ADB offers $500m funding to generate 480MW of electricity

ISLAMABAD — The Asian Development Bank (ADB) has offered $500 million new funding to Pakistan to help generate additional 480MW of electricity and thus reducing growing power shortages in the country.

By A Correspondent

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Published: Thu 15 Feb 2007, 11:10 PM

Last updated: Sat 4 Apr 2015, 9:55 PM

Official sources said that the Water and Power Development Authority (Wapda) has identified 730 potential sites in Punjab for installing a number of hydel power plants, each having upto 50MW at different canals and distributaries.

The ADB's technical experts have approved 730 sites which included 324 potential and 306 raw sites for building small hydel power plants in the province.

The ADB funding is part of the government's plan to save foreign exchange by not importing fuel that is used in alternate thermal plants, Also, the purpose is to replace expensive thermal plants by hydro power plants in a medium to long term scenario, providing cheaper renewable hydropower resources.

Sources said that this will also help increase hydel share in generation mix to reduce the prevailing high tariff rates of electricity.

Overall Wapda has firmed up a study which said that Punjab has a hydel potential of 5895MW along rivers and existing canal falls and barrages with medium and small heads. In this regard, Wapda officials were further exploring new possibilities for mobilizing substantial funding from other international donor agencies especially the World Bank. The financial analysis has been carried out with transmission line cost for generating additional 480MW of hydel power. The financial internal rate of return (FIRR) with transmission line is 13.73 per cent which according to the ADB experts makes the project attractive.

The project is expected to create employment opportunity during the construction and operation phase directly. However, indirectly other related construction industry, supply of material, workforce in transportation, etc will get the benefit.

The main objective is to generate electricity and lay down track for hydel project implementation in the near future in Punjab. It has been planned that five powerhouses will be constructed after detail design and tenders were approved according to the ADB guidelines.

Sources said that the implementation time is estimated 57 months which includes pre-construction time, land acquisition and compensation, site installation, mobilization, de-mobilization, testing and commissioning.

Annual energy varies from year to year depending on the inflows keeping in view other water requirements. However, average energy generated through the construction of five powerhouses has been estimated as 160.16 GWh. The project will save an amount of Rs486.66 million annually that would otherwise be required to import of oil needs for equivalent thermal plant.

Also, the revenues of the government would increase due to direct and indirect taxation, duties and levies on the production of goods and services that will result from power generation benefits within the project area as well as from the electricity duty collected by the federal government, government of Punjab or any other agency. Sale of electricity is the direct revenue which will be collected by Punjab and return to ADB.

With the commissioning of the project, there will be multiple effects on socio-economic development of the region. Communication, infrastructure, livestock, forestry, cottage industry, livestock development and other opportunities would open with the construction of the project.

Pakistan's policy for power generation allows provinces to develop power projects upto to 50MW installed capacity.

Concerned officials said that energy demand is increasing at 8 to 10 per cent annually and Pakistan is still a net importer of energy and its spends about 30 per cent of total imports to import oil to meet its energy needs. The gap between the demand and supply in the past was met through installation of thermal power projects based on costly imported fuel. This situation, according to them, disturbed the hydel-thermal mix ratio from 65:35 to 35:65 which had resulted into unbearable increase in electricity tariff besides increasing dependency on imported fuels for meeting the energy needs of the country.

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