At the regular meeting of the Committee on Trade and Environment, held on 22nd June 2015, Pakistan’s Ambassador Dr Tauqir Shah shared Pakistan's experience on renewable energy. Ambassador Shah made a presentation on renewable energy projects in Pakistan: the Quaid-e-Azam Solar Park, current and future wind power projects.
In its presentation, Ambassador Shah highlighted the reasons that have led the Government to start reforming its energy policy and to pave the way with renewable energy: the prevalent energy crisis in Pakistan which is a global problem, the gap between supply and demand for energy and the unbalanced mix source of energy with a heavy reliance on fuels which became expensive due to the depreciation of the Pakistan Ruppee and historical increase in oil price. Those challenges constitute an impediment to economic growth and do not give access to elecricty to a large part of the population in Pakistan.
Two major sources of renewable energy are abundantly available in Pakistan: sun and wind. Ambassador Shah outlined the rationale to opt for solar as a source of energy: the non existence of monopoly on sun irradiation and Pakistan is well located to benefit from a 5.5 Kw/m2 per day of sun irradiation, with more than 300 clear days; solar project is easily replicable; there are less social and environmental concerns on solar project than on dams and hydel; solar is a clean source of energy in terms of gas emissions; it is economical in term of life cycle approach, and most importantly it is fairly rapid to set up.
When Pakistan Government provided important incentives for renewable energy projects amongst other the allocation of 6500 acres of land in Cholistan desert in Bhawalpur, issuance of letters of intent, the private sectors did not respond. The Government then paved the way with the Qaid-e-Azam Solar Park: the Government of Punjab set up a 100MW solar power station in six months at Quaid-e-Azam Solar Park, in Bahawalpur.
China-Pakistan Economic Corridor (CPEC) that will consist of investment package in energy and infrastructure projects contributes to an important boost to the renewable energy investments in Pakistan. Cooperation with China will see other major solar projects coming soon.
Ambassador Shah mentioned that the geographical position of Pakistan having a wind corridor, the Gharo wind corridor, offers opportunities to use wind as source of energy. Current operating wind powers are: FFC Energy a 50 MW Project in Jhampir, District Thatta; the Zorlu Enerji, 56.4 MW Wind Project in Jhampir, in District Thatta, and the Three Gorges Pakistan 50 MW Project. Ten more projects of cumulative capacity of approximately 530 MW are at advanced stages of development and will achieve Financial Closing by March 31, 2015. Four out of those ten projects are from Chinese Companies as part of the CPEC.
Ambassador Shah specifically mentioned the important incentives for investments in renewable energy projects that Pakistan Government is providing: guaranteed Return on investment is between 17% to 18% (IRR), no Import Duties on Equipment, Zero Sales Tax, No Income Tax / withholding tax / turnover tax, the repatriation of Equity along with dividends freely is allowed, and the possibility to convert PKR into USD.