Pakistan Power sector

Compiled by:

Consulate General of Switzerland in Karachi

Karachi, 6.09.2011

1. General: Pakistan having about 30% standby electricity few years back in 2003-04, has been facing a severe power crisis for the last seven years. The present crisis is considered to be the worst of four such crises that Pakistan has been facing since 1974. Due to a fast growing demand, high system losses, fuel supply limitations and seasonal reduction in the availability of hydropower, the gap between the demand and supply of electricity is resulting in routine load shedding. Inadequate power generation capacity is just one of the factors affecting power supply. The present average short fall in the supply demand gap is between 4,500-6,000 MW. The continuing energy crisis and hiking prices of electricity (due to imbalanced generation mix) are the main factors hampering national economy. The acute power shortages (ranging from 4 to 12 hours of load-shedding in both urban and rural areas) is forcing the industrial sector to work at underproduction level and threatens badly the export performance besides creating social as well as law and order problems in the country. One of the factors behind the difficult situation is the rising circular debt which affects energy producers, that is spiralling over PKR 400 billion. 2. History of Power Development in Pakistan: At the time of independence in 1947, Pakistan inherited 60MW of power generation capability for a population of 31.5 million, yielding 4.5 units per capita consumption. The Government of Pakistan in 1952 by acquiring majority shareholding took control of the Karachi Electric Supply Company (KESC) engaged in generation, transmission and distribution of electric energy to the industrial, commercial, agricultural and residential consumers of the metropolitan city of Karachi and its suburbs. In 1958, Water and Power Development Authority (WAPDA) was created as a semi-autonomous body for the purpose of coordinating and giving a unified direction to the development of schemes in water and power sectors, which were previously being dealt with by the respective electricity and irrigation department of the provinces. In 1959, the generation capacity had increased to 119 MW and by that time the country had entered the phase of development, which required a dependable and solid infrastructure, electricity being its most significant part. The task of power development was undertaken by WAPDA for executing a

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number of hydel and thermal generation projects, a transmission network and a distribution system, which could sustain the load of the rapidly increasing demand of electricity. After the first five years of its operation by 1964-65, the electricity generation capability rose to 636 MW from 119 MW in 1959. At the inception of WAPDA, the number of electrified villages in the country was 609 which were increased to 1882 villages (688,000 consumers) by the year 1965. The rapid progress witnessed a new life to the social, technical and economic structures of the country. Mechanized agriculture started, industrialization picked up and general living standards improved. The task of accelerating the pace of power development picked up speed and by the year 1970, the generating capability rose from 636 MW to 1331 MW with installation of a number of thermal and hydel power units. In the year 1980 the system capacity touched 3,000 MW which rapidly rose to over 7,000 MW in 1990-91. However, electricity consumption in Pakistan has been growing at a higher pace compared to economic growth due to the increasing urbanization, industrialization and rural electrification. From 1970 to the early 1990s, the supply of electricity was unable to keep pace with demand that was growing consistently at 9-10% per annum. In the early 1990s, the peak demand exceeded supply capability by about 15-25%, necessitating load shedding of about 1,500 - 2,000 MW. On the demand side, there was a weak link between the electricity price and demand, which failed to manage the demand. On the supply side, the main reason behind this capacity shortage was the inability of the public budget to meet the high investment requirement of the power sector, despite the allocation of a high share to this sector. During the 1990s, the economic growth rate of Pakistan declined to a level of 45% per annum from a level of 6% per annum in the 1980s. In order to eliminate power shortage/load shedding in the minimum possible time, the Government constituted an Energy Task Force in 1993 to devise a consolidated and comprehensive policy for revamping the energy sector. On the recommendations of the Energy Task Force, the Government announced a Policy Framework and Package of Incentives for Private Sector Power Generation Projects in March 1994 for a large scale induction of private sector in power development. The said policy offered a fix levelized tariff of USD 5.57/kWh to the prospective investors (USD 6.1/kWh average for 1-10 years) and a number of other incentives to attract foreign investment in the power sector. The Power Policy 1994 helped in overcoming load shedding in the country. Rather, it resulted in surplus power as the actual load growth was much less than that projected and the projects were contracted beyond requirement. Moreover the Policy attracted only thermal projects resulting in reversal of the hydel/thermal generation mix. In the year 2000, the vertical disintegration of WAPDA started as part of the countrys new electricity market restructuring and liberalisation program. Since then WAPDA has been broken down into fourteen separate units: four thermal power generating companies, nine distribution companies and a transmission and distribution company. In November 2005, the Government of Pakistan privatised (74.35%) the Karachi Electric supply Company (KESC). At present, KESC and WAPDA operate their own networks and are interconnected through 220 KV double circuit transmission lines and can supply power to each other.

