Govt likely to continue hiring power projects

 











ISLAMABAD: Discouraged by a lack of interest in the private sector, the government is considering to add about 8,800MW of power generation capacity in the public sector by 2015 and continue to hire power projects to meet electricity requirement.

Public sector investment in power sector capacity addition was prohibited during the Pervez Musharraf-Shaukat Aziz administration and that is one of the main causes of the current electricity shortfall, sometimes exceeding 5,500MW. Emergency efforts to install rental power projects and fast track IPPs have only added to the rising electricity cost and that too without sufficient supplies.

Informed sources told Dawn that in the present situation, RPPs’ exit might be difficult and they would continue to cause public discontent. Therefore, public sector outlays would have to fill in the capacity deficits.

For this to become a reality, the government would be making substantial allocations for the public sector capacity addition in the 10th five-year plan currently under preparation. The US administration, they said, was being wooed to be part of the programme through assistance and involvement of its companies.

Policymakers decided to review the energy sector strategy after realising that the upcoming independent power producers (IPPS), RPPs and four public sector initiatives scheduled to come into production by 2012 would not be able meet the present and future requirements. Additionally, the banking sector has become over-exposed to the power sector as a result of issuance of TFCs for circular debt and other advances.

The government, however, concedes mishandling of recent series of RPPs and intends to hire them in future “without large advances or time limits for installations and just corporate guarantees or small mobilisation advances with judicious rentals”. It also concedes that socio-political obligations of the government for large-scale village electrification played a major role in distribution losses.

The sources claimed that the government had come to the conclusion that private sector appetite to arrange fast-track projects had also been exhausted and all-out efforts, including additional incentives through higher returns on investments, would not spurn more private sector investment in the shorter run because the present situation was a ‘hard-sell’.

The 10th five-year plan now envisages conversion of economic growth base from agriculture to industrial basis in the medium and long-term that would need sufficient power supplies at an affordable rate. Also, a concerted programme would be implemented to convert all agricultural tube wells from diesel engines and electricity from national grid to localised solar panels to reduce their cost of operation and reliance on imported fuels.Reclaiming of about 450MW projects of de-rated generation capacity at Guddu, Jamshoro, Muzaffargarh and Lakhra has already been taken in hand. Another 2,350MW have also been taken in hand for completion by end of 2011 and include 425MW Nandipur, 525MW Chichuki Mallian, 750MW Guddu, 325MW Chashma Nuclear and 320MW UAE gifted second hand projects for installation at Faisalabad.

Some of the mega projects that were planned for development in public sector include a 1000MW combined cycle plant at Dadu, 1,050MW of three plants at Jamshoro, 700MW at Muzaffargarh, 1,800MW of three plants at Sahiwal and two coal-based projects of 1000MW each at Islamkot, Thar, and Karachi.

For the RPPs, the ministry of water and power has already hinted at their conversion into long-term IPPs if they meet efficiency and affordability standards.