Pakistan is a non-aligned developing country and net importer of energy. Energy sector development is an economic priority, and recent reforms provide incentives for private (including foreign) assistance in this effort.
Economic reform is a priority for the government of
Prime Minister Benazir Bhutto. The current Five
Year Plan emphasizes privatization and incentives
for private sector investment (including increased
foreign participation), particularly in the electric
power and natural gas industries. Reform efforts are
frustrated, however, by long-standing economic
vulnerabilities -- including high levels of debt service
and defense spending, dependence on cotton-based
exports, a large and rapidly growing population, and
a small tax base. Concerns for private investors
include inadequate and deteriorating infrastructure,
low levels of literacy, and increasing sectarian,
ethnic, and tribal violence. Unrest in Karachi,
Pakistan's commercial capital, has tested business
confidence and contributed to a decline in
international reserves as local businesses move
foreign currency abroad.
As a developing country, Pakistan is also a major recipient of international aid (about $2 billion/year). In June 1995, the International Monetary Fund (IMF) canceled a $1.5 billion loan agreement because Pakistan was unable to meet IMF lending conditions. The government subsequently declared a 7 percent currency devaluation, imposed a 10 percent temporary duty on imports, and received an emergency stabilization loan (almost $600 million) from the IMF to support economic reforms.
Private foreign investment totaled $1.6 billion in the 1994-95 fiscal year, according to Pakistan's Board of Investment, with U.S. investors providing the largest share (more than 30%). In September 1994, partly as a result of initiatives taken by the U.S. Department of Energy, Pakistani business organizations signed 15 energy business agreements with U.S. companies totaling almost $4 billion. The agreements cover a spectrum of projects, from large power plants and oil and gas concessions to small renewable and efficiency technology ventures. U.S. government assistance must comply with the Pressler Amendment requiring Presidential certification that Pakistan does not possess a nuclear device. U.S. aid was suspended when the Pressler Amendment was invoked on October 1, 1990. However, the United States is delivering $370 million worth of military equipment for which Pakistan has already paid under a temporary waiver enacted in September 1995.
A major foreign policy concern for Pakistan is its
historically difficult relationship with neighboring
India, particularly over the status of Kashmir state,
nuclear and ballistic missile proliferation, and other
defense, security, and economic issues.
Pakistan has enacted policies to boost private
investment in oil and natural gas development.
Pakistan's 1994 Petroleum Policy, which divides the
country into three zones, provides higher prices for
production from riskier zones, allows duty-free entry
of equipment for exploration and production, and
links prices of non-associated gas to a basket of
Mideast crudes. In 1995, the country began offering
a guaranteed 25 percent rate of return for pipelines
and refinery projects that use domestic supplies.
Private companies are already active in Pakistan.
Union Texas, a U.S. company, produces about 30
percent of Pakistan's oil and 10 percent of its natural
gas. Other participants include Zaver Petroleum (the
country's first private exploration company) and
international investors such as British Gas, OMV,
and Hunt. Private companies have occasionally
declared force majeure due to lawlessless in frontier
areas. State-owned Oil and Gas Development
Corporation (OGDC) remains the most active
participant in the industry. The government plans to
convert OGDC to a joint-stock company and reduce
its holdings in natural gas pipeline companies.
Oil is produced primarily in two regions: the Potwar
Plateau (southwest of Islamabad in Punjab) and the
Lower Sindh province. Natural gas is produced
mainly in the Sui field and another large field (Mari)
which supplies gas for the fertilizer industry.
Increased investment in areas such as the Ahmadal
Block could boost oil production to a peak of 90,000
b/d by 2000. Development of natural gas reserves
for use in power generation is a priority in Pakistan's
Five Year Plan. Priorities include the Qadirpur field
(with estimated reserves of 3 trillion cubic feet) and
others such as Dhodak, Loti, and Tando Adam.
Net oil imports are expected to double as demand
growth, much of it associated with the startup of new
oil-fired power plants, outstrips increases in
production. Pakistan's first private oil terminal,
which opened in April 1995 at Port Qasim in
Karachi, is designed to handle increased fuel-oil
requirements associated with the planned startup of
the Hub power plant in 1996. Additional investment
in refineries is also planned, including planned joint
ventures with the United Arab Emirates, Kuwait,
Iran, and South Korea. Domestic supplies of natural
gas will be supplemented with imports from the
Middle East. Pakistan is currently pursuing several
pipeline alternatives with the United Arab Emirates,
Iran, Qatar, and Turkmenistan.
