PRIVATE POWER & INFRASTRUCTURE BOARD

 

GOVERNMENT OF PAKISTAN

MINISTRY OF WATER & POWER

   
  FAQs

 

1.

What does IPP stand for ?
IPP is an abbreviation of Independent Power Producer

2.

How many  IPPs facilitated by PPIB are functional  in Pakistan?
At present there are 30 private power projects with a installed capacity of about 7410 MW which are in operation. In addition Kot Addu Power Company (1638 MW) and K-Electric power plants (2341 MW) are also operating in the private sector.

3.

Why has private sector been inducted in power generation?

Power shortage had been one of the chronic problems hampering Pakistan's socio-economic growth since late 1980s, the problem had assumed such acute dimensions that power supply fell short of demand by almost 2000 MW during peak load hours. On a routine basis, this resulted in forced interruptions in the supply of electricity to consumers during peak hours resulting in load shedding. The unreliable power supply shattered the industrial progress. There was a gap between demand and supply due to the rapid increase in electricity demand (estimated to be growing at a rate of 7-8 % per annum at that time).

This situation called for immediate intervention by the GOP through adoption of policy measures aimed at massive resource mobilization for investment in the power/energy sector. The enormous quantum of required investment compared with the constrained funding potential of the national exchequer, was not conducive to allocation of scarce GOP funds for power/energy. Therefore, the GOP took a bold initiative in late 80s to induct private sector investment in the power sector.

4.

Why was PPIB created as a dedicated institution to handle Private Power Projects?
Developing power generation capacity is very capital intensive. For example the capital requirements for a deficit of 5000 MW is around US$ 6 billion. Such an amount cannot be carved out from the annual budget of federal government. As such in late eighties the Government of Pakistan made in principle decision to seek private sector investment in power generation. Attracting investment of that big magnitude require a team of highly qualified professionals who are trained in project, financial and contract management / analysis beside being courteous and imbued in corporate culture. Long and tedious experimentations by various governmental agencies on part time basis with HUBCO (the first private sector power generation project) and other prospective Independent power Producers (IPPs) in late 1980's convinced the government to create a dedicated organization having roots in government but having a corporate look that could provide a suitable interface to private sector entrepreneurs, their consultants, lawyers, and lenders feel easy to approach, Private Power and Infrastructure Board(PPIB) was created as a dedicated one window facilitator for attracting private investments in power sector.

The resultant success of PPIB was so impressive that PPIB's model was followed by many other countries. Given the current shortfall and magnitude of investment required, the justification of PPIB as dedicated institute for providing one window facilitation and attract private investment in power sector has magnified manifold. 

5 Who are the main lenders?

Foreign Lenders Local Lenders

IFC        

National Bank of Pakistan
World Bank Habib Bank Limited
ADB United Bank Limited
IDB Muslim Commercial Bank
US Exim Bank Allied Bank Limited
AIDEC Askari Bank Limited
CDC (UK) Faysal Bank Limited
EDC (UK) Meezan Bank Limited
SACHE (Italy) Bank Al Habib
ANZ Banking Group  (Australia) Habib Metropolitan Bank Limited
ABN Amro Bank (Now merged with Faysal Bank) The Bank of Punjab
Jexim (Japan) Soneri Bank Limited
Bank of Tokyo Mitsubishi NIB Bank Limited
Toronto-Dominion Bank Pak Oman Investment Company
DEG (Germany) Pak China Investment Company
FMO (Netherlands) Saudi Pak Industrial and Agricultural Investment Company
PROPARCO (France)  
SWEDFUND (Sweden)  
OPIC (US)  
K-Exim  
Exim Bank of China  
Industrial & Commercial Bank of China  
China Development Bank  
   
6 Who are the Investors(Sponsors) in Private Power Projects?

Foreign Investors (Sponsors) Local Investors (Sponsors)

International Power (UK)

Nishat Group
Congen Technology Sapphire Textile Limited
El Paso (USA) Attock Refinery Limited
Tenaska (USA) Engro Chemical
Mitsui (Japan) Shirazi Investment
Xenel (KSA) Fauji Foundation
TNB - (Malaysia) Saif Group
AES Corporation Liberty Mills
ADB Descon Group
IFC Gul Ahmed
Oman Oil Tapal
DEG Germany saigols
GE Capital HUBCO
GDF Suez (France) Lucky Group
KOSEP, Korea Siddiqsons Ltd.
K-Water, Korea  
CMEC, China  
Shanghai Electric Group, China  
Power Construction Corporation, China  
China Power International Holding Co, China  
China Gezhouba Group, China  
China Three Gorges, China  
   
7 What is the minimum equity requirement to finance IPPs in Pakistan?

The minimum equity requirement for an IPP in Pakistan is 20% of the total Project Cost.
8

Why IPPs were allowed to do business in Pakistan ?
If projects are implemented through the public sector utilities, they absorb a significant portion of national budget allocation. The allocation for new power projects surpasses the cumulative allocation for health, housing, education and agriculture sectors. Therefore, in order to save governmental allocations for these vital sectors, private sector investment has been sought in Pakistan.

