Pakistan – part two:

Published December 19th, 2000 - 02:00 GMT

Electric Power:  

Pakistan has 13 gigawatts (GW) of electric generating capacity. Hydroelectricity makes up about 40 percent of this capacity, followed by oil-fired plants at about 30 percent and natural gas at about 25 percent.  


Pakistan also has one nuclear power plant, Kanupp, which accounts for 2 percent of Pakistan's total generating capacity. Pakistan's total power generating capacity has increased rapidly in recent years, due largely to foreign investment, leading to a partial alleviation of the power shortages Pakistan had faced earlier.  


Rotating blackouts ("load shedding") are, however, necessary at times in some areas. Transmission losses are about 30 percent due to poor quality infrastructure and a significant amount of power theft.  


Seasonal reductions affect the availability of hydropower. With much of the Pakistan's rural areas yet to receive electric power, and less than half of the population connected to the national grid, demand growth is expected to continue in the long term, though in the short term, Pakistan has some excess generation capacity.  


The electric power sector in Pakistan is still primarily state-owned, but a privatization program is underway.  


The main state-owned utilities are the Water and Power Development Authority (WAPDA), which has about 11 GW of installed capacity, and the Karachi Electricity Supply Corporation (KESC), which has about 1.7 GW of installed capacity and serves only Karachi and surrounding areas.  


WAPDA, which is made up of eight regional electricity boards, will be split up for privatization. One regional entity, the Faisalabad Area Electricity Board, has begun the privatization process as well. Pakistan set up a National Electric Power Regulatory Authority (NEPRA) in 1997.  


Growth in power generation in recent years has come primarily from new independent power producers (IPP's), some of which have been funded by foreign investors. The two largest private plants are the Hub power company (HUBCO) and the Kot Addu power company.  


HUBCO is owned by a consortium of National Power (UK), Xenal (Saudi Arabia), and Mitsui Corporation, and has a 1,300 MW capacity.  


Kot Addu, with a 1,500 MW capacity, was privatized in 1996 (from WAPDA), and is owned by National Power. Both of these plants, as well as a few other small private operators, sell power to the national grid currently run by WAPDA.  


Several other IPP plants are under construction. Two power projects involving U.S.-based companies (Babcock and Wilcox, and General Electric) received $293 million from the U.S. Export-Import Bank in early 1998.  


These projects involved equipment and services for Uch Power Ltd., and the Saba oil-fired power project.  


Uch Power is expected to become operational in mid-2000. Private sector projects will rely primarily on increased use of natural gas and coal.  


New WAPDA projects are confined to hydropower, including projects such as the 1,425-MW Ghazi-Barotha plant which takes advantage of the enormous untapped potential of the Indus River. The dam is under construction, but progress has been slowed due to WAPDA's financial problems.  


IPP's have run into problems during 1998-99 in their relations with the Pakistani government. This, along with the oversupply problem, has dampened foreign investor interest in Pakistan's power sector.  


IPP's have been involved in disputes and litigation with the government over the rates set in their Power Purchase Agreements (PPA's) with the national WAPDA grid. The government under Nawaz Sharif had charged that the IPP's had engaged in price fixing and paid bribes to officials of the previous Benazir Bhutto government.  


The Sharif government's main demand was for a reduction in rates to 4.5 cents per kilowatt hour (kwh), from the 6.5 cents per kwh which most of the IPP had in their original contracts.  


Both of the largest IPP's, HUBCO and Kot Addu, had been targeted, as well as the Malaysian-owned Dharki power plant. In response to the Pakistani government's demands for a rate reduction, the IPP's have demanded that prices for fuels be lowered, in particular oil, which is supplied by a state controlled monopoly.  


The International Monetary Fund has made resolution of the IPP pricing issue a condition of continued lending. The new government under General Musharraf has continued negotiations with the IPP's, but as yet the disputes remain unresolved.  


In the short term, Pakistan faces power oversupply, and an inability on the part of WAPDA to pay the IPP's for all of the new capacity under construction. During the period from 1994, when the previous government under Benazir Bhutto announced the policy of promoting foreign investment in the power sector, to the fall of 1995, 33 projects totaling an additional 7,740 MW of capacity were approved.  


Some of this capacity is currently under construction (while much has been cancelled), and will give Pakistan an oversupply problem until economic growth fuels enough demand growth to absorb the new capacity.  


Power theft is a pressing issue in Pakistan. While it is impossible to precisely measure theft (as opposed to line loss), it is obvious that it constitutes a sizable proportion of Pakistan's overall 30 percent loss rate.  


The situation was so severe by early 1999 that the Pakistani government assigned army units to look for illegal connections to transmission lines and rigged meters.  


By March 1999, the army had lodged 2,439 complaints against power thieves. The program is still continuing, albeit with reduced manpower. Power theft is just one part of the financial problem for WAPDA, however.  


