Electricity Generation And Power Generating Capacity
|e/f = BMI estimate/forecast. Source: National Sources, BMI|
|Generation, Total, TWh||99.677||103.205||106.601||110.967||115.508||120.309|
|Generation, Total, % y-o-y||2.777||3.540||3.290||4.096||4.093||4.156|
|Generation, Total, KWh per capita||547.244||557.465||566.591||580.439||594.721||609.857|
|Generation, Thermal, TWh||63.738||65.033||66.789||67.860||70.099||71.532|
|Generation, Thermal, % y-o-y||0.937||2.031||2.700||1.603||3.300||2.045|
|Generation, Thermal, KWh per capita||349.936||351.276||354.987||354.957||360.919||362.603|
|Generation, Thermal, % of total generation||63.945||63.013||62.653||61.153||60.687||59.457|
|Generation, Coal, TWh||0.112||0.148||1.337||7.554||12.842||19.854|
|Generation, Coal, % y-o-y||2.000||31.500||805.000||465.000||70.000||54.600|
|Generation, Coal, KWh per capita||0.617||0.798||7.106||39.514||66.121||100.641|
|Generation, Coal, % of thermal electricity generation||0.176||0.227||2.002||11.132||18.320||27.755|
|Generation, Coal, % total electricity generation||0.113||0.143||1.254||6.808||11.118||16.502|
|Generation, Natural Gas, TWh||31.789||32.889||33.257||31.395||31.410||30.123|
|Generation, Natural Gas, % y-o-y||2.350||3.460||1.120||-5.600||0.050||-4.100|
|Generation, Natural Gas, KWh per capita||174.527||177.649||176.764||164.218||161.723||152.694|
|Generation, Natural Gas, % of thermal electricity generation||49.874||50.573||49.794||46.264||44.809||42.111|
|Generation, Natural Gas, % of total electricity generation||31.892||31.867||31.198||28.292||27.193||25.038|
|Generation, Oil, TWh||31.837||31.996||32.195||28.911||25.846||21.556|
|Generation, Oil, % change y-o-y||-0.440||0.500||0.620||-10.200||-10.600||-16.600|
|Generation, Oil, KWh per capita||174.792||172.829||171.117||151.225||133.075||109.268|
|Generation, Oil, % of thermal electricity generation||49.950||49.200||48.204||42.604||36.871||30.134|
|Generation, Oil, % of total electricity generation||31.940||31.003||30.201||26.054||22.376||17.917|
|Generation, Nuclear, TWh||2.511||2.574||2.613||2.680||2.720||2.775|
|Generation, Nuclear, % y-o-y||1.000||2.506||1.500||2.586||1.500||2.000|
|Generation, Nuclear, KWh per capita||13.787||13.904||13.887||14.020||14.007||14.066|
|Generation, Nuclear, % of total electricity generation||2.519||2.494||2.451||2.415||2.355||2.306|
|Generation, Hydropower, TWh||32.460||34.349||35.699||38.737||40.794||43.914|
|Generation, Hydropower, % change y-o-y||3.770||5.820||3.930||8.510||5.310||7.650|
|Generation, Hydropower, KWh per capita||178.210||185.536||189.741||202.622||210.035||222.605|
|Generation, Hydropower, % total electricity generation||32.565||33.282||33.488||34.908||35.317||36.501|
|Hydro-Electric Pumped Storage, TWh||0.000||0.000||0.000||0.000||0.000||0.000|
|Hydro-Electric Pumped Storage, KWh per capita||0.000||0.000||0.000||0.000||0.000||0.000|
|Hydro-Electric Pumped Storage, % total electricity generation||0.000||0.000||0.000||0.000||0.000||0.000|
|Generation, Non-Hydropower Renewables, TWh||0.968||1.250||1.501||1.690||1.896||2.088|
|Generation, Non-Hydropower Renewables, % change y-o-y||1,278.245||29.151||20.093||12.619||12.166||10.142|
|Generation, Non-Hydropower Renewables, KWh per capita||5.312||6.750||7.976||8.840||9.760||10.584|
|Generation, Non-Hydropower Renewables, % of total electricity||0.971||1.211||1.408||1.523||1.641||1.735|
|f = BMI forecast. Source: National Sources, BMI|
|Generation, Total, TWh||125.333||130.571||136.019||141.757||147.812||154.198|
|Generation, Total, % y-o-y||4.176||4.179||4.173||4.218||4.271||4.320|
|Generation, Total, KWh per capita||625.664||642.094||659.123||677.110||696.176||716.384|
|Generation, Thermal, TWh||72.665||75.110||78.046||81.423||84.970||88.695|
|Generation, Thermal, % y-o-y||1.584||3.365||3.909||4.327||4.356||4.385|
|Generation, Thermal, KWh per capita||362.745||369.362||378.198||388.922||400.197||412.067|
|Generation, Thermal, % of total generation||57.978||57.525||57.379||57.439||57.485||57.520|
|Generation, Coal, TWh||20.211||21.181||22.643||24.069||25.682||27.506|
|Generation, Coal, % y-o-y||1.800||4.800||6.900||6.300||6.700||7.100|
|Generation, Coal, KWh per capita||100.895||104.162||109.723||114.969||120.960||127.787|
|Generation, Coal, % of thermal electricity generation||27.814||28.200||29.012||29.561||30.225||31.011|
|Generation, Coal, % total electricity generation||16.126||16.222||16.647||16.979||17.375||17.838|
|Generation, Natural Gas, TWh||31.243||32.824||34.531||36.485||38.419||40.317|
|Generation, Natural Gas, % y-o-y||3.720||5.060||5.200||5.660||5.300||4.940|
|Generation, Natural Gas, KWh per capita||155.966||161.415||167.330||174.274||180.949||187.308|
|Generation, Natural Gas, % of thermal electricity generation||42.996||43.701||44.244||44.810||45.215||45.456|
|Generation, Natural Gas, % of total electricity generation||24.928||25.139||25.387||25.738||25.992||26.146|
