Energy, infrastructure projects: Govt expects $76b investment in 6 years

Bureaucrats and ministers brief over 75 diplomats and opinion-makers

ISLAMABAD: Pakistan has embarked upon an ambitious plan to invest a whopping $76 billion over the next six years to address energy supply bottlenecks and build quality infrastructure, as the country gears up to become a regional hub under China-Pakistan Economic Corridor (CPEC).



Federal ministers and senior bureaucrats on Thursday gave detailed briefings to over 75 diplomats, representatives of international financial institutions and opinion makers. The Prime Minister’s Office organised the event to highlight the performance of the Pakistan Muslim League-Nawaz government in the past three years and the plans for years ahead.

The country’s top decision makers also tried to quell misconceptions about CPEC projects, particularly about the western alignment, showing with maps that work on half a dozen sub-projects of the western route was underway.

However, among the challenges highlighted during the briefings were the United States sanctions against Iran that could affect work on Iran-Pakistan gas pipeline and the security situation in Afghanistan, which may have implications for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.

The other concern that Water and Power Minister Khawaja Asif and National Highway Authority (NHA) Chairman Shahid Tarar tried to downplay was timely availability of finances for projects undertaken. Most of these projects are planned to be completed in the next three years.



The IP pipeline is still facing major issues due to a couple of remaining international sanctions against Iran, said Petroleum Minister Shahid Khaqan Abbasi. He said “dollar transactions [with Iran] are still not allowed,” making it difficult to conduct normal business with Tehran.

Abbasi said the existence of the snapback clause in Tehran’s agreement with the West also prevented raising funds for the project internationally. Under the snapback clause, if Iran violates the agreement, the sanctions that helped make the deal possible will snap back into place.

The minister said that discussions with Iran on these issues were in progress and hoped that the project would be completed by June 2018.

Abbasi said $2 billion have so far been invested in LNG terminal and pipeline projects. He said about $10 billion were being raised from the market for pipelines and LNG Terminals, which will help meet gas shortages by 2018.

He said that efforts over the past three years have resulted in industrial sector energy shortages being overcome and that in the next two years, Pakistan will have surplus gas supplies.

Responding to question on TAPI, the minister said Turkmenistan had taken upon itself to deal with security of the pipeline in Afghanistan and added that the project could materialise in the next four years.

To completely overcome the gas shortages, the import of LNG was “the only short to medium term solution of Pakistan’s energy crisis as it was sustainable, flexible and scalable,” said Abbasi. He said the government has a target to inject 2000mmcfd of LNG in the system by mid-2018 to ‘wipe out load-shedding’.

He said LNG-based power plants producing a total of 4,000MW will become operational by mid-2017. The minister also tried to address concerns of western countries over use of coal and said Pakistan has a clean energy mix, which it would like to maintain.

Power investment

Top guns of the water and power ministry boasted that in next six years Pakistan would receive an estimated $58.2 billion investment in the power sector and a major chunk of it would come under CPEC. Power Secretary Younus Dagha said that projects to produce a total 30,948MW are being planned.



Without giving a firm date, Khawaja Asif said load-shedding will end in 2018. He said that out of $58 billion, as much as $36 billion projects are at various stages of financial closure. He said the financial closures would make sure that these projects would come on line.

Dagha said that in last three years, the PML-N government managed to improve recoveries of electricity bills and bring down aggregate technical and commercial losses from 28.2% to 23.4%. He said circular debt has been effectively capped.

Infrastructure

NHA chairman Shahid Tarar said $8.5 billion worth of infrastructure projects will be completed in the next three years.  He said Prime Minister Nawaz Sharif has conceived 13 new motorways and two of those have already been completed. The chairman said $8.5 billion will be arranged from China, government’s own resources and from the private sector.

Tarar said work on the CPEC western route was underway and will be completed in various segments. The Gwadar-Hoshab (M-8) 193km section is completed. Work on 449km Surab-Hoshab section will be completed by end of this year. The 151 KM Khuzdar-Shahdadkot section is at the advanced stage of completion. He said the Zhob-Mughalkot (N-50) 81 km long section will be completed in January 2018.

Published in The Express Tribune, June 10^th, 2016.