Energy: Power generation capacity expected to jump 46% by 2018

Published: April 7, 2013
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32,400MW will be Pakistan’s power generation capacity by 2018, if the next govt were to do absolutely nothing to prevent or slow down the progress currently being made on projects that are already approved and progressing.

32,400MW will be Pakistan’s power generation capacity by 2018, if the next govt were to do absolutely nothing to prevent or slow down the progress currently being made on projects that are already approved and progressing.

KARACHI: 

After five years of unbearably long daily power outages, Pakistan’s private sector has had enough: over the next five years, they plan on investing over $14.3 billion in increasing the nation’s power production capacity by nearly 46%, and they are doing so by investing in the cheapest possible sources of electricity.

According to data released by the National Electric Power Regulatory Authority (Nepra) in its 2012 State of the Industry report, private sector firms have already begun work on dozens of projects that would substantially increase the country’s electricity generation capacity. For the purposes of this special report, we include only those projects that are scheduled to be completed by the end of the next administration’s term in 2018.

If the next administration were to do absolutely nothing to prevent or slow down the progress currently being made on projects that are already approved and progressing, Pakistan’s power generation capacity will increase to 34,200 megawatts (MW), compared to the approximately 23,500MW today. Of that increase, more than 80% is coming through private sector initiatives.

Yet it is not just the private sector’s initiative that deserves to be applauded: it is also their foresight. Nearly all of the private sector projects scheduled to come online use the cheapest fuels possible. These firms are scheduled to add about 4,900MW to the nation’s hydroelectric power generating capacity, for example. Another 800MW will be added in terms of gas-fired thermal power plants. And nearly 3,000MW will be added or converted to coal and bagasse (a waste product from sugar manufacturing).

Residents of Karachi should rejoice in particular: the Karachi Electric Supply Company is converting 840MW of oil-fired thermal power stations to coal, which will dramatically increase the country’s only private utility’s ability to generate cheaper electricity. Put simply, this will mean even fewer power outages in Karachi.

The private sector’s focus appears not only towards fuel sources that are cheap, but also easily available. Natural gas, for instance, is possibly the cheapest source electricity, cost an average of Rs4.24 per kilowatt-hour, according to Nepra. But the bulk of the investment is going towards hydroelectricity, which, according to Nepra’s tariff determination, is expected to cost Rs5.43 per unit for the first 12 years of a project’s life, while the debt used to finance the plants is still being paid off, following which the tariff will be reduced to Rs2.47 per unit.

The preference for hydroelectricity has to do with the fact that Pakistan’s natural gas reserves are rapidly being depleted and importing gas is far more difficult than importing coal. Power plants that run on imported coal can produce electricity for an average of Rs10 per unit, according to industry experts, much cheaper than the Rs16 per unit that oil-fired thermal plants cost.

Compared to the $14.3 billion being invested by the private sector, the government is planning to invest just over $2.5 billion over the next five years to upgrade its power infrastructure, which will add about 2,100MW of electricity generating capacity over the next five years, the overwhelming bulk of which will be in thermal power plants that can run on both oil and gas.

The picture, of course, is not completely rosy. Power projects are notorious for not meeting their deadlines so it is possible that the next administration will not see all of these projects come to fruition during its term. But given the private sector’s commitment to solving Pakistan’s energy problems, the least the government can do is not create hurdles in their way. It will only help their own re-election chances.

Published in The Express Tribune, April 8th, 2013.

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Reader Comments (9)

  • just_someone
    Apr 7, 2013 - 11:22PM

    this is all completely wrong. where is the alternative in the mix in 2018? if we are going to be completely on cloud 9, why not look at the 3400MW that is supposed to be generated from wind only? also, kesc is definitely investing in coal but who ever said that will mean cheaper electricity for the masses? it doesnt even necessarily imply less breakouts since kesc heavily gets supplied by wapda and this supply will be cut off over time.
    this is just so bad, i dont even think its worth the time to point out the flawed facts and illogical assertions!

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  • mahakaalchakra
    Apr 8, 2013 - 1:51AM

    Strange coincidence Pakistan has installed capacity of 23,500 MW while Gujarat state in India under Modi has established 24,400 MW capacity of power generation. Google the Central Electricity Authority of India Tables for verification, if needed. All this was done in just last 8 years and now Gujarat can boast to have largest solar power farm as well. Also the per unit rates in Gujarat are far less than that of Pakistan.

    Pakistan needs someone like Modi to bring development.

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  • Apr 8, 2013 - 6:09AM

    No one will invest in power generation in Pakistan when the govt. keeps defaulting on its sovereign guarantees to private power producers.

    @mahakaalchakra:
    Very funny! I bet you also advice Jews that they need someone like Hitler to lead them?

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  • sure?
    Apr 8, 2013 - 9:40AM

    No one can disagree that there is a need for Pakistan to break out of the energy crisis that it finds itself in which cripples the industrial sector and destroys the quality of life of individuals. But it is not absence of generation capacity that is leading to load shedding. Let us consider facts:

    At this time the requirement is 13,000 MW and production is 7000 MW. http://dawn.com/2013/04/08/shortfall-rises-to-6000mw-urban-areas-suffer-18-hours-of-loadshedding-2/
    So with generation capacity of 23500 MW and requirement of 13000 MW, why does Pakistan suffer such punishing load shedding? Answer is power generation utilities simply do not have the funds to pay for the fuel.

    Adding capacity will not solve the problem until the circular debt issue is resolved. Under the current government, this problem actually ballooned instead of reducing. Hence your conclusions are wrong.

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  • Pakistani
    Apr 8, 2013 - 10:38AM

    Big problem is the free electricity to the elite class….cut down this free electricity and charge all the consumers equally..

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  • Falcon
    Apr 8, 2013 - 11:14AM

    @sure?:
    Circular issue debt is worsened because of high cost of oil based electricity. Since the plan is to bring online new capacity from cheaper sources, the utilization rate of infrastructure as well as affordability will be much higher leading to reduced load shedding and lower subsidies by Govt.

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  • Pak Patriot
    Apr 9, 2013 - 12:21AM

    Has Any one read Asad omer (of PTI) vision? He plans to bring in private sector (which are technically capable) for generating low-cost electricity. So please people vote for PTI which will rid of this crisis for us.

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  • Ali
    Apr 15, 2013 - 2:10AM

    Is this a joke? What are we supposed to do in next 5 years? Right now situation is 1 hour light and 1 hour loadshedding with 2 hour loadshedding twice in a day which makes total loadshedding about 14 hours in Lahore. I don’t know what’s the situation of other cities but I can’t live like this for next 5 freaking years!
    Also what about government not paying money to gas companies which increases the loadshedding even more.

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  • Shahid Khan
    Apr 26, 2013 - 5:45AM

    @Pak Patriot:

    Will the same Asad Umar enlighten me that after the Sindh government handed over a plethora of Thar Coal blocks directly to an organistation he was heading at the time not a single watt of power was produced? This is despite that the same organisation got institutional and financial support from the government of Sindh to go ahead with the extraction and power generation through Thar coal?

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