Tauseef H. Farooqi, Chairman of the National Electric Power Regulatory Authority (NEPRA), stated that the China-Pakistan Economic Corridor (CPEC) energy projects have improved the power industry in Pakistan and contributed to economic growth by increasing power supply with high efficiency at a lower cost.
The Chairman stated that the total installed capacity of CPEC energy projects, including coal, wind, solar, and hydropower, is 6570 MW. In FY2020-21 and FY2021-22, they generated 28549.94 Gwh and 25772.48 Gwh of power, respectively, accounting for 22.03% and 18.37% of total generation in Pakistan.
The average annual addition to the national grid of 20% has alleviated rampant cases of load shedding within the country and has particularly powered Pakistan’s export-oriented industries.
Moreover, Pakistan’s energy sector relies heavily on imported fuel (oil and LNG), putting a strain on the country’s foreign reserves and limiting the country’s industrial development.
As the CPEC energy projects replaced the costlier energy production from furnace oil and diesel to coal and renewable energy resources in the last five years, the energy needs of Pakistan have been fulfilled at lower prices, driving growth in the export-oriented industries, the Chairman added.
In terms of power generation costs, CPEC projects based on imported coal produced electricity at Rs.8.0/kWh in October 2021. Domestic projects based on FO and RLNG cost Rs.21.5/kWh and Rs.20.0/kWh, respectively, making them twice as expensive as CPEC projects, according to KASB Trade data.
The cost has risen in the last year due to rising international fuel prices. Nonetheless, the CPEC projects continue to offer competitive rates. In October of this year, the power generation cost of CPEC projects using imported coal was Rs.18.5/kWh, while domestic projects using FO and RLNG cost Rs.34.0/kWh and Rs.31.0/kWh, respectively.
Regarding electricity rates, the chairman stated that the average for CPEC projects (EPP) based on coal is Rs.22.13/kWh, while the average for non-CPEC projects based on oil is Rs.36.61/kWh. This demonstrates that the CPEC energy projects, which use more efficient fuel, provide affordable electricity to millions of Pakistani households.