|Generation, Oil, TWh||21.211||21.105||20.873||20.869||20.869||20.873|
|Generation, Oil, % change y-o-y||-1.600||-0.500||-1.100||-0.020||0.000||0.020|
|Generation, Oil, KWh per capita||105.885||103.785||101.145||99.679||98.288||96.972|
|Generation, Oil, % of thermal electricity generation||29.190||28.099||26.744||25.630||24.560||23.533|
|Generation, Oil, % of total electricity generation||16.924||16.164||15.345||14.721||14.118||13.536|
|Generation, Nuclear, TWh||2.849||2.925||3.000||3.077||3.158||3.242|
|Generation, Nuclear, % y-o-y||2.675||2.666||2.548||2.587||2.625||2.664|
|Generation, Nuclear, KWh per capita||14.223||14.384||14.535||14.698||14.873||15.062|
|Generation, Nuclear, % of total electricity generation||2.273||2.240||2.205||2.171||2.136||2.103|
|Generation, Hydropower, TWh||47.546||50.075||52.309||54.396||56.626||59.007|
|Generation, Hydropower, % change y-o-y||8.270||5.320||4.460||3.990||4.100||4.204|
|Generation, Hydropower, KWh per capita||237.350||246.251||253.478||259.825||266.703||274.138|
|Generation, Hydropower, % total electricity generation||37.936||38.351||38.457||38.373||38.310||38.267|
|Hydro-Electric Pumped Storage, TWh||0.000||0.000||0.000||0.000||0.000||0.000|
|Hydro-Electric Pumped Storage, KWh per capita||0.000||0.000||0.000||0.000||0.000||0.000|
|Hydro-Electric Pumped Storage, % total electricity generation||0.000||0.000||0.000||0.000||0.000||0.000|
|Generation, Non-Hydropower Renewables, TWh||2.273||2.460||2.665||2.861||3.058||3.254|
|Generation, Non-Hydropower Renewables, % change y-o-y||8.866||8.229||8.319||7.368||6.888||6.402|
|Generation, Non-Hydropower Renewables, KWh per capita||11.347||12.097||12.912||13.666||14.403||15.117|
|Generation, Non-Hydropower Renewables, % of total electricity||1.814||1.884||1.959||2.018||2.069||2.110|
|e/f = BMI estimate/forecast. Source: National Sources, BMI|
|Capacity, Net, MW||21,701.9||22,171.7||23,251.4||25,829.9||27,721.5||31,409.6|
|Capacity, Net, % y-o-y||4.4||2.2||4.9||11.1||7.3||13.3|
|Capacity, Conventional Thermal, MW||13,776.3||13,776.3||14,436.3||15,756.3||17,076.3||19,716.3|
|Capacity, Conventional Thermal, % y-o-y||3.8||0.0||4.8||9.1||8.4||15.5|
|Capacity, Conventional Thermal, % of total capacity||63.5||62.1||62.1||61.0||61.6||62.8|
|Capacity, Nuclear, MW||309.1||309.1||309.1||309.1||309.1||309.1|
|Capacity, Nuclear, % y-o-y||0.0||0.0||0.0||0.0||0.0||0.0|
|Capacity, Nuclear, % of total capacity||1.4||1.4||1.3||1.2||1.1||1.0|
|Capacity, Hydropower, MW||7,497.2||7,884.1||8,171.1||9,120.5||9,458.0||10,244.0|
|Capacity, Hydropower, % y-o-y||4.9||5.2||3.6||11.6||3.7||8.3|
|Capacity, Hydropower, % of total capacity||34.5||35.6||35.1||35.3||34.1||32.6|
|Capacity, Non-Hydroelectric Renewables, MW||119.3||202.3||334.9||644.0||878.2||1,140.2|
|Capacity, Non-Hydroelectric Renewables, % y-o-y||112.8||69.6||65.6||92.3||36.4||29.8|
|Capacity, Non-Hydroelectric Renewables, % of total capacity||0.5||0.9||1.4||2.5||3.2||3.6|
|f = BMI forecast. Source: National Sources, BMI|
|Capacity, Net, MW||33,516.0||34,800.4||35,776.5||36,485.7||37,426.1||38,595.9|
|Capacity, Net, % y-o-y||6.7||3.8||2.8||2.0||2.6||3.1|
|Capacity, Non-Hydroelectric Renewables, MW||1,438.1||1,702.4||1,980.0||2,275.4||2,583.8||2,900.3|
|Capacity, Non-Hydroelectric Renewables, % y-o-y||26.1||18.4||16.3||14.9||13.6||12.2|
|Capacity, Non-Hydroelectric Renewables, % of total capacity||4.3||4.9||5.5||6.2||6.9||7.5|
|Capacity, Geothermal, MW||0.0||0.0||0.0||0.0||0.0||0.0|
|Capacity, Geothermal, % of total non-hydroelectric renewables capacity||0.0||0.0||0.0||0.0||0.0||0.0|
|Capacity, Geothermal, % of total capacity||0.0||0.0||0.0||0.0||0.0||0.0|
|Capacity, Wind, MW||750.8||895.7||1,042.5||1,190.6||1,325.1||1,436.4|
|Capacity, Wind, % y-o-y||26.4||19.3||16.4||14.2||11.3||8.4|
|Capacity, Wind, % of total non-hydroelectric renewables capacity||52.2||52.6||52.7||52.3||51.3||49.5|
|Capacity, Wind, % of total capacity||2.2||2.6||2.9||3.3||3.5||3.7|
|Capacity, Solar MW||568.5||687.9||818.6||966.0||1,139.9||1,345.0|
|Capacity, Solar, % y-o-y||33.0||21.0||19.0||18.0||18.0||18.0|
|Capacity, Solar, % of total non-hydroelectric renewables capacity||39.5||40.4||41.3||42.5||44.1||46.4|
|Capacity, Solar, % of total capacity||1.7||2.0||2.3||2.6||3.0||3.5|
|Capacity, Tide and Wave, MW||0.0||0.0||0.0||0.0||0.0||0.0|
|Capacity, Tide and Wave, % of total non-hydroelectric renewables capacity||0.0||0.0||0.0||0.0||0.0||0.0|
|Capacity, Tide and Wave, % of total capacity||0.0||0.0||0.0||0.0||0.0||0.0|
|Capacity, Biomass, MW||118.8||118.8||118.8||118.8||118.8||118.8|
|Capacity, Biomass, % of total non-hydroelectric renewables capacity||8.3||7.0||6.0||5.2||4.6||4.1|
|Capacity, Biomass, % of total capacity||0.4||0.3||0.3||0.3||0.3||0.3|
The Pakistani government announced in May 2015 that it was drawing up plans to liberalise the local energy market. By enacting the 'Electricity Act 2015', the government would partially relax its monopoly of energy production and sale in the country.
