Clean development mechanism project design document … Switch_100320.pdf · CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) Version 03 ... Wartsila generators

PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) - Version 03

CDM – Executive Board

1

CLEAN DEVELOPMENT MECHANISM

PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD)

Version 03 - in effect as of: 22 December 2006

CONTENTS

A. General description of the small scale project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

D. Environmental impacts

E. Stakeholders’ comments

Annexes

Annex 1: Contact information on participants in the proposed small scale project activity

Annex 2: Information regarding public funding

Annex 3: Baseline information

Annex 4: Monitoring Information



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Revision history of this document

Version

Number

Date Description and reason of revision

01 21 January

2003

Initial adoption

02 8 July 2005 The Board agreed to revise the CDM SSC PDD to reflect

guidance and clarifications provided by the Board since

version 01 of this document.

As a consequence, the guidelines for completing CDM SSC

PDD have been revised accordingly to version 2. The latest

version can be found at

<http://cdm.unfccc.int/Reference/Documents>.

03 22 December

2006

The Board agreed to revise the CDM project design

document for small-scale activities (CDM-SSC-PDD), taking

into account CDM-PDD and CDM-NM.

http://cdm.unfccc.int/Reference/Documents



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SECTION A. General description of small-scale project activity

A.1 Title of the small-scale project activity:

Reduction of Heavy Fuel Oil usage for Power Generation at Lucky Cement, Pezu, Pakistan

Version No. 1

Date: 19/03/2010

A.2. Description of the small-scale project activity:

Lucky Cement Limited, a part of Yunus Brothers Group (YB Group), started production in 1996 with a

daily production capacity of 4,200 tonnes per day. It is presently a 21,000 tonnes per day, dry process

Cement Plant having production facilities at Pezu (Production capacity: 10,800 Tons per day) and

Karachi (Production capacity: 9,000 Tons per day)1.

Lucky Cement’s – Pezu plant, is in the process of retrofitting its existing heavy fuel oil (HFO) based

Wartsila generators to operate in dual fuel mode, with natural gas (NG) as the primary fuel and an option

to use HFO in case of gas unavailability. The electricity generated, from the generators, is used to meet

the electricity demand for in house cement manufacturing process. Diesel is consumed as a support fuel

during both NG and HFO operation.

The purpose of the project activity is to reduce greenhouse gas (GHG) emission for electricity generation,

by replacement of a higher carbon intensive fossil fuel mix with a lower carbon intensive fossil fuel mix.

In the pre project scenario (also the baseline scenario), the generators were based on approximately 100%

HFO (~0.04% Diesel oil consumption). Under the project scenario the generators would be based on an

average fuel mix of approximately 35% HFO and 65% NG. Thus, the project results in lower emissions

for generation of equivalent amount of power during the project scenario as compared to the baseline.

In the pre project scenario, the power requirement for the cement manufacturing process was being met by

10 numbers HFO (and very low percentage of diesel oil) based Wartsila generators of total capacity

69.358 MW. As part of project activity, these generators have been modified to operate on dual fuel

(Natural gas (NG), Heavy fuel oil (HFO) and very low percentage of diesel oil as support fuel) mode. The

de-rated capacity of the generator post modification is around 65.87 MW (on NG mode).

Contribution of project activity to sustainable development of host country:

As per Ministry of Environment (DNA-Pakistan), a project contributes to sustainable development of

Pakistan, under the following criteria:

In view of project proponent, the proposed CDM project activity results in sustainable development in

the following ways:

1 http://www.lucky-cement.com/



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1. General criteria:

a. The project activity is consistent with all the national laws and regulations.

b. The project would not result in any further obligation apart from the CERs generated, to

any other party outside of Pakistan

2. Environmental criteria:

a. The proposed project activity is replacing high carbon intensive fossil fuel mix with a

lower carbon intensive fossil fuel mix, for generating same units of electricity. This

results in lower quantity of net CO2 emission.

3. Social criteria:

a. The project activity would create job opportunities for localities to be recruited as skilled

and unskilled workers for data monitoring and during the installation and conversion

procedure.

b. These new job opportunities would help in poverty alleviation of the local region

c. Natural gas transportation pipelines setup and maintaince would result in more economic

activities in the region.

d. The project would create awareness about global warming impacts and mitigation by use

of environment friendly energy sources.

e. Since HFO is brought in heavy tankers, the reduction in HFO in the project situation

shall prevent degradation of local roads by heavy transport vehicles.

4. Economic criteria:

a. The project would reduce the dependence on HFO as well as provide new and diversified

methods of energy generation.

b. The project will reduce the dependence of Pakistan on HFO which is mainly imported

thus saving a lot of revenue for the country.

c. The project would bring revenues in the form of CER. These revenues would result in

economic development of the country.

d. The local people would be employed for various jobs which would bring economic

development in the region.

e. Pakistan would become one of the favoured destinations of CDM project activity and

would bring in investments by Annex I parties which would result in further sustainable

development.

5. Technological criteria:

a. The technical know-how of using natural gas to generate power will be available for use

by other industries in the NWFP



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A.3. Project participants:

Name of Party involved

(host) indicates a host

Party

Private and/ or public entity(ies)

project participants

(as applicable)

Kindly indicate if

the Party involved

wishes to be

considered as

project participant

(Yes/ No)

Pakistan (Host party) Private Entity:

Lucky Cement Limited

No

Pakistan (Host party) Private Entity:

Carbon Services (Private) Limited

No

Switzerland First Climate (Switzerland) AG No

A.4. Technical description of the small-scale project activity:

A.4.1. Location of the small-scale project activity:

A.4.1.1. Host Party(ies):

Pakistan

A.4.1.2. Region/State/Province etc.:

Province: North-West Frontier

District: Lakki Marwat

A.4.1.3. City/Town/Community etc:

Town: Pezu

A.4.1.4. Details of physical location, including information allowing

the unique identification of this small-scale project activity :

Geographical coordinates of the site2: 32.32.4º (N), 70.73.2º (E)

Indicative map:

2 http://www.wikimapia.org/#lat=32.3242756&lon=70.7327271&z=10&l=0&m=a&v=2



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3

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A.4.2. Type and category(ies) and technology/measure of the small-scale project activity:

With reference to “Appendix B to the simplified modalities and procedures for small scale CDM project

activities” the project activity falls under the Type III: Other Project Activities and Category AH.

In the pre-project scenario, Lucky cement used the following 10 numbers HFO based generators to meet

its electricity demands:

Generator Number of generators Capacity of each generator in

MW

Wartsila 18V32 7 Nos. 5.594

Wartsila 12V46 3 Nos. 10.09

Conversion of generators from HFO to natural gas based has resulted in a de-rating of these generators.

The de-rated capacities of the retrofitted generators are as follows:

Generator Number of generators Capacity of each generator in

MW

Wartsila 18V32 (Retrofitted) 7 Nos. HFO – 5.584

NG – 5.39

Wartsila 12V46 (Retrofitted) 3 Nos. HFO – 10.09

NG – 9.38

3 www.mapsofindia.com

4 http://www.lucky-cement.com/



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The modifications to the existing generators were carried out by Wartsila Corporation – Finland. The

major components changed were complete cylinder head, button end bearing, WIOS and WECS, starting

system, turning gear unit, fuel system, turbocharger unit.

Based on availability trend of NG in Pakistan (NG is unavailable during most part of winter season), it is

envisaged that the generators would operate for 65% of the annual operating time on NG mode and

remaining 35% of the time on HFO mode. This converts to an annual average fuel mix of approximately

35% HFO and 65% NG.

A.4.3 Estimated amount of emission reductions over the chosen crediting period:

Years Estimation of annual emission reductions in

tonnes of CO2e

1st Sep 2010 – 30

th Aug 2011 34,342

1st Sep 2011 – 30

th Aug 2012 34,342

1st Sep 2012 – 30

th Aug 2013 34,342

1st Sep 2013 – 30

th Aug 2014 34,342

1st Sep 2014 – 30

th Aug 2015 34,342

1st Sep 2015 – 30

th Aug 2016 34,342

1st Sep 2016 – 30

th Aug 2017 34,342

1st Sep 2017 – 30

th Aug 2018 34,342

1st Sep 2018 – 30

th Aug 2019 34,342

1st Sep 2019 – 30

th Aug 2020 34,342

Total estimated reductions

(tonnes of CO2e)

343,420

Total number of crediting years 10

Annual average of the estimated reductions

over the crediting period

34,342

A.4.4. Public funding of the small-scale project activity:

There is no public funding involved in the project activity.

