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Pakistan Power Report Q1 2013

Pakistan Power Report Q1 2013

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Price	$1,175.00
Publisher	Business Monitor International
Date of Report	Jan 16, 2013

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Quick Overview

BMI View: Pakistan will continue to face chronic power shortages for the next year or more, despite
aggressive pledges and plans announced by government officials and aid promised by various foreign
organisations and diplomats. System inefficiencies prevent plans of the international organisations from
being effectively implemented, while the poor fiscal position aggravates the situation as private producers
are discouraged from increasing investment given the lack of promptness in payment. Hydro power and
renewable energy sources remain as alternatives that states struggle to tap on due to the high capital
outlays required.
Permanent resolutions and solutions to the power shortage remain out of sight for Pakistan as load
shedding across the country remains on the rise. The shortfall has escalated further as faulty generators,
lack of fuel (oil and gas) and low levels of rain compounded the situation. However, with the general
elections in Pakistan due in 2013, the government has raised PKR82bn from debt issuance in September
2012 to pay its delayed dues (estimated around PKR400bn or US$4.2bn) to private electricity producers
to encourage electricity production. Poor performance from existing generating assets, the lack
investment in generating capacity, power thefts and an inefficient grid remain obstacles to the
government's aim.
The key trends and recent developments in the Pakistani electricity market include:
?? Iran has begun negotiations with Pakistan in November 2012 on an agreement that would see
Iran export 1,000 MW of electricity. Mjid Namjou, Iranian Minister of Energy has further
expressed keenness to build another power plant on Iran's border that his country could boost the
total amount of energy available for export by another 2,000 MW. Pakistan's neighbour has
further pledge to complete the gas pipeline by 2014, a move which could alleviate the fuel
shortages faced by certain states.
?? The constructions of the various dams have met with increasing environmental concerns and
financing issues, which threaten to stall works. For example, the World Bank and other
international aid agencies have withdrawn their support for the Diamer-Basha dam project due to
environmental concerns raised by India. While it remains to be seen if financing will indeed
come through, recent improvements in Pakistan-Iran relations have made other countries such as
the US wary, and has spurred a wave of diplomatic meetings with the Pakistani government
which could prompt the provision of funds for these infrastructure projects. In particular, the US
has agreed to discuss the financing issue of the Diamer-Basha dam in the US-Pakistan Economic
Working Group meeting held in December.
?? The Central Power Purchase Agency has requested the National Electric Power Regulatory
Authority to approval a power tariff hike of PKR39 in January 2013 as the cost of generating
continued to rise in October due to the shortage of gas. This comes after a recent tariff increase
granted in October, and this trend is likely to continue as fuel prices continue to raise the cost of
electricity production.
?? Progress of talks between India and Pakistan regarding the sale of electricity and petrol remains
slow, with Indian officials citing their Pakistani counterparts keeping a cautious stance. While
several suggestions have been raised during the talks, including building of a pipeline directly to
Lahore, the Pakistan government remains wary of issues such as security and dependability of
oil imports from India. However, worsening energy shortage in Pakistan may push Pakistani
authorities to push ahead with negotiations, although imports from India are unlikely to exceed
supplies from Kuwait.
?? During 2013-2021, Pakistan's overall power generation is expected to increase by an annual
average of 3.86%, reaching 135.5 terawatt hours (TWh). Driving this growth is an annual 6.39
%rise in hydroelectric generation and a 4.14% increase in gas-fired generation. Growth in coalfired
generation is likely forecasted to remain at a more subdued pace of an average of 2.17
%while oil-fired generation is estimated to suffer an average annual contraction of 0.13%.
?? A government planning commission has warned in its 2005 energy security plan that unless
power production capacity is increased by 143 gigawatts (GW) in a phased manner by 2030, it
will not be possible for the country to sustain higher growth rates in the long run. Pakistan is
looking for US$8bn of private power project investment to meet its medium-term target.
?? The government has allotted approximately 39,000 acres of land and increased the rate of return
for investors in wind power projects to 17%, which implies a tariff rate of 14.6 cents per
kilowatt-hour. Approximately half of these projects are projected to be completed by June 2013,
and could potentially add 1.8GW of power in the summer, when electricity demand is at its
highest. Although these incentives and guarantees could help bolster the success rate of these
projects compared to previous attempts, there remains a possibility that global economic woes
could delay financing from foreign companies and push back the completion dates.
?? Following estimated real GDP growth of 3.7% in 2012, BMI forecasts the economy to grow at a
speed of approximately 4.1% between 2013 and 2021. The population is expected to rise steadily
from the current size of 180.0mn to 208.5mn during 2013-2021, and net power consumption
looks set to increase from 77.09TWh to 110.26TWh. This brings puts our projections for the
annual growth rate for electricity demand to an average of 3.8% over the forecast period.
?? Owing partly to the expected short-term rise in net generation, which growth rate lags
significantly the actual underlying 2013-2021 electricity demand trend, Pakistan is likely to
maintain its import requirements. A falling percentage of transmission and distribution losses -
from around 19.9% in 2013 to 18.6% in 2021 - will likely only provide minor supply
improvements.

