Electrical Energy: Prime Engine for National Development

By Jeelani, Vaqar A. | Economic Review, May 1996 | Go to article overview
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Electrical Energy: Prime Engine for National Development

Jeelani, Vaqar A., Economic Review

In order to support the power development programme of the country for the Eighth Plan (1993-1998), a minimum estimated amount of Rs.102 billion in foreign currency and Rs.16 billion in local currency would have to be raised in private sector.

Shortage of electrical power is one of the most crucial issues facing Pakistan today. Supply has been unable to keep pace with the growing demand, with the result that consumers have been subjected to forced power cuts or load-shedding on a routine basis. Electrical energy, is the prime engine for national development.

Without it all efforts for fast-track industrial development economic progress cannot be made. The government is giving top priority to power and energy sector. The government constituted a Task Force on Energy in October 1993 to eliminate the menace of load-shedding and to devise a consolidated and comprehensive policy for revamping and rejuvenating the energy sector.

This commitment was translated into reality when on 25th September 1994, 16 agreements were signed with US firms involving an investment of US$4 billion, whose representatives had come to Pakistan as members of a high-powered 100-member American businessmen delegation led by US Energy Secretary. Ms Hazel O'Leary. A total of 16 power plants with a total capacity of 3,500 megawatts will be set up by 1997.

In addition to those earlier successful efforts when the largest private investment in Asia, in the shape of HUBCO in Balochistan, with a total capacity of 1,292 MW, was successfully signed, the financial package and the project is expected to go into commercial operation in July 1996.

On October 6, 1994 Hong Kong-based industrialist, Mr. Gordon Wu, signed a memorandum of understanding (MoU) with the Governments of Pakistan. Sindh and the PPIB for a comprehensive package for the construction of 5,280 MW coal-fired power plant with an investment of US$5.5 billion near Karachi with additional investment of US$2 billion being made in the transmission network. The construction is scheduled to start next month.

The plant would have eight units of 660 MW each. The first one is expected to come on line by December, 1997 or early 1998. This will be the single largest investment from Mr. Gordon Wu. Farewell to load-shedding is the battle cry raised by the Government. More than mere hollow rhetoric the government has embarked whole-heartedly in its crusade to rid the country of the existing chronic power shortage.

In Prime Minister's own words electric power is the necessary oxygen for the very survival of Pakistan. To combat this problem the Government has launched a massive programme in the private sector to generate power which will totally eliminate load-shedding, leading Pakistan to a prosperous future in the 21st century.

Because of the poor shortage, the country is facing total loss of Rs.900 million per year in duties besides colossal losses in production and export commitments which is simply unbearable. Pakistan today offers a secure, stable investment environment with deregulation programmes and a free market economy. Presently the total installed capacity in the country is 10,800 MW which is insufficient to meet the demand on a year-round basis.

The magnitude of this shortage is of the order of 2,000 MW. Electricity is available to less than one-third of the population and per capita consumption of electricity per annum is 300 KWH which is extremely low. The system is characterised by a high degree of suppressed demand. Projected annual growth in the demand is nearly 89% for the next 20 years. This means approximately 40,000 MW of additional capacity will be added to the national grid by the year 2018. Such a gigantic programme cannot be financed in the public sector due to ceiling on public sector development programme (PSDP), and resource mobilisation in the private sector is essential for meeting these development targets.

In order to support the power development programme of the country for the Eighth Plan (1993-1998), a minimum estimated amount of Rs.

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