USAID SARI Energy Countries

Pakistan Energy Overview - Source:EIA

Pakistan had 20.4 gigawatts (GW) of installed electric generating capacity in 2004. Conventional thermal plants using oil, natural gas, and coal account for about 66 percent of Pakistan’s capacity, with hydroelectricity making up 32 percent and nuclear 2 percent. The Pakistani government estimates that by 2010, Pakistan will have to increase its generating capacity by more than 50 percent to meet increasing demand. In 2004, Pakistan generated 80.2 billion kilowatt-hours (Bkwh) of electricity while consuming 74.6 Bkwh. Pakistan's total power generating capacity has increased rapidly in recent years, due largely to foreign investment, leading to a partial alleviation of the power shortages Pakistan often faces in peak seasons. However, much of Pakistan’s rural areas do not have access to electric power and about half the population is not connected to the national grid. Rotating blackouts ("load shedding") are also necessary in some areas. In addition, transmission losses are about 30 percent, due to poor quality infrastructure and a significant amount of power theft.

Map of PakistanSector Organization
The electric power sector in Pakistan is operated by the Water and Power Development Authority (WAPDA), and the Karachi Electricity Supply Corporation (KESC), with additional generation contribution from Independent (private) Power Producers (IPPs). WAPDA is responsible for supplying power to all of Pakistan, with the exception of Karachi, which is supplied by KESC. Currently, 15 IPPs operate in Pakistan under a Build-Own-Operate (BOO) basis. The National Electric Power Regulatory Authority (NEPRA) regulates the power sector in Pakistan, which includes power generation, transmission and distribution. NEPRA is also responsible for determining electricity rates in Pakistan.
Disputes over rate adjustments are common within the industry. For example, in July 2004, NEPRA announced that electricity rates would be lowered for domestic, industrial and agricultural customers in the three distribution areas of Hyderabad, Peshawar, and Quetta. The affected distribution companies complained that, due to lower rates, they would be unable to cover their operating costs. NEPRA advised the federal government to subsidize the providers at a cost of around $24 million. WAPDA is at the center of a public sector "circular debt" problem, in which state firms and government ministries have failed to pay power bills, while WAPDA has failed to meet obligations to them and to private sector creditors, especially state-owned PSO.

Privatization
The Pakistani government continues to seek reform in the state-held electric companies. In November 2005, the Privatization Commission in Pakistan sold KESC to Hassan Associates, a group of local and Saudi investors. KESC controls a power transmission network in the southern part of Karachi. Because KESC has struggled to make a profit, the Pakistani government has supported the company with a $200 million annual subsidy. But, Hassan Associates has indicated that they are confident in their ability to make a profit from KESC in the future. The Pakistani government will maintain a 26 percent share of the company. Plans have also been made to transform WAPDA into three generation companies, eight distribution companies and a transmission entity with the hope of seeing it privatized.

Hydroelectricity
Hydroelectric power represents a third of Pakistan’s power source, however, periodic droughts affect the availability of hydropower production. WAPDA controls the country’s major hydroelectric plants, with the largest being the Tabela plant at 3,046 megawatts (MW) installed capacity. The Tabela plant was the largest hydroelectric plant in Asia until China began building the Three Gorges project, which will have 18,000 MW of installed capacity. Additional hydroelectric plants in operation include Mangla (1,000 MW), Warsak (240 MW), and Chashma (184 MW).

Although Pakistan has plans to develop additional hydroelectric generating capacity, infrastructure constraints, such as access roads in mountainous regions and resettlement costs of affected populations have stalled progress. Nevertheless, Eden Enterprises is going ahead with its Suki Kinari (655 MW) hydropower project. Eden Enterprises, along with Pakistani partners own 95 percent of S.K. Hydro, which was given a 35-50 year concession period for the power plant. Construction is expected to begin in 2009, with the plant coming online in 2011. The Private Power and Infrastructure Board (PPIB) is currently reviewing six additional hydropower projects for the Swat River. If approved, the projects would provide several hundred MW of additional hydroelectric power capacity to the country.

Conventional Thermal
WAPDA operates the majority of thermal power plants in Pakistan, with over 5,000 MW of installed capacity in its control. The Guddu plant is the largest plant operated by WAPDA, with a capacity of 1,650 MW. In recent years, growth in Pakistan’s thermal power generation has come primarily from new independent power producers (IPPs), some of which have been funded by foreign investors. The two largest IPPs in Pakistan are Kot Addu (1,600 MW) and Hubb River (1,300 MW), both of which supply power to WAPDA. The Kot Addu plant was privatized in 1996 (from WAPDA). International Power holds a 36 percent equity stake in the Kot Addu plant. The Pakistani government has recognized that the majority of thermal plants in the country are run on fuel oil and produce considerable amounts of pollution. In an effort to reduce pollution, the government would like to see fuel oil-power plants converted to natural gas in the future.

Other Renewables
Pakistan is working to expand the use of renewable energy to help bridge the gap of energy deficiency in the country. In 2003, the Pakistani government created the Alternative Energy Development Board (AEDB). AEDB’s primary objective is to help Pakistan achieve a 10 percent renewable energy share in the country’s energy mix. AEDB is working to create an environment in Pakistan that is conducive to investment from the private sector in renewable energy. In July 2006, Turkish-based Zorlu Energji Grubu signed a letter of intent to install a 50-MW wind farm. Zorlu would operate the wind farm for 20 years once the project is completed in 2008. Zorlu has indicated that it would like to install an additional 2,000 MW of renewable energy capacity in Pakistan by 2015.

Nuclear
Pakistan has two nuclear power plants, Chashma-1 and Kanupp, with 300 MW and 125 MW respectively, of installed capacity. The Pakistan Atomic Energy Commission operates both nuclear plants. Pakistan is currently working on a third nuclear power plant (Chashma-2), with the help of China National Nuclear Corporation. The plant will have 325 MW of installed capacity and could be completed by 2009.


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