The Asian Development Bank (ADB) estimates Pakistan’s energy investment will be between $62 billion and $155 billion by 2030.
ADB’s CAREC Energy Outlook for 2030 report shows that energy investment needs till 2030 differ across three scenarios.
Due to rising demand and low baseline efficiency, power generation and energy efficiency need the biggest investment. In all three scenarios, hydropower development requires the most money, $11 billion to $26 billion.
Wind and solar energy investment needs are estimated to exceed $12 billion in the business-as-usual scenario, $36 billion in the government pledges scenario, and $57 billion in the green growth scenario, illustrating the country’s ambitious aspirations to harness its considerable renewable energy potential.
According to the country’s nuclear power generation targets, expansion and rehabilitation investments total $12 billion in the business-as-usual scenario, $21 billion in the government commitments scenario, and $31 billion in the green growth scenario.
Generational rehabilitation and expansion are expected to take 60% to 75% of the total, or $38 billion to $115 billion. In the business-as-usual scenario, energy efficiency measures require $12 billion, roughly $21 billion in the government commitment scenario, and over $26 billion in the green growth scenario.
Modernizing and expanding the power and gas infrastructures and installing advanced metering technology will cost $13 to $14 billion.
Several problems must be addressed to open Pakistan’s energy industry to private enterprises. First, uncertainty in resource categorization is a major concern.
Hydropower is considered a renewable energy resource globally, but not by the Alternative and Renewable Energy Policy.
Given the 30% renewable energy objective for 2030, wind and solar PV alone won’t cut it. Hydropower would make meeting the stated aim and introducing stiffer competition more realistic.
The energy sector lacks a comprehensive plan. The National Energy Policy has been authorized; however, policymakers haven’t yet assigned policy areas to relevant stakeholders.
Current authorities develop sector-specific policies. Alternative Energy Development Board (AEDB) develops alternative energy policy, whereas the National Electric Power Regulatory Authority draughts power generation policy (NEPRA). It also leads to excessive paperwork and delays in project implementation.
With a concentration on generation for decades, T&D was underinvested. As a result, Pakistan has one of the region’s greatest transmission losses, with certain distribution companies reaching 38%. Therefore, a centralized transmission plan, including future load development, is essential to provide a long-term direction for network expansion and to establish realistic targets for lowering T&D losses and attracting investments.
Over 25% of the population lacks access to power, which is another difficulty. Rural electrification will raise demand, straining distribution and generation. Circular debt adds to T&D’s issues.
Importing high-priced fuels and devaluing the currency increased costs for thermal power plants. Distribution utilities tasked with energy supply confront financial problems due to poor tariff collection rates and T&D loss targets. Distribution businesses can’t pay generator companies for purchased electricity, initiating a chain of arrears that reaches fuel providers.
The government pays a subsidy to cover the difference between NEPRA-approved and uniform pricing. The government is enhancing the investment climate by creating a clean and favorable environment for private energy investors. Pakistan has authorized a plan to develop a competitive wholesale market structure via a bilateral contract.
The government aims to unbundle natural gas utilities into transportation and distribution firms and create a competitive natural gas market to encourage private investments.
Pakistan has established incentives for its renewable power sector to use its 3,000 GW of renewable resources (including hydropower). With feed-in tariffs for wind and solar PV, it tries to stimulate renewable energy development.
Investment potential is significant given the energy sector’s development needs and the government’s focus on renewable energy.
The government is contemplating management contracts and concession agreements to fix electricity shortages and enhance energy distribution. This might increase electricity supply, reduce losses, and boost distribution market competition.
Pakistan’s population is expanding by 2% annually, creating a significant potential customer base. However, over a quarter of the population lacks electricity. With appropriate government priorities and regulatory frameworks, this would boost energy sector investment, return on investment, and project implementation.
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