A.4.5. Confirmation that the small-scale project activity is not a debundled component of

a large scale project activity:

Reference to Appendix C to the simplified modalities and procedures for the small scale CDM project

activities:

Further reference to Compendium of guidance on the debundling for SSC project activities (EB 36,

Annex 27):

As per paragraph 2:



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A proposed small-scale project activity shall be deemed to be a debundled component of a large project

activity if there is a registered small-scale CDM project activity or an application to register another

small-scale CDM project activity:

(a) With the same project participants Applicable:

The same project participants have applied for

registration of another CDM project

(b) In the same project category and

technology/measure

Not applicable:

The project participant has applied for registration

of a Waste heat recovery based power generation

project, which is based on a different

technology/measure as compared the proposed

CDM project activity, which is fuel switch

measures at captive generators.

(c) Registered within the previous 2 years Not applicable:

The project participant has not registered any other

project activity at the time of start of validation of

the project.

(d) Whose project boundary is within 1 km of the

project boundary of the proposed small scale

activity at the closest point?

Not applicable:

The project participant has not registered any other

project activity at the time of validation of the

project.

Thus it can be concluded that the project activity is not a debundled component of a large scale project

activity.



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SECTION B. Application of a baseline and monitoring methodology

B.1. Title and reference of the approved baseline and monitoring methodology applied to the

small-scale project activity:

With reference to UNFCCC CDM website, the approved baseline and monitoring methodology applied

to the project activity is:

Methodology No: AMS III AH

Title: Shift from high carbon intensive fuel mix ratio to low carbon intensive fuel mix ratio

Version no.: 01

B.2 Justification of the choice of the project category:

Referring to the applicability criteria as given in paragraphs 1 to 11 of the methodology, the justification

of the choice of methodology is presented here-below:

Paragraph

No.

Applicability criteria as given in

AMS III AH

Applicable (Not applicable) to project

activity with justification

1 This methodology comprises of activities that

result in increased share of low GHG

intensive fossil fuel in an element process of

an industrial, residential, commercial, and

institutional or electricity generation

application that uses a mix of fossil fuel. For

example, shift from high carbon intensive fuel

mix ratio to low carbon intensive fuel mix

ratio on an annual basis in power generation

Applicable and fulfilled:

The project activity involves shift in fossil

fuel mix, from higher carbon intensive

mix to lower carbon intensive mix, for

electricity generation application. This

result in lower CO2 emission per unit of

electricity generated.

2 This methodology is applicable for retrofit or

replacement of existing installations. Cases

involving Greenfield projects and capacity

additions are not eligible under this

methodology.


The project activity involves retrofit of the

existing HFO based generator units.

3 Switching of fuel mix ratio may also result in

energy efficiency improvements of the facility,

thus both the project activities with or without

energy efficiency improvements are eligible

under this category. Project activities for

implementation of energy efficiency measures

not-related to the switch of energy sources

shall apply Type II SSC methodologies.

Not applicable:

The project activity is primarily aimed at

fuel switch and not aimed at achieving

energy efficiency improvement.

4 The requirements for demonstration of the

remaining lifetime of the equipment replaced


The remaining lifetime of the retrofitted



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shall be met as described in the general

guidance. If the remaining lifetime of the

plant increases due to the project activity, the

crediting period shall be limited to the

estimated remaining lifetime, i.e., the time

when the existing equipment of the element

process would have been replaced in the

absence of the project activity.

equipment does not increase due to

project activity implementation. The

generators would have had a remaining

lifetime of around 15 years, in absence of

the project activity.

5 This methodology is not applicable to project

activities that propose switch from fossil fuel

use in the baseline to renewable biomass,

biofuel or renewable energy in the project

scenario. This methodology is not applicable

to project activities utilizing waste gas or

energy; these project activities may consider

applying AMS-III.Q.

Not applicable:

The project activity does not involve

switching from fossil fuel to renewable

biomass.

6 This category is applicable to project

activities where it is possible to directly

measure and record the energy use (e.g.,

electricity or heat) and consumption (e.g.,

fossil fuel) within the project boundary.


Meters installed at the generator end

records the amount of power generated

from the project boundary. The natural

gas consumed in the generators would

come through dedicated pipelines and

measured through gas flow meters, while

liquid fuels feeding into the generators,

would be metered from buffer tanks.

7 Heat or electricity produced under the project

activity shall be for on-site captive use and/or

export to other facilities included in the

project boundary. In case energy produced by

the project activity is delivered to another

facility or facilities, to displace more carbon

intensive energy source than the project fuel

mix, within the project boundary, a contract

between the supplier and consumer(s) of the

energy will have to be entered into specifying

that only the facility generating the energy can

claim emission reductions from the fuel

switch.


Net electricity generated under the project

activity, would be completely used for on-

site captive use.

8 Export of electricity to a grid is not eligible

under this category. That is, the project

activity may physically connect to a grid but

emission reduction cannot be claimed by

exporting electricity to the grid.

Not applicable:

As mentioned above, net electricity

generated would be completely used for

on-site captive consumption and no

surplus power would be sent to the grid.

9 Measures are limited to those that result in

emission reductions of less than or equal to


The project activity would result in



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60 kt CO2 equivalent annually. emission reductions of 34342 t CO2

equivalents.

10 Regulations do not constrain the facility from

using the energy sources cited in paragraph 1

before the fuel switch. Regulations do not

require the use of low carbon energy source

(e.g., natural gas or any other fuel) in the

element processes.


No government regulation in Pakistan

restricts the use of HFO for electricity

generation in generator sets.

11 The project activity does not result in

integrated process change. The purpose is to

exclude measures that affect other

characteristics of the process besides switch

of energy sources e.g., operational conditions,

type of raw material processed, use of non-

energy additives, change in type or quality of

products manufactured etc.

Not applicable:

The project activity does not result in any

integrated process change.

Thus, the project activity meets all the applicability criteria of the methodology. The selection of the

methodology is thus justified.

B.3. Description of the project boundary:

As per paragraph 12 of the methodology, “the project boundary is the physical, geographical site where

the switching of energy source takes place. It includes all installations, processes or equipment affected

by the switching. The boundary also extends to the industrial, commercial or residential facilities

consuming energy generated by the system.”

Natural Gas

HFO

Power

Lucky Cement - Pezu

Generator sets

(MW)

Cement manufacturing

unit



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B.4. Description of baseline and its development:

The baseline scenario to the project activity is the continuation of pre project scenario, which is use of

HFO (and very small percentage of diesel as support fuel) as fuel for electricity generation in generator

sets.

As per paragraph 13 of the methodology, “historical information (detailed records) on the use of fossil

fuels and the element process output (e.g., heat or electricity) from at least three years prior to project

implementation shall be used in the baseline calculations”

For the project activity historical data for HFO consumption, diesel consumption and power generated

during the last 3 years (2004 – 2006) is available and presented below:

Particulars Unit Year

2004 2005 2006

HFO consumption by 7 No.

18V32 Wartsila generators

Tonne 37,068 38,878 31,584

Electricity generated by 7 No. of


MWh 164,459 171,625 140,722

Diesel consumption by 7 No.


Litre 20,459 16,832 19,535

HFO consumption by 3 No.


Tonne 0 9,390 35,709

Electricity generated by 3 No.


MWh 0 47,326 179,225

Diesel consumption by 3 No.


Litre 0 1,000 11,200

As per paragraph 14 of the methodology, “during the crediting period, if there is a restricted

availability of a particular baseline fuel on account of local regulations this has to be considered by

adjusting the baseline emissions ex post for the period where the baseline fuel is not available. The

adjustment is done in a conservative manner i.e., if the restriction results in downward adjustment of

baseline emissions it shall be taken into account5 and on the other hand upward adjustment of baseline

emissions are not eligible.”

During the crediting period, it is expected that there would be no restriction to availability of baseline

fuels (HFO and diesel). In fact, there may be restricted availability of the project fuels (NG). However,

the availability of both the baseline fuels is being monitored during the crediting period and in case of

restricted availability baseline emission would be adjusted accordingly.



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B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below

those that would have occurred in the absence of the registered small-scale CDM project activity:

As per the decision 17/cp.7 paragraph 43, “a CDM project activity is additional if anthropogenic emissions of

greenhouse gases by sources are reduced below those that would have occurred in the absence of the

registered CDM project activity.”

According to Attachment A to Appendix B of the simplified modalities and procedures for small scale CDM

project activity categories, the project participants are required to provide an explanation to show that the

project activity would not have occurred anyway due to at least one of the below mentioned barriers

Investment barrier

Technological barrier

Barriers due to prevailing practice or

Other barriers..

In the project the investment would not have happened due to the existence of investment barriers: Option (a),

investment barrier is chosen to demonstrate the financial attractiveness of the project activity. The Internal Rate

of Return (IRR) for the project activity has been evaluated and demonstratred to be lower than the benchmark

return (which also corresponds to the minimum opportunity cost of capital invested in the project activity), and

the project IRR surpasses the benchmark return with additional revenue stream from sale of Certified Emission

Reductions (CER) generated under the project activity.

