ISLAMABAD, Feb 13: The Asian Development Bank (ADB) has agreed to offer $534 million through "its soft loan" window to help generate additional 480-mw of electricity and thus reducing growing power shortages in the country.

Official sources told Dawn on Tuesday that Water and Power Development Authority (Wapda) has identified 730 potential sites in Punjab for installing a number of hydel power plants, each having up to 50-mw at different canals and distributaries.

The ADB’s technical experts have approved 730 sites which included 324 potential and 306 raw sites for building small hydel power plants in the province.

The ADB funding is part of the government’s plan to save foreign exchange by not importing fuel that is used in alternate thermal plants. Also, the purpose is to replace expensive thermal plants by hydro power plants in a medium to long term scenario, providing cheaper renewable hydropower resources.

Sources said that this will also help increase hydel share in generation mix to reduce the prevailing high tariff rates of electricity.

Overall Wapda has firmed up a study which said that Punjab has a hydel potential of 5,895-mw along rivers and existing canal falls and barrages with medium and small heads. In this regard, Wapda officials are further exploring new possibilities for mobilising substantial funding from other international donor agencies especially the World Bank.

The financial analysis has been carried out with transmission line cost for generating additional 480-mw of hydel power. The financial internal rate of return (FIRR) with transmission line is 13.73 per cent which according to the ADB experts makes the project attractive.

The project is expected to create employment opportunity during the construction and operation phase directly. However, indirectly other related construction industry, supply of material, workforce in transportation, etc., will get the benefit.

The main objective is to

generate electricity and lay down track for hydel project implementation in the near future in Punjab. It has been planned that five powerhouses will be constructed after detail design and tenders were approved according to the ADB guidelines.

Sources said that the implementation time is estimated 57 months which includes pre-construction time, land acquisition and compensation, site installation, mobilisation, de-mobilisation, testing and commissioning.

Concerned officials said that energy demand is increasing at 8 to 10 per cent annually and Pakistan is still a net importer of energy.

The gap between the demand and supply in the past was met through installation of thermal power projects based on costly imported fuel. This situation, according to them, disturbed the hydel-thermal mix ratio from 65:35 to 35:65 which had resulted into unbearable increase in electricity tariff besides increasing dependency on imported fuels for meeting the energy needs.