Pakistan Filling Power Gap with Fast-Track Unit Rentals from U.S.

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Researched by Industrial Info Resources (Sugar Land, Texas). Facing a power supply shortfall of 1,400 megawatts in 2006, which could become a supply gap of 5,000 megawatts by 2010, the Pakistan government has given permission to Wapda (Water Power Development Authority) to procure stop gap power supplies in the form of fast-track installations and the rental of secondhand units from the U.S. Three-year term deals were made with Jacksonville, Florida-based Alstom Power Rentals (LSE:B0YLTQ7) (APR) and GE Energy Rental (NYSE:GE)(GEER) (Atlanta, Georgia) in the second half of September.

APR will commission a 136-megawatt (MW) power plant at Bikki near Multan within 120 days of signing the $117 million agreement and will not require any capital investment on the part of Wapda. Walters Power International (WPI) (Oklahoma City) and the local Associated Group (Lahore) are working with APR on the project, which will produce electricity at a tariff of about 3.2 cents per unit excluding the fuel cost that will be borne by Wapda and produce a compound tariff of just over 6 cents per unit. The plant will be operated and maintained by Alstom. The company has undertaken other fast-tracked power projects worldwide, including projects in Sri Lanka, Haiti and Mexico.

GEER will supply a secondhand 150 MW power plant to be located near Sheikpura to start generating power in January 2007. It has been reported that Wapda will divert natural gas from one of its existing power plants to feed the imported plant. Wapda will pay 3.133 cents per unit as capacity payment and will also be responsible for the fuel supply. As with APR installation, the overall tariff is expected to be over 6 cents. The GEER will operate and maintain the installation, which will be made up of seven 21.5 MW units.

Even with the power from these fast-track projects, Pakistan’s power supply will remain in crisis mode with an 800 MW to 1,200 MW shortfall for at least two years in peak summer season. The situation should begin to ease in August 2008 when Wapda's 340 MW thermal power plant at Chichuki Malyan comes on stream to be followed by an additional 160 megawatts by December 2008.

The first of four 80 MW, secondhand thermal power stations, donated by the United Arab Emirates, is expected to start operating by mid-2007. The 80 MW plant at Wapda’s site at Shahdra should be ready for operation by July/August 2007. The plant was first commissioned in the UAWE in 1996. In terms of the donation, the UAE government has undertaken the dismantling, transportation to Pakistan and the installation of the units. The other three units will be dedicated to Karachi’s power supply with a target date for commissioning at the end of 2007.

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