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On June 30 2010, the total generation capacity from WAPDAs own hydel and thermal sources plus generation from two nuclear power plants, KESC and Independent Power Procedures (IPPs) stood at 20,922 MW. 3. Main Electric Power Producers in Pakistan: The main electric power producers in Pakistan are Water and Power Development Authority (WAPDA), Karachi Electricity Supply Company (KESC) and Pakistan Atomic Energy Commission (PAEC, the operator of the two nuclear power plants). Besides these three main power producers, a number of independent power producers (IPPs) established since 1994 are also contributing significantly to the electricity sector of the country. a. Water and Power Development Authority (WAPDA): WAPDA www.wapda.gov.pk the Pakistan Water and Power Development Authority, was created in 1958 as a semi-autonomous body for the purpose of coordinating and giving a unified direction to the development of schemes in water and power sectors, which were previously being dealt with, by the respective electricity and irrigation department of the provinces. Since October 2007, WAPDA has been bifurcated into two distinct entities i.e. WAPDA and Pakistan Electric Power Company (PEPCO) www.pepco.gov.pk . WAPDA is responsible for water and hydropower development whereas PEPCO is responsible for the management of all the affairs of WAPDAs fourteen public limited companies in the areas of thermal power generation, transmission, distribution and billing. These fourteen (14) corporate entities are: Four (4) Thermal Power Generation Companies (GENCOs) 1. Southern Generation Power Company Limited (GENCO-1) head quarter at Jamshoro district Dadu near Hyderabad Sindh. 2. Central Power Generation Company Limited (GENCO-2) head quarter at Guddu district Jacobabad Sindh. 3. Northern Power Generation Company Limited (GENCO-3) head quarters at TPS Muzaffargarh district Muzaffargarh Punjab. 4. Lakhra Power Generation Company Limited (GENCO-4) Headquarter at WAPDA House Lahore. One (1) National Transmission & Power Dispatch Company (NTDC) Nine (9) Distribution Companies (DISCOs) as under: 1. 2. 3. 4. 5. 6. 7. 8. 9. Lahore Electric Supply Company (LESCO) Gujranwala Electric Power Company (GEPCO) Faisalabad Electric Supply Company (FESCO) Islamabad Electric Supply Company (IESCO) Multan Electric Power Company (MEPCO) Peshawar Electric Power Company (PESCO) Hyderabad Electric Supply Company (HESCO) Quetta Electric Supply Company (QESCO) Tribal Electric Supply Company (TESCO)

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b. Karachi Electric Supply Company (KESC): The Karachi Electric Supply Company Limited www.kesc.com.pk was incorporated on 13th September 1913 under the Indian Companies Act, 1882 as amended to date vide the Companies Ordinance 1984. The company is listed on Karachi, Lahore and Islamabad stock exchanges. The Government of Pakistan took control of the company by acquiring majority shareholding in 1952. The Ministry of Water and Power looks after the affairs of the company at federal level. The company has been privatized in November 2005 with the transfer of 73% shares of the Government of Pakistan along with Management Control to the new owner viz M/s KES Power & others. KESC is principally engaged in generation, transmission and distribution of electric energy to industrial, commercial, agricultural and residential consumers under the Electricity Act, 1910 as amended to date & NEPRA Act 1997, to its licensed areas. The licensed area of KESC is spread over entire Karachi and its suburbs up to Dhabeji and Gharo in Sindh and over Hub, Uthal, Vindhar and Bela in Baluchistan. The total area covered is around 6000 square kilometres with over 2 million customer base. The company owns 1,955 MW of generation capacity (oil- and gasfired), which is not fully operational due to short supply of gas. It is pertinent to mention that KESC loses above 30% of its power supply on account of transmission and distribution. The approximate demand for power in the city is at least 2300 MW. To meet the supply-demand gap, KESC purchases power from WAPDA, Independent Power Producers (IPPs) and KANUPP. Whenever any of these outside entities fail to provide power or there is a breakdown in KESCs own installed generation base, the company has to restore the load shedding. c. Pakistan Atomic Energy Commission (PAEC): PAEC (www.paec.gov.pk) is the operator of the existing two nuclear power plants in Pakistan. Karachi Nuclear Power Plant (KANUPP), the first nuclear power plant of the country was commissioned in 1971 in Karachi through a turn-key agreement with Canadian General Electric Company. The second Chashma Nuclear Power Plant-1 (CHASNUPP-I), was commissioned in the year 2000 also through a turn key agreement with China National Nuclear Corporation. After successful experience of KANUPP and CHASNUPP-I, the Government of Pakistan has entered into another contract with China for construction of the second unit CHASNUPP-II. The construction of the unit is in progress and it is expected that the unit will be commissioned by the year 2011. The total installed capacity of the two nuclear power plants in the country is 462 MW. Karachi Nuclear Power Plant (KANUPP): KANUPP, Karachi is a single unit CANDU PHWR with a total gross capacity of 137 Mega Watts. It is located at Paradise Point on the arid Arabian Sea Coast, about 15 miles to the west of Karachi. It has been in commercial operation since 1972. KANUPP is part of Karachi Nuclear Power Complex (KNPC) and is owned and operated by Pakistan Atomic Energy Commission (PAEC). Chashma Nuclear Power Plant-1 (CHASNUPP-1): The Chashma Nuclear Power Plant Unit-1 (CHASNUPP-1) has been in commercial operation since September 2000. The construction of Chashma Nuclear Power Project Unit-2 (CHASNUPP-2) has just started in 2005.
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CHASNUPP-1 is a two-loop PWR plant with gross output of 325 MWe & net output of 300 MWe and life span of 40 years. The Plant is located in the province of Punjab near Chashma Barrage on the left bank of River Indus, 32 kms south of Mianwali City, 280 kms south-west of Islamabad and 1160 kms North-East of Karachi.

d. Independent Power Producers (IPPs): At present following IPPs are operating in Pakistan while a number of projects are under construction. The gross power generation capacity of the IPPs is 7,123 MW. KAPCO and HUBCO are the two largest companies among IPPs with a production of 1,466 MW and 1,292 MW respectively.

