Pakistan: Hopes Rise For Cheap and Abundant Electricity

Pakistani power sector is continuing its march toward cheap indigenous sources of electricity. Hydropower component has increased 22%, coal 57% and nuclear 8% while oil is down 54% and natural gas and LNG are down 32% and 15% respectively, according to Bloomberg. These changes in power mix are expected to help significantly reduce power subsidies that run into hundreds of billions of rupees contributing to large annual budget deficits.

Data From NEPRA. Courtesy Pakistan Today

Coal's contribution to power mix now stands at just 21%, in spite of 57% increase in use of coal in Fiscal Year 2020. It is still almost half of the global average of 38% of electricity produced from coal. Overall, the contribution of fossil fuels in electricity generation is now about 54%, down from nearly 66% a few years ago.

Pakistan Power Generation Mix. Source: Bloomberg

Hydropower and natural gas now contribute 32% each, making them the biggest sources of electricity in Pakistan. Coal comes next at 21%, followed by nuclear at 8%.

Pakistan Power Generation Plan 2019-2040. Courtesy of World Economic Forum

One of the biggest economic challenges Pakistan faces is it growing debt and deficit from subsidies to the power sector. Often referred to as "circular debt" in Pakistan, the government owes Rs. 1.6 trillion ($7.2 billion) to power sector at the end of June 2019. Pakistan government is now is committed to improving the situation by its development of an Indicative Generation Capacity Expansion Plan (IGCEP) that runs until 2040.

Change in Sources of Electricity in 2020. Source: Bloomberg

Pakistan recent efforts to diversify its fuel mix for cost reduction are raising hopes for cheap and abundant electricity needed for its industries and residential consumers.  Already, the electricity generation cost is down 11% and current account deficit has declined 78%. There is a plan called "Indicative Generation Capacity Expansion Plan" in place. Execution is the key to making the power sector greener, cheaper and more reliable.

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Riaz Haq said…
Integrated plan devised to generate 100,000 MW by indigenous resources

https://dunyanews.tv/en/Pakistan/557578-Integrated-plan-devised-to-generate-100,000-MW-by-indigenous-resources

ISLAMABAD (Dunya News) – The incumbent government has devised an integrated plan to generate 100,000 MW by 2047 through indigenous resources to ensure energy security and boost industries.

Under the devised plan, share of indigenous energy would be enhanced to 80 per cent to get rid of expensive energy based on imported fuel.

Minister for Power Division Omar Ayub Khan Tuesday said Renewable Energy (RE) policy has already been chalked out with the consultation of all stakeholders and it would now be placed before Council of Common Interests (CCI).

Sindh and Balochistan would be major beneficiaries as many solar and wind projects would be set up in these provinces, he said. He said the energy projects would be set up in areas under the integrated programme.

The minister said the policy targets increasing the share of alternative energy in the energy mix up to a level of 20% by 2025 and 30% by 2030. Some 8000 MW would be added through RE by 2025 and its share would be increase to 30,000 MW by 2030, he added.

He said the past governments signed agreements with power companies at high rates and these projects were mostly based on imported fuel resulting increase in tariff. Unfortunately, the previous government generated expensive electricity through liquefied natural gas (LNG) and winded up many low cost RE projects. However, he said the incumbent government revived all RE projects to provide maximum relief to the consumers.

Regarding circular debt, the minister said circular debt had reached to Rs 450 billion during PML-N government and Rs39 billion per month was pilling up in it.

The PTI government successfully brought down it to Rs 12 billion per month, he added.

Omar Ayub said the previous government did not also enhance the power tariff despite NEPRA’s determination. This move was aimed at winning the general elections and continued power supply to loss making feeders resulted in the piling up of Rs 200 billion in dues, he added.

Regarding investment in transmission system, Omar Ayub said the government enhanced the transmission capacity by 5500 MW during the last two years.

Owing to up-gradation of transmission lines, now over 25000 MW could easily be transmitted it. Earlier, the system could only transmit 18,000 MW, he added.

He said in past the NTDC 500 kV and 220 Kv always witnessed frequent tripping particularly in winter season, however, not a single tripping incident occurred after up-grading the transmission system.

He said Pakistan Tehreek-e-Insaf (PTI) government collected Rs 121 billion more revenue in the energy sector. Around 80% feeders had already been cleared from power pilferage and efforts were being made to clear remaining 20 per cent.

He said various mega projects including Diamer Basha, Mohmand dams and other hydel projects have been started to get cheap hydel electricity.
Riaz Haq said…
Pakistan to boost renewables and continue coal expansion

https://www.trtworld.com/business/pakistan-to-boost-renewables-and-continue-coal-expansion-38743

Mix of renewables to include mainly wind and solar power, but also geothermal, tidal, wave and biomass energy, according to Syed Aqeel Hussain Jafry, policy director for the government's Alternative Energy Development Board.