WAPDA is at the center of a mounting public sector "circular debt," in which state firms and government ministries have failed to pay power bills, and WAPDA has failed to meet obligations to them and to private sector creditors.  



Coal currently plays a relatively minor role in Pakistan's energy mix, but the discovery of large volumes of low-ash, low-sulfur lignite in the Tharparkar (Thar) Desert in Sindh province could increase its importance.  


Thar reserves are being developed under the jurisdiction of the provincial Sindh Coal Authority and have enormous economic potential. The Authority's policy is to develop the reserves primarily to fuel large electric power plants to be built in tandem with the coal mines.  


A feasibility study recently was carried out for the construction of a coal-fired power plant near the Thar coal mines.  



Pakistan's attempt to raise the living standards of its citizens has meant that economic development has largely taken precedence over environmental issues.  


Unchecked use of hazardous chemicals, vehicle emissions, and industrial activity has contributed to a number of environmental and health hazards, chief among them being water pollution.  


Much of the country suffers from a lack of potable water due to industrial waste and agricultural runoff that contaminates drinking water supplies. Poverty and high population growth have aggravated, and to a certain extent, caused, these environmental problems.  


Although Pakistan is renowned for its mountain ranges and areas of untouched wilderness, the country passed legislation to protect its environment only in the past 10 years.  


Environmental groups have questioned the country's commitment to environmental protection, pointing to the decision in August 1999 to allow oil and gas exploration in Kirthar National Park, the country's oldest national wildlife park, by a multi-national company.  


In the cities, widespread use of low-quality fuel, combined with a dramatic expansion in the number of vehicles on Pakistani roads, has led to significant air pollution problems. Although Pakistan's energy consumption is still low by world standards, lead and carbon emissions are major air pollutants in urban centers such as Karachi, Lahore, and Islamabad.  


Theft or diversion of electricity in transmission, as well as a lack of energy efficiency standards, have contributed to Pakistan's high energy and carbon intensities. To increase energy efficiency, the country is stepping up its use of renewable energy sources to bring electricity to rural areas.  


As urbanization continues and the population grows at a rapid rate, in the 21st century Pakistan will need to confront its environmental problems in order to safeguard the health of it citizens.  


Energy Overview:  

Proven Oil Reserves (1/1/00E): 208 million barrels  

Oil Production (1998E): 59,000 barrels per day (bbl/d), of which 55,000 bbl/d was crude oil  

Oil Consumption (1998E): 350,000 bbl/d  

Net Oil Imports (1998E): 290,000 bbl/d  

Crude Oil Refining Capacity (1/1/00E): 143,350 bbl/d  

Natural Gas Reserves (1/1/00E): 21.6 trillion cubic feet (Tcf)  

Natural Gas Production (1998E): 0.7 Tcf  

Natural Gas Consumption (1998E): 0.7 Tcf  

Coal Production (1998E): 3.5 million short tons (Mmst)  

Coal Consumption (1998E): 4.5 Mmst  

Net Coal Imports (1998E): 1.1 Mmst  

Recoverable Coal Reserves (12/31/96E): 3,228 Mmst  

Electric Generation Capacity (1/1/98E): 13.0 gigawatts  

Electricity Generation (1998E): 59 billion kilowatthours  

Energy Industry:  

Organization: Oil and Gas Development Corporation (OGDC), a state company, handles oil and gas exploration and development; Water and Power Development Authority (WAPDA) supplies electricity to most of the country; Karachi Electric Supply Corporation Limited (KESC) serves the greater Karachi metropolitan area; Pakistan Atomic Energy Commission (PAEC) operates one nuclear power plant.  

Major Foreign Energy Company Involvement: AES, Atlantic Richfield, British National Power, Coastal Power, Gaz de France, Total, General Electric, Lasmo Oil (U.K.), Marubeni (Japan), ExxonMobil, Monument Oil & Gas, Premier Oil, Royal Dutch Shell, Xenal (Saudi Arabia)  

Major Ports: Gwadar, Karachi, Muhammed bin Qasim, Ormaro  

Major Gas Fields: Bhit, Dhodak, Kadanwari, Mari, Prikoh, Qadipur, Sawan, Sui  

Major Oil Fields: Dhurnal, Fimkasser, Liari, Mazari, Thora  

Major Pipelines: Sui Northern Gas Pipeline; Sui Southern Gas Pipeline; Pak-Arab Refinery Company (PARCO) petroleum product pipeline  

Major Refineries (Capacity): Attock Refinery in Rawalpindi (35,000 bbl/d), National Refinery in Korangi (62,050 bbl/d), Pakistan Refinery Ltd. in Karachi (46,300 bbl/d)  

Source: United States Energy Information Administration 


© 2000 Mena Report (

You may also like