Aug 06 - 12, 2007

The Water and Power Development Authority (WAPDA) is encouraging the private sector in setting up power projects to overcome the electricity shortage in the country. In the past, setting up of power plants by the private sector was a gigantic task but now more and people from private sector are establishing power plants.

An agreement between WAPDA and lead arrangers, National Bank of Pakistan, Standard Chartered Bank and Dubai Islamic Bank, was recently signed for launching Rs 8 billion Sukuk bonds. This is the second issue being launched by WAPDA to raise a sum of Rs8 billion required for three power projects i.e. Khan Khwar (72 megawatts), Allai Khwar (121 megawatts) and Duber Khwar (130 megawatts). The total cost of these projects is Rs 13.449 billion. The first Sukuk bond was launched for the Mangla project.

According to WAPDA Chairman Tariq Hamid, the Sukuk issue would be beneficial for both WAPDA and the banks acting as lead arrangers. Talking about the bond's tenure, Hamid said that the total period was 10 years with a grace period of four years. The individuals, institutions, trusts and employee funds, corporate bodies including Islamic banks, modarabas, insurance companies and financial institutions can purchase Sukuk bonds. However, he said that Pakistan requires a quantum jump in generation of electricity and this is possible only through construction of more than one mega dams, which will also cater to the increasing needs of storage of water in the country.

According to officials in WAPDA, the organisation has already undertaken feasibility studies of 10 new hydropower projects-Bunji, Oasu, Kohala, etc., with a generation capacity of more than 11,000 MW. These studies, including preparation of detailed engineering design and tender documents, would be ready by the year 2008-09, thus facilitating the government of having a number of options to start with for generating low-cost hydropower electricity. At present, feasibility reports of the projects with generation capacity of 10,000 MW were in hand and construction work could be started as and when the Federal government gives a go ahead signal. Pakistan, by kindness of nature, has the potential of generating 50,000 MW of hydropower, however the existing capacity stands at only 6,463 MW, they added.

They said Rs 176.34 billion were paid to Independent Power Producers (IPPs) for purchase of electricity during the fiscal year 2006-07. They added providing electricity on affordable rates to the customers was only possible with the induction of more generation of electricity through hydel resources. The sources further said WAPDA had generated up to 87.84 billion units of electricity in the year 2006-07 which is 6.8 percent higher than that of 2005-06.

The WAPDA had provided more than 14,200 villages with power in 2006-07, saying it was a record in Pakistan's history. In addition, up to 13,000 agricultural tube-wells were energised during the year. Up to 1,035,543 new connections were provided in the country against the target of 895,390. New connections include 927,880 domestic, 83,987 commercial, 10,423 industrial, 13,000 agricultural and 253 others. The number of consumers on June 30, 2007 stands at more than 17 million against a target of 16.8 million for 2006-07.

Analysts told PAGE that growth in population and sedimentation of water reservoirs has reduced the per capita availability of water in Pakistan to an alarming level while the consumption of electricity had been surging by about 10 percent per annum because of high economic growth. ''Only a series of mega projects could improve the situation vis-a-vis availability of water and generation of electricity. If the storage capacity is not enhanced considerably, Pakistan might become a drought ridden country," they said. Moreover, the government has allocated Rs. 93441.472 million for Power Sector in Public Sector Development Programme (PSDP) for the fiscal year 2007-08.

According to Public Sector Development Programme (PSDP) 2007-08, the allocation includes Rs. 86713.893 million for ongoing WAPDA projects and Rs. 2518.534 million for new projects in Water and Power Division. The amount also includes Rs. 4180 million for FIP Project for improvement of KESC System Network and Reduction of T & D Losses, Karachi. In total allocated amount, Rs. 7121.510 million includes as foreign loan for on-going projects while Rs. 86.284 million allocated as foreign loan for new projects.

In new projects, an amount of Rs. 2000 million has been allocated for KKU Upgradation and Rehabilitation, Rs. 302.600 million for Construction of Thakot Bridge, Rs. 92.020 million for Institutional Capacity Building of Discos (ADB), Rs. 75.914 million for Power Distribution Enhancement Project (ADB) and Rs. 48 million for Rehabilitation of Jaban Hydro Electric Power Station.

Similarly, out of total allocated amount for on-going projects, an amount of Rs. 500 million has been allocated for Distribution, Rehabilitation, Renovation and Augmentation of LESCO, Rs. 500 million for GEPCO, Rs. 400 million for MEPCO and Rs. 400 million for FESCO. In PSDP, the government has earmarked Rs. 400 million for MEPCO, Rs. 400 million for IESCO, Rs. 300 million for GEPCO and Rs. 300 million for GESCO.