy-starved-pakist...

Comment by Riaz Haq on March 10, 2014 at 9:53pm

Sindh experts say the area is virtually ruled by the Makhdoom family and four sons of Makhdoom Amin Fahim, the senior PPP leader, are directly involved and responsible. In the Sindh government, all the four sons hold key positions.

Makhdoom Jamil Zaman is the provincial minister for relief and revenue. Makhdoom Aqil Zaman held the post of Tharparkar deputy commissioner until two days ago. Before him, six months ago, it was Makhdoom Shakil, another son, who held the position of district management for three consecutive years. Amin Fahim’s another son, Makhdoom Khalil Zaman, is a member of the Sindh Assembly (MPA) from the same district.

It is also a fact that the Makhdoom family holds widespread spiritual following in most parts of Tharparkar. But they have been found negligent and the latest crisis has proved that. Makhdoom Aqil was transferred only after the tragic death of children came to the light.

Makhdoom Jamil, the Relief and Revenue minister, is responsible for supplying relief to the affected areas. He reportedly does not take interest in the affairs of his ministry and has never even attended his office, insiders told The News. Also when the news of Tharparkar broke out, he did not take any action for any measure for relief.

http://www.thenews.com.pk/Todays-News-13-29029-Zardari-summons-Qaim...

Comment by Riaz Haq on September 27, 2014 at 11:11pm

LONDON (Alliance News) - Oracle Coalfields PLC Thursday said it has signed a engineering procurement and construction agreement in Beijing with SEPCO Electric Power Construction Corp for the construction of an integrated coal mine and power plant.


SEPCO is a power and construction group in China.

Oracle Coalfields, which is a developer of a lignite coal mine located in the south eastern Sindh Province in Pakistan, said the construction of the integrated coal mine and power plant is a major milestone in the development of the Block VI project in the Thar Coalfields.

Through its local coal mining subsidiary Sindh Carbon Energy Ltd, Oracle owns the mining lease for Block VI in Thar Coalfield, for the mining of lignite coal. Oracle plans to develop the mine and to sell coal to a new created company, provisionally called Electric Power Ltd, at an integrated power station next to the mine.

Oracle said that SEPCO has also proposed a financing structure to potentially securitise up to 85% of the cost of the two EPC contracts, which would be provided by Sinosure, the China Export & Credit Insurance Corp, and some Chinese banks.

The EPC contract is for a 4.2 million tonnes per year coal mine and the 600 megawatt power plant.

The combined EPC transaction value is around USD1.3 billion, Oracle said.

The EPC framework agreement confirms SEPCO's intention to purchase minority equity interests in Electric Power and to potentially make an investment in Sindh Carbon Energy Ltd, Oracle said.

"Entering the EPC Framework Agreement with and receiving a financing proposal from one of China's largest state-owned enterprises in the energy sector is another step towards bringing the project to reality. Both SEPCO and Oracle are eager to succeed in the development of our integrated coal mine and power plant project and to play an effective role in addressing Pakistan's energy crisis," said Oracle Chief Executive Shahrukh Khan in a statement.

http://www.lse.co.uk/AllNews.asp?code=2mspz9ic&headline=Oracle_...

Comment by Riaz Haq on January 31, 2015 at 11:08pm

K-Electric (KE) has signed an agreement with China Machinery Engineering (CMEC) for the development of a coal-fired power project with a capacity of 700MW in Pakistan.

Under the terms of the joint development agreement (JDA), the $1bn power plant will be built at Port Qasim, Pakistan. China Datang Overseas Investment Company (CDTO) is also part of this agreement.

The project is being developed as part of KE's effort to diversify its energy fuel-mix toward cheaper sources of energy.

KE CEO Tayyab Tareen said: "This initiative is in line with KE's vision of Karachi being a net exporter of power in the years ahead.

"This project will also contribute to KE's fuel diversification strategy and marks a significant step towards a new era of cheap base load power in Pakistan."

In addition to creating employment opportunities, the project will help to overcome the ever rising electricity demand of the port city of Pakistan.

CDTO president Duan Zhongmin said: "We are fully committed to cooperate with KE and CMEC to successfully execute this Port Qasim project which shall go a long way to meet the energy needs of the people of Pakistan."

http://fossilfuel.energy-business-review.com/news/k-electric-and-cm...

Comment by Riaz Haq on August 22, 2015 at 6:03pm

ISLAMABAD (Dunya News) -- Shanghai Electric Power signed an agreement with government regarding Thar coal power project on Friday. Federal Minster of Power and Energy Khawaja Asif said that the project worth 2 billion dollars with will bring 1320 Megawatt (Mw) which will be charged at an initial tariff of 8 rupee per unit, reported Dunya News.

