China boosts Pakistan’s power sector

M. Aftab (Analysis)
Filed on August 16, 2011

The Chinese investors are moving ahead to build multi-billion dollar energy development projects in this country. It will make China the single largest investor in the energy sector of Pakistan.

These efforts aim at overcoming, at least, part of the worst electricity and, natural gas outages that often last for days. The seriousness of the energy crunch can be judged from the fact that it has not only slashed the GDP by 2 per cent nearly halving the government target of 4.5 per cent but is making the Pakistan Peoples Party-led government of president Zardari-Prim Minister Yusuf Razaf Gilani extremely unpopular.

This is because besides industries, households and commercial users, too are hit. This is the growing mood of the people at a time when the national elections are due in a year. In fact, the opposition political parties are demanding early elections-citing the government failure to overcome the energy crisis as one of the key reasons to oust it.

Chinese investment plans for Pakistan took a leap forward as Naveed Qamar, Minister for Water and Power, held intensive negotiations with the Chinese government and a range of companies in Beijing this week. The occasion was the fist meeting of China-Pakistan Joint Energy Group (JEWG). The big Chinese delegation was headed by Qian Zhimin, Deputy Administrator of National Energy Administration (NEA) of the National Development Reform Commission of China. The cooperation follows December 17, 2010 signing of the memorandum of understanding at the tp level. Qian Zhimin informed the JEWG session “our efforts are a clear evidence of the brotherly relationship between our two neighbouring countries. This is the spirit with which we are moving fast to develop energy resources of Pakistan.”

“Pakistan has always encouraged and welcomed participation of Chinese entrepreneurs, investors end manufacturing companies to participate in the development all of its sectors, especially in power.

Many of the leading Chinese entrepreneurs, investors and power sector companies are already actively engaged in various energy projects in Pakistan,” Naveed Qamar said at the JEWG conference. He asked the Chinese to invest and develop energy projects in Pakistan as the country is endowed with abundant natural resources, including hydel, natural gas, and renewable energy. Pakistan’s hydro-power generation potential is around 60,000 mw, a vast portion of which is economically exploitable.

Against it, the existing generation installed capacity is less than 20 per cent of the total potential. Pakistan’s coal reserves at Thar in Southern Sindh province alone are estimated at 185 billion tonnes.

Even if half of these reserves are exploited, coal can generate an additional 100,000 mw over the next 30 years. Pakistan also has a big potential in the field of solar and wind based renewable energy resources.

Islamabad has also invited Chinese and other foreign investors to participate in renewing, upgrading and building national level transmission lines for power distribution. This, in itself, is a field with a multi-billion dollar investment potential and big profits.

Qamar said, Pakistan is currently faced with energy demand-and- supply gap, yet the government is fully committed to resolve the prevalent energy shortages and achieving energy security on a sustainable basis with active support of friendly countries, specially China. Pakistan is now faced with an electricity shortage of 5,000 megawatts (mw) which is rapidly widening due to growing consumer demand, industrialisation, expanding services and population growth.

Qamar informed the session, the government of Pakistan has taken various initiatives—including development of upfront tariffs for multiple fuel-technology-based power projects operation and maintenance of public sector power generation companies through private sector, and conversion of the existing Independent Power Projects (IPPs) to cheaper fuels.

The Joint Group discussed and evaluated several projects for joint development and investment. These projects include: Neelum-Jhelum, Khan Khwar, Debai Khwar, Allai Khwar, Jinnah, Satpara, Darawat, Kohala, Gomalzam, Bunji, raising of Mangla Dam, Ghabir, Nai Gaj, Naulong, Diamer-Bhasha, Matiltan Suki Kinari, Kotli, Madian, Sindh-Engro Coal Mining and Power project, Sonda Jherruk Coal Project, AES Import and Coal, Nandipur Thermal Power Project, and Chichuki Malian Thermal Project. The investors also discussed a number of alternate energy projects for development and investment.

Besides Chinese energy officials, a large number of Chinese energy companies and financial market institutions also took part in the JEWG negotiations. They include: China Development Bank, Exim Bank, ICBC, Three Gorges Dam Corporation, China Machinery Engineering Corporation, Dongfang Electric Company, Sinohydro Corporation, HydroChina Corporation, China National Chemical Engineering Corporation, Tianchen Engineering corporation, China Energine International, and China Gazhouba Group Corporation.

The negotiations in China, and the projects in hand will also generate huge business for investors, exporters and Pakistan’s trading partners, in the near future.

Views expressed by the author are his own and do not reflect the newspaper’s policy.

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