INVESTMENT OPPORTUNITIES IN

POWER SECTOR OF PAKISTAN

Sequence
ENERGY MIX OF PAKISTAN
DEMAND-SUPPLY SCENARIO OF PAKISTAN
POLICY INCENTIVES FOR IPPs
POWER PLANTS
TRANSMISSION LINES
POLICY INCENTIVE FOR RENEWABLE ENERGY
SPECIFIC PROJECT OPTIONS

OVERVIEW OF PAKISTANS POWER SECTOR

At present the following entities are responsible for delivery of power to the end
consumers:

One Transmission and Dispatch Company (NTDCL)

Ten Distribution Companies (DISCOs)

Four Public Sector Generation Companies (GENCOs)

Thirty One (31) IPPs

The Electricity Generation is blend of Hydel and Thermal Units.

Total installed capacity is around 25,000 MW with 53% and 47% Share of Public
and Private Sector respectively.

Currently Country is facing deficit of around 6,000 MW in peak summer months

whereas the power demand has been growing by 6-7% per annum resulting into
load shedding of 8-16 hours.

Expansion in
Transmission Network is required to evacuate power from
upcoming projects.

Due to Financial Constraints in the Public Sector, the GOP is focusing on private
sector to invest in PPS to bridge the electricity demand supply gap.
3

PAKISTAN ENERGY MIX

Wind;
Nuclear;
3%
LNG;
4%1%
Hydel; 31%
Oil; 39%

2%
Wind;
4% Solar;
2%
Nuclear;
3% Import;
Coal Imported; Hydel;
20% 26%
Coal Local; 3%
LNG; 13% Gas; 12%

Gas; 22%

Current Fuel Mix

Oil; 14%

Fuel Mix 2019-20

Power Demand and Supply

27094
25145

23500
23434

23107
17582 17285 17582
14174
12140

20213
18402

1811 1949

28168
26905
22940
19690

3250

30803
25077
21068

1263

-3408

4009

28788

2015

42370 -5822
42522 42736 42917 43101 43252 43466 43617 43831 43983
-5442

Peak Demand
Gap

Available Generation

PAKISTAN POWER SECTOR

CURRENT SCENARIO

In the peak summer months, electricity demand-supply gap reaches

up to 6,000 MW resulting in load-shedding of up to 8-16 hours per
day

Even if the maximum capability of 18,477 MW is assumed, country

would need additional 13,310 MW (net) by the year 2020, requiring an
investment of $15 billion

The government is looking towards private sector to bring additional

generation on coal, hydro and renewable energy on fast track basis

In order to encourage private sector, the government has been

issuing various policies/ guidelines from time to time in the past at
both federal and provincial levels

PLANS TO ENHANCE POWER GENERATION

CAPACITY AND ALLIED INFRASTRUCTURE

The Present Government is striving hard to overcome the ongoing power

crisis which has adversely impacted the National Economy.

A number of initiatives are in progress to enhance generation capacity of the

system, including power plants based on coal, hydel, gas and renewable
resources, both in public as well as private sector.

The GoP has recently approved Power Generation Policy 2015 which
provides attractive incentives for private investors

Extensive networks of high voltage transmission lines and grid stations are
being developed to evacuate power from upcoming mega coal and hydel
projects to be located southern and northern part of country.

The GoP has approved Private Transmission Line Policy for allocating
private investment in high voltage transmission lines

POWER GENERATION POLICY 2015

SALIENT FEATURES/ INCENTIVES
PPIB /relevant entities in the Provinces / AJK / GB will provide a onewindow facility for implementation of projects under the Policy.
Exemption from Corporate Income Tax, Turnover Tax, Withholding Tax and
Sales Tax, only 5% concessionary Import Duty on plant & equipment not
manufactured locally
GOP Guarantees obligations of power purchaser & provinces
GOP provides protection against Political Force Majeure, Change in Law
and Change in Duties & Taxes
For Hydro Power Projects; WUC will be paid @ Rs. 0.425/kWh to the
province where the project is located.
Power Purchaser to bear Hydrological Risk for Hydro projects

