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Hydel power projects.

The hydel power policy was issued two years back but the model aggreement has not been designed. The NWFF government had even issued Letter of Support (LoS) to five companies but as there was no PPA, these projects are pending white millions of rupees are lying wiht the government as their bank guarantee. Hydel Power Policy should have a target of 6000 MW for the year 2004.

The government is launching hydel power policy by initially offering 12 small and medium sized projects of cumulative 3610 MW capacity requiring investment of $4280 million.

The policy, to be promulgated shortly, will be accompanied by a comprehensive documents package including the implementation agreement (IA), the power purchase agreement (PPA) and a long term lease agreement (LA) with the concerned provincial government dedicating the site and use of water. An attractive return of around 30 per cent on the investment will be offered. Initially the SHYDO had completed pre-feasibilities of 12 hydel power projects indicating the potential sites and capacities of the projects.
Hydel Power Projects in Northern Areas

 Project Cost
Name of the project MW (in $ million)

Kaghan System including Naran 219.3 720
Suki Kinari 651.8 611
Swat System BI 428 673.4
Swat Scheme Al 104.7
Spat Gah/Chor Nala System
Stage I & II 851 831
Kangiah System 463.5 1156
Including Karrang 545.5
Allai-VI 124.4 93
Duber Khawr 122 88.4
Darai Khawr, 25 25
Matiltan/Ushu River 35 44.5
Summer Gah 22 13.5
Shishi 2 3.2
Bata Khawr 8.1 10.3
Ranolia 11.5 11.2

Source: Economic Forecasting Service

Hydel Power Capacity

After the construction of Ghazi Barotha Dam, which has already been initiated three more hydel power projects Kalabagh, Chashma and Munda are ready for implementation with a total power generation capacity of over 5000 MW. However, the provinces now must reach a consensus over the vital issue of construction of Kalabagh Dam project of 3600 MW generation capacity which has been lying pending for the last about 20 years, since funds for its construction were approved by the World Bank.

The expected fall in water storage capacity of Dams currently in operation would result in serious implications for the agriculture sector. Therefore, in future more emphasis would be laid on the exploration of country's remaining 28,000 MW hydel power generation potential.

WAPDA officials pinpointed that during the last 20 years water storage capacity of three major dams in the country has been reduced from 15.7 million acre feet (MAF) to 13.2 MAF and by the year 2,000 it will further reduce to 12.5 MAF which amounts to decrease of 3.2 MAF or 25 per cent of the total storage capacity. Therefore, to serve the cause of predominantly agriculture-based national economy, early development of new water storage facilities has become inevitable. By virtue of that not only enough water for irrigation would be available during all seasons but it would also help control occurrence of floods in the country.

A senior WAPDA engineer related to hydel power generation asserted that only option left for the survival of economy rests in early utilisation of hydel potential, both for agriculture and power generation purposes. Continuous and proper supply of water has always been an important factor in getting maximum yield of different crops which necessitate availability. of adequate water storage facilities. it may be stated that water storage also ensures continuous supply of low cost power for domestic, industrial and agricultural consumers who could play an important role in the development of the country with the utilisation of this power.

While giving details of hydel power generation projects in the country WAPDA sources said, out of the already marked over 80 sites for hydel power stations of different sizes with total capacity of 33,583 MW, power stations at only 12 sites which also include three major dams (Tarbela, Mangla & Warsak) have so far been utilized with total installed capacity of 4,826 MW. Construction work on 1,450 MW Ghazi Barotha has already started while three other projects with generation capacity of about 5,000 MW are ready for implementation. Whereas feasibility and pre-feasibility work on 12 more projects of 6,823 MW generation capacity at 10 sites has also been completed.
Indicative List of Hydropoer
Projects Identified by SHYDO

 Estimated Estimated
 Capacity Costs
Name of Project (MW) (US $ Million)

- Ranolia 11.5 11.2
- Batal Khwar 8.1 10.3
- Shishi 2.0 3.2
- Summer Gah 22.0 13.6
- Matiltam/Ushu River 35.0 44.5
- Daral Khwar 25.0 25.0
- Duber Khwar 122.1 88.4
- Allai-IV 124.4 93.0
- Spat Gab/Cor Nala System State I & II 850.8 829.0
- Kandiah System Karrang 453.5
 Kaigh 548.5
- Swat System Swat Scheme BI 428.5 673.4
 Swat Scheme AI 104.7
- Kaghan System Naran 219.3 720.0
 Suki Kinari 651.8 611.0

Total: 3607.2 4278.6

Moreover, other sites in the Northern Areas and Azad Kashmir have also been identified for setting up hydel power stations with total generation capacity of 15,960 MW. Moreover, a large number of small schemes with less than 5 MW power generation capacity have also been marked from which 190 MW of power will be produced.

