PBC proposes framework to save forex, cut power costs

KARACHI: Pakistan Business Council (PBC), a business policy advocacy group, has shared a framework with the government to optimize power sector costs and foreign currency outflows, following meetings with the Minister for Energy and the Special Investment Facilitation Council (SIFC).

The framework aims to reduce reliance on imported fuel, renegotiate the terms of Chinese debt to independent power producers (IPPs), make power available at more competitive cost to industry, incentivize consumption in winter months, and address the inefficiencies in transmission and distribution.

According to PBC, the annual forex savings per this framework are estimated at between $1.9 billion to $2.6 billion with paybacks of 1-2 years. The annual Pakistani rupee savings range from Rs. 213 billion to Rs. 278 billion. The net effect on the national tariff is quantified at between Rs. 5.6 to Rs. 6.44 per unit.

The forex saving arises from the proposal to convert the three plants based on imported coal to Thar coal, for which a rail link is already planned.

PBC said that the framework would support exports, reduce import reliance and add jobs by making power more affordable for industry. It would also help replace gas consumption in winter months, as the reserves of natural gas are depleting rapidly.