The Electricity Act 2015 will permit private sector participation in building, maintaining and operating a captive generating plant as well as dedicated transmission infrastructure in the region for which the government grants a licence by the designated authority. While plans for power sector liberalisation were still on the drawing board at the time of writing, it appears that plans are afoot to fast-track 10,500MW of power generation. According to Finance Minister Ishaq Dar, if the current plans come to fruition, the country's perennial power outage issues could be alleviated, to some extent, by 2017.
BMI believes that this is a step in the right direction. From a macro-economic perspective, persistent energy outages have impeded broad-based growth as industrial and commercial activity is constantly interrupted. It is estimated that power outages shave between two to three percentage points off GDP growth annually. Encouraging private sector involvement in the energy sector will not only lead to broader economic growth, but will also take the pressure off the government's coffers as Prime Minister Nawaz Sharif's administration attempts to trim the country's fiscal shortfall, particularly in a time of depressed oil prices.
BMI estimates that growth in Pakistan's power generation sector will pick up in 2015, and expects the pace to come in at 3.3% versus a slightly greater 3.5% recorded in 2014. However, there are growing downside risks to our forecasts, even as the new Pakistan Muslim League (Nawaz) [PLM (N)] government seeks to find new financing sources and implements new schemes to improve the attractiveness of the sector. The country continues to face daily blackouts, and an increasingly hostile civilian response towards the government's crackdown on power theft has heightened security risks, with power companies facing cases of bombing of distribution and transmission assets, which have been increasing.
The sector's perennial difficulties in securing financing and support from Pakistan's neighbours appear to have been temporarily alleviated. On August 8 2014, Pakistan's Prime Minister Muhammad Nawaz Sharif announced that 14 power projects ( see table) in the country had obtained approval from the Chinese government. The Chinese government would provide loans to cover the project costs (up to 85% of the total cost) and help in the development of these projects. Work on these projects is expected to start immediately and the 14 projects with a combined capacity of 10,400MW are expected to come online by 2017-2018. An additional 6,445MW of power projects are scheduled to be completed in the second phase, on a fast track basis.
|Source: Pakistan Government|
|Engro Thar||Coal Fired-Mining of Block 2||660MW|
|Quaid-e-Azam Solar Park (Cholistan)||Solar power||1000MW|
|United Energy (Karachi)||Wind power||100MW|
|Dawood (Karachi)||Wind power||50MW|
We believe that Pakistan's power sector is set to benefit tremendously from the Chinese government's decision to finance these 14 power projects. The country suffers from a power deficit which has worsened over the past five years and crippled economic growth. For instance, State Minister for Power Abid Sher Ali and Secretary Nargis Sethi Asif said in July that the power shortfall in the country had reached 7,000MW, or around one-third of energy demand. This deficit is due to a shortage in generation capacity as investors have generally avoided the market for a number of reasons. Two of the most frequently cited reasons are insufficient returns and a poor business environment. Therefore, the Chinese government's decision to provide a major part of the financing for the 14 power projects would lead to a significant boost in generation capacity by 2017-2018. This would help to alleviate power shortages in the country despite a lack of private sector investment.
In our opinion, the heavy emphasis placed on coal-fired projects is a step in the right direction for the sector. This is because the current energy mix in Pakistan is extremely costly and unreliable. The country's significant reliance on hydropower means that a large portion of the electricity supply is dependent on weather patterns, and droughts in recent years have exposed this weakness. Meanwhile, the country's reliance on gas- and oil-fired power has become an increasingly expensive endeavour due to rising import prices and falling or stagnant reserves. Coal-fired power is more reliable and cheaper than these three sources of energy. This is because Pakistan has sizeable reserves of coal that can be quickly extracted, while the price of coal imports remains reasonable. These factors led us to conclude that coal-fired power would be a fundamental driver of growth in Pakistan's power sector.
During 2015-2024, Pakistan's overall power generation is expected to grow by an annual average of 4.1% to reach 154.2TWh. Driving this growth is an average yearly 5.7% rise in hydroelectric capacity. Gas-fired generation, on the other hand, is expected to maintain an average of 2.0% annual growth over the next 10 years. Given the relatively high cost of fuel and greater level of pollution emitted, coupled with growing capacities in other sources of electricity generation, we now expect oil generation to contract by an average of 4.0% through 2024. Meanwhile, given the abovementioned developments, we expect coal-powered generation to grow by more than double every year, averaging growth of 145% though our forecast period.
Despite the recent alleviation in the country's power capacity problems, the persistent problems we have previously highlighted: poor performance from existing generating assets, an inefficient grid, and difficulties in increasing generating capacity due to poor fiscal finances, may continue to weigh on the country's ability to turn around the situation. The government's inability to curb electricity theft and raise electricity prices further locks the sector in a vicious cycle as governments struggle to pay the power companies who, in turn, are unable to pay their fuel suppliers, which reduces the willingness and ability of firms to invest in assets which will help alleviate the problem. The shortage of power continues to weigh on the economy, with textile and steel-rolling industries recording losses directly due to the lack of electricity. Slow negotiations with more amply-supplied neighbours and delays in paying for imports (due to Pakistan's foreign policies and poor fiscal position) continue to hamper the building and refurbishments of various dams, pipes and transmission infrastructure.
While the PLM (N) government had aimed to end load-shedding by 2017 under its National Energy Policy 2013-18 which was unveiled in July 2013, we have seen little progress in its implementation. The extensive policy covers the revamping of the national regulator, privatisation of various government assets, upgrading of the distribution and transmission assets, the creation of a 'coal corridor' to help incentivise investments, with the aim of generating 7GW of power via cheaper coal plants as well as the gradual removal of electricity subsidies. Despite these plans, we remain sceptical about the government's resolve to tackle the situation. The approval of the plan by the Council of Common Interest included a hike of PKR3-7 for various types of power users. However, although the National Electric Power Regulatory Authority (NEPRA) raised electricity tariffs that were implemented in November 2013, the government, via the Ministry of Water and Power, chose to step in to reduce the price for consumers through further subsidies.