S.no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Project name

Uch Power Limited TNB Liberty Power Project Tapal Energy Limited Southern Electric Power Company Limited Saif Power Saba Power Company Limited Rousch (Pakistan) Power Limited Orient Power Nishat Power Kohinoor Energy Limited Kot Addu Power Company Limited (KAPCO) Japan Power Generation (Pvt) Limited Hub Power Company HUBCO Habibullah Coastal Power (Pvt) Co. Gul Ahmed Energy Ltd. (GAEL) Fauji Kabirwala Power Company Engro Energy Atlas Power Attock Gen Altern Energy Limited AES Pak Gen. (Pvt) Limited AES Lalpir Limited Total

Gross capacity in MW 586.00 235.00 126.00 135.00 229.00 134.00 450.00 229.00 200.00 131.00 1466.00 136.00 1292.00 129.00 136.00 157.00 217.00 214.00 165.00 29.00 365.00 362.00 7,123.00

Source: Pakistan Energy Book 2010 (HDIP)

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4. Electricity Generation: The electricity generation sector in Pakistan is a mixed industry of hydro, thermal and nuclear power plants. About 31 percent power is generated through hydel system, 66.8 percent through thermal system and the rest 2.2 percent is generated through nuclear power generation systems. The country meets its energy requirement 29.4% by indigenous gas, 37.8% by oil, 29.4% by hydro electricity and 0.26% through import. Coal and nuclear contribution to energy supply is limited to 0.1% and 3.02% respectively with a vast potential for growth. Installed electricity generation capacity
(as on June 30 2010)

TYPE Hydel - WAPDA Thermal - WAPDA Thermal KESC Thermal IPPs Nuclear Total

MW 6,481 4,900 1,955 7,123 462 20,922

% 30.97 23.42 9.34 34.04 2.20 100.00

Source: Pakistan Energy Book 2010 (HDIP)

Electricity generation, import and supply in GWh

(as on June 30 2010)

Total electricity generation Import Total electricity supply

95,358 249 95,608

Source: Pakistan Energy Book 2010 (HDIP)

4.1. Hydel Generation: As a consequence of partition of the Indo-Pakistan Sub-Continent in 1947, India and Pakistan became two independent sovereign states. Hydel generation capacity of only 10.7 MW (9.6 MW Malakand Power Station & 1.1 MW - Renala Power Station) existed in the territory of Pakistan. With the passage of time, new hydel power projects of small and medium capacities were commissioned including the first water storage dam and power house at Warsak due to which country's hydel capability rose to about 267 MW up till 1963. In the year 1967 & 1977, Mangla Dam on Jhelum River and Tarbela Dam on Indus River having the provision of power generation were commissioned respectively. However, their capacities were subsequently extended in different phases. Hydel Generation Capacity: The total capacity of existing 13 hydel stations as of today is 6,481 MW including 37 MW hydel generation of AJKHEB. During the year 2009-2010, aggregate energy sharing of the hydel power plants was 30.97%.

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Power stations

June 30 2010 MW

1. HYDEL - WAPDA Tarbela 3,478 Ghazi Barotha 1,450 Mangla 1,000 Warsak 243 Chashma 184 Malakand (Decommissioned due to fire incident in November 2006) Dargai 20 Rasul 22 Shadiwal 14 Chichoki Mallian 13 Nandipur 14 Kurram Garhi 4 Renala 1 Chitral 1 2. HYDEL Azad Jammu & Kashmir Hydro Electric Board (AJKHEB) Jagran 30 Leepa Others 7 Total of 1 & 2 6,481
Source: Pakistan Energy Book 2010 (HDIP)

Seasonal variations of Hydel Generation: The seasonal variations of reservoir levels and consequent reduction in Power outputs of storage type hydel projects in Pakistan are very pronounced. Tarbela with maximum head of 450 feet experiences variation of 230 feet while Mangla has 162 feet variation against the maximum head of 360 feet. The lean flow period of Tarbela reservoir is from November to June when the Capability reduces to as low as about 1,350 MW against the maximum of 3,692 MW during high head period i.e. August to September (15% permissible overloading on Units 1~10). Lean flow period of Mangla reservoir is observed from October to March when the minimum generating capability is 500 MW. The capability rises to as high as 1,150 MW during 'high head' period (15% permissible overloading). In all, WAPDA's hydel generating capability varies between the two extremities of 2,414 MW and 6,746.0 MW over the cycle of a year. Future plans: WAPDA is carrying out feasibility studies and engineering designs for various hydropower projects with accumulative generation capacity of more than 25,000 MW. Most of these studies are at an advance stage of completion. After the completion of these projects the installed capacity would rise to around 42,000 MW by the end of the year 2020. Pakistan has been blessed with ample water resources but could store only 13% of the annual flow of its rivers. The storage is fast depleting due to sedimentation and the statistics war-

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rant construction of number of reservoirs to enhance availability of water which stands at 1,070 cubic meters per capita. The hydropower potential in Pakistan is over 100,000 MW with identified sites of 55,000 MW. Currently, studies under way include Diamer Basha (4,500 MW), Bunji (5,400 MW) and Kohala (1,100 MW) amongst many others. 4.2. Thermal Generation: Bulk of Pakistans power generation is based on thermal resources mainly furnace oil and natural gas as fuel. Despite the fact that Pakistan has over 185 billion tons of coal reserves, the coal based power generation is almost non-existent. The total installed capacity of thermal power plants in the country as on June 30 2010 was 13,978 MW. As per Energy Yearbook 2010, share of thermal power generation during 2007-08 was recorded at 66.8 percent.

