The Chinese government and its private companies will invest in over 16,000 megawatts of power projects in Pakistan over the next few years to ease the country’s burgeoning energy crisis, federal minister for planning and development Chaudhry Ahsan Iqbal told thethirdpole.net in an exclusive interview before he accompanied prime minister Nawaz Sharif on his recent trip to China.
During the visit, the two countries signed US$ 42 billion worth of deals including a number of coal-fired power stations, as well as hydropower, wind and solar projects.
However, some experts believe the new initiatives will be counterproductive, unless problems of huge losses along power transmission lines, mismanagement and poor governance in the power sector are addressed. Power companies also need to collect revenue from unpaid electricity bills, with the government representing the largest defaulter.
Pakistan’s energy crisis is the number one constraint on future economic development, said the planning and development minister, who is responsible for the construction of power projects. According to conservative figures, the country’s total power demand is 18,000 megawatts, well above the 12,000-13,000 megawatts of available power.
The first major challenge is the shortage of supply, Ahsan said. Second, the current transmission system is not capable of transmitting more than 15,000 megawatts of electricity. And third, the breakdown of governance in this sector is causing huge power losses.
Pakistan sees the latest round of Chinese investments as key to its efforts to solve power shortages that have crippled its economy. Power cuts in some areas have sparked violent protests and damaged an economy already struggling with high unemployment, poverty and insurgent violence. It was the biggest issue during the last elections in Pakistan, and the current Nawaz Sharif government was voted into office largely on the promise of solving the crippling power shortage crisis.
The two countries recently signed an agreement to develop the China-Pakistan Economic Corridor, which will add 10,400 megawatts of energy projects in the short to medium term. In the long run, a total of 16,000 megawatts of energy will be added to Pakistan’s system in the coming years with Chinese help, Ahsan said.
The government will also speed up ongoing energy projects, he added. For example, the Jamshoro coal powered plant in Sindh province is being built with the help of the Asian Development Bank. The construction of a liquefied natural gas (LNG) plant is scheduled to be completed in February 2015 to supply gas to power stations in Punjab province.
Besides this, the government is aggressively exploring potential shale gas resources, as studies have shown that there are rich reserves in Pakistan.
Minister Iqbal confirmed coal power projects under construction will be completed within three and half years, along with the 969 megawatt Neelum Jhelum hydropower project on the Nelum River in Pakistan controlled Kashmir, and new turbines to boost capacity of the Tarbela dam. “All these new and ongoing projects will come on line in five years so we are hopeful that by 2018 we should be able to bridge the supply gap,” he said. The Neelum is a tributary of the Jhelum, which, in tun, joins the Indus further downstream.
Power sector in disarray
However, experts question the route proposed to solve Pakistan’s energy crisis. The problem is poor governance rather than a shortage of energy, argued Daanish Mustafa, professor of geography at King’s College London, who has written extensively on Pakistan’s energy and water policies. “In fact, the country has 22,000 megawatts of installed capacity, well above the peak demand of 18 000 megawatts,” he claimed. “They don’t use it usually because no one pays their energy bills and the government is the largest defaulter.”
Pervaiz Amir, director of the Pakistan Water Partnership and former advisor to the prime minister agreed. “The government has to overcome its own weakness first by plugging the huge losses through power transmission lines and overcoming corruption and mismanagement,” Amir said. “Around 40% of Pakistan’s total installed capacity is wasted due to corruption, power theft, line losses and default on payments.”
“The recent energy deals with China seem to be for short term political mileage as most of the projects are coal based and not hydropower projects to generate cheap and clean power,” said Amir.
“Long term investment in hydro power is the only solution for overcoming the country’s power crisis,” he held, pointing out that Pakistan has the capacity to generate 60,000 megawatts from hydropower alone.
The minister defended his government’s policy to exploit the country’s rich coal resources, despite concerns about the environment and health implications. “Pakistan has been blessed with one of the richest coal reserves in the world. Thar area is an untapped goldmine of coal,” Iqbal said. “We have the most modern technology so that the environmental standards are not compromised through coal power generation.”
Water challenges
Securing enough water is another major challenge for Pakistan in the face of climate change, with droughts and floods now occurring every year. “If we fail to plan effectively today Pakistan is likely to face a worse water crisis in the coming 15 to 20 years,” Iqbal said.
The government has revived the Diamer-Basha dam project, to provide water storage through a large reservoir and generate 4,500 megawatts of hydropower.
“We need as many as water reservoirs as we can to store each and every drop of our water which flows through our land to not let half of our country turn into drought condition,” the minister said.
There have been major questions raised over the future of the Diamer-Basha dam since India has asked the US not to fund the project planned in a disputed region of Gilgit Baltistan. The minister said international investors had showed serious interest during a recent investment road show in Washington. “We will move forward with the construction of this project regardless,” Iqbal said. “If needs be we can also float investment bonds for overseas Pakistanis to generate funds for this crucial dam.” He also hopes the Asian Development Bank or China’s new infrastructure bank may provide funds for the dam.
Iqbal maintained mega power projects, including those in the Himalayan region, are only given the green light once detailed environmental impact assessments have been carried out. “We are very mindful of the environmental sensitivities, which will be taken into consideration and we will comply with them fully.”