ISLAMABAD, March 16: Pakistan is trying to attract $37-40 billion in foreign direct investment (FDI) in the energy sector to offset looming energy shortages as a result of 10 per cent annual increase in energy needs.

Informed sources told Dawn on Thursday that the government had initiated a soft campaign to attract direct investment for seven energy projects. These projects are estimated to be completed in five to seven years.

This will be in addition to the ongoing efforts to attract investments in the oil and gas exploration sector and development and privatisation of energy sector units, including oil and gas and power generation and distribution.

The sources said that the government was offering foreign investors to finance its $3 billion plan for import and supply chain of liquefied natural gas (LNG), enabling the country to meet fast approaching energy shortfalls.

The government, they said, believed that LNG would be vital to fill the gap in energy supply between 2007 and 2011-12 when pipelines for gas import might start functioning after the total energy consumption increased from the current 55 million tons of oil equivalent (MMTOEs) to over 80 MMTOEs in 2011-12.

The government is also mobilizing international investors for $7 billion Iran-Pakistan-India gas pipeline, $5 billion Turkmenistan-Pakistan-India gas pipeline and $8 billion Qatar-Pakistan-India gas pipeline.

Similarly, about $8 billion investment is being sought for generating over 32,000MW of hydroelectric power to increase the share of indigenous resources in the overall electricity production.

Further, about $1-2 billion worth of projects are being offered to foreign investors for coal projects, besides $5billion for thermal power plans to meet immediate power shortages.

The sources said the local gas production would be on top of the government agenda for many years to come because it was still the cheapest source of energy.

According to a latest comparison of fuel prices, the local cost of gas comes to about $3.4 per MMBTU (million British Thermal Unit), against $5 per MMBTU of imported gas. Gasification of coal has a slightly higher cost of $5.5 per MMBTU while the cost of high-sulphur fuel oil comes to about $7.5 per MMBTU.

The per MMBTU cost of naphtha is estimated to be much higher at $11.7 while LPG costs $12.3 per MMBTU, followed by high-speed diesel at $14 per MMBTU.