ISLAMABAD: The world’s leading power investors endorsed Pakistan’s power sector development strategy and made suggestions for improving the investment process at an investors’ roundtable hosted by the World Bank, the IFC, and the Government of Pakistan at the World Bank Group offices in Washington DC. The press release received from Washington DC says that the roundtable was attended by the world’s leading power investors such as AES (USA), International Power (UK), Zorlu (Turkey), Global Steel Holdings (UK), Waddell & Reed (USA), Barrick Gold (Canada), Aga Khan Fund for Economic Development, Amwal (USA), Tata Power (India), and Essar Group (India) as well as leading Pakistani investors such as Engro, Jahangir Siddiqui Group, Fatima Group, Hasan Associates, and Hubco.
In addition, key international financial institutions and government/aid agencies were amply represented: Japan Bank for International Cooperation, Islamic Development Bank, Nordic Investment Bank, KfW of Germany, and US Agency for International Development, US Ex-Im Bank, US Department of State, US Department of Energy, US Trade and Development Agency as well as the World Bank and IFC.
Mr. Rashad Kaldany, the IFC’s VP for Infrastructure, welcomed the participants by observing that the presence of major investors and leading international financial institutions at the roundtable indicates that interest remains high in Pakistan and in the investment opportunities in its power sector.
Pakistan’s Minister for Water & Power, Mr. Raja Pervaiz Ashraf stated that the Pakistan People’s Party Government set the framework for private investment in Pakistan in 1994. And due to the party’s efforts, Pakistan received some 5,000MW of private generation capacity and the power sector has 40 percent private participation today. The current government is looking to achieve a similar feat to address the current challenges.
The Chief Minister of Sindh, Mr. Qaim Ali Shah, introduced the enormous coal resources of the Thar region and mentioned that the development of these resources for power generation is a cornerstone of the Party’s manifesto. Mr. Shah extended a warm welcome to investors on behalf of the Government of Sindh to develop this resource.
Mr. Salman Faruqui, Deputy Chairman of the Planning Commission, noted that in the 1990s Pakistan became one of the first developing countries to use standardized documentation for power projects. A similar roundtable of investors kicked off that process some 15 years ago and this roundtable promises to be the beginning of another major round of investment. He also noted that the high investor interest in Pakistan’s electricity sector was evidenced by the response to the recent tender requests by the Government which elicited tenders of some $4.5 billion.
Federal Secretary Water & Power, Mr. Ismail Qureshi, presented an overview of Pakistan’s power sector and emphasized that Pakistan’s power strategy is guided by the principles of affordability, energy security, and financial viability. Pakistan’s focus is on accelerated development of its indigenous energy resources and diversifying its energy mix through private participation as well as regional cooperation.
The Secretary presented a realistic assessment of the sector’s recent financial difficulties and outlined the measures already taken by GOP to address it. He presented major investment opportunities in the power sector of nearly 16,000MW in hydro, gas, coal generation capacity and associated T&D totaling some $30 billion of which the private sector is expected to invest nearly $20 billion by 2015.
The international financial institutions were unanimous in their willingness to support GOP in the development of Pakistan’s power sector. Dr. Walid Abdelwahab of the Islamic Development Bank recommended that capacity has to be built in the Thar Coal & Energy Board and that tariff increases must not overly burden the economy. Mr. Raghuveer Sharma of the World Bank underlined his institution’s keenness to support Pakistan’s energy sector as GOP takes bold policy steps for stabilizing the macro-economic situation and shoring up the sector’s finances and focuses on implementation.
Mr. Adil Marghub of the IFC outlined policy measures taken by the governments of the Philippines, India, Jordan, and Turkey to recommend possible paths Pakistan could follow. IFC underlined the need to address the current challenges—both macro-economic and sectoral—in an urgent and bold way to be able to advance IFC assistance. Investor feedback was positive. Mr. Paul Hanrahan, president of one of the world’s largest power companies operating in developing countries, AES Corporation, told the audience that AES is investing further in Pakistan’s power sector because of its positive Pakistan experience over the last 15 years.
The relationships at the WAPDA and GOP levels have been well maintained and the skills of Pakistani engineers and managers have been critical to AES’s success. He noted that major foreign investors in other sectors regularly cite electricity shortages as the key constraint to their expansion. Continued emphasis is needed on tariff reform, the financial strength of WAPDA/NTDC and more active support to investors in land acquisition and environmental clearances, he said.
Mr. Vince Harris of International Power, another global investor and leading investor in Hubco, seconded Mr. Hanrahan’s views about his company’s positive investment experience in Pakistan. Mr. Murat Bursa of Zorlu Enerji (Turkey) complimented Pakistan for its favorable power incentives and hospitality to investors at a personal level. Mr. Asad Umar of Engro Pakistan recommended that GOP build on the previous successes in Pakistan’s power sector by speeding up implementation, particularly by further empowering PPIB with decision-making authority and possibly through the establishment of an integrated energy ministry.
The country is considering all options for power generation with hydropower, gas, alternative energy resources (wind, solar, etc.), and coal as well as energy conservation and efficiency on the demand side. The development of Thar coal was recognized as a landmark development opportunity for Thar as well as for Pakistan. The discussion on coal policy focused on whether Pakistan should develop a large-scale operation rather than multiple medium-sized operations, whether coal mining and coal-fired generation should be integrated, whether investor participation should take place through an upfront tariff announced by the Government or tariff-based international competitive bidding, etc.
Investors underlined the need for definitive investigation of the coal composition, water availability and recharge, environmental implications of exploiting lignite coal, etc., through a master plan study under public-private partnership. Mr. Salman Faruqui thanked the investors and IFI’s for their feedback and outlined the measures being considered by GOP to address the concerns raised. Mr. Ismail Qureshi, in his recap of the day’s proceeding observed that he was pleased to see that investors see Pakistan has having honored its contractual commitments. He noted that Pakistan stands ready to welcome private investment in all its forms.
In his closing address to investors, Mr. Shah Mahmood Qureshi, Minister of Foreign Affairs, emphasized Pakistan’s value as an energy corridor for the region and its will to diversify its energy mix through trade with all its neighbours.-SANA