ISLAMABAD, June 29: The incentives offered by the government for coal-based power generation in the country have, so far, failed to attract international investors, Dawn has learnt.

Informed sources said on Friday that the lacking response to the lucrative fiscal incentives offered for setting up integrated coal-mining and power generation projects makes the power crisis situation gloomier.

Even exemption of sales tax and customs duty on import of machinery and equipment for the coal-fired power projects, besides fiscal incentives available under the existing power policy did not help lure international companies.

Inadequate institutional arrangements, harsh climatic conditions, challenging mining environment, large capital requirements, location disadvantages, non-existence of industrial support services and the absence of an authentic data on hydrological budget have been identified as some of the major problems that have thwarted government's efforts to attract international companies in the sector.Sources said that lack of professional expertise, non-availability of developed human resources and absence of clean coal technologies have further hindered the investment process.

Sources said the looming power shortfall which is to touch 2500MW in 2007-08 which would affect the targeted growth rate.

The country has witnessed an accelerated development in various fields, but power growth, sources said, could not commensurate with the development of other sectors for which the government needed to develop indigenous resources for ensuring energy security.

Sources said the World Bank wanted Pakistan to offer adequate facilities to foreign investors with an improved security environment for attracting foreign investment in various fields, including oil and gas and coal sector.

The government had decided to enhance the share of coal in overall energy mix from the present seven to 20 per cent to generate 20,000MW of electricity by 2030.

The annual coal production in Pakistan was about 5 million tons up to 2005-06, but there is a need for 120 million tons of coal to generate 20,000MW to achieve the long-term target.