For calculating the project’s IRR, following data parameters and assumptions were used:

Sl.

No.

Parameter Value applied Unit Source of value

Investment cost – Generator

change 7x18V32 1,731,063,036

PKR Feasibility study report

Debt component 100 % Feasibility study report

Equity component 0 % Calculated

Loan period 7 years Feasibility study report

Grace period 5 years Feasibility study report

Base rate (KIBOR) 10.33 % Feasibility study report

Risk premium 2 % Feasibility study report

Technical lifetime of the

project

15 years Feasibility study report

Depreciation cost 6.67 % Feasibility study report

Tax rate 35 % Feasibility study report

Crediting period 10 years Feasibility study report

CER price 1264 PKR/CER Feasibility study report

Price of HFO 19350 PKR/t Feasibility study report

Price of natural gas 9.35 PKR/ Nm3 Feasibility study report

Price of diesel 31.5 PKR/l Feasibility study report

Price of O&M in baseline 0.18 PKR/kWh Feasibility study report

Price of O&M in project 0.22 PKR/kWh Feasibility study report

Cost of major overhaul

every 5th

year

10,000,000 PKR Feasibility study report



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Yearly electricity generated

(Net)

300,000,000 kWh Feasibility study report

Electricity generation by

HFO in baseline

100 % Feasibility study report


NG in baseline



HFO in project



NG in project


Average specific HFO

consumption of generators

0.21 kg/kWh Feasibility study report

Specific NG consumption

of generators

0.26 Nm3/kWh Feasibility study report

Specific diesel

consumption

6 g/kWh Feasibility study report

Cost of un-for-seen diesel

consumption due to

generator mall operation

0.03 PKR/kWh Feasibility study report

The investment analysis is done in line with the “Guidance on the Investment Analysis”5.

Referring to guidance provided by document, fulfillment of this guidance by the proposed project

activity’s investment analysis is shown below:

Guidanc

e

Number

Guidance text Explanation related to fulfillment of

guidance by the below presented

Investment Analysis

General issues in presentation and calculation

3 The period of assessment should not be limited to

the proposed crediting period of the CDM project

activity. Both project IRR and equity IRR

calculations shall as a preference reflect the period

of expected operation of the underlying project

activity (technical lifetime), or - if a shorter period

is chosen - include the fair value of the project

activity assets at the end of the assessment period.

In general a minimum period of 10 years and a

maximum of 20 years will be appropriate. The IRR

calculation may include the cost of major

maintenance and/or rehabilitation if these are

expected to be incurred during the period of

assessment. Project participants are requested to


The period of assessment is taken as

15 years (which is not limited to the

10 years crediting period for the

project activity). The project is using

project IRR to demonstrate investment

barrier.

The same is reflected in the IRR

spreadsheet.

5 http://cdm.unfccc.int/EB/051/eb51_repan58.pdf



15

justify and DOEs are requested to validate the

appropriateness of the period of assessment in the

context of the underlying project activity, without

reference to the proposed

CDM crediting period.

4 The fair value of any project activity assets at the

end of the assessment period should be included as

a cash inflow in the final year. The fair value should

be calculated in accordance with local accounting

regulations where available, or international best

practice. It is expected that such fair value

calculations will include both the book value of the

asset and the reasonable expectation of the potential

profit or loss on the realization of the assets.


The fair value of assets at the end of

assessment period is included as cash

inflow in the final year. The same is

reflected in the IRR spreadsheet.

5 Depreciation, and other non-cash items related to

the project activity, which have been deducted in

estimating gross profits on which tax is calculated,

should be added back to net profits for the purpose

of calculating the financial indicator (e.g. IRR,

NPV). Taxation should only be included as an

expense in the IRR/NPV calculation in cases where

the benchmark or other comparator is intended for

post-tax comparisons.


Depreciation, which is a non cash item

was deducted to calculate tax, and was

added back to calculate post tax cash

flows. Taxation has been included as

an expense because the IRR calculated

is post tax IRR. The same is reflected

in the IRR spreadsheet.

6 Input values used in all investment analysis should

be valid and applicable at the time of the investment

decision taken by the project participant. The DOE

is therefore expected to validate the timing of the

investment decision and the consistency and

appropriateness of the input values with this timing.

The DOE should also validate that the listed input

values have been consistently applied in all

calculations.


All variables and assumptions in the

IRR is based on values presented in

the FSR which was drafted at the time

of decision making. The same is


7 In the case of project activities for which

implementation ceases after the commencement and

where implementation is recommenced due to

consideration of the CDM the investment analysis

should reflect the economic decision making

context at point of the decision to recommence the

project. Therefore capital costs incurred prior to the

revised project activity start date can be reflected as

the recoverable value of the assets, which are

limited to the potential reuse/resale of tangible

assets.

Not Applicable:

For the project activity CDM was

considered from the decision making

and the same was followed up with

raise of purchase order.

8 Project participants should supply spreadsheet

versions of all investment analysis. All formulas


Spreadsheet versions of all investment



16

used in this analysis be readable and all relevant

cells be viewable and unprotected. The spreadsheet

will be made available to the Executive Board,

UNFCCC secretariat and others contracted to

assess the request for registration on behalf of the

Board including assigned members of the

Registration and Issuance Team. In cases where the

project participant does not wish to make such a

spreadsheet available to the public an exact read-

only or PDF copy shall be provided for general

publication. In case the PP wishes to black-out

certain elements of the publicly available version, a

clear justification for this shall be provided to the

UNFCCC secretariat by the DOE when requesting

registration.

analysis would be provided to the DoE

and UNFCCC EB.

Specific Guidance on the calculation of project IRR and Equity IRR

9 The cost of financing expenditures (i.e. loan

repayments and interest) should not be included in

the calculation of project IRR.


Loan repayment is not considered in

the IRR analysis. Interest payment is

considered only for tax computation

purpose and has been added back

again. The same is reflected in the IRR

spreadsheet.

10 In the calculation of equity IRR only the portion of

investment costs which is financed by equity should

be considered as the net cash outflow, the portion

of the investment costs which is financed by debt

should not be considered a cash outflow.

Not Applicable:

Project IRR is calculated.

11 Due to the impact of loan interest on income tax

calculations it is recommended that when a project

IRR is calculated to demonstrate additionality a pre-

tax benchmark be applied. In cases where a post-tax

benchmark is applied the DOE shall ensure that

actual interest payable is taken into account in the

calculation of income tax. In such situations interest

should be calculated according to the prevailing

commercial interest rates in the region, preferably

by assessing the cost of other debt recently acquired

by the project developer and by applying a debt-

equity ratio used by the project developer for

investments taken in the previous three years.


Project IRR is calculated to

demonstrate additionality and has been

compared against commercial lending

rate in Pakistan. The same is reflected

in the IRR spreadsheet.

Selection and validation of appropriate benchmark

12 In cases where a benchmark approach is used the

applied benchmark shall be appropriate to the type

of IRR calculated. Local commercial lending rates


Project IRR is calculated to

demonstrate additionality and has been



17

or weighted average costs of capital (WACC) are

appropriate benchmarks for a project IRR.

Required/expected returns on equity are appropriate

benchmarks for equity IRR. Benchmarks supplied

by relevant national authorities are also appropriate

if the DOE can validate that they are applicable to

the project activity and the type of IRR calculation

presented.

compared against local commercial

lending rate in Pakistan. The same is


13 In the cases of projects which could be developed

by an entity other than the project participant the

benchmark should be based on publicly available

data sources which can be clearly validated by the

DOE. Such data sources may include local lending

and borrowing rates, equity indices, or benchmarks

determined by relevant national authorities. The

DOE.s validation of such benchmarks shall also

include its opinion of the suitability of the

benchmark applied in the context of the underlying

project activity.


The proposed project activity is fuel

switch at existing generators from

higher carbon intensive fossil fuel mix

to lower carbon intensive fossil fuel

mix, which can be developed by

entities other than the project

participant too. Thus, KIBOR which is

a publicly available data is used as

benchmark.

14 Internal company benchmarks/expected returns

(including those used as the expected return on

equity in the calculation of a weighted average cost

of capital - WACC), should only be applied in

cases where there is only one possible project

developer and should be demonstrated to have been

used for similar projects with similar risks,

developed by the same company or, if the company

is brand new, would have been used for similar

projects in the same sector in the country/region.

This shall require as a minimum clear evidence of

the resolution by the company’s Board and/or

shareholders and will require the validating DOE to

undertake a thorough

assessment of the financial statements of the project

developer - including the proposed WACC - to

assess the past financial behavior of the entity

during at least the last 3 years in relation to similar

projects.