Break-up of thermal generation capacity (MW) Power stations June 30 2010 1, WAPDA 59 Gas Turbine Power Station (GTPS) Shahdra 132 Steam Power Station (SPS) Faisalabad 244 Gas Turbine Power Station (GTPS) Faisalabad 195 Natural Gas Power Station (NGPS) Multan 1,350 Thermal Power Station (TPS) Muzaffar Garh 1,655 Thermal Power Station (TPS) Guddu 174 Gas Turbine Power Station (GTPS) Kotri 850 Thermal Power Station (TPS) Jamshoro 150 FBC Lakhra 35 Thermal Power Station (TPS) Quetta 39 Gas Turbine Power Station (GTPS) Panjgur 17 Thermal Power Station (TPS) Pasni 2, KESC 250 Thermal Power Station (TPS) Korangi 125 Gas Turbine Power Station (GTPS) Korangi town 100 Gas Turbine Power Station (GTPS) Site 1,260 Thermal Power Station (TPS) Bin Qasim 220 Korangi CCP 3, IPPs 7,123 Total MW (1, 2 & 3) 13,978
Source: Pakistan Energy Book 2010 (HDIP)

Future plans: Continuing the policy of former government, the current administration has approved 19 contracts for rental power projects in September 2008, bringing the governments total commitment to buy rental power to 2,734 MW. Among these 19 rental power projects (RPPs) of 2,734 MW that the government has committed to, only one has come online as scheduled (a turkish-made power ship Kaya Bey), adding

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only 62 megawatts of electricity to the national grid against the guaranteed 93 percent efficiency to provide the 231.8 MW based on diesel-run sets for 60 months. By end 2011, eleven power projects (including five rental power plants) with power generation capacity of approximately 1,900 MW are expected to commission with a cost of about PKR 1.3 billion. Furthermore, GENCOs, PPIB and WAPDA has also submitted plans to provide 2,110 MW through fourteen different projects based on hydel, gas, oil, coal, wind, nuclear, waste gas and bio gas to be commissioned by 2012. It is envisaged to add around 11,058 MW from 2011-2015 through generation and expansion. 4.3. Nuclear Power Generation: The share of nuclear power in the total power generation capacity of Pakistan is just 2.2 percent. At present, only two nuclear power plants are established in Pakistan with a total generation capacity of 462 MW. The third nuclear power plant is under construction.

Break-up of nuclear generation capacity (MW) Power stations June 30 2010 Karachi Nuclear Power Plant (KANUPP) 137 Chashma Nuclear Power Plant-I (CHASNUPP-I) 325 Total MW 462
Source: Pakistan Energy Book 2010 (HDIP)

4.4. Alternative / Renewable Energy: Pakistan has abundant available and inexhaustible renewable energy (RE) resources, which if tapped effectively can play a considerable role in contributing towards energy security and energy independence of the country. In May 2003, Alternative Energy Development Board AEDB (www.aedb.org) was established to act as a central agency for development, promotion and facilitation of renewable energy technologies, formulation of plans, policies and development of technological base for manufacturing of renewable energy equipment in Pakistan. The Government of Pakistan has tasked the AEDB to ensure 5% of total national power generation capacity to be generated through renewable energy technologies by the year 2030. In addition, under the remote village electrification program, AEDB has been directed to electrify 7,874 remote villages in Sindh and Balochistan provinces through renewable energy technologies. At present, total Renewable Energy produced in the country accounts at 40MW which is about 0.21% of total installed generation capacity of all sorts. The renewable energy being produced in the country is used for electrification of remote villages and not yet added to national grid. The investment potential for the renewable energy sector of the country from short to medium term is over USD 16 billion dollars.

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Renewable energy potential in Pakistan Wind 0. 346 Million MW Solar 2.9 Million MW Bagasse Cogeneration 1,800 MW Waste to Power 500 MW Mini & Small Hydel 2,000 MW
Source: Alternative Energy Development Board (AEDB)

5. Import of Electricity: Since October 2002, Pakistan is importing electricity from Iran at three points of the province of Balochistan; Mand interconnection on 132 KV and Tuftan and Mashkhel through 20 KV. During the fiscal year 2009-10, Pakistans total import of electricity from Iran stood at 249 GWh. Further, Pakistan has planned to import 1,100 MW of electricity from Iran for supply to Gwadar and other coastal areas of Balochistan.

6. Electricity Transmission & Distribution: 6.1. Transmission: In Pakistan, two companies are engaged in the business of electric power transmission namely, National Transmission and Dispatch Company (NTDC) and the Karachi Electric Supply Company Limited (KESC). NTDC is the national grid company of Pakistan and is exclusively, responsible for electric power transmission in the whole of country except the area covered by KESC. a. National Transmission and dispatch Company (NTDC): NTDC is a public sector company and came into existence as a result of restructuring of WAPDA in 1998 and obtained a transmission licence from National Electric Power Regulatory Authority (NEPRA) in 2002 to engage in the exclusive transmission business for a term of thirty (30) years. NTDC is responsible for overall reliability, planning and coordination of the electricity transmission in Pakistan except the area under KESC. At present, NTDC operates and maintains nine 500 kV and twenty three 220 kV Grid Stations, 4,160 km of 500 kV transmission line and 4,000 km of 220 kV transmission line in Pakistan. b. Karachi Electric Supply Company Limited (KESC): The second company engaged in electric power transmission business in Pakistan is KESC. It has two separate licences; electric generation and distribution while its application for transmission licence is under process with NEPRA. The transmission network of KESC is connected to the national grid of the country by 220kV and 132 kV links at two points. One is the Jamshoro-Bin Qasim link in East of Karachi and other in HUBCO-KESC link in West of Karachi.

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6.2. Distribution: As a result of restructuring and unbundling of the power wing of Water and Power Development Authority (WAPDA), following eight distribution companies are responsible for channelling electricity from the transmission substations below 220 kV to the consumers at different distribution voltages. The end users are classified as residential, commercial, industrial, agriculture and street lights etc.

