Minister says $58bn power sector investment lined up
ISLAMABAD: The government claimed on Thursday to have lined up $58 billion investment in the troubling power sector till 2022, but aired uncertainty over implementation of the Iran-Pakistan gas pipeline project.
This was the gist of a briefing the Prime Minister Office had arranged for Islamabad-based foreign diplomats, civil society members, academics and media persons on the eve of completion of three years of the Pakistan Muslim League-Nawaz government with focus on power projects, oil and gas and connectivity limited to roads.
At the outset, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said the Iran-Pakistan gas pipeline project was still facing two major issues to take off. Explaining, he said international sanctions against Iran had eased but “dollar transactions are still not allowed”, making it difficult to have normal business transactions with Tehran. Secondly, the existence of snap-back clause in Iran’s agreement with the West was a problem for international financing of the project.
Responding to a question why such restrictions did not work against the European Union, Mr Abbasi said the EU had only a one-off transaction with Iran while the Iran-Pakistan pipeline project was a long-term arrangement for 20 years which could be affected in case of application of snap-back clause.
He said the discussions with Iran were in progress on these issues and hopefully the project would go through and be completed by June 2018. The project could start with 250mmcfd of gas flows in June 2018 and then gradually go up to 750mmcfd.
In reply to a question on the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project, the minister said Turkmenistan had taken upon itself to deal with security of the pipeline in Afghanistan and the project envisaging 1,325mmcfd of gas to Pakistan could materialise in January 2020.
He said even if both the IP and Tapi projects materialised, Pakistan’s energy needs would not be overcome because domestic gas supplies were about 4,000mmcfd against a demand of about 8,000mmcfd.
Therefore, import of liquefied natural gas was “the only short- to medium-term solution of Pakistan’s energy crisis as it was sustainable, flexible and scalable”. He said the government had a target to inject 2,000mmcfd of LNG in the system by mid-2018 to “wipe out loadshedding”.
A total of 4,000MW of LNG-based power plants would become operational by mid-2017 while $2bn had been invested in LNG terminals and pipelines. Currently, 400mmcfd of LNG was being supplied to the system which would increase to 1200mmcfd in June next year.
By 2018, Pakistan will have surplus gas in the system and all consumers including power plants, fertilisers, industry, CNG, captive power plants and housing colonies would have gas available without any problem. To meet this challenge, Rs850bn worth of gas pipeline network and four LNG terminals at a cost of Rs120bn were in different stages of implementation, the minister said.
He said the country needed investments in oil storages, oil pipelines and deep conversion refining capacity in coastal areas. The “biggest need” is to have deep conversion 250,000-400,000 barrels per day of petrochemical complex worth $5bn in the coastal area.
ELECTRICITY: Minister for Water and Power Khwaja Asif said $58bn worth of investment in the power sector was expected for generation of 30,948MW by 2022 and the power crisis would completely wipe out in 2018 but declined to give a deadline.
Asked what gave him the confidence that $58bn investment would materialise, Mr Asif said the government had already lined up $36bn investment and added that agreements for 11,000MW had already been signed. Many projects were now achieving financial close, others were already in advanced stage with equity investment.
Power Secretary Younas Dagha said under the 10,400MW portfolio of the China-Pakistan Economic Corridor 8,630MW were currently under execution phases and promised zero loadshedding in 2018. He said the loadshedding to industry had been wiped out except for Ramazan when its one shift had been taken out for domestic consumers
Responding to a question on conservation, the minister said wastage of energy was a serious issue in Pakistan and the federal government was “getting absolutely no support from the provinces including from Punjab for energy conservation and closure of markets at sunset”.
He regretted that Pakistan was blessed with a lot of sunshine, but the nation was doing business in electric lights. “This is sad,” he said.
ROADS: Chairman of the National Highway Authority Shahid Ashraf Tarrar said his agency was currently implementing Rs850bn worth of road projects which would be completed in three years. He said work on various segments of the western route of the CPEC was in progress.