Talking at the occasion, Federal Minster of Power and Energy Khawaja Asif said that Thar coal power project is a vital part of China-Pakistan Economic Corridor (CPEC). The project, costing 2 billion dollars, will be completed in 2018. He said that project will bring 1320 Mw which will be charged an initial tariff of 8 rupee per unit.

Federal Minster of Power and Energy said that LNG is being supplied to the power plants.


http://dunyanews.tv/index.php/en/Pakistan/294557-Shanghai-Electric-... 

Comment by Riaz Haq on December 21, 2015 at 10:02am

#China, #Pakistan ink $2 billion deal to build massive #coal power plant in Sindh - The Economic Times #CPEC #Energy http://economictimes.indiatimes.com/news/international/business/chi...
BEIJING: China and Pakistan today signed a $2 billion agreement to jointly build a massive coal- fired power station in Pakistan's southern Sindh province.

The project will cost in excess R$2 billion, including the exploitation of a 3.8-million-tonne coal mine and the construction of a 660,000-kilowatt power station near the mine, China's state-run Xinhua news agency reported.

China will contribute USD 800 million to the financing, while the Pakistani partners will provide $500 million, mainly through China Development Bank and Habib Bank.

The project is expected to be completed by the end of 2017, and it will be the first such project in the China- Pakistan Economic Corridor.

The corridor will be a 3,000-kms long network of roads, railways and energy infrastructure between the ports of Gwadar in Pakistan and Kashgar in China's Xinjiang.

It was established to help lift Pakistan out of its economic slumber and boost growth for the Chinese ..

Comment by Riaz Haq on January 25, 2017 at 8:01pm

Part of #CPEC: #Pakistan #China Sign Deals for $2.5b coal-fired power plants at #Hub and #Thar

http://tribune.com.pk/story/1306746/part-cpec-deals-signed-2-5b-coa...

The government on Wednesday signed four agreements for setting up two coal-based power plants of 1,650 megawatts in Hub and Thar under the China-Pakistan Economic Corridor (CPEC).

The agreements – two each for project implementation and power purchase – were inked by representatives of China Power Hub Generation Company Limited, Hub Power Company and Private Power and Infrastructure Board.

Minister of Water and Power Khawaja Muhammad Asif and Water and Power Secretary Mohammad Younus Dagha were present on the occasion. Under the agreements, a 1,320MW coal-fired power plant will be set up in Hub, Balochistan at an estimated cost of $2 billion while a 330MW plant will be installed in Thar, Sindh costing $500 million.

First power project will be completed by August 2019 and the second will come online by December 2019.

Terming the projects a major milestone, Khawaja Asif said construction work on the 1,320MW plant had already commenced and both projects would be completed in 2019.

He boasted that the government was also fully executing the projects that would come on stream after the end of its tenure keeping in view future energy requirements of the country.

Asif pointed out that preference was being given to the consumption of Thar coal for generating cheap electricity. “These projects will open a new chapter in the energy sector … Thar will be a centre of energy for the country in future,” he remarked.

He said the projects would not only help save foreign exchange, but would also produce electricity at affordable prices.

Responding to a question, the minister elaborated that the 1,320MW project was based on super-critical technology, meaning it would be more environment-friendly.

However, the 330MW plant will run on sub-critical technology. Replying to a question about why the sub-critical technology was being used, the minister clarified that it was a pilot project and after the passage of time and more projects were taken up, the technology would be upgraded.

He emphasised that equal attention was being paid to upgrading the power transmission system and work on that was being carried out simultaneously.

About the Nandipur power plant, the minister claimed that it was supplying 430MW, its full capacity, as six furnace oil treatment plants had been put in place. “Gasification process has also started and the plant will start running on gas in May this year and generate 525MW,” he said.

He revealed that payment had also been made to Sui Northern Gas Pipelines for laying a pipeline for gas supply to the plant. Turning to Diamer-Bhasha and Mohmand dams, the minister said groundbreaking of both the projects would be carried out this year and the reservoirs would be built with the help of domestic resources.

Land acquisition for the Diamer-Bhasha dam had been mostly completed and a little percentage was left, he said.

Asif said around 1,000MW of alternative energy was being generated, which came to around 6% of the total power production in the country. The minister announced that the government was going to unveil the water policy very soon and was also planning to hold an international water conference this year.

Meanwhile, in a tweet, Asif said the government had made payments of Rs270 billion out of the total Rs480 billion to the independent power producers (IPPs) in 2013 whereas Rs71.6 billion was paid to the oil and gas companies.

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