Table of Contents

BMI Industry View ........................................................................................................................................... 5
SWOT Analysis ................................................................................................................................................ 7
Pakistan Power SWOT .......................................................................................................................................................................................... 7
Regional Industry Overview ............................................................................................................................ 8
Table: Vietnam's Power Development Roadmap ................................................................................................................................................ 11
Industry Forecast Scenario ........................................................................................................................... 12
Pakistan Snapshot (Macro) ...................................................................................................................................................................................... 12
Table: Country Snapshot: Economic and Demographic Data ............................................................................................................................. 12
Table: Country Snapshot: Power Sector ............................................................................................................................................................. 12
Pakistan Forecast Scenario ..................................................................................................................................................................................... 13
Electricity Generation And Power Generating Capacity .................................................................................................................................... 13
Table: Pakistan Total Electricity Generation Data And Forecasts, 2010 - 2017 ................................................................................................ 13
Table: Pakistan Total Electricity Generation Long Term Forecasts, 2014 - 2021 .............................................................................................. 15
Table: Pakistan Electricity Generating Capacity Data And Forecasts, 2010 - 2017 .......................................................................................... 17
Table: Pakistan Electricity Generating Capacity Long Term Forecasts, 2014 - 2021 ........................................................................................ 18
Electricity Consumption...................................................................................................................................................................................... 26
Table: Pakistan Total Electricity Consumption Data And Forecasts, 2010 - 2017 ............................................................................................. 26
Table: Pakistan Total Electricity Consumption Long Term Forecasts, 2014 - 2021 ........................................................................................... 26
Transmission And Distribution, Imports And Exports......................................................................................................................................... 27
Table: Pakistan Electric Power Transmission And Distribution Losses Data And Forecasts, 2010 - 2017 ........................................................ 27
Table: Pakistan Electric Power Transmission And Distribution Losses Long Term Forecasts, 2014 - 2021 ...................................................... 27
Table: Pakistan Trade Data And Forecasts, 2010 - 2017 .................................................................................................................................. 28
Table: Pakistan Trade Long Term Forecasts, 2014 - 2021 ................................................................................................................................ 28
Key Policies/Market Structure ...................................................................................................................... 31
Regulation And Competition ............................................................................................................................................................................... 31
Key Projects Database ............................................................................................................................................................................................. 32
Table: Pakistan Key Projects database............................................................................................................................................................... 32
Power Risk/Reward Ratings .......................................................................................................................... 38
Asia Regional Power Risk/Reward Ratings ............................................................................................................................................................. 38
Table: Asia Power Risk/Reward Ratings ............................................................................................................................................................ 42
Pakistan's Power Risk/Reward Ratings .............................................................................................................................................................. 42
Rewards .............................................................................................................................................................................................................. 42
Risks ................................................................................................................................................................................................................... 43
Competitive Landscape ................................................................................................................................ 44
Water And Power Development Authority (WAPDA) ......................................................................................................................................... 44
Karachi Electric Supply Corporation (KESC) .................................................................................................................................................... 45
Glossary of Terms ......................................................................................................................................... 46
Table: Glossary Of Terms ................................................................................................................................................................................... 46
Methodology And Sources ............................................................................................................................ 47
Industry Forecasts .............................................................................................................................................................................................. 47
Power Industry - Data Methodology .................................................................................................................................................................. 48
Generation And Consumption Data .................................................................................................................................................................... 48
Electricity Generation Capacity Data ................................................................................................................................................................. 49
Power Risk/Reward Ratings Methodology .......................................................................................................................................................... 49
Table: Power Risk/Reward Indicators ................................................................................................................................................................ 51
Sources ............................................................................................................................................................................................................... 52