Facing Chronic Power Shortfalls, Pakistan Opens Door to Foreign Investment

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Researched by Industrial Info Resources (Sugar Land, Texas). Private sector and foreign investors are invited to set up power plants in Pakistan to help the country close its energy gap. This was said by the country’s president General Pervez Musharraf towards the end of May at the foundation-laying of a $200 million combined cycle power plant at Daharki, north of Karachi. The plant will be the first in Pakistan to use low BTU gas and will be constructed by South Korea’s Doosan.

The president said that the country was facing serious shortfalls in the energy sector which offered lucrative returns to investors as power needs were rising at a rate of 10% per annum. The government was working on short, medium and long term strategy to meet the power shortage and was looking to all sources of power generation including water, gas, coal alternative and nuclear energy. There was a need to upgrade electricity generation, transmission and distribution to meet future energy needs, he said.

Targets are not being met in the short term strategy and the government was removing all bottlenecks to facilitate investors in the power sector. Investor friendly policies had been created by implementing liberalization and deregulation. Foreign direct investment had risen to $6 billion from $300 million in 1999, he said. He added that the country’s per capita income had doubled and the profit for foreign investors ranged from 20% to 60% driven by the wide demand-supply gap.

Earlier in May the federal minister for water and power Liaquat Ali Jatoi had told the National Assembly that the private sector would establish 28 thermal power stations in the next few years. He said that the Private Power Infrastructure Board (PPIB) was scrutinizing the entire process. The projects would generate 7,679 MW that would be sold to the Water and Power Development Authority (WAPDA). He said that power was being purchased from Iran and other countries and the National Electric Power Regulatory Authority (NEPRA) would fix the electricity tariff for every project.

Solar energy projects are to be launched in areas where transmission lines do not exist and solar energy powered street lights will be installed under the Alternate Energy Development Board (AEDB) for which a tariff had been settled that would save electricity. The minister said that the private sector was currently working on 16 power projects and several hydro dam projects, including the 3,360 MW Bhasha project, would be constructed.

Power shortages could double to 2,500 MW this summer and this critical shortfall could continue through 2010. Power projects coming into operation from September 2008 to June 2009 would add 4,400 MW of capacity and take the total installed capacity to 22,400 MW. In September 2009 to June 2010 seven projects with a total capacity of 1,180 MW will come into operation. WAPDA projects that a 1,000 MW coal fed project will come into production in 2012 and identifies another 8,319 MW coming onstream by December 2016, when total capacity would reach 43,300 MW and a surplus of 3,000 MW would exist if all projects are completed. Setting capacity against growth in demand shortfalls and power cuts will occur through 2014.

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