9

Induction of IPPs has resulted in increase in consumer tariff. Is it true?

The Bulk Power Tariff (BPT) offered by Pakistan to the IPPs inducted under the 1994 Power Policy was comparable to the IPP tariffs in other Asian countries. The increase in tariff with time is mainly due to increase in the prices of furnace oil and gas, and devaluation of the Pak Rupee.

10

Who determines the tariff for IPPs?

In order to promote fair competition in the electricity industry and to protect the interests of consumers, producers and sellers of electric power, the GOP has enacted the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997. Under this Act, the National Electric Power Regulatory Authority (NEPRA) has been created to introduce transparent and judicious economic regulation, based on sound commercial principles, to the power sector of Pakistan. One primary responsibility of the regulator is determination of tariff for the various generation, transmission, and distribution companies, including the IPPs. NEPRA follows a standard and transparent procedure for tariff determination, which includes public hearing and views from all stakeholders.

11

What is the estimated hydropower potential in Pakistan, and How much of the total potential has been developed so far ?

Estimated power potential in Pakistan is about 60,000 MW and Projects with installed capacity of 6928 MW have been developed so far

12

Where can some one find information on status of hydropower projects in Pakistan ?

Information on the status of hydropower projects can be found in the report "Hydro Power Resources of Pakistan" published by PPIB, available at PPIB web site.

13

Which are the major hydropower plants in Pakistan?

Tarbela (3478 MW), Ghazi-Barotha (1450 MW) and Mangla (1000 MW) are the major hydropower plants in operation in Pakistan.

14

Is there any Hydropower IPP in Pakistan?

84 MW New Bong is the 1st Hydro-IPP in Pakistan/AJK.

15

What is the model of hydropower project implementation in private sector?

Hydropower Projects in private sector are being implemented on Build- Own-Operate-Transfer (BOOT) basis and the project based on this model  shall be transferred to the Government at the end of the concession period.

16

What is the concession period for hydropower projects?

The hydropower projects shall be implemented on BOOT basis or any other mode and the term of term of concession period for the private sector will be 30 years after which the project will be transferred to the Provincial Government/AJK and GB (as the case may be) for Pak Rupee1.

17

What is the average cost of building a hydropower project?

According to the data available on the hydropower projects recently under implementation, the average capital cost for construction is being worked out as 1.5 million to 2 million US $/ MW. This cost is for medium size run of river type hydropower projects, however, the costs of building a hydropower project can vary considerably depending upon nature and location of the project, availability of transmission line and potential environmental mitigation needs.

18

What is the construction time required for development of hydropower project?

Due to the site specific nature and being on remote locations, construction time required for development of hydropower project is a bit longer as compared with the thermal power projects. For a medium size run of river hydropower project the development and construction time could be around 5 to 6 years.

19

What is the coal resources potential in the country?
Numerous studies have been conducted all of which have concluded that all coal reserves of Pakistan are suitable for power generation. Pakistanís total coal reserves are 186,007 million tons. The biggest coal reserve of Thar which lies in Sindh has an estimated potential of 175,506 million tons and preliminary studies suggest that Thar is capable of generating 100,000 MW for two centuries.

20

What efforts are being made by PPIB to develop  Thar/local coal based projects ?

Inspite of fact that constitutionally coal is a provincial subject, PPIB has endeavored to promote private sector investment in coal based power generation. The Federal Government has announced a set of incentives for coal mining and coal based power projects. Whereas the Government of Sindh (GoS) has created a high power decision making agency i.e. Thar Coal & Energy Board (TCEB) which has high level representation from both the federal and provincial governments. Following Power Generation projects are being developed through PPIB on local coal:

1320 MW Shanghai Electric Power Project at Thar Block-I

1320 MW Engro Powergen Project at Thar Block-II

1320 MW Oracle Coalfield PLC Power Project at Thar Block-VI

300 MW Salt Range Power Project at Pind Dadan Khan

21

What efforts are being made by PPIB to develop  imported coal based projects ?

Presently PPIB is processing following six (6) imported coal based projects totaling 5133 MW. They are listed at http://www.ppib.gov.pk/N_upcoming_ipps.htm

22

Will there be any role of PPIB in coal based power generation after creation of TCEB?
Yes, PPIB may process private power projects including coal based power projects in the country and will also continue to extend support to all the provincial governments including AJK/GB. Further, the provincial governments may recommend the projects for further processing by PPIB including coal based projects earlier awarded by concerned province as per Power Generation Policy 2015. However, TCEB will be the focal and decision making body for coal affairs of the Thar coal field located in Sindh province.

23

Instead of conventional mining why underground coal gasification projects are not being initiated?
Underground Coal Gasification (UCG) technology is in development stage and a pilot project at Thar block-V based on UCG is being implemented. After ascertaining commercial viability of the pilot project, large scale projects would be considered.

 

 
 
 Home  Links Tenders   Careers