PAKISTAN HAS A HUGE HYDEL POTENTIAL
In Pakistan, the hydel resources are mainly in the north; the resources in the south being scarce.
June 11 - 17, 2007
The generation, transmission, distribution and retail supply of electricity in Pakistan is presently undertaken by two vertically integrated utilities, with significant contribution to generation from various private Independent Power Producers ('IPPs'). These utilities are the Water and Power Development Authority ('WAPDA') and the Karachi Electric Supply Corporation ('KESC'). Power generation is mainly in the public sector. Keeping in view the electricity demand patterns and lack of funds in the public sector, the Government of Pakistan decided to mobilise private sector resources by inducting it into power generation. In November 1985, the GOP announced measures to encourage private sector participation in the power sector. The 1292 MW Hub Power Project (HUBCO) was initiated at the same time, which was the first private sector power project of its size and kind in the entire world. It took almost 12 years for HUBCO to reach its completion, when in March 1997 it was fully commissioned. These initiatives were followed by Power Policies in Pakistan, the first successful policy being the 1994 Power Policy, followed by the 1995 Hydel Policy, the 1995 Transmission Line Policy, the 1998 Power Policy, and finally the 2002 Power Policy.
The Power Wing of WAPDA is being restructured with the ultimate goal of privatizing it to make Power Sector strong and vibrant through enhancing efficiency to meet the needs of the consumers.
The transmission systems of WAPDA and KESC are interconnected through 220 kV double circuit transmission lines. Presently, the total installed electricity generation capacity in the country is about 19,478 MW. In the total installed capacity, the share of public sector is around 70%, and the private sector is 30%. The rising share of private sector in electricity generation and presence of some of the leading foreign and local companies in this business, are evidence of Pakistan being an ideal investment destination.
Currently, there are 16 IPPs in the country, which have been implemented on a Build, Own and Operate ('BOO') basis, mainly under the private power policy announced by the GOP in 1994.
Transmission of electricity takes place at voltages of 500kV, 220kV, 132kV, 66kV and 33kV and distribution to at 11kV.
Key players of power sector in Pakistan are Private Power and Infrastructure Board (PPIB), National Electric Power Regulatory Authority (NEPRA), Water and Power Development Authority (WAPDA), Karachi Electric Supply Corporation (KESC), Private Power Cell N.W.F.P., Private Power Cell Azad Jammu and Kashmir, Private Power Cell Punjab, Board of Investment (BOI), Privatization Commission, Pakistan Atomic Energy Commission (PAEC), National Transmission Distribution Company (NTDC), Islamabad Electric Supply Company (IESCO), Lahore Electric Supply Company (LESCO), Faisalabad Electric Supply Company (FESCO), Multan Electric Supply Company (MESCO), Peshawar Electric Supply Company (PESCO), Hyderabad Electric Supply Company (HESCO), Quetta Electric Supply Company (QESCO), Gujranwala Electric Supply Company (GESCO), Alternative Energy Development Board (AEDB).
HYDEL POWER POTENTIAL OF PAKISTAN
In Pakistan, the hydel resources are mainly in the north; the resources in the south being scarce. The hydel potential of Pakistan can be divided into six sectorial regions namely:
•Azad Jammu & Kashmir
Pakistan is endowed with a hydel potential of approximately 41722 MW, most of which lies in the North West Frontier Province, Northern Areas, Azad Jammu and Kashmir and Punjab. However, an abundant hydel potential is still untapped which needs to be harnessed.
The total installed capacity of the hydropower stations in the country is about 6595 MW, out of which 3767 MW is in NWFP, 1698 MW in Punjab, 1036 MW in AJK and 93 MW in the Northern Areas. Table-1 depicts a comparative summary of the hydel projects in various stages of implementation in various regions of Pakistan. Table-2 shows a list of existing hydropower plants ranging from 1 MW to 3478 MW, while Figure-1 shows the graphical representation of Province/ area wise hydel power generation in Pakistan.
On the basis of data available in PPIB and information obtained from various organizations, details of the projects of the following categories in the aforesaid regions of the country are given in table-1.