Distribution companies 1, Peshawar Electric Power Company Limited (PESCO) 2, Tribal Area Electric Supply Company Limited (TESCO)* 3, Islamabad Electric Supply Company Limited (IESCO) 4, Gujranwala Electric Supply Company Limited (GEPCO) 5, Lahore Electric Supply Company Limited (LESC) 6, Faisalabad Electric Supply Company Limited (FESCO) 7, Multan Electric Power Company Limited (MEPCO) 8, Hyderabad Electric Supply Company Limited (HESCO) 9, Quetta Electric Supply Company Limited (QESCO)
*Has no distribution licence, working under PESCO

The distribution network is composed of lines and grid stations of 132kV and lower voltage capacities, and each distribution company is responsible for constructing, operating and maintaining the power distribution facilities within each dedicated geographic area. Overall, the distribution system, especially in urban area is overstressed and needs to be upgraded, augmented and expanded. Besides these eight distribution companies, Karachi Electric Supply Company (KESC) is a private limited company and is engaged in distribution of electric power in the area of Karachi. In addition to one private sector and eight public sector distribution companies, National Power Regulatory Authority (NEPRA) has so far granted seven distribution licences to small power producers (SPPs) for supply of electric power to designated bulk power consumers. 6.3. Losses in the transmission and distribution: One of the major problems in Pakistan is the unsafe and unreliable transmission and distribution of electricity. Due to weak grid infrastructure and significant theft of electricity, losses from the transmission and distribution network during the year 2009-10 accounted at 20.6% for WAPDA and about 30% for KESC. 7. Demand and supply of electricity: According to the Planning Commission of Pakistan, the peak power sector demand during fiscal year 2011-12 is expected to increase at 21,00 MW. Therefore, supply will fall short and is expected to remain at current supply demand gap between 4,500-6,000 MW. 7.1. Load pattern and peak load hours: The electrical load pattern in the country varies from season to season; during summer season there is an increase in the inductive load while in the winter season increase in resistive load has been observed. The peak hours of the country also vary from season to season depending the time of sunset. As an average, peak hours are generally taken as between 06:00 PM to 10:00 PM. A short span of peak, about one hour, also occurs in the morning

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but this being about 20 percent less in magnitude than evening peak and is not very important for generation planning but it is significant for system operation and planning. 7.2. Maximum load: Maximum on the different power plants during the year 2007-08 is given in below table: Power generation capacity and maximum load on power plants (in MW) 2007-08 Power stations Installed generation caMaximum load pacity WAPDA + AJKHEB Hydel 6,481.2 6,737.0 WAPDA Thermal 4,900.0 3,324.0 KESC 1,955.0 1,536.0 IPPs 7,123.0 5,820.7 Total MW 20,459.2 17,417.7
Source: Pakistan Energy Book 2010 (HDIP)

7.3. WAPDA - Supply and demand estimates: Electricity consumption in the country is growing steadily. The projected committed power generation and peak demand trend in the areas of WAPDA for the period of 2010 - 2030 is given as under. Fiscal Years Net deMW pendable Growth Capacity Rate MW Peak DeGrowth mand Rate Surplus/Deficit 2010 19,477 15% 22,353 9% -2,876 2015 27,000 9% 32,704 8% 324 2020 40,000 10% 48,843 9% 4,066 2025 70,000 8% 72,169 8% 4,031
Source: WAPDA

2030 90,000 8% 10,1478 7% 5,087

7.4. Consumers: Having consumption of 46 percent of electricity, domestic sector is the major consumer of electricity in Pakistan, followed by industrial sector 26.6 percent, agricultural 13 percent and commercial sector 7.5 percent. Electricity consumption by sectors 2007-08 (Percentage of Total 74,348 GWh) Sector Domestic Industrial Agriculture Commercial Bulk supplies Street lights, traction & others Total % 46.0 26.6 13.0 7.5 5.9 0.7 100.0

Source: Pakistan Energy Book 2010 (HDIP)

The sector-wise and province-wise consumption of electricity is given in the following charts:
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Electricity consumption by sector (GWh) Sector Domestic Commercial Industrial Agriculture Street light Traction Bulk supplies Other/Government Total (GWh) Annual growth rate 2004-05 27,601 4,080 18,591 6,988 305 12 3,700 50 61,328 6.67% 2005-06 2006-07 30,720 4,730 19,803 7,949 353 13 3,985 51 67,603 10.23% 33,335 5,363 21,066 8,176 387 12 4,246 127 72,712 7.56% 2007-08 33,704 5,572 20,729 8,472 415 8 4,342 158 73,400 0.95% 2008-09 32,282 5,252 19,330 8,795 430 5 4,177 101 70,371 -4.13% 2009-10 34.272 5,605 19,823 9,689 458 2 4,417 81 74,348 5.65% ACGR* 4.4% 6.6% 1.3% 6.8% 8.4% -28.2% 3.6% 10.1% 3.9%

Source: Pakistan Energy Book 2010 (HDIP) *ACGR: Annual Compound Growth Rate

Sectoral electricity consumption by Province 2009-10 (GWh) Sector Domestic Commercial Industrial Agriculture Street light Traction Bulk supplies Other/Government Total (GWh) 8. Regulatory framework: The Ministry of Water and Power, is responsible for all policy matters relating to the development of water and power resources. Besides that it performs certain specific functions, such as carrying out strategic and financial planning for the long term master plans in public and private sector. The long term power sector projects submitted by WAPDA and its allied corporations are being scrutinized in the Ministry through its attached departments keeping in view the technical and financial viability of such projects. The Ministry of Water and Power also monitors activities in the fields of power generation, transmission and distribution and performs supervisory and advisory role for smooth operation of power sector. It also coordinates inter-provincial water sharing issues and activities related to irrigation, drainage, water logging and to the monitoring of the operation of Indus Water Treaty of 1960 between Pakistan and India. Punjab Sindh KPK 5,453.4 483.4 1,443.0 363.1 19.9 493.7 2.9 8,259.4 Balochistan 462.6 92.6 113.4 3,348.3 3.7 78.4 0.1 4,099.1 AJK 625.1 48.8 64.7 51.7 790.3 Total 34,272.0 5,605.4 19,823.4 9,689.3 457.9 2.3 4,417.4 80.6 74,348.2

