About 20,000MW need to be added in 10 years

[Lahore_Real_Estate]

ISLAMABAD: Pakistan needs to add a power generation capacity of about 20,000MW in 10 years at a cost of $32 billion, with the main focus on indigenous resources, to overcome energy shortages for sustainable economic growth.

While these estimates have been presented by a private consultant hired jointly by the Ministry of Water and Power and the World Bank, many energy sector stakeholders have criticised the government’s inability to introduce efficiency in the power sector and make maximum and cost-effective use of existing generation capacity. They have also raised questions about uneconomic fuel mix and failure to recover power bills.

IGI Securities, a vendor of the World Bank and the Water and Power ministry, told a two-day conference on power sector reforms that foreign investments in power sector had been almost non-existent over the last eight years and only four per cent of the total investment went into the power sector.

The participants were told that the government had prepared a 10-year plan (till 2020) which required about $32 billion investment in the sector to bridge the supply-demand gap. Of the total $32 billion, about $17 billion would be provided by the government and the remaining portion, $15 billion, to be raised through private investment. The plan envisaged generation of 4929MW of hydropower with an estimated cost of $8.3 billion. About, 3500MW electricity would be generated at a cost of $6.5 billion by using indigenous coal.

The IGI representative said that the immediate need for revival of the power sector was to change the existing fuel mix that depended heavily on imported fuel and, at the same time, to improve the balance-sheet of the power sector which was possible only through tariff increase.

Commercial banks extended more than Rs500 billion loans to the power sector project financing, fixed investment and working capital, but the poor credit worthiness of the sector was a major bottleneck to attract foreign investment. The 2002 power policy “did not produce results and a lot has to be achieved through tariff reforms and changing the tariff structure”.

Minister for Water and Power Raja Pervez Ashraf said that the circular debt had jeopardised the entire economy and, therefore, the government had launched comprehensive reforms in the sector. He agreed that deteriorating energy mix was a real problem, but gas shortfalls did not allow a major change.

He said the government was working on a plan to reduce line losses by unbundling power distribution companies and in the first instance Sukkur Electricity Supply Company would be carved out of the Hyderabad Electricity Supply Company.

He said that despite the reforms programme, 150,000 Wapda employees would remain protected and should not feel threatened by the process.

Deputy Chairman of Planning Commission Dr Nadeem ul Haque said the government would install smart meters to stop pilferage and electricity theft.

An annual report of the National Electric Power Regulatory Authority (Nepra) said the overall global economic meltdown had affected power industry and slowed down the completion of projects.

Nepra said that the generation capacity needed to be supplemented on a war footing to meet growing electricity requirement.

“The need of the hour is to develop a multi-pronged strategy, looking for short-term as well as long-term solutions”.