POWER GENERATION POLICY 2015

SALIENT FEATURES / INCENTIVES
Attractive ROE provided by the Regulator Imported Coal: 27.3 ; Local
Coal: 29.5; Thar Coal: 34.5; Hydro: 23% ROE ; Gas/LNG: 18% ROE
To mitigate high underground geological risk, long construction period
and environmental sensitivities following tariff re-openers are provided
by NEPRA

Cost Escalation in Civil and Cost Variation for E&M works

Resettlement Cost

Cost variation due to Geological Conditions limited to Tunnel Area

Tariff indexation for inflation (US CPI & Pak WPI)

Government ensures conversion of Pak Rupee & remittance of foreign

exchange for project-related payments

INVESTMENT INITIATIVES
(Coal based Power Projects)

At present, various local and imported coal based IPPs are under
process with PPIB, most of which are being developed under the
China Pakistan Economic Corridor (CPEC)

PPIB, after consultation with the stakeholders, has finalized and

shared Security Package Documents with the Sponsors
(Implementation and Power Purchase Agreements)

Moreover, the total potential of Thar is estimated at 175 billion tons of

lignite coal which may be sufficient to produce 100,000 MW electricity
for 200 years

NPERA has already announced Upfront Tariff for Indigenous Coal

based Projects

Investors are encouraged to participate as equity partner with existing

Sponsors in development of power projects based on Thar Coal and/
or propose new projects based on Thar Coal.
10

INVESTMENT INITIATIVES
(Transmission Line Projects)

Transmission Line and Allied Infrastructure Projects under the

proposed Transmission Line Policy (to be announced shortly)

List of Transmission System projects to be offered to Private

Sector will be prepared by GOP

Award of Projects through ICB and Upfront Tariff on BOOT basis

Policy to cover Transmission Line & Grid Station projects of 220
kV voltage level and above (EHVAC & HVDC)

Land & Legal Right of way to be provided by NTDC

Project Term: 25 years
Transmission utility (NTDC) to pay a fixed Transmission Service
Charge, regardless of the quantum of energy transmitted

Exemption from Corporate Income Tax for first ten years including
turnover rate tax and withholding tax on imports

Standardized Security Package (IA & TSA)

One Window facility by PPIB
11

NEW INVESTMENT INITIATIVES

(RLNG Projects)

3,600 (3 x 1200) MW Power Generation Projects based on R-LNG, to be

commissioned 2400 MW open cycle by May 2017; completion of 3600
MW early 2018

Tendering for all plants has been completed and contractors have
mobilized

02 projects being developed by Federal government while 01 by

government of Punjab

Equity participation in these plants is available for Russian investors

02 similar projects have been initiated at Jamshoro (600 MW) and

Guddu (1200 MW)

These 02 plants can be implemented on G-to-G basis with Russian

companies
12

Renewable Energy Policy 2006

No customs duty or sales tax on import of equipment
No Income Tax / withholding tax / turnover tax
Repatriation of Equity along with dividends freely allowed
Convertibility of PKR into USD
Non-Muslims and non-residents exempted from payment of
Zakat on dividends
Mandatory purchase of electricity by power purchaser
17-18% ROE
Governments Sovereign Guarantee
Grid evacuation responsibility of power purchaser

Renewable Energy Projects

Wind Energy

Five (05) wind power projects of 255.4 MW operational.

Nine (09) wind power projects of 477 MW are under construction.

14 wind projects of 664 MW in different stages of development.

Solar Energy

One (01) solar project of 100 MW installed.

Three (03) solar projects of 300 MW under construction.

31 solar projects of 711.44 MW in different stages of development.

Biomass Energy

Three (03) biomass cogeneration projects of 82.7 MW operational.

Eleven (11) biomass cogeneration projects of 333.4 MW in development

stages.

Renewable Energy Potential

Wind:

340,000 MW (Theoretical)*
1396 MW in pipeline

Solar:

2,900,000 MW (Theoretical)*

Hydro (small/mini)

3,000 MW (Approx.)

Bagasse Cogen: 2,000 MW (Approx.)

Waste to Energy:
Geothermal

1,000 MW (Approx.)

Potential yet to be determined

Alternative Fuels

Potential being determined

Initial macro level resource maps for wind and solar developed by NREL
(USA).
Resource mapping and spatial planning of solar , wind and biomass
energy resources has been initiated with the support of the World Bank
and ESMAPs Renewable Energy Resource Mapping Initiative.
* Based on NREL study conducted in 2006.

