$7.5 billion CPEC hydropower projects may reduce Pakistan’s reliance on foreign fuel by 2026

$7.5 billion CPEC hydropower projects may reduce Pakistan’s reliance on foreign fuel by 2026

(Arab News)

KARACHI: Pakistan’s plan to add four new hydropower projects with Chinese assistance at a cost of $7.5 billion in the next six years would reduce its reliance on oil and gas purchased from international market and lower its import bill substantially, officials and stakeholders said on Saturday.

The country recently signed an agreement with a transnational corporation, China Gezhouba Group, for the construction of Azad Pattan Hydropower Project for $1.5 billion under the second phase of China-Pakistan Economic Corridor (CPEC).

A tripartite agreement was also signed on June 25 for the construction of Kohala Hydropower Project.

The two power generation facilities will be built in Azad Jammu and Kashmir (AJK) and are going to produce 1,800 megawatts (MW) of clean energy after their completion in 2026. They are also expected to create 8,000 jobs, according to CPEC chairman Asim Saleem Bajwa. 

The projects will also benefit the Kashmir government since it will receive water use charges and take ownership of these plants after the completion of agreed terms.

“The government of Azad Kashmir will take over the projects after 30 years as per the agreement,” Sardar Naveed Sadiq, Chairman of Kashmir Board of Investment, told Arab News.

Two other hydropower projects, Karot and Suki Kinari, are scheduled to commence operations in December 2021 and December 2022, respectively. They are built at a cost of $3.65 billion and will produce 1,590 MW.

China is helping Pakistan with nearly 20 power sector projects worth more than $20 billion, according to the Private Power and Infrastructure Board (PPIB). Four of them have already started commercial production.

The country’s focus on hydropower generation has increased the share of this specific energy component in the overall mix from 25.8 percent to 31 percent this year, according to the latest Pakistan Economic Survey.

“Our initial focus was on coal but we are now focusing on hydel projects. The issues have been resolved and tripartite agreements of Kohala and Azad Pattan were recently signed,” Dr. Liaqat Ali Shah, CPEC’s project director, told Arab News.

“At present, we are generating surplus energy, but we have transmission problems,” he said, adding: “As we go forward and set up huge industries in Special Economic Zones, the demand for power will also surge. That should tell you why we need to increase our energy portfolio.”

Pakistan’s estimated hydropower generation capacity stands at 60,000 MW, though the country is only utilizing about 11,000 MW of that potential annually.

The country’s power sector is deteriorating and desperately needs to be restructured. We can rapidly reduce 20 percent reliance on imported fuel, however, by making a few changes to it,” Khalid Faizi, international hydropower consultant and founder of Laraib Group, a stakeholder in the Azad Pattan Power Project, told Arab News.

“The production cost of the hydropower plant is Rs0.50 per unit while oil-base power generation costs Rs14 per unit of electricity,” he added. “No one can beat power generated through hydropower production in terms of its cost and Pakistan needs more projects like these.”

Faizi said the Azad Pattan Power Project would produce 3.3 billion kilowatt hour (kWh) electricity per year to meet about 5 percent of the country’s energy requirement of around 130 billion kWh.

“The life of hydro projects is usually around 200 years. The life of solar and wind power projects is somewhere around 25 years and coal power projects can last for 30 years,” he continued. “Pakistan needs to set up long term projects.”

“Dams are used for many purposes other than power generation. They can be helpful with irrigation and flood control. They can also provide wonderful picnic spots. They do require a significant initial investment but offer clean and affordable energy for a much longer tenure,” he added.

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