20,824.6 6,906.3 3,528.7 1,452.0 13,640.6 4,561.7 5,087.9 890.0 234.9 199.4 2.3 2,566.9 1,278.5 20.3 5.6 45,906.2 15,293.3

Source: Pakistan Energy Book 2010 (HDIP)

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8.1. Restructuring of power sector: Due to the electricity shortage in the 1980s and early 1990s, a strategy plan geared to restructuring of Pakistans power sector was adopted in 1992. Under the plan, deregulation, privatization and transformation of its two major power utilities Water and Power Development Authority (WAPDA) and Karachi Electric Supply Corporation (KESC) took place. WAPDA established in 1958 was unbundled in December 1998 while KESC was privatized in February 2005. Keeping in view the electricity demand patterns and lack of funds in the public sector, the Government of Pakistan decided to mobilise private sector resources by inducting it into power generation. In November 1985, the Government of Pakistan announced measures to encourage private sector participation in the power sector. The 1,292 MW Hub Power Project (HUBCO) was initiated at the same time, which was the first private sector power project of its size and kind in the entire world. It took almost 12 years for HUBCO to reach its completion, when in March 1997 it was fully commissioned. In 1994, the Government formulated a power policy that allows the private sector to invest in the power sector to ensure sufficient generation capacity. The policy also allowed full flexibility to independent power producers (IPPs) to bring capacity on line as quickly as possible at predetermined power purchase prices. The Government guaranteed implementation, fuel supply, and power purchase. 8.2. Creation of Private Power and Infrastructure Board (PPIB): The Private Power and Infrastructure Board (PPIB) was created in 1994 to facilitate private sector in the participation of power generation in Pakistan. PPIB provides a One-Window facility to private sector investors in matters concerning establishing power projects and related infrastructure. These matters include negotiation of the Implementation Agreement (IA). PPIB also provides support to the power purchaser and fuel supplier while negotiating the Power Purchase Agreement (PPA), Fuel Supply Agreement (FSA)/Gas Supply Agreement (GSA), other related agreements, and liaison with the concerned local and international agencies for facilitating and expediting progress of private sector power projects. PPIB is working to attract and facilitate Foreign Direct Investment (FDI) in Pakistans power se ctor. A number of foreign investors and world-renowned independent power producers e.g. AES, International Power, El Paso and Tenaska etc. are already present in the market, while many have expressed interest in setting up power generation projects that would exploit the indigenous resources including hydel, wind, natural gas, and coal. Their proposals have been evaluated and the prospective investors are facilitated and encouraged to come up with power projects focusing on maximum utilization of available local resources. 8.3. The Power Policy: After the first successful policy being the 1994 Power Policy, came the 1995 Hydel Policy, the 1995 Transmission Line Policy, the 1998 Power Policy, and finally the Power Policy 2002 which is currently in vogue in the country. The salient features of the Power Policy 2002 are: Scope of the Policy covers private, public-private and public sector projects; Invitation of bids on tariff through International Competitive Bidding (ICB);
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Encourage exploitation of indigenous resources including hydel, coal, gas and renewable resources through active involvement of the local engineering, design and manufacturing capabilities. Customs duty at the rate of 5% on the import of plant and equipment not manufactured locally. To enhance share of renewable energy sources, hydel and fuels other then oil-based fuels, full levy of income tax on oil-fired power projects. For projects above 50 MW One-Window support to be provided at the federal level. For projects below and up to 50 MW One-Window support to be provided at the respective provincial/AJK level. Ministry of Water and Power (through PPIB) to remain the focal point at federal level. To develop raw sites whose feasibility studies are not available, unsolicited bids would be welcomed. The sponsors of feasibility studies on raw sites will have first right of refusal. Two-part tariff structure consisting of fixed capacity and variable energy component is recommended with the proviso that fixed capacity payment for hydel projects would fall between 60% to 66% of the total tariff; Hydrological risk to be borne by power purchaser (WAPDA/NTDC/KESC).

Details of the power policies can be obtained from the website of Private Power and Infrastructure Board (PPIB) www.ppib.gov.pk . 8.4. Creation of National Power Regulatory Authority (NEPRA): The December 16, 1997, issue of the Gazette of Pakistan proclaimed the enactment of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, which had become effective on 13 December 1997. Thus, NEPRA has been created to introduce transparent and judicious economic regulation, based on sound commercial principals, to the electric power sector of Pakistan. NEPRA reflects the country's resolve to enter the new era as a nation committed to free enterprise and to meet its social objectives with the aim of improving the quality of life for its people and to offer them opportunities for growth and development. NEPRA's main responsibilities include: Issue licences for generation, transmission and distribution of electric power; Establish and enforce standards to ensure quality and safety of operation and supply of electric power to consumers; Approve investment and power acquisition programs of the utility companies; and Determine tariffs for generation, transmission and distribution of electric power.