Not Applicable:

The proposed project activity is fuel

switch at existing generators from

higher carbon intensive fossil fuel mix

to lower carbon intensive fossil fuel

mix, which can be developed by

entities other than the project

participant too. Thus, KIBOR which is

a publicly available data is used as

benchmark.

15 Risk premiums applied in the determination of

required returns on equity shall reflect the risk

profile of the project activity being assessed,

established according to national/international

accounting principles. It is not considered

reasonable to apply the rate general stock market

returns as a risk premium for project activities that

Not Applicable:

Project IRR is used for additionality

demonstration.



18

face a different risk profile than an investment in

such indices.

Investment Comparison Analysis and Benchmark Analysis

16 If the proposed baseline scenario leaves the project

participant no other choice than to make an

investment to supply the same (or substitute)

products or services, a benchmark analysis is not

appropriate and an investment comparison analysis

shall be used. If the alternative to the project

activity is the supply of electricity from a grid this is

not to be considered an investment and a benchmark

approach is considered appropriate.

Not Applicable:

The baseline scenario to the project

activity does not creates a situation

where the project proponent is left

with no other choice but to make an

investment in any other kind of power

plant.

Sensitivity Analysis

17 Only variables, including the initial investment cost,

that constitute more than 20% of either total project

costs or total project revenues should be subjected

to reasonable variation (all parameters varied need

not necessarily be subjected to both negative and

positive variations of the same magnitude), and the

results of this variation should be presented in the

PDD and be reproducible in the associated

spreadsheets.. Where a DOE considers that a

variable which constitute less than 20% have a

material impact on the analysis they shall raise a

corrective action request to include this variable in

the sensitivity analysis


Only parameters which would

contribute to more than 20% of total

project cost or total project revenues

have been varied in a range of +10% to

-10%, and sensitivity has been

conducted. The same is reflected in the

IRR spreadsheet.

18 The DOE should assess in detail whether the range

of variations is reasonable in the project context.

Past trends may be a guide to determine the

reasonable range. As a general point of departure

variations in the sensitivity analysis should at least

cover a range of +10% and .10%, unless this is not

deemed appropriate in the context of the specific

project circumstances. In cases where a scenario

will result in the project activity passing the

benchmark or becoming the most financially

attractive alternative the DOE shall provide an

assessment of the probability of the occurrence of

this scenario in comparison to the likelihood of the

assumptions in the presented investment analysis,

taking into consideration correlations between the

variables as well as the specific socio-economic and

policy context of the project activity.


Parameters which would contribute to

more than 20% of total project cost or

total project revenues have been varied

in a range of +10% to -10%, and

sensitivity has been conducted. The

same is reflected in the IRR

spreadsheet.



19

In the light of above figures and assumptions, the project IRR comes to 10.15% without considering

revenues from CDM.

The applied benchmark for the project IRR is local commercial lending rates. In the case of the project

activity this is the Risk added KIBOR Rate which is at 12.33%.

Results of Sensitivity Analysis:

The parameters considered for the Sensitivity Analysis are the project investment, the fuel prices, the

O&M cost under the project and the load factor of Natural Gas in a range of +/- 10%. For the fuel prices,

the fact that the natural gas and the HFO prices are highly correlated with 98.10%6 leads to the

conclusion that a variation in the natural gas price will implicate a comparable variation in the HFO

prices and therefore the sensitivity analysis does consider the variation of all fuel prices in a similar

range.

A +/- 10% variation of the project investment would lead to a corresponding variation of the IRR

between 8.57% and 12.05%. A variation of the fuel prices would lead to the project IRR between 7.96%

and 12.28% while the variation of the O&M cost of the project activity would implicate an IRR between

9.69% and 10.62%. A change in the load factor would bring the IRR to a range between 8.98% and

11.31%. All these changes would result below the benchmark of 12.33% and therefore the Sensitivity

Analysis does confirm that the project is not economically viable without CER revenues.

6 Detailed information was provided to the DOE.



20

The project IRR was recalculated considering CDM revenues into the assessment and the new IRR was

13.07%, which is higher than the required benchmark return of 12.33, making the project feasible with

CDM revenues in consideration. Thus, CDM helps in removing the barrier to the project activity.

Prior CDM consideration:

Sl Date Project

Implementation

Sl Date Action for

securing CDM

status for the

project

1 07/04/2006 Offer from

Wartsila for

conversion of 7 x

18V32 generators

1 03/02/2007 Letter from

Carbon Services,

Pakistan to LCL

about possible

benefits from

CDM for fuel

switch.

2 19/02/2007 Extract from

Minutes of

meeting of the

Board about

Investment

2 19/02/2007 Extract from

Minutes of

meeting of the

Board about

Investment



21

decision with

CDM

consideration

decision with

CDM

consideration

3 13/04/2007 Purchase Order to

Wartsila for

conversion of 6 x

18V32 Wartsila

generators.

3 28/05/2007 E mail from

Carbon Services

Pakistan to LCL

with CDM

contract.

4 19/07/2007 Offer from

Wartsila for

conversion of 3 x

12V46 generators

4 19/09/2008 Date for

stakeholder notice

5 30/10/2007 Contract signed

with SNGPL for

gas supply

5 18/11/2008 Date of

stakeholder

meeting

6 03/04/2008 Commissioning

of gas facilities by

SNGPL

6 25/06/2008 Date of contract

signing between

Verde Consulting

Pvt. Ltd. and First

Climate AG for

development of

PDD.

B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

Baseline emission:

As per paragraph 13 of the methodology, “historical information (detailed records) on the use of fossil

fuels and the element process output (e.g., heat or electricity) from at least three years prior to project

implementation shall be used in the baseline calculations, e.g., information on coal use and heat output

by a district heating plant, liquid fuel oil use and electricity generated by a generating unit (records of

fuel used and output can be used in lieu of actual collecting baseline validation data). For facilities that

are less than three years old, all historical data shall be available (a minimum of one year data would

be required). In case of project activity exporting to other facilities included in the project boundary, the

above historical information from the recipient plants are required.”

Historical information for historic three years (year 2004 – 2006, already presented in section B.4 of the

PDD) is available and has been used for calculation of baseline emission.

As per paragraph 14 of the methodology, “during the crediting period, if there is a restricted

availability of a particular baseline fuel on account of local regulations this has to be considered by

adjusting the baseline emissions ex post for the period where the baseline fuel is not available. The

adjustment is done in a conservative manner i.e., if the restriction results in downward adjustment of



22

baseline emissions it shall be taken into account and on the other hand upward adjustment of baseline

emissions are not eligible.”

The baseline fuel is HFO, which would be available in abundance, during the crediting period. The

availability of baseline fuel is monitored during the crediting period. The same is included under section

B.7.1 of the PDD.

Baseline emissions are calculated based on paragraph 15 of the methodology as follows:

, , 2,( * * )j

y BL j y j CO jBE FC NCV EF ______________________________________(1)

Where:

BEy tCO2 Baseline emission during year y

FCBL,j,y kt Amount of fuel j consumed during the year y operating at the baseline

energy scenario

NCVj TJ/kt Net calorific value of the fuel type j

EFCO2,j tCO2/TJ CO2 emission factor of the fuel type j

As per paragraph 15 of the methodology, “the amount of each fuel type j consumed is calculated ex-post

using the total monitored energy output of the element process i during year y and the share of each

energy source in the identified baseline scenario”

There is a single element process, making the use of “i” unnecessary.

, , 3, ,

, , ,

**(3.6*10 )

*

PJ y j BLBL j y

BL j BL cofire HFO DI

EG aFC

NCV Eff

________________________________

______(2)

Where:

FCBL,j,y kt Amount of fuel j consumed during the year y operating at the baseline

energy scenario

EGPJ,y MWh Total monitored electricity during the year y

aj,BL ratio Share of fuel j in the total input energy for the identified baseline

scenario

EffBL,cofire,HFO+D

I

% Conversion efficiency of the element process when operating with

fuel mix of HFO + DI in the baseline scenario. The baseline scenario

is a cofired scenario.

NCVBL,j TJ/kt Net calorific value of the baseline fuel type j

Project activity emissions:

As per paragraph 18 of the methodology, “project activity emissions consist of those related to use of

fossil fuel in the element processes i during the crediting period.”



23

There is a single element process, making the use of “i” unnecessary.

Project emission is calculated using the following equation:

, , , , 2,* *y PJ j y PJ j PJ CO j

j

PE FC NCV EF __________________________________________(3)

Where:

PEy tCO2 Project emissions during the year y

FCPJ,j,y kt or Nm3 Quantity of fuel type j combusted during the year y

NCVPJ,j TJ/kt or

TJ/Nm3

Net calorific value of the fuel type j

EFPJ,CO2,

j

tCO2/TJ CO2 emission factor of the fuel type j

Leakage emission:

As per paragraph 19 of the methodology, “no leakage calculation is required.”