Similarly, Prime Minister Nawaz Sharif ordered a crackdown against defaulters in early May 2014, which resulted in electricity and gas outages at several government offices, including the prime minister's. The electricity was restored after payments were received. While the power and gas companies involved have received payments since this episode, the attitude among public officials and provincial governments has changed little, and as such, we believe they are likely to continue to owe large sums of unpaid bills and propagate the vicious debt cycle.
|Pakistan Total Net Generation, By Type TWh|
Within the National Energy Policy 2013-2018, there is a target to remove the supply-demand gap by 2017. However, no hard generation capacity target was put forth within the document, although the policy outlines a list of projects and initiatives that are at various stages of discussions and development. It also sets aside cities and corridors with better incentives to increase private sector involvement. Based on BMI's calculations, installed capacity is expected to grow to 23.3GW by end-2015 and rise further to 38.6GW by 2024. This remains far removed from the country's previous 25-year energy security plan, approved in 2005. This plan had envisaged an increase in power generation by 143GW, with nuclear power generation growing by 8.8GW by 2030, hydroelectric capacity by 26.2GW, coal-fired generation by 19.8GW, renewable energy supply by 9.5GW, just 1.4GW of additional oil-fired generation and 77.8GW of new gas-fired generating capacity.
With few funds available in the country, these targets and even our forecasts face downside risks. Unsurprisingly, this has led Pakistan to look for greater private power project investment to meet its medium-term target.
Although successive Pakistani governments have made hydropower generation a key priority, it remains to be seen if delays in funding from international agencies and external counterparties will prevent these projects from being completed on time, as problems such as environmental concerns and cost escalation continue to hamper progress. We see a shift towards other types of generation, such as solar and coal. As we have highlighted before, the PML-N ruling together with 19 other independent candidates in the coalition government, could result in a radical shift towards the development of coal generation as opposed to hydropower, and we are seeing growing evidence of this. In mid-2013, authorities proposed plans to convert three oil-based steam power plants (1350MW-Muzaffargarh, 850MW-Jamshoro and 640MW-Guddu) to burn coal instead, while three other hydropower projects are now sitting idle (72MW-Khan Khawar, 121MW-Allaykhawar and 130MW-Dubair Khawar) due to the costs of installing transmission infrastructure. The Pakistani government appears to have also secured financing from China and the UAE for coal projects in Thar (in December 2013) and Gadani (March 2014), respectively. This highlights the fluidity of the sector's business environment which has often been a weight on the sector, and it remains to be seen if the federal government will honour its pledge to liberalise the sector in line with agreements with the International Monetary Fund (IMF) and World Bank.
|Region||First 10 Years (PKR per kWh)||Next 15 Years (PKR per kWh)|
|Source: BMI, NEPRA, Various News Sources|
|North: Northern Punjab, Federally Administered Tribal Areas, Kyber Pakhtunkhwa, Islamabad Capital Territory, Azad Kashmir and Gilgit-Baltistan.||22.0||9.1|
|South: Balochistan, Sindh and Southern Punjab (including Cholistan)||21.1||8.8|
Pakistan is also firming up its framework for other types of renewable energy in the hope of encouraging greater (foreign) private sector interest. In January 2014, the NEPRA set rates for the nation's new feed-in tariffs policy. Introduced as a tiered tariff structure, the rates will differ from north and south, and rates for the first 10 years will be higher ( see table for greater detail).
On July 16 2014 Prime Minister Nawaz Sharif announced that the government was constructing 26 coal-based power projects across the country to deal with the ongoing electricity crisis. Sharif said the 26 projects had been launched in Khyber Pakhtunkhwa, Sindh, Balochistan and Punjab. Just two days before this announcement, the Punjab Power Development Board had announced that a new coal-fired power plant with a capacity of 660MW was to be developed in Jhang by a consortium comprising conglomerate Nishat Chunian, DG Khan Cement and Adamjee Insurance. A spokesman for the Punjab Power Development Board said the provincial Energy Department would help in the land acquisition process for the power plant.
The decision by the consortium to undertake a 660MW coal-fired project in Jhang also highlights the attractiveness and viability of coal-fired plants to the private sector. While state-owned companies operate a monopoly on transmission and distribution (T&D) in Pakistan, private sector participation in power generation has grown significantly over the past few years. Coal-fired plants are particularly viable for the private sector as they have fewer barriers to entry. For instance, coal-fired plants require fewer environmental permits than hydropower plants and procuring fuel is a relatively simple process (relative to gas or nuclear plants).
Despite these developments, however, we find it instructive to highlight the inefficiency of thermal power plants in Pakistan continues to weigh down all the stakeholders of the industry. Line losses have been found to play a major role in the energy crisis that the Karachi Electric Supply Company (KESC) faces. A study by the Sustainable Development Policy Institute in 2000 reported that Pakistani gas-fired plants require almost twice as much gas on average to generate the same amount of electricity compared to plants in other developing countries. However, with the KESC facing difficulties to pay for fuel, due to a growing amount of unpaid electricity bills from its end users, there is a risk that the company will be further constrained in terms of electricity generation, aggravating the shortfall that already exists.
We highlight that a lack of generation capacity is not the only problem facing the sector and there are a number of obstacles hindering existing capacity from reaching its full potential. Some of the most pertinent obstacles include a lack of accompanying T&D infrastructure, shortages in fuel, and poor management. Recent instances of these obstacles include:
The 404MW Uch-II gas-fired power plant was inaugurated in April 2014, but has been operating significantly below capacity due to a lack of transmission capacity and a shortage of purified gas.
The 425MW Nandipur plant was inaugurated by Sharif on May 30, but was taken offline within days. This was because the plant was designed to be operated on furnace oil, but was being run on diesel. The plant is likely to remain closed for three months until new components are shipped in.
The Guddu Power Plant has been operating at 30-40% of capacity. At least seven power units of the plant are currently unutilised due to a number of accidents and equipment shortages.
We note that the obstacles listed above hinder power generation by the public and private sector. The lack of T&D infrastructure, in particular, has had a devastating effect on the sector and we have seen private sector players move towards captive (or off-grid) generation in order to bypass grid limitations.
