The new fiscal year has started with a focus on economic stability and improvement, which is an encouraging sign. However, the much-needed economic growth is still missing. Nonetheless, PM Shahbaz, in his meetings with the Special Investment Facilitation Council (SIFC), has emphasized that the country is focused on attracting capital investment by addressing bottlenecks, especially in the energy sector.
There is significant attention on the privatization agenda by the Federal Government, with DISCOs topping the list in every discussion. Amid various challenges in the power sector, including IPPs and capacity payments, Federal Minister Awais Leghari has maintained a pragmatic approach, ensuring that these discussions have not detracted from the topic of privatization of DISCOs.
Privatization is going to be a lengthy journey, but the long-term benefits to industries, the country, and individual companies cannot be overstated. Recent news about K-Electric receiving 15 bids for its renewable energy projects exemplifies the value that privatization can have in attracting investor interest.
Local and international investors willing to work with the company on the first leg of its 640 MW renewable energy projects set a positive precedent for others to follow. The bids received by KE are for 150 MW solar projects in Balochistan. There is a second set of projects in Sindh with a capacity of 270 MW, which is still open and should be considered by more players.
Recall that these 640 MW projects are part of the company’s larger Power Acquisition Program, which aims to add 1300 MW of renewable energy in the next five years. The government is also focusing on transitioning towards renewable energy significantly over the coming decade.
In the larger context of the sector, such collaborations can have a tremendous positive impact. The country’s oil import bills (excluding coal) averaged $19 billion in the last three years. Adding renewable energy can help reduce this burden while transitioning to indigenous production.
A consistent renewable energy mandate in government policies will offer substantial advantages and provide a sustainable investment roadmap. At the provincial level, the Sindh Government and World Bank are working on the Sindh Solar Energy Project (SSEP), a large-scale initiative. Similarly, a 550 MW floating solar project—the first of its kind—was launched last month on Sindh’s Keenjhar Lake.
These provincial efforts are good steps. Promoting utility-scale renewable energy projects can help lower the cost of energy production across the country. Policymakers must consider how to stem the annual increase in tariffs and optimize the energy mix to provide relief to customers through reduced fuel charge adjustments.
The attitude displayed by key government figures reflects a long-term, focused approach. This approach needs to be supported by enabling policies that can foster privatization and greater collaboration between these entities.
This is important because capital investment is needed to transition the generation value chain and bolster the transmission network to reduce distribution line losses. For now, we look toward the future with hope to see how the interest of investors grows.
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