ISLAMABAD, April 16: Flagging power sector has received a shot in the arm from 10 companies interested in building plants, a government official told Reuters on Wednesday.
The companies, a few of them foreign-based, want to set up gas-based and hydro-power plants for producing more than 1,000 megawatts.
“I am very excited about it,” said Zafar Ali Khan, managing director of the Private Power and Infrastructure Board (PPIB).
Billions of dollars poured into the country between 1992 to 1996 when foreign companies set up independent power plants (IPPs) for a total of 5,522 mw electricity generation.
That all came to a halt when a bitter dispute on tariff and power purchase agreements erupted between the IPPs and Pakistan in 1997, clouding the overall investment climate of the country.
Soon after General Pervez Musharraf took the reins of the government in October 1999 the disputes were settled but the damage was done and new firms were wary to invest.
Khan said the situation was changing after Pakistan unveiled a new policy in last October. “We thought our track record was not very good,” he said. “But we have got a very good response.”
Pakistan now offers complete income tax exemption to power plants based on indigenous fuel including gas, coal and hydro.
Customs duty on import of machinery has been brought down to five per cent, provided the same goods were not locally available.
The government has also guaranteed it would meet contractual obligations, provide protection against specified political risks and provide protection against changes in taxes and duties.
Khan said Pakistan has once again become a good investment destination after the resolution of the disputes with IPPs.
Pakistan expects an estimated shortfall of 5,529 mw of electricity by 2010, for which it needs to start working now.
Khan said seven out of the 10 companies wanted to set up gas-based power plants for which PPIB was in talks with the Sui Northern Gas and Sui Southern Gas to ensure supplies.
“We are now firming up with them a commitment that gas will be supplied for at least 15 to 20 years, an un-interrupted supply of required quality and quantity.”
He said he expected talks with the gas companies to be finalized this month and the power companies could start the pre-qualification procedures by next month.
He said state-owned Water and Power Development Authority (WAPDA) had requested the PPIB seek private participation for two gas-based power plants of 450-mw each.—Reuters