In line with its plans to convert existing oil-fired plants to coal in order to reduce the costs of generation, the government announced on October 20 2013 that it will switch the Muzaffargarh, Jamshoro and Guddu plants to coal-based from furnace oil with the aid of external financing. Increasing oil prices have left the government saddled with escalating costs, and the private players have begun to make plans to align themselves to the government's cost reduction strategy. Hub Power Company, Pakistan's largest independent power producer also made plans at the beginning of October 2013 to convert four of its furnace oil boilers to coal, and expects the first boiler to come online by September 2016 The development of Thar coal fields remains key to providing the country with sufficient fuel. However, community dissent continues to stall the development of the fields.
In the Energy Policy for 2013-2018, the gorvernment makes mention of a coal corridor that the government hopes to bring online, which is slated to have a capacity of 6-7GW. That, however, is still lower than the country's previous energy security plan (in 2005), where the increase in coal-fired generation was intended to reach 19.8GW by 2030, making it one of the highest growth segments. There have been setbacks and costs are likely to exceed the government's previous estimates. One such example is the Thar mining and power project, which was abandoned by the Chinese Shenhua Group Corporation in 2007. Sindh Engro Coal Mining Company has since taken over the project, and has presented plans of an integrated coal mining and power project with a capacity of 6.5mn tonnes of coal per annum and 1.2GW of electricity. The government previously agreed to the company's request for a sovereign guarantee, in order to assist the company to secure the funding it needs from its Chinese financiers who have agreed to finance USD900mn of the total cost of USD1.2bn. In addition to the pending sovereign guarantee (which has yet to be provided to the financers), the power generation company running the plants in the project has expressed concerns over the need to convert current oil-based plants to coal-based plants that can use the coal extracted from the Thar mine. The company fears that delays in extraction could lead to interruption in power generation and would force the company to source similar-grade coal on the international market. Indeed, complications surrounding the extraction and shipping of the mined coal may demand that the firm seek technical expertise to explore other alternatives such as coal gasification.
Port Qasim Authorities signed a deal for the building of four coal-based power plants in February 2013, each with a capacity of 125MW with the help of Burj Power, a development and advisory firm from the UAE and China's Harbin Electric International Co Ltd. KESC will likely purchase electricity from these plants, provide long-term demand for the coal entering into the port's coal terminal and aid in the reduction of the cost of power in Karachi.
Building Pakistan's nuclear capacity remains fraught with difficulty, not least due to the significant technical expertise required. The country has three nuclear plants and its third nuclear electric power plant came online in May 2011, and added 330MW of capacity. Former prime minister Yousaf Raza Gilani inaugurated the Chashma Nuclear Power Plant Unit-1, located near Chashma Barrage on the left bank of River Indus, 32km south of Mianwali. The former prime minister confirmed that China had also been contracted to build two more reactors at the plant. He said the generation of additional 330MW electricity would provide immediate relief to consumers, adding that two more power plants, C-3 and C-4, which are already under construction at the site, would help pave the way for the Pakistan Atomic Energy Commission (PAEC) to meet the government-assigned target of 8.8GW by the year 2030.
While the country is keen to expand its nuclear power capacities, it faces concerns from its neighbours and key world powers, that its nuclear fuel could be used for nuclear weapons. This is in addition to other similar hurdles such as the lack of financing faced in all the other types of power generation. Historically, Chinese companies have been the most forthcoming in terms of support technically and financially.
In June 2010, China stated it would move forward with plans to provide and finance the construction of the two new nuclear reactors in Pakistan. Chinese news source China Daily cited Chinese experts who stated that China would most likely go ahead with financing the construction of the nuclear reactors despite concerns voiced by the international community - owing to Pakistan's non-adherence to the nuclear non-proliferation treaty. Through the proposed USD2.38bn deal, China is to export two 650MW nuclear reactors to Pakistan as well as provide financing for the construction and installation of the plants, according to the Times of India. The nuclear power plants would be located in the Punjab province. Construction of the two reactors, Chashma III and IV, are under way and the government expects the plants to be operational by 2016 respectively.
In addition to the four units in Chasma, the government has reported begun work on two 1,100MW nuclear plants adjacent to the current plant in Hawks Bay, Karachi (Kanupp II and III). The Pakistan Nuclear Regulatory Authority previously relicensed the Kanupp-I in 2004 after its design life ended in 2002. In all, the government aims to have seven nuclear plants by 2030, with total generation capacity of 8,900MW. Given the state of Pakistani finances, the country is likely to receive help from China to finance the building of this plant.
The 2005 energy security plan envisaged a rise in nuclear power generation of up to 8.8GW by the year 2030. The plan is to increase the share of nuclear power to 4.2% of the country's total energy mix. BMI forecasts nuclear to account for just 2.5% of total generation in 2015.
Pakistan has huge hydroelectric potential of an estimated 42GW, but boasted only 7.5GW of installed capacity as of 2013. The government's 25-year energy security plan envisages an increase in hydro-electric capacity of up to 26.2GW between 2005 and 2030, while the new five year plan (2013-2018) lists several hydropower projects as part of its medium- to long-term plan. The amount of power generated from hydro-electric plants fluctuates year to year, aggravated by the weak monsoon. It has been forecast that USD20bn would be needed to fully exploit hydro-power resources. There are projects being evaluated, such as the Diamer-Bhasha dam, which is expected to generate 4.5GW of electricity on completion. Many unresolved issues continue to shroud the progress and feasibility of various projects, increasing the risks of delays or even cancellations. Some of these issues include financing, the government's ballooning deficit, environmental issues, infrastructure development, land acquisition, compensation packages and other related concerns. The previous pull-out of funding from international donor organisations in August 2012 for the construction of the Diamer-Bhasha dam exemplifies these risks, as the retraction of funds was done after India's fears that the dam's construction would have an adverse impact on the environment. Pakistani officials had looked to China or Russia for help to finance this project in mid-2012, but in August 2013, Finance Minster Ishaq Dar announced that the Asian Development Bank and World Bank had agreed to provide a credit line for the project, on the condition that the Pakistani authorities obtain a letter of non-objection from India. Given that the building of the dam would give Pakistan the ability to control the level of water downstream in the part of the Indus River that runs through India, it seems unlikely the Indian authorities will agree to provide such a letter. Moreover, local landowners seeking far higher compensation for the land that the project will require, the cost of the project could yet escalate further, and stall the project once again.