Emission Reduction:

As per paragraph 20 of the methodology, “The emission reduction achieved by the project activity will

be calculated as the difference between the baseline emissions and the project emissions” as follows:

y y yER BE PE _____________________________________________________________(4)

Where:

ERy tCO2 Emission reduction in the year y

BEy tCO2 Baseline emissions during the year y

PEy tCO2 Project emissions during the year y

B.6.2. Data and parameters that are available at validation:

Data / Parameter: EFPJ,CO2,NG

Data unit: tCO2/TJ

Description: CO2 emission factor for natural gas

Source of data used: IPCC 2006 Report, Vol 2 Ch 1

Value applied: 56.1

Justification of the

choice of data or

description of

measurement methods

and procedures actually

IPCC report is an authentic source of data



24

applied :

Any comment: The value would be archived for a period of 10 + 2 years from the start of

crediting period

Data / Parameter: EFPJ,CO2,HFO, EFCO2,HFO

Data unit: tCO2/TJ

Description: CO2 emission factor for HFO


Value applied: 77.4


choice of data or

description of

measurement methods


applied :



crediting period

Data / Parameter: EFPJ,CO2,DI, EFCO2,DI

Data unit: tCO2/TJ

Description: CO2 emission factor for Diesel oil


Value applied: 74.1


choice of data or

description of

measurement methods


applied :



crediting period

Data / Parameter: aHFO,BL

Data unit: ratio

Description: Share of HFO in the total input energy for the identified baseline scenario

Source of data used: Historic plant records(for the years 2004, 2005, 2006)

Value applied: Derived value (Refer table 7 under Annex 3 of the PDD):

0.9996


choice of data or

description of

measurement methods


applied :

This value is derived based on following historic data:

Sum of HFO consumption during the last 3 years: 107,530 tonne

Diesel consumption during the last 3 years: 45,099 tonne

NCV of HFO: 40.4 TJ/kt

NCV of diesel: 43 TJ/kt




25

crediting period

Data / Parameter: aDI,BL

Data unit: ratio

Description: Share of diesel oil in the total input energy for the identified baseline scenario

Source of data used: Historic plant records (for the years 2004, 2005, 2006)

Value applied: Derived value (Refer to Table 7 under Annex 3 of the PDD):

0.0004


choice of data or

description of

measurement methods


applied :

This value is derived based on following historic data.

Sum of HFO consumption during the last 3 years: 107,530 tonne

Diesel consumption during the last 3 years: 45,099 tonne

NCV of HFO: 40.4 TJ/kt

NCV of diesel: 43 TJ/kt


crediting period

Data / Parameter: EffBL,cofire,HFO+DI

Data unit: %

Description: Conversion efficiency of the element process when operating with fuel mix of

HFO + DI in the baseline scenario. The baseline scenario is a cofired scenario.

Source of data used: Maximum value of efficiency provided by two manufacturers

Value applied: 44.59


choice of data or

description of

measurement methods


applied :

As per paragraph 16 (b) of the methodology, “Highest of the efficiency values

provided by two or more manufacturers for units with similar specifications,

using the baseline fuel,” is acceptable.


crediting period

Data / Parameter: DDI

Data unit: kg/l

Description: Density of diesel oil

Source of data used:

Value applied: 0.86


choice of data or

description of

measurement methods


applied :

IOCL specification is an authentic source of data




26

crediting period

Data / Parameter: DNG

Data unit: kg/Nm3

Description: Density of natural gas

Source of data used: Specification sheet as per www.engineeringtoolbox.com7

Value applied: 0.65


choice of data or

description of

measurement methods


applied :

The source of data used is a public domain data and is authentic


crediting period

Data / Parameter: DHFO

Data unit: kg/l

Description: Density of HFO

Source of data used: Specification sheet as per www.engineeringtoolbox.com8

Value applied: 0.93


choice of data or

description of

measurement methods


applied :

The source of data used is a public domain data and is authentic


crediting period

B.6.3 Ex-ante calculation of emission reductions:

Baseline emission:

Table No. 1

Equation no. 1 under section B.6.1 of the PDD

, , 2,( * * )j

y BL j y j CO jBE FC NCV EF

BEy tCO2 Baseline emission during year y 301,859 Using equation no. 1

under section B.6.1

7 http://www.engineeringtoolbox.com/specific-gravities-gases-d_334.html

8 http://www.engineeringtoolbox.com/fuels-densities-specific-volumes-d_166.html

http://www.engineeringtoolbox.com/specific-gravities-gases-d_334.html

http://www.engineeringtoolbox.com/fuels-densities-specific-volumes-d_166.html



27

of the PDD

FCBL,HFO,

y

kt Amount of HFO consumed during the

year y operating at the baseline energy

scenario

96.493 From table no. 2

under section B.6.3

of the PDD

NCVHFO TJ/kt Net calorific value of HFO 40.4 IPCC Report 2006,

Vol 2 Ch 1

EFCO2,HFO tCO2/TJ CO2 emission factor of HFO 77.4 IPCC Report 2006,

Vol 2 Ch 1

FCBL,DI,y kt Amount of diesel oil consumed during

the year y operating at the baseline

energy scenario

0.0399 From table no. 2

under section B.6.3

of the PDD

NCVDI TJ/kt Net calorific value of diesel oil 43 IPCC Report 2006,

Vol 2 Ch 1

EFCO2,DI tCO2/TJ CO2 emission factor of diesel oil 74.1 IPCC Report 2006,

Vol 2 Ch 1

Table no. 2

Equation no. 2 under section B.6.1 of the PDD:

, , 3, ,

, , ,

**(3.6*10 )

*

PJ y j BLBL j y

BL j BL cofire HFO DI

EG aFC

NCV Eff

FCBL,HFO,y kt Amount of HFO consumed during the

year y operating at the baseline energy

scenario

96.493 Using equation no.

2 under section

B.6.1 of the PDD

FCBL,DI,y kt Amount of diesel oil consumed during

the year y operating at the baseline

energy scenario

0.0399 Using equation no.

2 under section

B.6.1 of the PDD

EGPJ,y MWh Total monitored electricity during the

year y

483,053 Please refer to

Table 5 under

Annex 3of the PDD

for details

aHFO,BL ratio Share of HFO in the total input energy

for the identified baseline scenario

0.9996 Based on historical

data. Please refer to

Table 7 under

Annex 3 of the

PDD for details.

EffBL,cofire,

HFO+DI

% Conversion efficiency of the element

process when operating with fuel mix

of HFO + DI in the baseline scenario.

The baseline scenario is a cofired

scenario.

44.59 Maximum value of

efficiency provided

by two suppliers of

similar equipments

NCVBL,HF

O

TJ/kt Net calorific value of the baseline HFO 40.4 IPCC 2006 Report,

Vol 2 Ch 1

aDI,BL Ratio Share of diesel oil in the total input

energy for the identified baseline

0.0004 Based on historical

data. Please refer to



28

scenario table 7 under Annex

3 of the PDD for

details.

EffBL,cofire,

HFO+DI

% Conversion efficiency of the element

process when operating with fuel mix

of HFO + DI in the baseline scenario.

The baseline scenario is a cofired

scenario.

44.59 Maximum value of

efficiency provided

by two suppliers of

similar equipments

NCVBL,DI TJ/kt Net calorific value of the baseline

diesel oil

43 IPCC 2006 Report,

Vol 2 Ch 1

Project activity emissions:

Table No. 3


, , , , 2,* *y PJ j y PJ j PJ CO j

j

PE FC NCV EF

PEy tCO2 Project emissions during the year y 267,517 Using equation no.

3 under section

B.6.1 of the PDD

FCPJ,NG,y Nm3 Quantity of NG combusted during the

year y

85,322,265 Please refer to Table

6 under Annex 3 of

the PDD

NCVPJ,NG TJ/Nm3 Net calorific value of NG 0.0000312 Derived from NCV

of NG as per IPCC

2006 Report, Vol 2,

Ch 1 and density of

NG as per The

Engineering Tool

Box.

EFPJ,CO2,NG tCO2/TJ CO2 emission factor of NG 56.1 IPCC 2006 Report,

Vol 2, Ch 1

FCPJ,HFO,y kt Quantity of HFO combusted during the

year y

37.757 Please refer to Table

6 under Annex 3 of

the PDD

NCVPJ,HFO TJ/kt Net calorific value of HFO 40.4 IPCC 2006 Report,

Vol 2, Ch 1

EFPJ,CO2,HF

O

tCO2/TJ CO2 emission factor of HFO 77.4 IPCC 2006 Report,

Vol 2, Ch 1

FCPJ,DI,y kt Quantity of diesel oil combusted

during the year y

0.034 Please refer to Table

6 under Annex 3 of

the PDD

NCVPJ,DI TJ/kt Net calorific value of diesel oil 43 IPCC 2006 Report,

Vol 2, Ch 1

EFPJ,CO2,DI tCO2/TJ CO2 emission factor of diesel oil 74.1 IPCC 2006 Report,



29

Vol 2, Ch 1

Emission Reduction:

Table no. 4


y y yER BE PE

ERy tCO2 Emission reduction in the year y 34,342 Using equation no.

