Pakistan's Proactive Power Roadshow a Transparent Success in Dubai and London

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). AES (NYSE:AES) (Arlington, Virginia) has expressed the written intention to invest $1 billion to establish a 1,000-megawatt (MW) power station in Pakistan's coal-rich region of Thar. The country's water and power minister, Liaquat Ali Jatoi, announced this after the completion of roadshows in Dubai and London showcasing the power industry’s opportunities to potential foreign investors.

Globeleq (U.K. state owned, London) had also shown interest in a $1 billion power investment during the shows, the minister said. Three projects were marketed, including the Uch-11 400-500 MW cogen plant, with the proposed feedstock being low-BTU gas; the 450 MW cogen Faislabad project, with gas and oil feedstock, and the 350-400 MW and the 350-400 MW Lahore cogen project. Investment interest to the tune of $1.3 billion is represented in the three projects. Brazilian power utilities showed specific interest in these projects.

The minister said that he was expecting $3.5 billion in foreign investments, representing 3,500 MW in power projects, once gas supplies had been confirmed. He said that the government would soon make a decision on importing gas from Iran and Qatar.

It was reported that China had agreed in principle to invest in the Thar coal project and set up a 600 MW coal-fired power station there. This decision was taken during Pakistani President Musharraf's recent visit to Beijing.

The process of international competitive bidding on the Neelum-Jehlum hydropower project would be completed by April 30. The government would then award contracts to the winning party to initiate the project, the minister said.

Response to the roadshows, both sponsored by foreign investment companies, were good, as the investment opportunities had been optimized for investors by cutting customs duties and by the provision of a one-window operation to tackle hiccups faced by them. The PPIB (Private Power and Infrastructure Board) was available to help investors with difficulties.

Internal bids were being handled in a transparent manner, to give investors the best deal through open bidding and competitiveness, thus avoiding opportunities for graft. A range of major international and local power companies attended the roadshows. The U.S., Europe, Japan, Asia, and the UAE were well represented. Major companies in the upstream and downstream energy sector will be attending the third Pakistan Oil, Gas & Energy Exhibition and Conference (POGEE 2005) at the Karachi Expo Center from May 18 to 21.

During the road shows briefings were given to investors on opportunities for five coal blocks - two in Thar, two in Soda, and one in Lakhrar. Answering a question on the simplification of the cumbersome procedures which have stood in the way of investment, the Sindh province minister for mining, Irfanullah Khan Marwat, said that previously it could have taken an applicant two years to get a contract, but that period had now been reduced to two weeks. An independent 'commiittee' set up for the purpose would make the decision on such issues on a fortnightly basis. See related news item - March 15, 2005 - Pakistan Looks to Massive Coal Reserves to Fire Power Generation Gap.

The power minister said that the margin of profitability in the power sector stands at between 50 to 60%, and that the process of corporatization of the sector would be completed as early as possible.

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