International donors previously pledged USD328mn in financial assistance for the Neelum-Jhelum project. Then, the announcement of financing for the scheme was made at a meeting that included members of the Islamic Development Bank (IDB), the Saudi Fund for Development, the Kuwait Fund for Development and the Abu Dhabi Fund for Development, according to reports in Pakistani newspaper The Post. The funds were to be used to finance the first three phases of the power project. Farrukh Muhammad, the IDB's representative at the meeting, said that further funding would be made available as the project progressed.
Subsequently, the Export-Import Bank of China sanctioned a USD450mn loan to support the Neelum-Jhelum project. The plant is due to generate revenue of approximately PKR45bn (USD482mn) annually and is expected to recover its construction cost within seven years. The plant was originally due to cost PKR130bn (USD1.39bn), but this has increased by 154% to PKR330bn (USD3.53bn). The major financiers of the plant are the Export-Import Bank of China, the Kuwait Fund, the Saudi Fund for Development and the UAE government. More than 30% of the work has been completed. Despite the progress in securing funding from these sources, funds remained insufficient as cost escalations grew, causing the cost to rise four-fold by end-2013. Political uncertainty at the end of 2012 and early 2013 had pushed the government to seek private sector support but the lack of interest led the new PLM-N government back to international agency. In October 2013, it was announced that the project was 50% complete, and Saudi Arabia had offered a loan of USD100mn to the project, while the Water and Power Development Authority raised approximately USD150mn through the issuance of term finance certificates. Although funding has now been secured, risks remain as these loans could be delayed, should any political changes arise. As of February 2014, Prime Minister Nawaz Sharif announced that about 63% of the work had been completed and that it should be completed before the scheduled deadline of 2016.
Apart from the Neelum Jhelum project, international donors have offered funds of USD1.8bn for the 4,320MW Dasu dam, which is further downstream on the Indus River from the Diamer-Bhasha dam, in the Kohistan district of Khyber-Pakhtunkhwa.
Eden Enterprises appears to be going ahead with its Suki Kinari (655MW) hydropower project. Eden, along with its Pakistani partners, owns 95% of SK Hydro, which has been given a 35-50 year concession period for the power plant. The Private Power and Infrastructure Board is currently reviewing six additional hydro-power projects for the Swat River. If approved, the projects would provide several hundred megawatts of additional hydroelectric power capacity to the country.
In May 2009, a consortium of K-Water, Sambu Construction and Daewoo E&C signed an agreement for the Patrind hydropower project valued at USD331mn, according to the Associated Press of Pakistan. The three Korean firms will share a 49% stake in the project and the plant will have a capacity of 150MW. In June 2013, local newspaper, The National, reported that ground break was to be held in July and construction started soon after.
France's international development agency, AFD, is considering funding the Munda multi-purpose dam project in the Mohmand Agency of Pakistan's Federally Administered Tribal Areas, according to AFD's country director, Nicolas Fomage. A proposal for the financial assistance, which will be used to design and build the project, has been submitted to AFD's board of directors for approval, with a three-member AFD delegation having visited the proposed location. The dam is expected to produce 740MW of electricity. Additionally, it will be capable of storing 300mn cubic metres of flood water from the Swat River, with the project estimated to generate benefits worth PKR20.2bn (USD222.2mn) annually.
The dam had an estimated cost of USD6.1bn in September 2005, but this has since been increased by 10% owing to the growing price of construction material required for the project. According to the newspaper, the government is also trying to find the extra funding from local banks.
A feasibility study for the dam was undertaken by a Japanese consultancy, and the American company Amzo Corporation was involved in the project before dropping out. The project is being overseen by WAPDA.
In August 2009, Pakistan and China signed a memorandum of understanding (MoU) to build the Bunji hydropower facility in Astore district. According to the Khaleej Times, the plant will have 7GW capacity. The agreement was signed by chairperson of Pakistan's ministry of water and power, Saleem Mandviwala and Yang'an, chairperson of China Three Gorges Project Corporation (CTGPC). According to the chairman of WAPDA Raghib Shah, engineering design and tender documents were due to have been completed by the end of March 2013.
CTGPC has offered to invest about USD10-15bn in hydropower projects through a direct financing model based on a public-private partnership (PPP) framework. The offer, which would aid Pakistan in addressing its electricity crisis, was made during discussions between officials from CTGPC and the Pakistani government in April 2011. According to local media reports, projects discussed in the meeting included the Kohala, Bhunji, Bhasha and Dashu hydropower projects in the upper Indus valley, as well as other hydropower projects in the lower Indus valley. CTGPC is already involved in a number of hydro and wind power projects in Pakistan. These projects are expected to add around 10GW to Pakistan's national grid over the next decade.
South Korean group Sambu Construction has won a contract worth USD146mn for the construction of a hydropower plant in Pakistan. The company will partner Star Hydro Power on the project and must complete the work within 54 months.
Total generation capacity of the Tarbela hydro station would rise to 4.83GW after the installation of 1.35GW units as part of the fourth Extension Project, official sources have said. WAPDA has established that three turbines of 450MW each could be installed instead of two turbines of 480MW each, as envisaged in a study conducted in the 1990s.
The US state congress has committed a further USD280mn in aid for the country's improvement works to the Mangla Dam and due diligence work on the Kurram Tangi Dam project.
Private sector sponsored development of privately-owned hydropower plants have been on the rise, with work starting on projects such as the New Bong Escape (84MW) and Patrind (147MW) projects. The government's Private Power Infrastructure Board is further looking to gather more interest through a series of investment conferences and road shows, which are to be held around the world in the months ahead. In April 2014, the Azad Jammu and Kashmir (AJK) provincial government received three private sector bidders for a 100MW hydropower project in Kotli, which will be constructed under a build-own-operate scheme for 30 years before it is returned to the government. The three bidders were CWE Investment from China, Ratchaburi Electricity Generating Holding PLC from Thailand and Sachal Engineering Works, a domestic company.
In January 2015, it was announced that the Pakistani government had approved a net metering scheme for solar power, which would allow solar generators to sell excess power they produce back to the national grid. Net metering is a billing mechanism which credits solar generators - typically those at a household level who utilise installed rooftop panels - when they add electricity to the grid. The government has also decided to cut recently imposed import taxes (of 32.5%) on solar panels, after a backlash from developers, the public and media. Rooftop installations are also becoming increasingly affordable, owing to the decision by the State Bank of Pakistan and the Alternative Energy Development Board to allow rooftop solar installations to be financed with home mortgages.