9. Major issues of power sector in Pakistan: Lack of generation capacity, Circular debt, and increasing constraints in Transmission and Distribution systems are the main issues. Availability and Efficiency of Existing Power Plants: Pakistan has not only failed to make substantial additions in the generation capacity but it also could not use the existing power plants to their full potential. The problem could be linked to the failure of adding new power generation capacity. In order to avoid power cuts and load shedding,
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the existing power plants operate round the clock resulting in the essential maintenance schedules being overlooked, specifically for power plants in the public sector. Such a practice which has been continuing over the years has a telling effect on the operational performance of the existing power plants and their capability to supply power to the grid. Their efficiency and availability have reached alarmingly low levels; resulting in frequent breakdowns. The overall requirement of fuel has increased to produce the same amount of energy and the plants operated at their required design efficiencies. This issue needs the urgent attention of the concerned Authorities. Circular Debt: In Pakistan, the power sector has effectively become hostage to Circular Debt which is created when the power generation companies fail to clear their dues to the fuel suppliers. The fuel suppliers in turn default on their payment commitments towards refineries and international fuel suppliers. Inefficiency in collection of revenues from the private sector, non-payment of dues by the public sector including the provincial governments and in-effective contractual arrangements between the Pakistan Electric Power Company (PEPCO) and the Karachi Electric Supply Company (KESC) are the major causes for inter-corporate debt. The factors responsible for the circular debt in the power sector include: The inability of the DISCOs to pass on the cost of electricity to consumers. The cost of providing electricity to consumers could not be fully recovered as no real increase in tariff was notified by the Federal Government from 2004-05 to 2006-07. The tariffs allowed by the GoP were inadequate to cover the average costs of the companies, therefore the companies started to incur losses which continued to build up to unmanageable limits. Affordability of consumers has always remained a key consideration before the Federal Government in notifying any change in the consumer-end tariff. Sociopolitical pressures prevent the government to pass-on the cost of power to the consumers. After the year 2007 the NEPRA determined tariffs were not passed on to the consumers, as the Federal Government notified lower tariffs with the gap reaching Rs.3.43/kWh on January 1, 2010. The policy affected negatively on the financial viability of the companies. Externalities like global economic meltdown and extraordinary high oil prices further compounded the circular debt issue. In order to pass-on the fuel price variation National Electric Power Regulatory Authority (NEPRA) provided adjustments on a six-monthly basis. However the oil prices fluctuated so rapidly that the six monthly adjustments could not support DISCOs in their day-to-day operations. As a result DISCOs had to resort to bank borrowing which became tougher under the liquidity position of the financial institutions who considered that their exposure to the power sector had already reached an unsustainable level. Declining Hydropower: Hydel power is considered as one of the cheapest and environment friendly source of energy. By keeping a generation mix dominated by cheap hydel generation the government could have achieved the objective to keep consumer-end tariffs at affordable levels while also passing on the true cost of electricity. However, after the construction of Mangla and Tarbela reservoirDownload: www.osec.ch 16 / 21

based power generation projects, no major project was constructed with the exception of Ghazi Barotha Hydropower Project which is a peaking power plant. Depletion of Natural Gas Reservoirs and Slow Efforts for the Import of LNG: Gas is considered a clean fuel for power generation and is cheaper than oil-based generation. Natural gas has been Pakistan's key input for energy including for the power sector. Rapid depletion of natural gas reservoirs resulted in expensive sources of power generation replacing it. The continuity of natural gas to the power sector by the end of the year 2011 has not been guaranteed. Efforts for import of gas and the development of LNG terminals for the import of LNG have also remained slow which led to ad-hoc solutions for the induction of new capacity in the form of expensive furnace oil-based power generation. Failure to Exploit Coal Reserves: Pakistan has failed to exploit and develop its huge reserves of coal which, according to conservative estimates, are good for more than 100,000 MW of power generation. Energy Security Issue: The electricity generation in the country is heavily dependent on furnace oil imports. Therefore any fluctuation in the international oil market directly affects power generation costs. Similarly any interruption in the oil supplies may result in power supply interruption. High Losses in Distribution Companies: Consumer-end tariffs are highly sensitive to the losses in the transmission and distribution systems. With every percent increase in losses, the tariff increases exponentially. At the country level the average losses are around 22%, ranging between 10.51% - 37.4%. Low Revenue Collection Efficiencies: The revenue collection efficiency of the distribution companies is very low. Incidentally the companies with higher losses also have lower collection efficiencies than others. Collection efficiency of such DISCOs with heavy losses is around 75%-80%. Governance Issues: Besides having inferior operational performance, almost all the Ex WAPDA Distribution Companies (DISCOs) are not aware about their role and the need of good governance as a corporate entity. The DISCOs, even the loss-making ones, are not reducing their operation and maintenance costs. Their mindset is still that of a public sector entity without due regard to their rights and obligations. Their power purchase contracts are not in place and defaults and delays are routine.

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10. Suppliers of power plants, machinery & equipments used by power producers in Pakistan: Following are some leading local and foreign engineering companies engaged in the power sector of Pakistan are: a. b. c. d. e. f. g. h. ABB (Switzerland) Alstom (France) Areva (France) Descon (Pakistan) General Electric Company GE (USA) Harbin Power equipment company Ltd. (China) Siemens (Germany) Pak Elektron Limited PEL (Pakistan)

11. Important addresses: Ministry of Water and Power Government of Pakistan A - Block, Pak Sectt. Islamabad. Tel.: 92 (051) 9212442 Fax: 92 (051) 9224825 Email: fminister@mowp.gov.pk Board of Investment (BOI) Government of Pakistan Ataturk Avenue, G-5/1, Islamabad. Tel.: 92 (051) 922 4103 / 922 4101 / 920 4339 Fax: 92 (051) 921 5554 / 921 8325 E-mail: mail@pakboi.gov.pk Water and Power Development Authority (WAPDA) WAPDA House, Sharah-e-Quaid-e-Azam, Lahore Tel.: 92 (042) 99202211 Fax: 92 (042) 99202454 E-mail: chairman@wapda.gov.pk
Pakistan Electric Power Company (Pvt.) Ltd. (PEPCO)

