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Power industry of Pakistan

Electricity in Pakistan is generated, transmitted, distributed, and retail supplied by two vertically integrated public sector utilities: Water and Power Development Authority (WAPDA) for all of Pakistan (except Karachi), and the Karachi Electric (K-Electric) for the city of Karachi and its surrounding areas. There are around 42 independent power producers (IPPs) that contribute significantly in electricity generation in Pakistan.

Electricity generation has increased by 3.18% in 2015 as a result of Government of Pakistan (GoP) efforts and China–Pakistan Economic Corridor (CPEC). The country has begun diversifying its energy producing capacity by investing in coal, nuclear energy, solar energy and wind energy to help offset the energy shortage while larger projects greater than 1000 MW such as the Diamer-Bhasha Dam, Kohala Hydropower Project, Pakistan Port Qasim Power Project, Sahiwal Coal Power Project, Thar Engro Coal Power Project, Hub Coal Power Project and new nuclear plants are now under construction or planned.

Electricity is considered to be life line of any economy and most vital instrument of socioeconomic development of a country. Electricity is pivotal in running machinery in factories and industrial units, for lighting our cities and powering our vehicles. The challenge of ensuring electricity access for industries and providing increased access to the poor parts of the population is the key issue for any government. Currently the country is facing severe energy crisis. Despite of strong economic growth and rising energy demand during past decade. Moreover, rapid demand growth, transmission losses due to outdated infrastructure, power theft, and seasonal reductions in the availability of Hydropower have worsened the situation.

At the time of independence, Pakistan inherited 60MW of power generation capability for a population of 31.5 million, yielding 4.5 units per capita consumption. Twelve years later, when WAPDA was created in 1959, the generation capacity had increased to 119 MW. There has been an enormous increase in the demand of energy as a result of industrial development and population growth, in comparison to enhancement in energy production. Supply of energy is, therefore, far less than the actual demand, resultantly crisis has emerged.

The Power sector was restructured in 1998 with the creation of PEPCO (Pakistan Electric Power Company). Prior to 1998, there were two vertically integrated utilities, i.e., KESC, which served the Karachi area and WAPDA which served the rest of the country. Later on, WAPDA’s power wing has been structured into distinct corporate entities comprising of 4 GENCOs, 10 DISCOs and one Trans CO (NTDC).

These 10 DISCOs are responsible for distribution to the end users. KESC meet its overall demand with its own generation plus purchase from NTDC, IPPs and from Karachi Nuclear Power Plant.

Electric power in Pakistan comes from a variety of sources.

  1. Hydro power
  2. Currently we are having 6555 MW against the potential of 41000 to 45000 MW.

  3. Wind
  4. Though Pakistan has potentials of wind energy ranging from 10000 MW to 50000 MW, yet power generation through wind is in initial stages in Pakistan and currently 06 MW has been installed in first phase in Jhampir through a Turkish company and 50 MW will be installed shortly. More wind power plants will be built in Jhampir, Gharo, Keti Bandar and Bin Qasim Karachi.

  5. Solar
  6. Pakistan has potential of more than 100,000 MW from solar energy. Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan.However, private vendors are importing panels / solar water heaters for consumption in the market. Alternative Energy Development Board (AEDB) is working for 20,000 solar water heaters in Gilgit Baltistan. Mobile companies have been asked by the government to shift supply of energy to their transmission towers from petroleum to solar energy panels.

  7. Nuclear
  8. Pakistan has a small nuclear power program, with 1200 MW capacity, but there are plans to increase this capacity substantially. Remaining issues in development of nuclear energy are enrichment of uranium from U235 to U238, controlling chain reaction and dumping of solid waste.

The IPP is an entity, which is not a public utility, but that owns facilities to generate electric power for sale to utilities end users. In Pakistan, private power producers control about 30 percent of the total generation capacity, the electricity market was opened to IPPs in 1990. Subsequently, 15 IPPs achieved commercial operations under Pakistan’s first power policy 1994. For several years afterwards, the IPP program remained stagnant, only to be revived as a huge power shortage hit the country in 2006-07. In a regional context, Pakistan offers a relatively sophisticated operational and regulatory framework for the IPPs.

  • Contractual framework of IPPs

    Like most other countries, here, IPPs face single buyer market. Water and Power Development Authority is the key buyer of IPP power. IPPs negotiate a tariff with the regulatory authority, NEPRA, under a transparent competitive bidding process. Investors are generally insulated from underlying economic risks through tightly written, long-term PPAs with underlying take-or-pay contracts, supported by explicit government guarantees and credit enhancements. The fundamental principle underlying the contractual framework is to limit, as far as possible, the risks borne by the Project Company. A fundamental assumption is that all parties abide by the terms of their contracts.

