20 October 2011Ref: R&D/AS-005/10/2011

Note to Dy. Managing Director (Ops)Thru: SGM (D-South)

APPOINTMENT OF CONSULTANT FOR PAKISTAN GAS APPLIANCE EFFICIENCY ENHANCEMENT PROJECT (PGAEEP) – COMPONENT OF NATURAL GAS

EFFICIENCY PROJECT (NGEP)

The Company has embarked on a five-year USD 272 million programme called NGEP for improving efficiency of gas distribution and end-use of natural gas in house-holds. The project involved USD 200 million financing component from the World Bank, which had provided guidelines for development of the proposal. Hence, a component called PGAEEP was also conceived alongwith NGEP by the project developers, i.e. R&D and Distribution South. An amount of USD 5 million was earmarked for this component, which also qualified for Global Environment Facility (GEF) grant for USD 1.5 million, through Ministry of Environment, as it contributed to the UNFCCC goals of arresting GHG (greenhouse gases) emissions.

The purpose of PGAEEP is to develop standards, labeling and testing regime for the local gas appliance industry vis-à-vis: energy efficiency, quality, reliability and safety (for further details refer to annexure – “A” Proposal for PGAEEP). The program will target the areas for improvement in Pakistan Standards/testing requirements laid down therein and would suggest improvement in standards/testing after comparing these with relevant International Standards. Accordingly, an energy labeling scheme will be developed/implemented with the collaboration of industry, implementing agency (SSGC) and partners (ENERCON, PSQCA and SMEDA). Besides, it will also develop appliance testing laboratory and other infrastructure necessary for accreditation and certification of appliance testing in the country.

The successful implementation of this project can yield numerous gas savings via reduction in gas usage in domestic sector. The potential gas savings have been projected at 13.5 BCF/annum (Gas Savings potential annexure – “C”). In addition to that the project will contribute to the development of the local industry and consumer awareness causing a positive impact on the Country for times to come.

A total budget provision for Rs. 460 million spread up over the period FY 2011-12 till FY 2014-15 has been made for this component. In order to initiate the project, SSGC needs to appoint a globally acclaimed consulting firm, well-versed in the field of gas appliance standardization initiatives to develop a project implementation plan. The terms of reference (TOR) for the same have been developed (attached as annexure – “B”) to facilitate bidding process.

It is, therefore, suggested that the attached document may be reviewed and the process for appointment of consultant/consulting firm may be initiated as per the World Bank guidelines.

Kindly accord your approval for initiating this project and the process of appointment of consultant/consulting firm through procurement of services by the M&IM department.

___________Aatir SalmanActg. Chief Engineer (R&D)