Tag Archives: Asian Development Bank

ADB boosts Pakistan’s wind power capacity

ISLAMABAD: The Asian Development Bank (ADB) is providing a loan to help fund the first privately owned wind farm in Pakistan. Zorlu Enerji Electrik Uretim will use the $36.8 million loan to install more wind turbines at the farm, raising power output from the current 6 megawatts (MW) to a total of 56.4 MW. The farm is located in southern Sindh province, 100 kilometres northeast of Pakistan’s commercial hub of Karachi.

The extra output will provide much-needed electricity for the economy, improve energy security, and lower reliance on fossil fuels.

“Acute energy shortages, caused by low investment, are cutting into Pakistan’s economic growth,” said Michael Barrow, Director in ADB’s Private Sector Operations Department. “This deal should provide a bankable template for future privately funded wind projects and send a signal that Pakistan’s wind sector is attractive for private sector investment and financing.”

Pakistan relies heavily on imported fossil fuels for the bulk of its energy needs however, this is costly, puts a heavy burden on its foreign exchange reserves, and leaves the country vulnerable to supply disruptions and global price fluctuations.

Investment in new capacity has lagged demand which has surged by over 40% over the past five years, resulting in regular brownouts in all major urban centers and the introduction of power rationing. This has forced shops and industries to close early, undermining Pakistan’s economy.

The Government of Pakistan is now undertaking a major drive to expand its energy sources, including tapping renewable energy resources such as wind. There are around 50,000 MW of wind power capacity available in the south of the country alone. Zorlu Enerji, listed on the Istanbul Stock Exchange, owns and operates Turkey’s largest wind farm and is 68% owned by Zorlu Holding AS, one of the largest conglomerates in Turkey.

“We estimate that five to seven projects will come on line following ADB’s support for Zorlu Enerji’s wind farm,” said Siddhartha Shah, Senior Investment Specialist in ADB’s Private Sector Operations Department.

Existing power generated by the wind farm is currently being dispatched to the Hyderabad Electric Supply Company. Once the second construction phase is complete-expected in 2013-the farm will supply power to the national grid through a 20 year take-or-pay power purchase agreement with the National Transmission and Dispatch Company. The tariff will be set at a competitive level with the rate dropping over time as project debt is paid down.

“The project will have multiple benefits including helping realize the government’s target of 6% renewable energy in the total power mix by 2030, while contributing to employment opportunities and economic growth in one of the poorest regions of the country,” said Mr. Shah.

The total cost of the project is $147 million with 30% financed through equity provided by Zorlu Enerji and the rest through US dollar-denominated loans from ADB, the International Finance Corp., and ECO Trade and Development Bank, as well as a Pakistan rupee loan from Habib Bank. ADB’s loan will carry a tenor of 12 years with a 2-year grace period.

ADB has taken the lead in supporting the Government of Pakistan’s efforts to attract private sector capital into the power sector. Initiatives include financing the country’s first private sector run-of-river hydropower project, the New Bong Escape Project in 2009, and the funding of three combined cycle power plants using domestic gas: Fauji Kabirwala Power Company Limited, Foundation Power Company Daharki Limited and Uch-II Power Private Limited.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members — 48 from the region. In 2010, ADB approvals, including cofinancing, totalled $17.51 billion. In addition, ADB’s ongoing Trade Finance Program supported $2.8 billion in trade.

Pakistan to import green technologies

London: Pakistan’s research on renewable energy has been severely hit by a lack of funds, experts say, forcing it to look abroad to import green technologies, The Guardian newspaper reported.

The country will aim to boost technology transfer from China & Germany for solar panels and wind turbines, attract more investment for research and development (R&D), according to its five-year policy on renewable energy, which will be launched in August by the Alternative Energy Development Board.

Pakistan already has plans to generate 2,300MW of electricity from solar and wind sources under an agreement signed in December last year with China’s Wind Electric. But some experts say that importing technology is only a short-term fix and government should invest more in developing local technologies. “The funding in renewable energy technology research by the government is close to nothing,” said Masood Ahmed, head Sustainable Development Research Centre at Z. A. Bhutto Institute of Science & Technology. There is “serious need” for government funding to tap country’s huge potential in the sector and “resolve deepening power crisis in Pakistan”, he said.

Main power resources in Pakistan are oil and gas, but reserves of both are expected to have run out by 2030, according to state-owned Oil and Gas Development Company, and the country already faces an energy shortfall. “Previous and present governments have shown they are only interested in short-term solutions to present energy crisis, as reflected in mere imports of renewable energy technology,” said Ahmed.

Pakistan’s universities have run pilot projects in areas such as fuel cells, biodiesel, ethanol fuel, innovative lighting systems, fuel cells for vehicles and biogas. But they lack funds to continue their research and roll out technologies, says Arshad Abbasi, water & energy advisor at Sustainable Development Policy Institute SDPI.

The new policy will set a target of generating five per cent of Pakistan’s total commercial energy from alternative and renewable energy sources by 2030. It will offer financial incentives for projects including a manufacturing base for renewable energy plants, components, and seek to develop infrastructure for renewable energy programs with help from Asian Development Bank & USAID.