The available knowledge of HydroElectric Potential of different rivers of Pakistan is estimated 25,268 MW, details of which is given in Table.
Know Hydro Electric Potential


Indus River 21,850
Upper Swat 295
Lower Swat 670
Cholistan Tunnel 162
Chitral River 318
Kabul River 240
Kurrum River 87
Gomal River 110
Jhelum 900
Saon 109
Kinhar 500
Chanal River 27

Total: 25,268

Ghazi Barotha Hydel Power Project

Work has also started on implementation of 1450 MWs Ghazi Barotha Hydel Project with 5 units of 290 MWs each. Power house will be located at the tailend of power channel having a capacity of 56480 cusecs to be taken off from a barrage proposed to be constructed down stream of Tarbela at Ghazi. The World Bank has agreed to provide 350 million dollars for this project for aide-memorie was signed between the World Bank and Government of Pakistan. Ghazi-Barotha (Ghazi Gariala) hydropower project will generate 1450 MW and help meet acute shortage of peak demand in the country. The Project is located on the Indus River between Tarbela Dam and the confluence of the Indus with the Hard River.

The project is based on utilization of the head available in the Indus river between Tarbela dam and its confluence with the Hard river. In this reach, the Indus river drops by about 76 m in a distance of 63 km. The Project studies (comprising of Project feasibility, detailed design, project cost estimates, environmental studies, and preparation of prequalification and tender documents for civil works) have been financed by the UNDP and the Government of Pakistan, with the World Bank as the Executing Agency and the Pakistan Water and Power Development Authority (WAPDA) as the Cooperating Agency.

These studies were undertaken in February 1990 by Pakistan Hydro Consultants, a joint venture of 5 engineering firms (3 expatriate and 2 local) and were completed during 1992. The Government of Pakistan has recently decided to proceed with the implementation of this power Project on priority. The Project will have three main components, a barrage, a power channel and power complex. The relatively flat slope of the power channel will permit most of the river drop to be utilized for power generation.

Detailed estimates have been prepared of the cost of the various elements of the Project, using the crew-up method. The total capital cost of the Project, in January 1992 price levels, is estimated by the Project Consultants at US$2,030 million including the transmission links to the national grid, physical contingencies, price contingencies and engineering. The cost will have a local component of US$580 million and foreign component of US$1,450 million. The Project cost estimate is being updated for September 1993 price levels. The present cost estimates are 2,250 million dollars.

The economic studies have demonstrated that the Project forms part of the least-cost expansion of the Pakistan Power System, resulting in savings to the power system of capital and operating cost with a present value of about US$870 million at a discount rate of 10 per cent. The least cost status of the Project remains valid for the full range of sensitivity analyses performed, including the timing of other projects.

Bunji Power Project

The government is planning to take initiative on another major hydropower project on the Indus River in Northern Areas. The technical committee on energy has cleared PC-II of 1290 MW Bunji hydropower project for submission to donor agencies for lining up foreign exchange financing. The project is based on ranking studies prepared by Montreal Engineering Company at an estimated cost of Rs. 293 million with FEC of Rs. 114.24 million. Foreign exchange financing of the project is not yet in sight, and due to heavy financial constraints of WAPDA, there seems to be no possibility of its implementation in near future, said official in the Ministry of Water and Power.

Planning and designing of the project was started at the prime minister's initiative and the concept had already been cleared by the Concept Clearance Committee and for making arrangements for foreign exchange financing. In view of political and other hindrances in the way of Bahsha and Kalabagh dam, there have some reservation about this project as well. However, WAPDA argues that it was on run off-the river and Kalabagh-like problems will not arise in this case.

Kohala Power Project

Kohala project, the largest private sector hydro power project in Asia has also been taken up/had run into snags during the PPP government due to discriminatory attitude and flimsy technicalities. It may be mentioned here that the AJK government had issued Letter of Intent (Lol) in early 1996, to Synergics Hydro Asia, a subsidiary of Synergics Energy Development Inc. of USA to undertake feasibility study of the first ever private sector power project in the country at a cost of about US$8 million at the investor's own risk and cost.

The project is estimated to bring an investment US$1 to 1.5 billion to Pakistan or for that matter to AJK. Synergics Hydro Asia, will complete detailed feasibility study and design report of the project till December 1997, to be followed by issuance of Letter of Support (LoS) for the implementation of the project. Within 18 months of issuance of LoS, the company will negotiate Power Purchase Agreement (PPA) and implementation agreement (IA) besides announcing financial close.