Pakistan has set in motion a plan this week to boost the share of its electric power that comes from renewables to 30 percent by 2030, up from about 4 percent today.

“The targets in the newly announced policy are a 20 percent share of renewables in installed capacity of Pakistan’s power mix by 2025 and 30 percent by 2030,” said Syed Aqeel Hussain Jafry, policy director for the government's Alternative Energy Development Board.

That will include mainly wind and solar power, but also geothermal, tidal, wave and biomass energy, he said.

With boosts in hydropower capacity expected as well, the shift could bring the share of clean energy in Pakistan's electricity mix to 65 percent by 2030, said Nadeem Babar, head of a task force on energy reforms in Pakistan.

But the legislation leaves in place plans to build seven more coal-fired power plants as part of the second phase of the China Pakistan Economic Corridor project - something that could impede scale-up of renewable power, warned Zeeshan Ashfaq, a solar and wind energy developer in Pakistan.

"A coal pipeline of around 4,000-5,000 megawatts will not provide much space for renewables," said Ashfaq, managing director of SOWITEC (Solar Wind Technology) Pakistan.

The new national renewables policy, approved by the prime minister's cabinet last December, was delayed by the coronavirus pandemic and as negotiators tried to resolve disputes with individual provinces.

But Asad Umar, federal minister for planning and development, said on social media the resolution of those disputes now opened the way to "unleash Pakistan's full potential" for renewables.

Reorganised sector

Hobbled by decades of energy shortages, successive Pakistani governments have pursued private sector investment in power production, offering lucrative returns backed by sovereign guarantees.

Up until 2017, prolonged power outages hit the country’s industrial production.

Power cuts and scheduled outages, known as load shedding, in urban areas were sharply reduced from about 12 hours a day previously to only occasional outages by mid 2018.

Despite the progress, seasonal production gaps and distribution woes remain.

New investment in renewable energy is also expected to come from private investors, with potential suppliers bidding in annual auctions and low-tariff proposals winning, said Nadeem Babar, chair of the energy task force and now special assistant to the prime minister.

Jafry, of the alternative energy board, said the policy represented a significant shift from the past, when investors approached the government with individual projects.

READ MORE: Economy forces Pakistan to reopen even as Covid-19 cases spike

A new focus

Ashfaq, the renewables developer, said the current government had shown more interest in renewable energy than previous administrations.

"The last government’s focus was on investing in fossil fuel power plants. This new government is much more open to renewable energy and wants to promote it” he said.

Babar said most of the new planned renewable power would be solar or wind, divided roughly equally between the two technologies, and coming from everything from wind farms to rooftop solar.

"We already have more than 30 wind and solar plants in operation, all financed privately by local and international banks, multilaterals and export credit agencies. New ones will be financed the same way," he said.

The new renewables plan represents "an ambitious target but achievable", he said.
Riaz Haq said…
Pakistan government’s finance Advisor Abdul Hafeez Shaikh has said that Pakistan has failed to increase its tax collection and exports. Last year, tax collection was 17% higher despite difficulties.

https://dunyanews.tv/en/Pakistan/558491-Pakistan-failed-increase-tax-collection-exports-Hafeez-Shaikh


Talking about the economic situation of the country to Dunya News program "Dunya Kamran Khan Kay Saath", the finance advisor said that the problems of refunds are being eliminated completely. Last year, refunds of Rs 240 billion were given and next week, refunds of up to Rs 50 million will be given.

Dr Abdul Hafeez Shaikh said that the Federal Board of Revenue (FBR) would set aside Rs 10 billion for refunds every month. With regards to refunds, the focus will be on private sector as the committee for the refund process will be headed by someone from the private sector.

Answering a question, Abdul Hafeez Shaikh said that reforms in the power sector are the number one priority of the Prime Minister. Today, the Prime Minister has made five major decisions regarding the energy sector, the effects of which will be observed in the coming weeks.

He said that today it has also been decided to improve electricity bills collection and reduce distribution losses. The government has to conclude negotiations with the IPPs in a few days, promote cheap power generation from alternative sources and involve the private sector in power distribution companies, he added.

He said that power sector reforms were a part of the IMF negotiations and there can be no slip-ups in this regard. Shehzad Qasim is responsible for implementing the government’s power sector reforms, he added.

Answering another question, he said that the Karachi steel mills would be run through foreign investment and a system is being devised to run it in a modern manner. He cautioned that the Privatization Commission has to carefully follow the rules and said that after the power sector, the matters of government corporations will be improved.
Riaz Haq said…
Minister for Planning and Development Asad Umar said that Moody’s reconfirmation of Pakistan’s credit rating with a stable outlook reflected that Pakistan’s economy was witnessing a ‘V’ shaped recovery amid COVID-19 pandemic.



https://www.gulftoday.ae/business/2020/08/10/pakistan-economy-witnessing--v-shaped-recovery-says-minister





In the middle of a global pandemic it was a testimony to the ‘V’ shaped recovery, Pakistan had seen, Umar said in his tweet.