4 under section

B.6.1 of the PDD

BEy tCO2 Baseline emissions during the year y 301,859 Using information

from Table 1 under

section B.6.3 of the

PDD

PEy tCO2 Project emissions during the year y 267,517 Using information

from Table 3 under

section B.6.3 of the

PDD

B.6.4 Summary of the ex-ante estimation of emission reductions:

Year Estimation of

project activity

emission

(tCO2e)

Estimation of baseline

emission

(tCO2e)

Estimation of

leakage

(tCO2e)

Estimation of

overall emission

reductions

(tCO2e)

Year 1 267,517 301,859 0 34,342

Year 2 267,517 301,859 0 34,342

Year 3 267,517 301,859 0 34,342

Year 4 267,517 301,859 0 34,342

Year 5 267,517 301,859 0 34,342

Year 6 267,517 301,859 0 34,342

Year 7 267,517 301,859 0 34,342

Year 8 267,517 301,859 0 34,342

Year 9 267,517 301,859 0 34,342

Year 10 267,517 301,859 0 34,342

Total 2,675,170 3,018,590 0 343,420



30

B.7 Application of a monitoring methodology and description of the monitoring plan:

B.7.1 Data and parameters monitored:

Data / Parameter: EGPJ,y

Data unit: MWh

Description: Total monitored electricity during the year y

Source of data to be

used:

Plant records (Generator room log book)

Value of data applied

for the purpose of

calculating expected

emission reductions in

section B.5

Will be monitored ex-post.

483,053 (Ex-ante value. Please refer to Table 5 under Annex 3 of the PDD)

This value is estimated based on the following:

Technical specification sheet of the generators

Assumed PLF for generators

Assumed annual working hours

Description of

measurement methods

and procedures to be

applied:

The electricity generated would be monitored by electricity meter installed at

generator outlet.

Frequency: Daily

QA/QC procedures to

be applied:

The meters would be calibrated regularly as per manufacturer’s specification. In

absence of manufacturer’s specification, national calibration standard would be

used.

Any comment: The data would be archived for a period of 10 + 2 years from the start of

crediting period

Data / Parameter: FCPJ,NG,y

Data unit: Nm3

Description: Quantity of NG combusted during the year y


used:



for the purpose of



section B.5


85,322,265 (Ex-ante value. Please refer to Table 6 under Annex 3 of the PDD)


Energy generated by the generators

Percentage input energy contribution of NG, in the project scenario

NCV of NG

Terminal heat rate of generators on NG operation

Description of

measurement methods


applied:

Digital gas flow meter installed by SNGPL

Frequency: Daily

QA/QC procedures to The meter would be calibrated regularly by SNGPL



31

be applied:


crediting period

Data / Parameter: FCPJ,HFO,y

Data unit: kt

Description: Quantity of HFO combusted during the year y


used:



for the purpose of



section B.5


37.757 (Ex-ante value. Please refer to Table 6 under Annex 3 of the PDD)



Percentage input energy contribution of HFO, in the project scenario

NCV of HFO

Terminal heat rate of generators on HFO operation

Description of

measurement methods


applied:

Volume of HFO consumed would be monitored by checking the level of dip

from a standard surface area storage tank. The consumption figure would be

multiplied by density (provided ex-ante) to obtain mass of HFO consumed.

Frequency: Every 12 hours

QA/QC procedures to

be applied:

Internal calibration is done by Operations department. External calibration is

done by stores/auditors.


crediting period

Data / Parameter: FCPJ,DI,y

Data unit: kt

Description: Quantity of diesel oil combusted during the year y


used:



for the purpose of



section B.5


0.034 (Ex-ante value. Please refer to Table 6 under Annex of the PDD)



Percentage input energy contribution of diesel oil, in the project

scenario

Description of

measurement methods


applied:

Volume of diesel consumed would be monitored by checking the level of dip

from a standard surface area storage tank. The consumption figure would be

multiplied by density (provided ex-ante) to obtain mass of diesel consumed.

Frequency: Every 12 hours

QA/QC procedures to

be applied:

Internal calibration is done by Operations department.


crediting period



32

Data / Parameter: NCVPJ,NG

Data unit: TJ/Nm3

Description: Net calorific value for Natural gas


used:

Laboratory test reports


for the purpose of



section B.5


0.0000312 (Ex-ante value. Derived value – This value is based on the

following:

NCV of NG as per IPCC 2006 Report, Vol 2 Ch 1

Density of NG (at NTP) as per The Engineering Tool Box)

Description of

measurement methods


applied:

The NCV of fuel would be measured at laboratory

Frequency: Annually

QA/QC procedures to

be applied:

The laboratory is accredited by relevant statutory authority.


crediting period

Data / Parameter: NCVPJ,HFO, NCVBL,HFO

Data unit: TJ/kt

Description: Net calorific value for HFO


used:

Laboratory test report


for the purpose of



section B.5


77.4 (Ex-ante value. This value is taken from IPCC 2006 Report, Vol 2 Ch 1)

Description of

measurement methods


applied:


Frequency: Annually

QA/QC procedures to

be applied:



crediting period

Data / Parameter: NCVPJ, DI, NCVPJ, DI

Data unit: TJ/kt

Description: Net calorific value for Diesel oil


used:

Laboratory test reports


for the purpose of


43 (Ex-ante value. This value is taken from IPCC 2006 Report, Vol 2 Ch 1)



33



section B.5

Description of

measurement methods


applied:


Frequency: Annually

QA/QC procedures to

be applied:



crediting period

B.7.2 Description of the monitoring plan:

Parameter

Hourly

Data

Collection

Daily Data

Log

Preparation

Initial Data

Verification

Final Data

Verification

Data Auditing

Designatio

n Frequency

Fuel

Consumption

by Generators

12 Hourly

by Engine

Room

Operator

By Shift

Engineer

By

Operation

Manager

By Senior

Manager,

verification

every day

Stores,

Accounts &

Power

Generation

Department

Monthly

Electricity

Generation

12 Hourly

by

Operator

or Shift

Supervisor

By Shift

Engineer

(Electrical)

By

Operation

Manager

By Senior

Manager,

verification

every day

Power

Generation

Department

Monthly

B.8 Date of completion of the application of the baseline and monitoring methodology and the

name of the responsible person(s)/entity(ies)

Date of completion: 19th

Mar, 2010.

Responsible entity:

First Climate (India) Pvt. Ltd.

3C, Camac Street, Camac Tower, 9th Floor,

Kolkata – 700 016, India

Phone – Direct: +91 33 4022 3456

Fax: +91 33 4005 6615

Website: www.firstclimate.com

First Climate (India) Pvt. Ltd. is not a project participant.

http://www.firstclimate.com/



34

SECTION C. Duration of the project activity / crediting period

C.1 Duration of the project activity:

C.1.1. Starting date of the project activity:

As per Glossary of CDM terms, “The starting date of a CDM project activity is the earliest date at

which either the implementation or construction or real action of a project activity begins (CDM

Glossary of Terms, Version 03). As per EB 41, in light of the above definition, the start date shall be

considered to be the date on which the project participant has committed to expenditures related to the

implementation or related to the construction of the project activity. This, for example, can be the date

on which contracts have been signed for equipment or construction/operation services required for the

project activity. For this CDM project activity, date of release of first purchase order can be taken as

the project activity start date.”

The start date is: (13/04/2007). This corresponds to the first purchase order release date.

C.1.2. Expected operational lifetime of the project activity:

15 years

C.2 Choice of the crediting period and related information:

C.2.1. Renewable crediting period

C.2.1.1. Starting date of the first crediting period:

Fixed crediting period is chosen

C.2.1.2. Length of the first crediting period:

Fixed crediting period is chosen

C.2.2. Fixed crediting period:

C.2.2.1. Starting date:

01/09/2010 or project registration date, whichever is later.

C.2.2.2. Length:

10 years 0 months



35

SECTION D. Environmental impacts

>>

D.1. If required by the host Party, documentation on the analysis of the environmental impacts

of the project activity:

According to the host country regulations, the project activity had to receive an Environmental Approval

from the Environment Protection Department of the local government, upon submission of an Initial

Environmental Examination (IEE) Report by the project proponent.

