$400m investment in reactive power compensation: 10-year transmission plan discussed with World Bank

ISLAMABAD: Minister for Power Sardar Awais Khan Leghari has shared government’s plan on transition from uniform tariffs and improve sector transparency through system improvements in distribution and transmission, emphasising the government’s commitment to sustainable, market-oriented reforms under the broader private sector partnership agenda.

During a meeting with World Bank’s Regional Director Infrastructure, Pankaj Gupta, the minister discussed proposed 10-Year Transmission Partnership, according to which, the bank will initiate a long-term engagement with the NTDC, starting with a $400 million investment in reactive power compensation.

As part of strategic engagement framework, the government and World Bank aim to build a $2 billion plus investment platform with co-financing from ADB, AIIB, and IFC, incorporating reform and investment planning.

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Both sides also discussed need for an integrated energy plan as lack of coordination between the power and petroleum sectors has led to inefficient investments, supply-demand mismatches, and inconsistent planning for gas-based power generation.

The meeting also felt that a unified Integrated Energy Plan (IEP) is critical to align upstream gas planning with downstream power generation and transmission development.

The bank asked the minister to ensure all future generation and transmission investments are guided by a transparent, data-driven least-cost planning framework as past decisions have resulted in overcapacity, high system costs, and expensive fuel-based generation. A robust least-cost approach is essential to avoid further financial stress on the sector.

The delegation was apprised that under the ongoing-private sector participation agenda for Discos, the government is carefully weighing options for the most equitable and financially sustainable way to transition from the uniform tariff regime. The approach will be phased, with attention to provincial dynamics and consumer affordability.

The minister apprised the World Bank of key power sector reforms underway, including progress on DISCO privatisation, NTDC restructuring, and the move toward CTBCM.He also highlighted efforts to transition from uniform tariffs and improve sector transparency through system improvements in distribution and transmission, emphasising the government’s commitment to sustainable, market-oriented reforms under the broader PSP agenda.

Both the government and the World Bank reaffirmed the strategic importance of hydropower as a clean, indigenous, and cost-effective energy source. The minister emphasised hydropower’s role in long-term water security, while also underscoring the need to ensure projects align with least-cost and affordability criteria. The World Bank reiterated its long-standing support, noting Pakistan’s unique Himalayan potential (~80 GW), and expressed interest in continuing collaboration on hydropower planning and optimisation.

Leghari said that the government is actively promoting public-private partnerships to better harness investment and technical expertise. He said that we are currently at a critical stage in the privatisation of distribution companies. Our aim is to meet the energy needs of future generations in a cost-effective and sustainable manner. For this, we must make difficult but necessary decisions.

He explained that when the current government assumed office, electricity pricing was a major concern. Under the prime minister’s directive, a well-considered strategy was implemented to reduce dependence on furnace oil and imported fuels. Grid stability and improved performance of distribution companies have been set as top priorities. Additionally, the government is revisiting net metering and solar energy policies to align with current needs.

Gupta shared that his engagement with Pakistan’s energy sector dates back to 1995. He emphasised that energy remains one of the World Bank’s top priorities and noted Pakistan’s remarkable potential for renewable hydropower, particularly, through the Indus River system. He said that we have had successful partnerships on projects such as Ghazi Barotha and Tarbela, and we are committed to continue this collaboration.

He added that the World Bank seeks to develop a comprehensive, long-term plan with Pakistan’s power sector, enabling alignment with the bank’s ten-year strategic framework for the country.

Gupta stressed the importance of utilising models such as the Integrated Generation Capacity Expansion Plan (IGCEP) and Integrated Energy Planning (IEP) to accurately forecast demand and resource availability.

He added that selecting the right projects, locating them appropriately, and maintaining affordability are essential elements. We support involving NTDC in the planning process and believe the transmission system should remain in the public sector until it is fully prepared for privatisation.

Copyright Business Recorder, 2025