Foreign investors are ready to invest in banking, telecom and IT sectors, but have shied away from investing in power sector due to the sector-specific policy, regulations, liquidity and operational issues. This was stated in the 'Key Risks Analysis' on power sector carried out under the Pak-US energy sector 'Stabilisation and Development Partnership'.
According to the analysis, the differences between National Electric Power Regulatory Authority (Nepra) and Private Power Infrastructure Board (PPIB) on tariff issues are compromising investment in the power sector. The roles and responsibilities of the two organisations are defined, but are not adhered to, and consequently the investors are reluctant to invest in the power sector.
The Nepra is slow in determining generation tariff for the private sector, routinely exceeding the time limit set by itself for the process, which increases the cost to investors. As per risk analysis, the government was advised to redefine the roles of the PPIB and the Nepra, with the line of authority made clear and strictly followed.
The government has also been advised to rationalise the quality of human resources and quantum needs of PPIB and Neora as harmony and co-ordination between these institutions is critical to attracting investment in power sector. The resistance within the bureaucracy could be a possible hurdle in any move to redefine the roles of PPIB and Nepra. However, redefining and enforcing lines of responsibility would clip excess power of the regulator acquired slowly over time. The time required for tariff approval must be reduced and strict adherence to the standard timeline must be meticulously adhered to.
Foreign investors are willing to invest in banking, telecom and IT sectors, but have shied away from the power sector due to sector-specific policy, regulations, liquidity and operational issues. This has compromised the ability of the government to attract investment for implementation of 2020 vision for power sector. The energy crisis is a major challenge Pakistan is facing for the last few years which is negatively impacting the socio-political as well as economy of the country.
The country has, therefore, not been able to exploit considerable local resources to meet the growing demand for electricity. Pakistan has coal reserves estimated at 185 billion tons with a hydropower potential of over 20,000 mw, but investment continues to be a major challenge.
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