The IEE points out that the project will be beneficial to the environment as utilization of NG, less carbon

intensive fossil fuel, is made possible by the proposed technology. No negative environmental impacts are

to be considered, as the technology to be adopted is mature and safe, once appropriate operation and

maintenance procedure are in place.

The environmental analyses conducted by Lucky Cement Limited for the project are consistent in

demonstrating that the project activity is expected to remain fully compliant with NEQS (National

Environmental Quality Standards). In fact, it is expected that pollutant emissions (both of local concern

and global concern, such as CO2) will reduce from the current levels.

D.2. If environmental impacts are considered significant by the project participants or the host

Party, please provide conclusions and all references to support documentation of an

environmental impact assessment undertaken in accordance with the procedures as required by

the host Party:

Neither the project participants nor the host Party have any concern about negative environmental impacts

associated with the project activity, given that project activity aims at reducing the local and global

environmental impacts of the industrial site where the project activity is to be implemented.

IEE Report (Initial Environmental Examination Report) and the accompanying approval request letter

were submitted on 10/11/2008. Approval letter was issued on 12/11/2008. The approval letter does not

raise any particular issue with regard to the environmental impact of the project.



36

SECTION E. Stakeholders’ comments

>>

E.1. Brief description how comments by local stakeholders have been invited and compiled:

The stakeholders to the project activity are local farmers, chowkidaar(security personnels), driver and a

teacher. They were notified about the project through a newspaper advertisement9. The stakeholders were

invited for a meeting at the plant10

. The stakeholders provided their views about the project in writing11

.

E.2. Summary of the comments received:

The comments received from the stakeholders were favourable and supportive of the project activity. The

comments are about the project’s contribution to:

Pollution reduction

Utilization of natural resources

Employment generation

Cleaner environment

Improved road condition

The comments received from stakeholders have been tabulated below:

Stakeholders’ Comments Translation for Lucky Cement Generator Change Project at Pezu Plant:

Com

ment

N.

Stakeholder’s

Name

Designation/

Profession

Qualification Address Comments/Views about

the Project

1 Muhammad

Saleem

Farmer Under Matric Pezu, P/O

Pezu.

Tehsil &

District

Lakki

Marwat

Natural gas based operation

will not only reduce

pollution but will also result

in a better utilization of

national resources.

2 Mr. Zaki Khan Farmer Under Matric Wanda

Ahmed

Khan teh &

Distt. Lakki

Marwat

1. Installation of gas plant

will result in abatement

of environmental

pollution.

2. The project will result

9 The local language version of the newspaper advertisement is present in Annex 6. Also an English version of the

same has been provided.

10 Snapshots of the meeting would be provided to the DOE during validation

11 All copies of written comments by invited stakeholders would be provided to the DOE during validation.



37

in increased

employment

opportunities.

3 Shah Nawaz Chowkidar Primary Wanda

Ahmed

Khan teh &

Distt. Lakki

Marwat

1. People will get jobs.

2. The air will be cleaner

and the environment

more pleasant.

4 Fida

Muhammad

Driver Primary Pezu P/O

Pezu

District

Lakki

Marwat

1. Gas based electricity

generation will cause

less pollution to the

environment.

2. New Job opportunities

will add to the

prosperity of this

region.

5 Inayatullah Driver Primary Wanda

Ahmed

Khan P/O

Pezu Tehsil

Distt Lakki

Marwat

1. Installation of a new

pipe line would result in

new employment

opportunities

2. Road condition will

improve.

6 Abadullah

Khan

Farmer Under Metric Wanda Jogi

P/O Pezu

Tehsil

Lakki

Marwat

1. Pollution will decrease

due to switching of

plant to gas.

2. New job opportunities

will result in over all

betterment of the area.

7 Noor Shah Teacher M.A Pezu P/O

Pezu, Lakki

Marwat

1. Gas based electricity

generation would result

in less import of crude

oil.

2. National economy will

improve

3. Pollution will decrease.

8 Muhammad

Nazir

Farmer SSC Pezu P/O

Pezu, Lakki

Maewat

1. General climate of the

area will improve.

2. New job opportunities

will be created.



38

9 Raza

Muhammad

Farmer Primary Wanda Jogi

P/O Pezu

Tehsil &

Distt Lakki

Marwat

1. This project will result

in abatement of

environmental pollution.

2. Number of oil tankers

on the road will

decrease resulting in

less wear an tear on the

road.

E.3. Report on how due account was taken of any comments received:

No adverse comments to the project activity have been received. All comments received during

stakeholder consultation will be made available to DOE during validation. The project would be put up

for international stakeholder consultation in the UNFCCC site as a part of validation.



39

Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

Organization: Lucky Cement Ltd.

Street/P.O.Box: A.Aziz Hashim Taba Street

Building: 6-A M.Ali Housing Society

City: Karachi

State/Region: Sindh

Postcode/ZIP:

Country: Pakistan

Telephone: 092 21-111 786 555

FAX: 092 21 3453 4302

E-Mail: [email protected]

URL: www.lucky-cement.com

Represented by:

Title: Director Power Generation

Salutation:

Last name: Haqqi

Middle name: Haq

First name: Intisar ul Haq

Department: Power Generation

Mobile: 0092-03008550883

Direct FAX: +92-969-580122

Direct tel: +92-969-580121

Personal e-mail: [email protected]

Organization: Carbon Services Private Limited

Street/P.O.Box: 19 Davis Road

Building: 2nd Floor, Al Maalik,

City: Lahore

State/Region: Punjab

Postfix/ZIP:

Country: Pakistan

Telephone: +92-42-36313235 / 36313236

FAX: +92-42-36312959

E-Mail:

URL: www.carbon.com.pk

Represented by: Mr. Omar M. Malik

Title: Director

Salutation: Mr

Last Name: Malik

http://www.carbon.com.pk/



40

Middle Name: M

First Name: Omar

Department:

Mobile: +92-300-8463743

Direct FAX: +92-42-36312959

Direct tel: +92-42-36313235 / 36313236

Personal E-Mail: [email protected]

Organization: First Climate (Switzerland) AG

Street/P.O.Box: Stauffacherstr.45

Building:

City: Zurich

State/Region: Zurich

Postcode/ZIP: 8004

Country: Switzerland

Telephone: +41-44-298 2800

FAX: +41 44-298 2899

E-Mail: [email protected]

URL: www.firstclimate.com

Represented by:

Title: Managing Partner

Salutation:

Last name: Lüchinger

Middle name:

First name: Alexander

Department:

Mobile:

Direct FAX: +41 44-298 2899

Direct tel: +41-44-298 2807

Personal e-mail: [email protected]

mailto:[email protected]

mailto:[email protected]

http://www.firstclimate.com/



41

Annex 2

INFORMATION REGARDING PUBLIC FUNDING

This section has been intentionally left blank



42

Annex 3

BASELINE INFORMATION

Electricity generated by the generators under project scenario:

Table no. 5

Parameter Unit Value Remarks

Electricity generated under HFO operation

The equations used are:

Electricity generated by 7 No. of 18V32 generators = {(De-rated capacity of each 18V32 Wartsila

generator on HFO) x (Number of 18V32 Wartsila generator) x (Annual operating hours for generator) x

(Percentage of time for which the generators would operate on HFO) x (PLF for

generators)}__________________________________________________________________(A)


generator on HFO) x (Number of 12V46 Wartsila generator) x (Annual operating hours for generator) x

(Percentage of time for which the generators would operate on HFO) x (PLF for

generators)}__________________________________________________________________(B)

De-rated capacity of each 18V32 Warsila

generator (On HFO) MW 5.584

Technical specification:

Appendix 1.3_18V32

Number of 18V32 Wartsila generators No 7

Information provided by

LCL


generator (On HFO) MW 10.09


Appendix 1.4_12V46



LCL

Annual operating hours for generator hours/yr 8,000

Assumed value. Industry

standard.

Percentage of time for which the generators

would operate on HFO % 35

Estimated based on annual

gas availability

PLF for generators % 90


standard.

Electricity generated by 7 No. 18V32

generators on HFO MWh/yr 98,501

Estimated using equation

no. A under table no. 5 of

Annex 3 of the PDD.




no. B under table no. 5 of

Annex 3 of the PDD.

Electricity generated on NG operation





43

generator on NG) x (Number of 18V32 Wartsila generator) x (Annual operating hours for generator) x

(Percentage of time for which the generators would operate on NG) x (PLF for

generators)}__________________________________________________________________(C)


generator on NG) x (Number of 12V46 Wartsila generator) x (Annual operating hours for generator) x

(Percentage of time for which the generators would operate on NG) x (PLF for

generators)}___________________________________________________________________(D)


generator (On NG) MW 5.39


Appendix 1.3_18V32



LCL


generator (On NG) MW 9.38


Appendix 1.4_12V46



LCL

Annual operating hours for generator hours/yr 8,000


standard.