He said the economic recovery could become possible due to prime minister Imran Khan’s balanced approach to safeguarding national health and livelihoods, delivering success on both counts.

Meanwhile the State Bank of Pakistan (SBP) has enhanced the limits for housing finance and microenterprise loans up to Rs3 million from the existing limit of Rs1 million for borrowings from the microfinance banks.

Likewise, the maximum size of general loans has been enhanced from Rs150,000 to Rs350,000.

Further, to commensurate with enhanced loan sizes, annual income eligibility for general loans and housing loans has been increased up to Rs1.2 million and Rs1.5 million, respectively. Moreover, the limit for lending against gold collateral to meet borrowers’ immediate domestic or emergency needs has also been enhanced.

The decision to increase the limit of housing finance loans has been made in view of the fact that the existing loan limit was insufficient to promote low cost housing finance through MFBs.

Similarly, limits for lending to micro enterprises needed to be enhanced considering the large unmet demand from Micro and Small Enterprise (MSEs). These initiatives would further support the micro borrowers and enterprises and an early revival of economic activities in the current challenging times.

However, in order to ensure sustainability, the enhanced loans sizes for housing and microenterprises would be allowed to those MFBs which are on sound footing and have the capacity to successfully cater the higher loan sizes.

In addition, SBP Relief Package for microfinance banks, which included deferment of principal and restructuring of microfinance loans to deal with the adverse implications of the ongoing Covid-19 pandemic, have now been expanded with three measures.

First, the relief measures that were earlier available from Feb.15, 2020 have now been allowed to borrowers who were regular on December 31, 2019. This would allow more borrowers to avail the regulatory relief who were previously not eligible.

Second, to facilitate MFBs during these testing times, the provisioning requirements have been extended by 2-months; and third, client’s consent through recorded lines has been allowed to facilitate the customers to avail the relief package.

Prime Minister of Pakistan, announced a Fiscal Package of over Rs1200 billion in the wake of Covid-19 Pandemic.

The ECC of Cabinet Division has approved the proposals on May 13, 2020. Out of this Package, an amount of Rs6.861 billion has been approved for provision of financial relief in terms of markup subsidy on Bank’s loans to the most deserving sub segment of farming community, i.e. farmers with land holding up to 12.5 acres, throughout the country.

Over 70 per cent of the farmers in Pakistan own land up to 12.5 acres.

A Mark-up subsidy at 10 per cent on the loans extended or to be extended during the fiscal year 2020-21 to the farmers of 12.5 acres of land has been approved by the Government of Pakistan. Total amount of subsidy is Rs6.86 billion. All the loans with passbook as collateral are eligible to avail the subsidy.

Meanwhile the advisor to Prime Minister on Commerce Abdul Razak Dawood said the government is vigorously following a prudent policy to boost export and minimise import for the economic stability through offering lucrative package of incentives to industrialists and businessmen.

It was stated by him while talking to a high level delegation of United Business Group led by President SAARC Chamber of Commerce and Industry Iftikhar Ali Malik.
Riaz Haq said…
Pakistan can save $5bn by scaling up renewable energy: WB - Profit by Pakistan Today

https://profit.pakistantoday.com.pk/2020/11/10/pakistan-can-save-5bn-by-scaling-up-renewable-energy-wb/

The study, titled Variable Renewable Energy (VRE) Integration and Planning, finds that Pakistan needs to urgently implement a major expansion of solar and wind “variable renewable energy”, to achieve a share of at least 30per cent of total capacity by 2030. This would help lower the cost of power, achieve greater energy security, and reduce greenhouse gas (GHG) emissions.

“A large and sustained expansion of solar photovoltaic and wind power, alongside hydropower and substantial investments in the grid, is both achievable and desirable”, World Bank Country Director for Pakistan Najy Benhassine said.

“Such an initiative would lead to immediate and long-term economic and environmental benefits. It would enhance the security of supply as well as positioning Pakistan at the forefront of the global energy transition. We stand ready to support Pakistan in achieving the goal of affordable, reliable power for all by 2030,” he added.

According to the study, many sources of fossil fuel generation are no longer competitive and should be retired or their use significantly reduced. This includes domestic and imported coal, which is not economical over the next 10 years compared to VRE and has the additional downsides of GHG emissions, air pollution, and use of scarce water resources.

The study, based on an hour-by-hour analysis of all generation options, finds that a substantial and immediate scaling up of VRE capacity represents a “least-cost” strategy for expanding capacity in Pakistan, including consideration of the costs of integrating the variable supply from solar and wind.

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