These three developments provide a significant boost to the outlook for solar power in Pakistan, driving demand for panels and supporting the continued expansion of the industry. Net metering in particular will help to alleviate the power shortfall in Pakistan, as it will allow for more electricity to be available through the national grid.
Our outlook for solar power in Pakistan was already positive; there is a strong project pipeline (with active involvement from Chinese developers) and solar is set to play an increasingly important role in the country's power mix over our 10-year forecast period. Solar power generation presents a viable alternative to conventional fuels, given the supply disruptions with thermal power projects and the very high solar irradiance levels across the country. Studies by the Japan International Corporation Agency have concluded that the proven power generation of solar energy in Pakistan is around 4-5kWh per square metre and that there are more than 3,000 hours of sunshine annually.
As such, the adoption of net metering and the increased affordability of rooftop solar systems provide upside to our already constructive forecasts. We will be monitoring the industry closely over the coming quarters and potentially upwardly revising our solar capacity and generation forecasts depending on the uptake of household solar systems. At present, we forecast solar capacity to total 1.3GW by the end of our forecast period in 2024.
Pakistan has huge wind power potential, with the US government estimating 130GW of possible capacity. This has not gone unnoticed, with Chinese and Turkish investors already making inroads into what could be a profitable sector.
The government has set aside 39,000 acres of land and revised tariff rates to ensure the rate of return from wind power investments will be around 17%. By offering a 'cost plus' incentive to investors, Pakistan could see a huge influx of interest in its wind sector, especially as renewable energy incentives are being cut across both developed and emerging markets. Indeed, we have seen a stream of projects come online, with as many as 45 wind projects on the way and 106MW of capacity ready for commercial operation. According to Zubair Motiwalla, the head of the Sindh Board of Investment, around 30 investors have expressed interest. In its 25-year energy security plan, the government envisages an increase of 9.5GW in renewable energy supply by 2030. Construction of the country's first wind project in Jhimpir, the Zorlu Energy Wind Power Project, which is estimated to have a capacity of 50MW, is under way.
However, Pakistan should heed the experiences of other countries with high potential emerging markets for renewables - where overly attractive incentives were established without caps, resulting in a huge boom in investment, but also a huge government bill. With Pakistan's fiscal situation indicating that the government has little cash to spare, it needs to ensure it is not offering incentives that it cannot afford to pay.
Iranian water and power company Sunir has signed a MoU with Pakistan's Planet Energy for the construction of a wind farm. The two companies will jointly develop a 50MW wind farm, with the specific location being dependent on land allocations made by Pakistan's Alternative Energy Development Board (AEDB). Financial details of the project have not yet been released. The deal was signed by the Chairman of Planet Energy, Tariq Sayeed, and the Managing Director of Sunir, Reza Ebadzadeh during a visit by Iran's Energy Minister, Parviz Fattah, to Pakistan.
AES Corporation has finalised an agreement with Pakistan for a wind power generation project near Karachi. The two-year project will include an investment of USD375mn and will have capacity of 150MW once completed. It will be developed at three sites in the Gharo Corridor in the Thatta district of Sindh.
Three Gorges First Wind Farm Project Company has signed a contract with Chinese firms China Huashui Development Corporation and China International Water and Electric Corporation regarding the establishment of a wind power plant in Jhimpir, Pakistan. Under the terms of the offshore and onshore engineering, procurement and construction (EPC) contract, the Chinese companies will supply and deploy wind turbines for the project. Once completed, the plant will have a power generation capacity of 49.5MW.
Pakistan's AEDB has announced that it is willing to approve a request by Norway-based clean energy company NBT to develop a 150MW wind farm in the north of Karachi in Sindh province. AEDB, which was created by the government in 2003 to drive private investment in renewable energy, is ready to provide and issue the land and letter of award for the project once NBT pays the initial fee. Since May 2010 NBT, a subsidiary of China-based power producer AEI China Power, has been in discussions with three Chinese manufacturers - Goldwind, Sinovel and China Energine International - about supplying turbines for the wind farm. NBT is also looking to raise financing for the project from these three companies, which all have a line of credit with the Chinese state-owned bank China Development Bank. NBT has plans to develop up to 250MW of wind power capacity in Pakistan over the next two years and 650MW over the medium term. According to Sgurr Energy, the appointed engineer and project developer, construction on the project was due to begin in 2013.
The Board of Directors of the Overseas Private Investment Corporation (OPIC) approved a USD95mn credit facility for a 50MW wind power project in the Ghoro-Keti Bandar Wind Corridor in March 2013; the project could generate 133GWh of emission-free electricity annually.
|e/f = BMI estimate/forecast. Source: EIA, BMI Calculation|
|Consumption, Net Consumption, TWh||79.9||82.8||86.2||89.8||93.6||97.6|
|Consumption, Net Consumption, % y-o-y||3.6||3.7||4.1||4.2||4.2||4.3|
|Consumption, Net Consumption, KWh per capita||438.5||447.3||458.2||469.9||482.0||494.9|
|f = BMI forecast. Source: EIA, BMI Calculation|
|Consumption, Net Consumption, TWh||101.7||106.1||110.7||115.5||120.5||125.9|
|Consumption, Net Consumption, % y-o-y||4.2||4.3||4.3||4.3||4.4||4.4|
|Consumption, Net Consumption, KWh per capita||507.9||521.8||536.3||551.5||567.7||584.9|
|Total Net Generation And Consumption TWh|
Following estimated real GDP growth of 4.1% in 2014, BMI forecasts average annual growth of 3.9% between 2015 and 2024. The population is expected to rise steadily from 188.1mn to 212.2mn over the same period, and net power consumption looks set to increase from 86.2TWh to 125.9TWh. Over the next decade, we project the annual growth rate for electricity demand to average at 4.2%.
