The Asian Development Bank (ADB) is likely to approve $0.6 million Project Preparatory Technical Assistance (PPTA) for 'Power Transmission Enhancement Project' to ensure a reliable power supply to an increasing number of industrial, commercial, and retail consumers. Well-informed source told Business Recorder here on Saturday that in order to enhance overall power system efficiency, last year during the ADB's country programme mission, Pakistan reconfirmed an earlier request for assistance for the preparation of a power transmission project.
He said that the objective of the assistance was to support the government's strategy for continued poverty reduction with a substantial economic growth, through assisting in the preparation of power transmission enhancement project. The project would ensure sufficient and stable power supply by good transmission system in the country, he added. Besides, it would also improve system stability and reliability; reduce losses through construction of 500 kV and 220 kV transmission lines, construction and extension of the same kV substations and preparation of a master plan on development of a nation-wide transmission system.
The source said that the total cost of the PPTA was estimated $0.8 million, of which the foreign exchange cost (FEC) was $0.394 million. However, out of that amount the Bank has agreed to provide $0.6 million, comprising the FEC cost and the local currency cost amounting $0.2 million. He further said that the government will finance the remaining $0.2 million through in-kind contribution by NTDC. These will include office accommodation and facilities, local communication etc.
The source informed this scribe that an ADB fact-finding mission led by Rune Stroem, principal energy specialist of the bank, 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.
The source added that the executing agency of this project would be the Ministry of Water and Power (MOWP) while the National Transmission and Dispatch Company (NTDC) would be the implementing agency. The NTDC being the single buyer company in Pakistan is responsible for linking the power generation facilities with the load centers throughout the country.
According to the source, Pakistan's Medium Term Development Framework 2005-10 (MTDF) also set out a challenging infrastructure investment programme in order to establish infrastructure service capabilities to consistently achieve the eight-percent GDP growth.
In Pakistan average electricity demand growth rate has been forecast at approximately 8.3 percent for the period 2005-15. To cope with the electricity demand growth, it was estimated that Pakistan would require about 2000 additional MWs annually, and this additional power needs to be evacuated through the transmission system.
The source said that a substantial investment was required to strengthen the transmission system to evacuate the power generation by the additional power plants and supply of electricity for the growing demand. The NTDC currently has transmission development programme for the period of 2005-12, out of which several schemes have been approved by the government.
The Pakistan power transmission system has three main shortcomings, including heavy power flow on the 500 kV systems, shortage of supply capacity of 220 kV system and high transmission loss, he added.
Besides, transmission and distribution losses in Pakistan were substantially high, amounting to 24.3 percent in FY 2002-03 caused by heavy load on transmission lines and transformers against their rated capacity, he added, which need to be addressed.
The source said that 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 the "Take or Pay" clause imbedded in the power purchase agreements (PPAs).