Rpps in Pakistan
RENTAL POWER PLANTS: PANACEA FOR ENERGY NEEDS OR LIABILITY FOR PAKISTAN
(K Raza Gardezi)
30 December 2010
EXECUTIVE SUMMARY
Pakistan is currently facing a power deficit estimated at 4000 MW - 5000 MW. To tide over the significant electricity shortages in the country, the Government of Pakistan planned to add 4,225 MW of generating capacity in 2009 against which the achievement was a meager 151 MW. There were many reasons for the failure of the 2009 capacity addition plan e.g. delays in Independent Power Projects (IPPs) due to a local and global financial crisis, security and terrorism related issues etc. Competitive bidding by 9 companies for new IPP projects under Private Power and Infrastructure Board's (PPIB) Fast Track process (Package A) was 'agreed in principle' by the Bid Evaluation Committee of PPIB in August 2008. Tariff was approved by NEPRA on 9th October 2008 and as of 6th December 2008 and the Cavalier IPP project was at stage 16 (notice for submission of Performance Guarantee and processing fee) out of 21 stages in PPIB’s Fast Track process. It was however reported in January 2009 that the project would not materialize because foreign investors were unwilling to provide financing due to recent increases in Pakistan's country risk premium.
This paper therefore intends to explore reasons for Pakistan to increase its power generation capacity through various new measures and incentives to private and foreign investors. The negative fallout of power shortages resulted in closure of industries, low production capabilities leading to unemployment and price escalation. This put a lot of pressure on the new government which was forced to take short term measures for filling in the power gap till its mid-term and long term power generation plans came on ground. The “Vision 2020 Program” of the government was initiated to address the power shortfall over the medium and long term with a view to add around 20,000 MW into
(K Raza Gardezi)
30 December 2010
EXECUTIVE SUMMARY
Pakistan is currently facing a power deficit estimated at 4000 MW - 5000 MW. To tide over the significant electricity shortages in the country, the Government of Pakistan planned to add 4,225 MW of generating capacity in 2009 against which the achievement was a meager 151 MW. There were many reasons for the failure of the 2009 capacity addition plan e.g. delays in Independent Power Projects (IPPs) due to a local and global financial crisis, security and terrorism related issues etc. Competitive bidding by 9 companies for new IPP projects under Private Power and Infrastructure Board's (PPIB) Fast Track process (Package A) was 'agreed in principle' by the Bid Evaluation Committee of PPIB in August 2008. Tariff was approved by NEPRA on 9th October 2008 and as of 6th December 2008 and the Cavalier IPP project was at stage 16 (notice for submission of Performance Guarantee and processing fee) out of 21 stages in PPIB’s Fast Track process. It was however reported in January 2009 that the project would not materialize because foreign investors were unwilling to provide financing due to recent increases in Pakistan's country risk premium.
This paper therefore intends to explore reasons for Pakistan to increase its power generation capacity through various new measures and incentives to private and foreign investors. The negative fallout of power shortages resulted in closure of industries, low production capabilities leading to unemployment and price escalation. This put a lot of pressure on the new government which was forced to take short term measures for filling in the power gap till its mid-term and long term power generation plans came on ground. The “Vision 2020 Program” of the government was initiated to address the power shortfall over the medium and long term with a view to add around 20,000 MW into