Transmission And Distribution, Imports And Exports
|e/f = BMI estimate/forecast. Source: BMI Calculation|
|Electric power distribution losses, TWh||19.8||20.4||20.4||21.1||21.9||22.7|
|Electric power distribution losses, % of output||19.9||19.8||19.1||19.0||18.9||18.9|
|f = BMI forecast. Source: BMI Calculation|
|Electric power distribution losses, TWh||23.6||24.5||25.3||26.3||27.3||28.3|
|Electric power distribution losses, % of output||18.8||18.7||18.6||18.5||18.4||18.4|
|e/f = BMI estimate/forecast. Source: BMI Calculation, EIA|
|Total Net Imports, TWh||0.0||0.0||0.0||0.0||0.0|
|f = BMI forecast. Source: BMI Calculation, EIA|
|Total Net Imports, TWh||0.0||0.0||0.0||0.0||0.0|
Pakistan has the potential to maintain its significant import requirement as the growth in its net generation capacity and output is expected to continue lagging behind demand growth in the short term. This provides opportunities to nearby countries such as India to help bridge the shortfall. That said, over the longer term, we expect the country's situation to improve and eventually reduce its import requirements through more renewable and thermal generation capacity. Indeed, a decline in transmission and distribution losses - which we estimate to come in at 18.8% in 2024 - remains at a slow pace due to the lack of investment in the grid, and as such will provide only minor reprieve to supply shortages. Even though the government's five-year energy plans targets transmission and distribution losses to decline to 16% from their current estimates of 23-25%, it remains to be seen if the country can attract the investment it needs to fund these infrastructure upgrading projects.
The existing power supply grid consists of 50,461km of transmission lines - including 500 kilovolts (kV), 220kV, 132kV and 66kV - as of 2009. While there are plans for upgrade and expansion, these have been relatively slow moving given the current strain on resources. As of 2013, the National Transmission and Distribution Company's (NTDC) website shows the construction and planning of a number of projects, including a 220KV sub-station in New Okara, two transmission line projects and a 500KV substation. Despite these efforts, there continue to be substantial power losses in the transmission system, leading to power shortages in spite of a theoretical surplus in generating capacity over demand. Moreover, the lack of connectivity between the power grids in the northern and southern parts of the country has prevented the transmission of electricity to areas facing the gravest shortage. Understandably, due to a shortage of funds, central and local governments have instead focused on increasing the generation in the vicinity of cities, rather than optimising the transmission grid.
As such, much of the progress for grid upgrades has been led by international organisation and foreign initiatives. For example, in 2005 the World Bank agreed to extend a financing facility covering the financing of investment programmes for the Pakistan electricity distribution companies and the central NTDC. The lending programme was to offer USD130mn for electricity distribution, USD55mn for transmission and USD15mn for technical assistance. Indeed, since then, the NTDC has said it would continue to rely on international financing institutions to complement its own funds and commercial borrowing to finance its investment programme, worth USD850mn over five years. The NTDC asked the World Bank to consider financing a 220kV double circuit transmission line in Dadu-Khuzdar in Balochistan, and two 220kV substations (Kasowal and Ghazi Road) with the associated shorter transmission lines.
Likewise, the Japan International Cooperation Agency (JICA) and the Pakistani government signed an official development assistance loan agreement to finance the 'National Transmission Lines and Grid Stations Strengthening Project' in Pakistan in early 2010. JICA was to provide up to JPY23bn (USD244.71mn) for the project. The loan was used for the construction and expansion of 500kV and 220kV high-voltage substations on four sites and related transmission lines - about 428km long - in the country's Punjab and Sindh provinces.
Apart from upgrading local infrastructure, help from investment into regionally shared grid could possibly improve Pakistan's situation. Indeed, although there is sufficient awareness that integration of electricity grids across South Asia could reduce the power cost and enhance the manufacturing competitiveness of each country, little success has been made in pushing this option as a solution. One potential project is India's proposal of a power transmission grid to link countries that are part of the South Asian Association for Regional Cooperation (SAARC). BMI believes that the project's aim - to resolve electricity shortages among SAARC's member countries - is credible, despite the numerous hurdles that will have to be overcome.
The proposed grid was announced during the 2011 South Asia energy conference held in the Indian capital New Delhi. The grid is estimated to have the potential capacity of at least 100,000MW for common use among the member countries, which include Bangladesh, Bhutan, India, Nepal, Pakistan, Sri Lanka and Afghanistan. In the same year, a study conducted by the Confederation of Indian Industry showed that Nepal, Bhutan, Afghanistan and India all have huge hydro-electric potential, which can be tapped for intra-regional power trade.
While negotiations for such a regional project is understandably complicated and slow, bilateral deals have the potential to fill its gap in the short term. That said, Pakistan's tenuous relations with its neighbours have often meant that bilateral proposals could fall prey to shifts in political stance and changes at both local and central governments. For example, while formal understanding for the sale of electricity from India was reached in November 2011, little progress has been made. The World Bank completed its study in June 2012, where it agreed to fund infrastructure to be laid down for the trading of electricity between the two countries, with each side building at least 45km of 220kV transmission lines. The bilateral agreement will last five years would provide Pakistan with 500MW of electricity at a cost of no more than PKR7-8 per unit, similar to the cost at which the country buys electricity from Iran. However, since then little progress has been made at this end. Instead, India has made offers to sell power to Pakistani authorities at rates of PKR15 per unit and above. In January 2014, the Economic Times reported that Prime Minister Nawaz Sharif and his cabinet had approved the signing of an MoU, the first step needed to implement the proposal of buying electricity from India.
Apart from electricity imports from India, Pakistan's electricity imports from Iran had doubled following the enhancement of transmission line capacity, a spokesperson of the Ministry of Water and Power said at the beginning of March 2012. All the power received from Iran is being supplied to Makran division - with important locations including the Gwadar Deep Sea port, the Gwadar district, Turbat, Panjgore, Mand and other areas of the division. The imported electricity means that Makran division does not have to undertake any load-shedding, and has actually left the region with an electricity surplus.
In May 2013, Iran's Minister of Energy Mjid Namjou further expressed keenness to build another power plant on Iran's border, so that his country could boost the total amount of energy available for export by another 2,000MW. This comes after the two countries signed an agreement that increased electricity imports from Iran by 1,000MW. According to the state-run Fars news agency, citing Iranian Deputy Energy Minister Mohammad Behzad, the countries will build a transmission line for electricity between the city of Zahedan in south-eastern Iran and Quetta in western Pakistan. The project will require an investment of USD700mn and will be financed jointly by the two countries, the official Islamic Republic News Agency reported, citing a statement from the Energy Ministry. However, since 2012, relations with Iran have been somewhat strained due to the sanctions placed on Iran by the UN. Given that Pakistan needs to maintain sufficiently cordial relations with international organisations, many of whom it receives funding from, this suggests that purchasing power from it is likely to become increasingly difficult.