Two vertically integrated public utilities are
responsible for generation, transmission, distribution,
and village electrification. The Water and Power
Development Authority (WAPDA), with about 9.5
gigawatts installed capacity as of March 31, 1994
(split almost evenly between hydropower and
thermal), generates most of the country's electricity.
Karachi Electric Supply Corporation (KESC), with
1.7 gigawatts installed capacity as of March 31, 1994
(all thermal), generates and distributes electricity to
the Karachi area.
Under a policy promulgated in early 1994, Pakistan
is offering internationally competitive terms to
attract investment for private sector power projects.
An important incentive is the government's
guarantee for payment of WAPDA and KESC power
purchase obligations and for fuel supply from public
sector entities. Other incentives include reduced
local currency investment requirements, simplified
procedures, and attractive bulk power tariffs (6.5
cents per kilowatt-hour). By the fall of 1995, the
government had received 127 applications for
projects totaling 26,000 megawatts and issued 33
letters of support for 7,740 megawatts.
WAPDA plans to sell state-owned power generation
units but retain control over the country's hydro
plants, which currently provide about 40 percent of
Pakistan's electricity. Its largest hydro project,
Tarbela, has nearly 3,500 megawatts capacity.
Seasonal fluctuations in water levels, however, limit
the extent to which the country may rely on this type
of power. In May 1995, the government approved a
draft policy that would open hydropower to foreign
investment and guarantee a 25 percent rate of return
on hydro projects.
Pakistan's Five Year Plan (1993-98) proposes $10.5
billion in electric power projects, including private
sector projects. In January 1996, WAPDA's 1000
megawatt oil-fired Muzaffar Garh station started
operating. The first private sector power project,
scheduled to be commissioned in 1996, is also oil-fired: the 1292 megawatt Hub power project being
built by an international team led by Xenel Corp. of
Saudi Arabia and National Power of the United
Kingdom.
New WAPDA projects are confined to hydropower,
including projects such as the 1425 megawatt Ghazi-Barotha plant which takes advantage of the enormous
untapped potential of the Indus River. Private sector
projects will rely primarily on increased use of
natural gas and coal. In January 1996, ground was
broken for the largest foreign investment in
Pakistan's power sector to date: the $6 billion coal-fired Keti Bandar power project to be built by
Consolidated Electric Power Asia (CEPA) of Hong
Kong.
Pakistan is also constructing a second nuclear plant
(using Chinese technology) at Chasma in the Punjab
region. Operations at the existing 125-megawatt
capacity plant (KANUPP), which uses Canadian
technology, are limited by safety concerns.
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File last modified: March 1996
Contact:OIL AND NATURAL GAS
Pakistan is seeking private sector (including foreign)
investment to further develop its reserves of oil and
natural gas and boost its refining capacity. The
country also expects to increase net imports of oil
and begin importing natural gas to meet anticipated
increases in energy demand.
ELECTRIC POWER
Despite recent increases in installed generating
capacity, Pakistan faces chronic electricity shortages
due to rapid demand growth, high system losses, and
seasonal reductions in the availability of
hydropower. Rotating power outages ("load
shedding") are common and many villages are not
yet electrified.
COAL
Coal currently plays a relatively minor role in
Pakistan's energy mix, but the discovery of large
volumes of low ash, low sulfur lignite in the
Tharparkar (Thar) Desert in Sindh province could
increase its importance. Thar reserves, estimated in
the range of 75-100 billion tons, are being developed
under the jurisdiction of the provincial Sindh Coal
Authority and have enormous economic potential.
The Authority's policy is to develop the reserves
primarily to fuel large electric power plants to be
built in tandem with the coal mines. The Authority
encourages private sector development, ownership,
and operation of both the mines and the power
plants. In January 1995, ground was broken on
Pakistan's first integrated coal mining and power
generation project based on Thar coal.
ENVIRONMENT
Pakistan's Environment and Urban Affairs Division
is responsible for environmental protection and
pollution prevention. A 1983 environmental
protection law established provincial environmental
protection agencies and provided for the
development of a national conservation strategy.
Pakistan receives assistance from the United Nations
for a major soil conservation program and has
established a National Energy Conservation Center
(Enercon) within its Ministry of Water and Power to
advise major industrial users on how to save energy.