  • List of IPPs
    • AES Pakistan (Pvt.) Limited
    • Atlas Power Limited
    • Attock Gen Limited
    • Bestway Power Limited
    • Blue Star Energy
    • Cavlalier Energy Corporation (Pvt.) Limited (CECPL)
    • Dawood Power (Pvt.) Ltd.
    • Eastern Power Company Ltd. (EPCO)
    • Engro Powergen Qadirpur Ltd. (EPQL)
    • Foundation Power Company (Daharki) Limited
    • Gujranwala Energy Ltd (GEL.)
    • Grange Power Limited (GPL)
    • Green Electric (Pvt.) Limited (GPL)
    • Green Power (Pvt.) Ltd.
    • Hub Power Company Ltd. (HUBCO)
    • JDW Power (Pvt.) Ltd. (JDW)
    • Japan Power Generation Ltd. (JPGL)
    • Kohinoor Energy Limited (KEL)
    • Laraib Energy Limited (LEL)
    • Liberty Power Tech Ltd. (LPTL)
    • Milergo Pakistan Ltd. (MPL)
    • Nishat Chunian Power Limited (NCPL)
    • Nishat Power Limited (NPL)
    • Orient Power Company (Pvt.) Limited (OPCL)
    • Pakistan Suger Mills Association
    • Progas Power Bin Qasim Ltd. (PPBQL)
    • Radian Energy Power Generation (Pvt.) Ltd.(REPGL)
    • RUBA Energy Pakistan (Pvt.) Limited (REL)
    • Sapphire Electric Company Ltd (SECL)
    • Saif Power Limited (SPL)
    • Star Power Generation Ltd
    • Tapal Energy Limited (TEL)
    • UCH-II Power (Pvt.) Ltd
    • Warda Power Generation (Pvt) Ltd

Water and Power Development Authority (WAPDA)

In March 2010-11, the electricity generation from hydro has increased by 14.4 percent while thermal decreased by 2.4 percent as compared to the same period last year, Furthermore, the share in total energy generation by hydro generation remained at 36 percent while thermal generation stood at 64 percent during the period under review.

Karachi Electric Supply Company (KESC)

Thermal Power Station Korangi 316MW, Gas Turbine Power Station Korangi 80MW, Gas Turbine Power Station SITE 100MW, Thermal Power Station Bin Qasim 1260MW. KESC’s total installed capacity: 1,756MW.

Independent power producers (IPPs)

Hub Power Project 1,292 MW, AES Lalpir Ltd Mahmood Kot Muzaffargarh 362 MW, AES Pak Gen Mahmood Kot Muzaffargarh 365 MW, Altern Energy Ltd Attock 29 MW, Fauji KabirWala Power Company Khanewal 157 MW, Gul Ahmad Energy Ltd Korangi 136 MW, Habibullah Coastal Power Ltd 140 MW, Japan Power Generation Lahore 120 MW, Kohinoor Energy Ltd Lahore 131 MW, Liberty Power Limited Ghotki 232 MW, Rousch Power Khanewal 412 MW, Saba Power Company Sheikhupura 114 MW, Southern Electric Power Company Ltd Raiwind 135 MW, Tapal Energy Limited Karachi 126 MW, Uch Power Ltd Dera Murad Jamali Nasirabad 586 MW, Attock Gen Ltd Morgah Rawalpindi165 MW, Atlas Power Sheikhupura 225 MW, Engro Energy Ltd Karachi 217 MW, Kot Addu Power Company Limited 1,638 MW. IPPs’ total installed capacity 6,365MW.

Pakistan Atomic Energy Commission (PAEC)

KANUPP 137 MW, CHASNUPP-1 325 MW. PAEC’s total capacity: 462 MW.

Pakistan-China electricity agreement

Given the significance of renewable energy, China tries to dominate the renewable energy technologies from solar panels to wind turbines to constructing huge hydro-projects. Pakistan has considerable renewable energy potential such as hydro, wind and solar but this resource potential has not been utilized fully due to resource constraints and politicization of projects of national interests such as Kalabagh Dam that depicts the real picture of political uncertainties in Pakistan. Due consideration is being given to hydropower plants that produce about 24 percent of the world’s electricity and supply more than one billion people with power.

Indus River system alone has 35,000 MW power potential. The prospects for Pak-China cooperation in hydro-power projects are bright as the Chairman of China Three Gorges Project Corporation (CTGPC) a state owned enterprise and China’s largest hydropower developer had already offered financial and technical assistance to develop hydro and wind power projects in Pakistan. These ongoing projects include Karot, Taunsa, Kohala and Bunji hydro-power projects. Bunji dam will be constructed some 83km from Gilgit on Skardu Road. After completion it will generate 7200 MW electricity.

The government of Pakistan has signed an agreement with China for the construction of the dam in 2009. Second important project has been Taunsa hydroelectric project in Punjab that will generate 120MW electricity. Another proposed project is Kohala hydro-power project in district Muzaffarabad that will have capability to generate 1100 MW electricity. Karot hydro-power project that will generate 720MW electricity will be completed in four years time. In addition to above mentioned hydro projects deliberations have been continued on some other hydro projects.

Pakistan has been currently facing 6,000 megawatts power deficit which may grow further but the investment in hydro-power projects could add 10,000 MW to Pakistan’s main grid over the next 10 years. China has developed expertise in coal energy and nearly 80 % of its electricity comes from coal. India is generating 75 percent of its electricity by using coal while Pakistan is generating 0.3 percent electricity from coal. Pakistan is among some of the states having large coal reserves in the world and has potential to generate electricity from coal. Pakistan has potential to develop wind power. The wind corridor in the coastal area of Sindh has the capacity to generate 50,000MW electricity. India presents a good example of a country that is utilizing wind energy and has added its electricity generation capacity.

China has become the world’s largest maker of wind turbines. China has offered help in the construction of 50 MW wind power project in Jhampir (Sindh) that is to be completed in 2012. Moreover, China has planned to invest in 300 MW solar power projects in Pakistan.

The most promising prospects within this sector for FY 2018 are

  • Power Generation Equipment: $80 million
  • Power Transmission Equipment: $245 million
  • Power Distribution Equipment, including equipment for Rural Electrification: $165 million