Power sector investment

ISLAMABAD: The Asian Development Bank (ADB) has identified re-emergence of circular debt as a grey area and main hurdle in the way of investment in the country’s power sector, said an official on Wednesday.

The Manila-based bank has asked the government of Pakistan to resolve the issue on permanent basis, otherwise it would discourage investment in the power sector, he said.

“During the second day of the national energy summit held in Islamabad, the representatives of the bank briefed the government officials about the measures to overcome the power crisis, which has crippled the economy,” a senior official, who attended the meeting, told The News.

“The bank has also asked the government to emphasise on indigenous energy resources by exploiting oil & gas and coal reserves, as it will not only change the existing energy mix, but would also help reduce the power tariff,” he said.

Bank officials said the country has hydrogenation capacity of 6,500MW, which can be enhanced to 40,000MW on various sites of River Indus and Jhelum.

The countryís power distribution companies also need to improve their services, the officials said, adding that the thermal power generation system also needs improvement in its efficiency to enhance power generation. The bank also proposed the government to enforce Energy Efficiency Law.

In the wake of uncontrolled line losses, theft and inefficiency, the system is suffering huge losses of Rs45 billion to Rs50 billion per annum, they said.

The bank also pointed out deterioration in the power distribution company’s institutional sustainability and said that it could be resolved by bridging gap between the generation cost and the current power tariff.

Mentioning about the gas sector, the representatives of the bank mentioned about distorted gas sale price for fertilizer sector and stressed for immediate rectification of the same. They asked the government to divert substantial quantum of gas to the power sector to ensure cheap electricity.

While importing oil, it was proposed that the authorities should also consider other suppliers than the regular ones, as they can offer better price of the commodity to Pakistan.

The bank also suggested enhancement in the existing capacity of oil storage at the Karachi Port.

Source: http://www.thenews.com.pk/daily_detail.asp?id=235286