Pakistan is racing to bridge its power supply gap before national elections next year after a series of widespread blackouts highlighted the fragility of the network and its negative pull on South Asia’s second largest economy.
The country faces a peak supply gap of 8,000 megawatts during the “scorching” summer, above the average 5,000 to 6,000 megawatt shortfall, said Shehbaz Sharif, the chief minister of Pakistan’s most populous province of Punjab and younger brother of Prime Minister Nawaz Sharif. About 7,000 to 9,000 megawatts will be added to the national grid by March 2018, he said.
Pakistan’s government faced protests after a series of unscheduled blackouts swept across the country as temperatures rose during the first week of the holy Muslim fasting month of Ramadan last month.
The commercial hub of Karachi suffered days of cuts due to power plant faults and grid tripping, caused by what distribution company K-Electric Ltd. said was high humidity levels in the sweltering port city. There’s now doubts about the ability of the aging transmission network to handle the planned extra load with demand rising about 7 percent annually.
“It’s not only the capacity, it’s about management, it’s about transmission lines, it’s about circular debt,” Sharif, 65, said in an interview at his residence in Lahore. “There are challenges and our transmission network is being augmented, the prime minister is personally coordinating this almost every 10 days to two weeks.”
Pakistan for years has struggled with a deficient power industry, holding back the economy and leaving residents and industry in the dark.
Resolving the issue is an election priority for the Sharif administration and some progress has been made, with average residential blackout times dropping to three to four hours from 8 hours in 2013, according to government figures. Industries have been exempt from planned cuts since the 2016 fiscal year, though many still run back up generators.
Along with the blackouts, the Sharif family has been dogged by a corruption probe after it emerged that the premier’s children used off-shore companies to make property investments in London. Shehbaz Sharif, who declined to comment on who would take over the party leadership if his brother was disqualified, was himself questioned by a court mandated investigative team on June 17.
With the Chinese providing expertise and loans of about $35 billion to the industry, power plants have been built at great speed. Yet the transmission network, which is in state hands, may not be able to keep pace.
“Building capacity does not translate into fixing the energy problem,” said Nikhil Bhatnagar, the New York-based director of Asia sales at Auebach Grayson & Co. “If you don’t have a profitable distribution system and an efficient transmission system then you wont be able to pay for the generation when it comes on stream.”
At the Sahiwal coal power plant south of Lahore – owned by China’s state-owned Huaneng Shandong Rui Group — engineers built the 1,320 megawatt power plant in 22 months, below the usual four-year timeline.
While an extension is planned at Sahiwal, the largest electricity plant in Punjab financed under the China-Pakistan Economic Corridor, it’s uncertain when it will go ahead as the transmission network needs to be upgraded and expanded, according to two people with knowledge of the matter, who asked not to be identified as they aren’t authorized to speak to the media.
In a report published in November last year, the National Electric Power Regulatory Authority said the national transmission agency’s development work was behind schedule, with some projects delayed by much as three years.
Days after making an unannounced visit to a gas power plant in Bhikki, which had suffered a technical fault, Sharif said he was hopeful the network would be strong enough. “Otherwise you produce megawatts and they are not transmitted and you are back to square one.”
There are also doubts over whether Pakistan can handle repayments of Chinese loans to the power sector. Pakistan has guaranteed repayments in dollars and a 17 percent profit on the projects and it’s betting that the investments will generate enough revenue to repay the borrowings and boost economic growth.
The government will be able to handle the foreign currency remittances to China, Sharif said, although, “I’m not discounting there won’t be any issues.”