COUNTRY OVERVIEW
Prime Minister: Benazir Bhutto
President: Farooq Leghari
Independence: August 14, 1947 (from UK)
Population (7/95): 131.5 million
Location/Size: Southern Asia/310,500 square miles (about
twice the size of California)
Major Cities: Islamabad (capital), Karachi, Lahore, Faisalabad
Languages: Urdu (national/official), English (official), Punjabi,
Sindhi, Pashtu, Baloch
Ethnic Groups: Punjabi, Sindhi, Pashtun (Pathan), Baloch,
Muhajir (immigrants from India and their descendants)
Religions: Muslim, 97% (Sunni 77%, Shi'a 20%); Christian,
Hindu, and other, 3%
Defense (1995): 800,000-member armed forces (the world's
eighth largest)
ECONOMIC OVERVIEW
Currency: Rupee
Average Exchange Rate (1/96): U.S.$1 = 34 rupees
Total Reserves (non-gold) (1/96): $1.7 billion
Gross Domestic Product (GDP, purchasing power parity,
1994E): $248.5 billion
GDP Per Capita (1994E): $1,930
Real GDP Growth Rate (1994E): 4%
Inflation Rate (1994): 11%
Unemployment Rate (1995E): 6% (based on government of Pakistan reports; may be understated)
Total External Debt (1994E): $30 billion
Current Account Balance (1995E): -$2.1 billion
Major Trading Partners: United States, Japan, Germany,
United Kingdom, and Saudi Arabia
Merchandise Trade Balance (1994E): -$1.3 billion
Major Export Products: Cotton yarn/fabrics, garments and
knitware, leather/ leather manufactures, rice, synthetic textiles
Major Import Products: Machinery/capital goods, crude oil
and petroleum products, chemicals
ENERGY OVERVIEW
Minister of Petroleum and Natural Resources: Anwar
Saifullah Khan
Minister of Water and Power: Ghulam Mustafa Khar
Proven Oil Reserves (1/1/96): 203 million barrels
Oil Production (1995E): 59,000 barrels per day (b/d), of which
55,000 b/d is crude
Oil Consumption (1994E): 270,000 b/d
Crude Oil Refining Capacity (1/1/96): 137,325 b/d
Natural Gas Reserves (1/1/96): 27 trillion cubic feet (tcf)
Natural Gas Production (1994E): 626 billion cubic feet (bcf)
Natural Gas Consumption (1994E): 626 bcf
Coal Production (1994E): 3.5 million short tons
Coal Consumption (1994E): 5.0 million short tons
Coal Imports (1994E): 1.3 million short tons
Recoverable Coal (12/31/93): 809 million short tons
Electric Generation Capacity (1/1/94): 10.6 gigawatts
Electricity Generation (1994E): 55 gigawatt hours
ENVIRONMENT OVERVIEW
Total Energy Consumption (1993E): 1.4 quadrillion btu
Energy Consumption per Capita (1993): 11.6 million Btu (vs.
325.6 million Btu in the United States)
Energy-Related Carbon Emissions (1993): 20.2 million
metric tons (0.3% of world carbon emissions)
Carbon Emissions per Capita (1993): 0.2 metric tons (vs. 5.3
tons in the United States)
Major Environmental Issues: Water pollution from raw
sewage, industrial wastes, and agricultural runoff; limited natural
fresh water resources; no access to potable water for a majority
of the population; deforestation; soil erosion; desertification.
ENERGY INDUSTRY
Organization: Oil and Gas Development Corporation (OGDC),
a state company, handles oil and gas exploration and
development; Water and Power Development Authority
(WAPDA) supplies electricity to most of the country; Karachi
Electric Supply Corporation Limited (KESC) serves the greater
Karachi metropolitan area; Pakistan Atomic Energy Commission
(PAEC) operates one nuclear power plant
Major Ports: Gwadar, Karachi, Ormaro (under construction),
Port Muhammed bin Qasim
Major Gas Fields: Sui, Mari, Pirkoh, Dhodak, Qadirpur
Major Oil Fields: Dhurnal, Mazari, Liari, Fimkasser, Thora
Major Pipelines: Sui Northern Gas Pipeline; Sui Southern Gas
Pipeline; Pak-Arab Refinery Company (PARCO) petroleum
product pipeline
Major Refineries (Capacity): Attock Refinery in Rawalpindi
(28,975 b/d), National Refinery in Korangi (62,050 b/d),
Pakistan Refinery Ltd. in Karachi (46,300 b/d)
Links to other sites:
Latest EIA Detailed Annual Data (1994)
1997 CIA World Factbook - Pakistan
EIA Privatization Report - Pakistan
Douglas MacIntyre
dmacinty@eia.doe.gov
Phone: (202)586-1831
Fax: (202)586-9753
URL: http://www.eia.doe.gov/emeu/cabs/pakistan.htm