GEOTHERMAL SPRINGS
OF PAKISTAN
Seismo-Tectonic & Suture Related Systems

Geothermal spring
Near the snout of Pechus
Glacier

... ... .

Yasin District
Hot Sulphourus spring

Geopressurised Geothermal Systems

Geothermal springs located
Neogene-Quaternary volcanism related Systems
Within Reshun and Ayun
fault domain
Geothermal springs at the north
of Zhob valley

...
. .
.
. .
. . . ..

Geothermal springs at
Harnai valley
Giandari Hot Spot
Geothermal springs at
West of Dhadar, near Sanni
Koh-e Sultan thermal springs
T: 25,6 34,8 C

Kharan region (potential)

geothermal system

Budelas
Geothermal springs
T: 36 - 46C

Murtazabad
Geothermal springs
T: 26 - 92C
Dassu area Skardu district
Geothermal springs
T: max: 71 C
Mushkin geothermal spring
T: 57 C

Tatta Pani geothermal spring

T: 65,5 - 83 C
Bakkur thermal spring
Taunsa thermal spring
Zinda Pir thermal spring
Uch thermal spring
Garm ab thermal spring

Khashkeli thermal gradient

3-3,5 C/100 m
Mangho Pir geothermal spring
T: 50,3 C

Karsaz geothermal spring

Lakhra thermal gradientTalhar thermal gradient T: 39 C
3,3 C/100 m
3-3,5 C/100 m

Hydel Power Potential

Project Under Study

Diamir Basha Dam Project (4500 MW)

Patan Hydropower Project (2300 MW)

Thakot Hydropower Project (4000 MW)

Future Projects

Yulbo Hydropower Project (2800 MW)

Tangus Hydropower Project (2200 MW)

Skardu Hydropower Project (1200 MW)

Coal Potential of Pakistan

Sindh
186 billion tons
Punjab

235 million tons

Balochistan

217 million tons

KP

90 million tons

Azad Kashmir

Thar

9 million tons

Thar Desert contains the worlds 7th largest coal

reserves:
175 Billion Ton = 50 Billion TOE = 2000 TCF
Total Thar Coal Reserve

More than Saudi Arabia

& Iranian Oil Reserves

68 times higher than

Pakistans total gas reserves

Fiscal Incentives for Coal Projects

Thar Coalfield is declared as Special Economic Zone, and projects

of development of Thar declared as Projects of National Security

20% ($ Based) IRR to firms which achieve Financial Close before

Dec 2015 for Mine & Power Plants based on indigenous coal.

Zero percent customs duties on import of coal mining equipment

and machinery including vehicles for site use.

Exemption on withholding tax on dividend for initial 30 years.

Exemption on withholding tax on procurement of goods and

services during project construction and operations.

Exemption for 30 years on other levies including special excise

20
duty, federal excise duty, WPPF and WWF.

Power evacuation from 1320 MW Hubco Project

Scope of
Work
Estimated
EPC Cost

500 kV Double Circuit Transmission Line from Hubco

Coal Power Plant to Matiari (200km).
Extension at 500 kV Matiari Switching Station (Two
line bays with Shunt Reactor Banks)
134MUS$

Expected
Commissioni
December 2017
ng of Power
Plant
Financing

Financing will be done through IFIs

PC-I
Approval
Status

PC-I submitted to MoW&P on 08.07.2015 and is under

process with Planning Commission for approval of
ECNEC

Completion

2017-18

Power Evacuation from Thar Power Plants

+ 600 kV Bi-Polar HVDC T/L from Thar to Lahore
(960km)
Scope of
Work

HVDC Converter & Switching /Control Stations at

Thar & Lahore
Grounding Stations at Thar and Lahore

Estimated
EPC Cost

1700 MUS$

Financing

Financing will be done through IFIs

Approval
Status

Not yet prepared

Completion

2020-21

23

 Pakistans Power Sector is Ready For

Investments in:
Generation
Transmission through wheeling
Transmission Lines
Distribution through Privatisation
Equipment and Materials

Investors are welcome

to avail investor friendly
profitable business
opportunities in
Pakistans Power
Sector

25