725-WAPDA House, Lahore Tel.: 92 (042) 99202140 Fax: 92 (042) 99202402 E-mail: webinfo@pepco.gov.pk

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National Electric Power Regulatory Authority (NEPRA) PIA Building, 2nd Floor, Fazl-e-Haq Road, Blue Area, Islamabad Tel.: 92 (051) 9217673 Fax: 92 (051) 9217651 www.nepra.gov.pk Private Power and Infrastructure Board (PPIB) 50, Nazimuddin Road, F7/4, Islamabad Tel.: 92 (051) 920 5421 / 920 5422 Fax: 92 (051) 921 5723 / 921 7735 E-mail: ppib@ppib.gov.pk National Transmission & Dispatch Company (NTDC) Limited 221- WAPDA House, Lahore Tel.: 92 (042) 99201020 / 99202211 Fax: 92 (042) 99210894 E-mail: itdir@ntdc.com.pk Pakistan Engineering Council (PEC) Pakistan Engineering Council, Attaturk Avenue (East) G-5/2, Islamabad Tel.: 92 (051) 9206974, 9219500, 2829348 Fax: 92 (051) 2276224 www.pec.org.pk Alternative Energy Development Board (AEDB) Government of Pakistan House # 3, Street # 8, F-8/3, Islamabad Tel.: 92 (051) 9262947-50 E-mail: support@aedb.org

The National Energy Conservation Centre (ENERCON) Ministry of Environment - Government of Pakistan ENERCON Building, G-5/2, Islamabad Tel.: 92 (051) 9209022 Fax: 92 (051) 9202657 Email: mdenercon@gmail.com www.enercon.gov.pk

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12. Trade Journals/Magazines: At present Energy Update (monthly) is the only trade magazine on energy sector in Pakistan. ENERGY UPDATE #309, 3rd floor, Al-Sehat Centre, Hotel Regent Plaza Shahrah-e-Faisal, Karachi Pakistan Tel.: +92 (021) 5653676, +92-21-5213853 Fax: +92-21-5651797 E-mail: energyupdate@gmail.com Web: www.energyupdate.com.pk 13. Trade Shows/Exhibition: a, Pakistan Oil, Gas & Energy Exhibition and Conference (POGEE): POGEE (www.pogeepakistan.com) is an annual event of international repute in Pakistan which caters to the demand for the products and services in the oil, gas and energy sector. It is an important platform for local and international players to discuss and secure business deals, as well as to keep themselves abreast with the latest developments in the industry. Organizer: Pegasus Consultancy (Pvt) Ltd. 2nd Floor Business Centre, Mumtaz Hassan Road, Karachi - 74000, Tel.: 92 (21) 111 734 266 Fax: 92 (21) 3241 0723 Email: info@pegasusconsultancy.com b, Power & Alternative Energy Asia ( www.powerasia.com.pk ) is an annual exhibition held in conjunction with International Trade & Industry Fair - ITIF Asia. The Exhibition welcomes leading manufacturers and
suppliers of equipment and services for the sectors: electric, hydroelectric, thermal, natural gas, fuels, nuclear & solar power supply systems, electricity transmission networks, manufacturers of energy saving equipment and technologies, safety, construction, repair & maintenance organizations etc.

Organizer: Ecommerce Gateway Pakistan (Pvt.) Ltd. C-17, KDA Scheme-1, off Karsaz Road, Karachi-75350 Tel: (92-21) 34536321, 111-222-444 Fax: (92-21) 3453 6330 Website: info@ecgateway.net

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14. Conclusion: Pakistan being in the process of industrialization and still about 35 percent of its households without electricity, needs investments in all segments; generation, transmission and distribution of electricity besides improving the efficiency of its existing system to meet the present and forthcoming demand. Thus, numerous investment opportunities are available in the form of establishing new power plants (hydel, thermal, solar and wind etc.), supply of power plants, machinery & equipments related to generation, transmission and distribution of electricity as well as energy conservation. The Government of Pakistan is urgently seeking the investments in the form of Fast Track Rental Power Projects to encounter the immediate power requirements. Further, vast opportunities are also available for the companies specialized in the construction of dams as the Government has announced several hydro power projects of which the feasibility studies have been completed. Manufacturers of power plants, machinery & equipments related to the power sector having no customer and representative in Pakistan can participate in the above mentioned exhibitions to establish contact with potential clients. Moreover, companies are encouraged to contact the Consulate General of Switzerland in Karachi for their personalized enquiries.

Date: Author:

6th September 2011 Aslam Pervez Commercial Officer E-mail: aslam.pervez@eda.admin.ch Consulate General of Switzerland 98, Block 5, Clifton 75600 Karachi - Pakistan Phone: +92 21 3587 3987, Fax: +92 21 3587 4104 kar.vertretung@eda.admin.ch

Authors address:

Main Sources: Ministry of Water and Power Water And Power Development Authority (WAPDA) Pakistan Electric Power Company (PEPCO) National Electric Power Regulatory Authority (NEPRA) Pakistan Power and Infrastructure Board (PPIB) National Transmission & Dispatch Company Limited (NEPRA) Alternative Energy Development Board (AEDB) Pakistan Energy Book 2008 (Published by: Hydrocarbon Development Institute of Pakistan - HDIP) Private sector representatives.

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