Asian Development Bank (ADB) has approved $0.50 million Project Preparatory Technical Assistance (PPTA) for power transmission enhancement project to ensure power supply to increasing number of industrial, commercial, and retail consumers.
Well-informed sources told Business Recorder here on Monday, in order to enhance overall efficiency of the power system, Pakistan reconfirmed an earlier assistance request for the preparation of a power transmission project.
He said the objective of the TA was to support the government's strategy for poverty reduction with substantial economic growth through assisting in the preparation of power transmission enhancement project.
The project will improve system stability and reliability; reduce losses through construction of 500kv and 220kv transmission lines; construction and extension of substations on these lines; and preparation of a master plan to develop a nation-wide transmission system.
Sources said the total cost of the PPTA was estimated at $0.80 million of which the ADB has agreed to provide $0.5 million. He further said the government would also finance the project through in-kind contribution by the National Transmission and Dispatch Company (NTDC). These will include office accommodation and facilities, local communication, etc.
Sources informed Business Recorder, an ADB fact-finding mission led by ADB principal energy specialist Rune Stroem also visited Pakistan during May 31 and June 9, 2005 in relation to the proposed project and reached an understanding with the government on the objectives, scope, cost, financing and implementation arrangements.
He said the executing agency of this project would be the water and power ministry while the NTDC would be the executing agency.
The NTDC, being the single buyer company in Pakistan, is responsible for linking power generation facilities with load centres throughout the country.
According to sources, Pakistan's Medium Term Development Framework 2005-10 (MTDF) also set out a challenging infrastructure investment program to consistently achieve 8 percent GDP growth.
The power sector, being a fundamental pillar of the infrastructure sector, needs to increase its capacities to meet the economic growth target and, thereby, assist in the poverty alleviation efforts of the government, he said.
In Pakistan, average electricity demand growth rate has been forecast approximately at 8.3 percent for the period 2005-15. To cope with the demand, it was estimated that Pakistan would require about 2000mw additional electricity annually, and this additional power needs to be evacuated through the transmission system.
Experts believe a substantial investment is required to strengthen the transmission system to evacuate the power generation by additional power plants and supply of electricity for the growing demand.
The NTDC currently has transmission development programme for the period of 2005-12, and the government has approved several schemes in this respect.
The power transmission system in Pakistan has three main shortcomings including heavy power flow on the 500kv systems; shortage of supply capacity of 220kv system; and high transmission loss, he added.
Besides, transmission and distribution losses in Pakistan were substantially high amounting to 24.3 percent during 2002-03, caused by heavy load of transmission lines and transformer against its capacity, which need to be addressed.
Because of these losses, Pakistan wastes substantial revenue annually due to under-utilisation of power generation stations and shortage of transmission capacities.
The overall impact is a higher electricity tariff due to "Take or Pay" clause imbedded in the power purchase agreements (PPAs).
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