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Country : PAKISTAN
Type of project : Loan

Increasing electricity production in Pakistan

 

Context

The national grid in Pakistan supplies only half of the population with electricity, generated from gas (51 %) hydro-electricity (30%) and fuel (16%). If there is no increase in generating capacity, it is estimated that the shortfall in supply will reach 5 500 MW by 2010. Given the long lead-time it takes to launch hydro-electricity projects and the limited potential for renewable energy, gas or fuel fired power stations are the main options available for increasing electricity production. But as gas reserves in Pakistan are limited, there is little room for new gas-based capacity addition.

 
ENGRO CHEMICAL, a major chemical and fertiliser company in Pakistan, has invested in a project launched by its subsidiary « ENGRO ENERGY LIMITED » to generate electricity from permeate gas. Permeate gas is a residual gas with a low calorific value and high sulphur content, by-product of a purification process, which is currently disposed of either by flaring or by being released into the atmosphere.
 

Objectives

The project’s aim is to increase the production of electricity in Pakistan, in order to meet increasing demand, by making the most out of a presently wasted resource. The use of permeate gas reduces CO2 emissions, as it allows more efficient gas-based energy to replace fuel-based energy and also avoids releasing methane directly into the atmosphere.

 

Project specifications

The project involves the construction and exploitation of a 217 MW combined cycle power plant in District Ghotki which is located in the Sindh province of Pakistan. The power plant will use the permeate gas which is a by-product of the Qadirpur gas field, for the lifetime of the field, after which it will be converted for use with the most economic fuel available at the time.

The energy generated will be sold by ENGRO ENERGY to the state-owned National Transmission and Despatch Company (NTDC), which is responsible for the transmission of electricity in Pakistan.
 
The total cost of the project stands at US$ 205 million. PROPARCO is participating in the financial plan along with the International Finance Corporation (IFC), the OPEC Fund for International Development (OFID), as well as German, Dutch and Swedish sister-companies.
 

Impact

The project will vastly reduce the emission of greenhouse gases. The carbon assessment brief drawn up by Proparco forecasts significant reductions: in the region of 15 to 20 million tons of CO2 over a 25 year period.

The project is also of considerable economic interest for the Government of Pakistan. Because of price difference between local gas and imported fuel, ENGRO’s production cost will be low in comparison with the fuel fired power plants in service today. In addition, the GOP will enjoy additional revenue derived from the sale of permeate gas, which, in the current situation, is completely wasted.
 
 

Dates and amounts

Start date: 2007

Financing: $ 23.3 million direct loan