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IPPs, the solution for Pakistan’s power crisis

Article - April 30, 2014
The two corporations Engro and Hubco are rising to the challenge of the National Energy Plan to revolutionise Pakistan’s energy mix by moving to cheaper and more sustainable sources: coal and hydropower
Upgrading power generation companies and moving towards independent power producers (IPPs), are what analysts are calling the key steps towards reducing the electricity demand and supply gap, which has risen to 4,300 MW.

According to Asian Development Bank and World Bank estimates, Pakistan loses out on 2 to 3 per cent gross domestic product (GDP) due to power outages annually.

“It’s not the government’s job to invest in power generation; their job is to create an enabling environment. It is the private sector who should come forward and utilise the right kind of investment opportunities by creating joint ventures with the foreign investors,” says Hubco CEO Khalid Mansoor.

“The private sector has to make full use of this wonderful business opportunity which in turn will make huge contributions towards the development of the country. An ongoing interaction and consultation amongst the state and the private sector is important to develop appropriate policies for investment.”

Engro Powergen operates a 220 MW IPP, run on permeate gas from the Qadirpur gas field. “This power plant is one of the first ‘green’ power plants in the country,” explains Muahmmad Aliuddin Ansari, President and CEO of Engro Corporation. “Previously, owing to the lack of infrastructure this gas was simply being flared at the oilfields instead of being piped into the national gas grid. Our investment in setting up a power plant on this gas ensured availability of electricity to the national grid whilst also reducing country’s overall carbon footprint by over 467,000 tonnes of carbon dioxide equivalent emissions.”

With gas in increasingly shorter supply nationwide, however, eyes are turning to coal to power stations. Engro’s subsidiary Sind Engro Coal Mining Company has large stakes in the Thar Desert. “We are hopeful that once the Thar Coal Project kicks off we will be able to provide significant royalties over the life of the project followed by savings of $50 billion due to substitution of expensive furnace oil by affordable power generation using Thar coal,” says Mr Ansari.

Hubco, for its part, is embarking on a project to retrofit its plants with coal-fired burners in anticipation of the Thar Coal Project. Meanwhile, its 75 per cent share in Laraib Energy’s 84 MW hydropower project – the first of its kind from the private sector – has made the company the first hydropower IPP in Pakistan. 

According to the Ministry of Water and Power, IPPs now comprise about 50 per cent of the country’s present installed generation capacity.

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