KARACHI: The World Bank (WB) is focusing to finance hydel and other mode of power generation in Pakistan instead of coal-based, as experts believed hydel could produce cheaper power than coal.
On the reason hydel normally has much lower carbon emissions, WB is not much impressed with Thar Coal power generation project.
The head of WB’s Pakistan power reforms’ projects Richard Spencer said, “Most people recognise Thar Coal may have a role to play in the future expansion of the electricity in Pakistan and we will work together with the government to help figure that out”.
Hydel normally has much lower carbon emissions, which emits about half the amount of carbon per unit of electricity produced. During the live public chat on Facebook, Spencer said hydropower is the largest source of affordable renewable energy deployable at scale in developing countries like Pakistan where only a fraction of its hydropower potential is actually realised.
The WB believed energy shortages in Pakistan would persist for some more years while the State Bank of Pakistan was working hard with the government to try and get power sector finances into better form.
Recently the WB approved a package of assistance for Dasu Hydropower Project phase-I. The package consists of an IDA credit of $588.4 million and an IDA Partial Credit Guarantee of $460 million to help mobilise commercial financing for the project. Dasu would have 2,160 megawatts (MW) hydropower plant on the main Indus River which could be expanded to 4,320 MW in future with low additional cost.
Bank had also approved $840 million for Tarbela IV Extension Hydropower Project, which would add 1,410 MW to the national grid directly benefiting industry, households and farmers who would get more electricity at a lower cost and suffer fewer blackouts.
WB will continue to engage in responsible, sustainable development of hydropower projects of all sizes and types depending on the local context run of the river, pumped storage and reservoir including off-grid projects that meet decentralised rural needs, he added.
Hydropower projects have economic, environmental, social and sometimes regional/international implications that should be managed.
WB will continue to engage with Pakistan in this important sector keeping the country's priorities and WB's policy and resource availability in view, Spencer replied to a query.
In response Pakistan will be able to produce surplus energy, Spencer said, “Demand is suppressed by the shortages at the moment and we cannot be sure how quickly it would grow if there were no shortages, I believe the shortages will persist, especially in times of peak demand in the summer for some years to come”.
Private sector investment is important to help alleviate Pakistan's energy shortages by encouraging private participants to invest in generation. Pakistan has over the years attracted investment in generation, but private investors would want to be sure they would get a return on their investment. We are working so hard with Pakistan government to try and get power sector finances into better shape, he added.
Spencer said it was by no means clear coal would be the lowest cost generation source in Pakistan, but there were certainly hydel which were cheaper including Dasu Dam and the fourth extension to Tarbelab Dam.
WB is concentrating financing hydel and other power generation sources and some other financiers are supporting coal including Asian Development Bank, which recently approved Jamshoro project, he added.
WB does not finance exploration and production projects that are left primarily to the private sector but we are working with the government to improve the investment climate for people in the exploration and production business, he added.
Spencer admitted Pakistan's tariffs were among the highest in the region and if people wanted the government to subsidise the electricity price, which meant taxes have to be higher, he added.
Spencer said WB has limited capacity, both financial and human and could not finance every project in Pakistan.
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