New and Stalled Projects Reflect Pakistan Power Sector's Frustrations

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Pakistan's power project sector continues to be full of contradictions. A number of new thermal and renewable projects have been announced in recent months, but the operations on the ground are still cramped by fuel feed supply problems, a lack of funding, and disputes between key players in the sector.

In December 2011, funding for the Patrind hydropower project was established at a ceremony in the capital city of Islamabad. The 147-megawatt (MW) project is sited at the borders of Khyber Pakhtunkhawa, Azad Jammu and Kashmir.

Three public- and private-sector South Korean companies are providing equity backing for the $400 million project. Funding is coming from the Export-Import Bank of Korea, the Asian Development Bank (ADB), the International Corporation and a $60 million finance lease deal with the Islamic Development Bank (IDB). The project is fully funded by foreign direct investment into Pakistan.

South Korean-based Star Hydropower (Islamabad), which is a project sponsor, reports that only 28 residents will need to re-settle as a result of the build-operate-own- transfer project, which will be handed over to the Pakistani government when the 30-year concession period has expired.

The project, which is scheduled for completion by 2016, is part of the strategy to increase the utilization of renewable resources by generating power in an economically sustainable manner to reduce dependency on imported fuel.

On the downside of the power scene, two units of the coal-fired Lahr power plant are still not operating after going out of order in 2006. The Water and Power Development Authority has not made the plant's maintenance fund available, due to a leasing dispute exacerbated by the labor union at the plant, taking a challenge on the leasing of the plant to the Supreme Court.

The two units need rehabilitation, but there is no basic technical problem. Coal and limestone are available for production, but the funding/leasing issue stands in the way of progress. A third unit, which was producing up to 35 MW, also has been closed for maintenance. When the project was first presented in 1986, it was proposed to generate between 300 MW and 700 MW.

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