COMPARATIVE SUMMARY OF THE HYDEL PROJECTS IN VARIOUS STAGES OF IMPLEMENTATION IN VARIOUS REGIONS OF PAKISTAN
NAME OF PROVINCE
PROJECTS IN OPERATION (MW)
PUBLIC SECTOR PROJECTS (MW)
PRIVATE SECTOR PROJECTS (MW)
PROJECTS WITH FEASIBILITY STUDY (MW)
PROJECTS WITH PRE-FEASIBILITY STUDY/RAW SITES (MW)
ABOVE 50 MW
BELOW 50 MW
Above 50 MW
Below 50 MW
EXISTING HYDEL POWER STATIONS IN PAKISTAN
NAME OF PROJECT
INSTALLED CAPACITY (MW)
Small/Micro Hydel Stations
Pakistan is certainly a place to invest especially in power sector owing to the following reasons. Here it is pertinent to mention that the facts and figures that have been provided are from the government sources and is not based on critical analysis.
IMPROVED ECONOMIC AND INVESTMENT CLIMATE IN PAKISTAN
The last year, Standard and Poor's upgraded Pakistan's sovereign long-term, foreign currency credit rating from B to single B+, and the local currency, long-term rating going up to BB from BB-, because of the consistent improvement in the economic reforms of the country. A boost in growth, continued fiscal adjustment and a structural improvement in the external account have meant that while debt declines, business conditions continue to improve in the country.
In the fiscal year 2004, the rate of growth was almost 6.5%, the highest level recorded since 1996 ñ and economic expansion is set to accelerate further. The average inflation in FY04 was 4.6% while investment growth rate has jumped to a record 22.3%, the highest ever in the recent history of Pakistan, pushing the investment-GDP ratio to 18.1 percent.
The success of the privatization programme has raised over $1billion. The trends are promising and surging economic activity is good news for Pakistan but the greater demands for energy this growth has fuelled, raises fears that a shortfall is on the way. Riding on the strong economic fundamentals in last couple of years, Pakistan's economy has shown improvement in the foreign exchage rate against US dollar that averaged Rs. 62.93 in FY 02, Rs. 60.23 in FY03 and Rs. 59.52 in FY04 respectively.
STRONG DEMAND FOR ELECTRICITY
Demand is now outstripping supply of electricity and by 2010 demand is expected to exceed supply by approximately 5,500 MW.
Adequate power supply is a key to achieving growth targets and each of the three projects is strategically important to the country. Uch II uses gas reserves which are best suited for power generation and it follows the success of Uch I. Faisalabad is an important industrial city and a major contributor to textile exports for the country. Lahore is a large and growing population base and also an important commercial centre.
TRANSPARENT REGULATORY ENVIRONMENT
The National Electric Power Regultory Authority (NEPRA), entrusted with regulation of power sector in Pakistan, has made considerable progress towards the development of the regulatory regime and future market design for the power sector.
For all three projects, sites have adequate infrastructure. Faisalabad and Uch-II projects will be set up close to the existing operating power plants and the Lahore power project will be installed close to the well developed city of Lahore. Therefore all three project sites are close to water resources and grid stations.
PREDICTABLE LONG TERM TARIFF
A long term tariff of 25 years will be contracted with the power purchaser. The IPPs are not subjected to the market risk for their output. The projects are expected to provide good and stable return on equity.
PASS THROUGH OF THE FUEL COST AND ADDITIONAL TAXATION
Any variation in price of fuel would be passed through to the power purchaser. Similarly any additional taxation over and above the Tariff assumptions is liable to be passed on to the power purchaser.
RISK OF EXCHANGE RATE VARIATION
To cover the exchange rate variations risk, various tariff components will be indexed for variation in the Pak Rupee and US$ exchange rates.
AVAILABLE GOP'S GUARANTEES
GOP guarantees the performance obligation of its entities such as the power purchaser, fuel supplier, etc. and provinces. GOP also provides protection to sponsors and lenders in case of termination of the project.
PROTECTION AGAINST CHANGE IN DUTIES & TAXES AND POLITICAL RISKS
GOP guarantees protection changes in taxes & duties and specified 'political risks'.