The company has already arranged about 300 million dollars equity and rest through EXIM bank of United States for the project. The KHPP is estimated to generate Rs.90 to 100 million per month for the AJK government. The Synergics Hydro Asia will carry out feasibility study at their own risk and cost and subsequent development on the basis of feasibility report which means that the Pakistan or AJK government will have nothing to spend on the project at all. Kohala Hydro Power Project, a run-of-the project between Garhi Dopatta and Domel Band, consists of 14 kilo-meter long tunnel and a simple diversion between Garhi Dopatta and Domel. The Project has already been found environmentally up to the World Bankstandards. Besides generating employment opportunities to the people of AJK the project will also contribute 700 MW to the national grid.

Hydel Power Policy

In the new policy framework for hydel power projects in the private sector, which is being formulated, almost similar conditions as were included in the policy framework for thermal power projects, are expected to be included making them rational and financially viable for the government, donor agencies and investors. Nevertheless in view of increased demand for funds due to huge costs of hydel power projects and also to undertake more projects in the private hydel power generation sector, separate funds (between $75 to $100 million) would be allocated under PSEDF during the coming financial year.

Explaining the utilisation of funds to be provided by PSEDF to investors, there would be short-term soft loans to investors to meet their initial project costs which they would spend on the preparation of feasibility reports of their respective projects besides on arrangement of funds required to undertake the work.

Moreover, like former thermal projects policy all hydel projects in the private sector are also expected to be financed at special equity ratio of 20:80. Other major financial incentives which will be enjoyed by the private investors for the construction of hydel power plants include, permission to issue corporate bonds, permission to issue shares at discounted price to institutional buyers and permission to have underwriting from foreign banks. Besides private hydel projects would be entitled to enjoy the same facilities in taxation as had been availed by non-banking financial institutions. But in this connection they would have to get prior approval from the Corporate Law Authority.

In this regard Pakistan stands among a few countries in the world which are gifted by nature with huge hydel power generation potential. At present less than one third of the potential is being utilized in Pakistan and sites with total power production potential of 28000 MW have only been identified but not developed so far. Total hydel power production potential of the country, including sites not identified, could exceed 35000 MW.

According to the plan, the hydel generation would be almost trebled from 4,825 MW to about 14,100 MW. The major hydel generation projects included in the plan are: Chasma 180 MW, Ghazi Barotha 1,450 MW, Kalabagh 2,776 MW (8 units), Kohala 576 MW, Tarbela Extension (Units 15, 16) 960 MW, and Bhasha 3,360 MW (12 units).

Chashma is expected to be ready by the end of the 8th plan period and Ghazi Barotha by the end of 9th plan period at the earliest. Kalabagh Dam and its powerstation are already late by 15 years or so as a result of the hesitation of the successive Governments to support a controversial project. The gigantic project, the total cost of which is now estimated to be $5 billion or Rs.200 billion, would take at least nine years to complete after receiving a go-ahead signal from the Government on obtaining a consensus from all the four provinces, three years for documentation, tendering and preliminary works and six years for the construction of the project.

Similarly, Bhasha Dam and its power station will take another decade or so to complete. Proposed to be built on river Indus 314 km upstream of Tarbela, the 660 feet high dam with 7.3 million acre feet of gross and 5.7 MAF of live storage capacity would have power potential of 3,360 MW.

It is felt that Private Power Infrastructure Board (PPIB) should speed up model power purchase agreement. The hydel power policy was issued two years back but the model agreement has not been designed. The NWFP government had even issued Letter of Support (LoS) to five companies but as there was no PPA, these projects are pending while millions of rupees are lying with the government as their bank guarantee. Hydel Power Policy should have a target of 6000 MW for the year 2004. Experts felt that hydel policy should further be improved on priority basis so as to make it more attractive for the foreign prospective investors. The power tariff which is at present about 6 cents per kwh for first five years can be widened for even 15 years to give an added incentive to the foreign investors in the hydel sector vis-a-vis thermal sector, as hydel projects also generate employment for thousands of people more than thermal projects.

The experts forwarded another suggestion that power tariff can either be negotiated with hydel power developers on case-to-case basis, as some of them cost on the high side to the sponsor while others are very low base on the site and transportation facilities.
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Title Annotation:Power Generation and Transmission in Pakistan; hydroelectric power
Publication:Economic Review
Date:May 1, 1997
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