Pakistan is facing a power deficit since 2007, deficit occurred as Pakistan fulfills mostly energy needs thermal power. Further demand for electricity grew by 6-8% per year in the Country. Current power deficit stands between 5,000-8,000 MW. Power shortfall is estimated to cost the economy 1%- 2% of GDP per annum.
To overcome power deficit and cater energy needs many Independent Power Producing Companies are working in the country. But due to severity of energy crisis there is scope of many other IPP’s. Being a developing country Government of Pakistan cannot invest huge sum of moneys in power sector only.
Pakistan current energy mix is heavily dependent on thermal power generation (approximately 70% of generation mix). Production cost of thermal power is too high in the whole world. Government of Pakistan is encouraging investment in alternative energies also.
- Total Installed Capacity – 22,797 MW
- IPP Share – 9802 MW (43%)
- Active Installed Capacity – 19,522 MW
- Annual Power Generation 2012 – 12,277 MW
Investment and Growth Potential in Energy Sector
The government is taking serious measures enhance Renewable Energy (RE) potential of the country to expand its energy mix. Alternative Energy Development Board (AEDB) is working for promotion and development of Alternative & Renewable Energy Technologies in Pakistan. AEDB has been is working for the development of Alternative and Renewable Energy (ARE) based power projects through private) investment.
In the country there is demand and supply gap of 5,000-8,000 MW and demand growing at 6%-8% per annum which guaranteed that power generated by IPP’s will be taken by government.
Incentives for investors in IPP sector:
- Moderate and transparent policy for investors to set up IPP projects.
- Easy process, one window facilitation for power projects – PPIB at federal level.
- Guaranteed power purchase produced by IPPs.
- Government of Pakistan has set up power parks at various locations where the government will develop the site with water and access provided. The investors only have to set up power projects at these locations with the entire support infrastructure in place.
- Power Parks being are being establish at Gaddani (6,600 MW coal potential) further Quaid-e-Azam Solar Park (6,000 MW solar potential) is also being constructed.
Registration with Securities and Exchange Commission of Pakistan (SECP) is necessary to be registered as company in Pakistan. Companies working outside the country may incorporate in Pakistan as Foreign Company. SECP has moderate and liberal policy for registration of Foreign Companies.
- Private Power and Infrastructure Board
- Alternative Energy Development Board
Licensing/registration with Private Power and Infrastructure Board (PPIB) is required for IPP
Companies intended to work in alternative and renewable energies i.e. wind ,solar and bioenergy are required to get license for Alternative Energy Development Board (AEDB). Licensing process requires several step like other government departments AEDB also uses moderate policy to issue license to power generating companies.