Percentage of time for which the generators

would operate on NG % 65

Estimated based on annual

gas availability

PLF for generators % 90


standard.


generators on NG MWh/yr 176,576


no. A under table no. 5 of

Annex 3 of the PDD.




no. B under table no. 5 of

Annex 3 of the PDD.

Total electricity generated

Total electricity generated during the year y = {( Electricity generated by 7 No. 18V32 generators on

HFO) + (Electricity generated by 3 No. 12V46 generators on HFO) + (Electricity generated by 7 No.

18V32 generators on NG) + (Electricity generated by 3 No. 12V46 generators on

NG)}___________________________________________________________________(E)

Total electricity generated during the year y Mwh 483,053


no. E under table no. 5 of

Annex 3 of the PDD.







Electricity generated by 3 No. 12V46 MWh/yr 131,695



44

generators on NG

Fuel consumption under project scenario:

Table no. 6


HFO consumption under project scenario


HFO consumption by 7 Nos. of 18V32 generators = [{(Electricity generated by 7 No. 18V32 generators

on HFO) x (Terminal heat rate for 18V32 Wartsila generators on HFO)} / (NCV of

HFO)]____________________________________________________________________(F)

HFO consumption by 3 Nos. of 12V46 generators = [{(Electricity generated by 3 No. 12V46 generators

on HFO) x (Terminal heat rate for 12V46 Wartsila generators on HFO)} / (NCV of

HFO)]_____________________________________________________________________(G)

Total HFO consumption by 10 No. generators = {( HFO consumption by 7 Nos. of 18V32 generators) +

(HFO consumption by 3 Nos. of 12V46 generators)}__________________________________(H)



Taken from Table no. 5

under Annex 3 of the PDD

Terminal heat rate for 18V32 Wartsila

generator (on HFO) KJ/kWh 8,710


Appendix 1.3_18V32

NCV of HFO TJ/kt 40.4

IPCC 2006 report, Vol 2,

Ch 1

HFO consumption by 7 Nos. of 18V32

generators tonne/yr 21,236

Using equation no. F under

table 6 of Annex 3 of the

PDD.





NCV of NG


Appendix 1.4_18V32


generators (on HFO) kJ/kWh 8,750


Ch 1

HFO consumption by 3 Nos. of 12V46

generators tonne/yr 16,521,

Using equation no. G under


PDD.

Total HFO consumption by 10 No


Using equation no. H under


PDD.

NG consumption under project scenario




45

NG consumption by 7 Nos. of 18V32 generators = [{(Electricity generated by 7 No. 18V32 generators on

NG) x (Terminal heat rate for 18V32 Wartsila generators on NG)} / (NCV of

NG)]____________________________________________________________________(F)

NG consumption by 3 Nos. of 12V46 generators = [{(Electricity generated by 3 No. 12V46 generators on

NG) x (Terminal heat rate for 12V46 Wartsila generators on NG)} / (NCV of

NG)]_____________________________________________________________________(G)

Total NG consumption by 10 No. generators = {( NG consumption by 7 Nos. of 18V32 generators) +

(NG consumption by 3 Nos. of 12V46 generators)}____________________________________(H)





Terminal heat rate for 18V32 Warsila

generator (on NG) KJ/kWh 8,990


Appendix 1.3_18V32

NCV of NG TJ/kt 56


Ch 1

NG consumption by 7 Nos. of 18V32


Using equation no. F under


PDD.






generators (on NG) KJ/kWh 8,160


Appendix 1.4_18V32

NCV of NG TJ/kt 56


Ch 1

NG consumption by 3 Nos. of 12V46


Using equation no. G under


PDD.

Total NG consumption by 10 No generators tonne/yr 55,459

Using equation no. H under


PDD.

Density of NG kg/Nm3 0.65 The Engineering Tool Box

Total NG consumption by 10 Generators Nm3/yr 85,322,265

Based on NG consumption

in tonne and density of NG

Diesel consumption under project scenario

The equation used is:

Total energy input by diesel = [{(Total HFO consumption by 10 No generators) x (NCV of HFO)} +

{(Total NG consumption by 10 No generators) x (NCV of NG)}] x {( Share of diesel oil in total energy

input) / (Share of fuels other than diesel in total energy input)}_______________________________(J)

Total diesel consumption = (Total energy input by diesel) / (NCV of diesel)_______________(K)



46

Total HFO consumption by 10 No.


Taken from above (same

table)

NCV of HFO TJ/kt 40.4 IPCC 2006, Vol 2 Ch 1

Total NG consumption by 10 No. generators tonne/yr 55,459

Taken from above (same

table)

NCV of NG TJ/kt 48 IPCC 2006, Vol 2 Ch 1

Share of fuels other than diesel in total

energy input % 99.96

Assuming equal % share of

energy input

of diesel on HFO and NG

operation

Share of diesel oil in total energy input % 0.04

Assuming equal % share of

energy input

of diesel on HFO and NG

operation

Total energy input by Diesel TJ/yr 1.47

Using equation no. J under


PDD

NCV of diesel TJ/kt 43

IPCC 2006 report Vol 2 Ch

1

Total diesel consumption by 10 No.

generators tonne/yr 34.3

Using equation no. K under


PDD

Historical data

Table 7:


18V32 generators

HFO consumption by 7 No. 18V32 Wartsila

generators in 2004 tonne 37,068

Historic operational data







Total HFO consumption by 7 No. 18V32

Wartsila generators during 2004 - 2006 tonne 107,530


Electricity generated by 7 No. of 18V32

Wartsila generators in 2004 MWh 164,459








Total electricity generated by 7 No. of

18V32 Wartsila generators during 2004 -

2006 MWh 476,806




47

Diesel consumption by 7 No. 18V32

Wartsila generators in 2004 Litre 20,459








Total diesel consumption by 7 No. 18V32

Wartsila generators during 2004 - 2006 Litre 56,826


12V46 generators


generators in 2004 tonne 0

Not installed

HFO consumption by 3 No. 12V46

Wartsila generators in 2005 tonne 9,390






Wartsila generators during 2004 – 2006 tonne 45,099



Wartsila generators in 2004 MWh 0

Not installed







Total electricity generated by 3 No. 12V46

Wartsila generators during 2004 - 2006 MWh 226,551



Wartsila generators in 2004 Litre 0

Not installed


Wartsila generators in 2005

Litre 1,000



Wartsila generators in 2006

Litre 11,200



Wartsila generators during 2004 - 2006 Litre 12,200 Historic operational data

Analysis of historical data


Total energy input by HFO during 2004 - 2006 = [{(Total HFO consumption by 7 No. 18V32 Wartsila

generators during 2004 – 2006) + (Total HFO consumption by 3 No. 12V46 Wartsila generators during

2004 – 2006)} x (NCV of HFO)]____________________________________________________(L)

Total energy input by diesel during 2004 - 2006 = [{(Total diesel consumption by 7 No. 18V32 Wartsila

generators during 2004 – 2006) + (Total diesel consumption by 3 No. 12V46 Wartsila generators during

2004 – 2006)} x (NCV of diesel)]___________________________________________________(M)

Percentage share of HFO in total energy input during 2004 – 2006 = (Total energy input by HFO during



48

2004 - 2006) / {( Total energy input by HFO during 2004 - 2006) + (Total energy input by diesel during

2004 - 2006)}___________________________________________________________________(N)

Percentage share of diesel in total energy input during 2004 – 2006 = (Total energy input by diesel

during 2004 - 2006) / {( Total energy input by HFO during 2004 - 2006) + (Total energy input by diesel

during 2004 - 2006)}_____________________________________________________________(P)


Wartsila generators during 2004 - 2006 Tonne 107,530



Wartsila generators during 2004 – 2006 Tonne 45,099


NCV of HFO TJ/kt 40.4

IPCC 2006 Report, Vol 2

Ch 1

Total energy input by HFO during 2004 -

2006 TJ 6,166

Using equation no. L under


PDD


Wartsila generators during 2004 - 2006 Litre 56,826



Wartsila generators during 2004 - 2006 Litre 12,200 Historic operational data

Density of diesel kg/l 0.86 IOCL specification

NCV of diesel TJ/kt 43

IPCC 2006 Report, Vol 2

Ch 1

Total energy input by diesel during 2004 -

2006 TJ 2.55

Using equation no. M

under table 7 of Annex 3 of

the PDD

Percentage share of HFO in total energy

input during 2004 - 2006 % 99.96

Using equation no. N under


PDD

Percentage share of HFO in total energy

input during 2004 - 2006 % 0.04

Using equation no. P under


PDD



49

Annex 4

MONITORING INFORMATION

This section has been left blank.