New metering projects and loss reduction in Pakistan

Lahore, Pakistan — (METERING.COM) — October 7, 2008 – New metering projects and addressing energy losses are among key elements in Pakistan’s new Power Distribution Enhancement Investment Project.

The project, which is being supported by the Asian Development Bank (ADB) and other financiers, is a major 10-year effort to rehabilitate and expand the power distribution system and to place the eight distribution companies (DISCOs) that were established in the sector unbundling in 1999 on a sound commercial basis.

The total project cost is estimated at $5.2 billion, with funding to be provided in four tranches by the DISCOs, the ADB and other investors. Tranche 1 funding of $252 million from the ADB has recently been approved and the DISCOs will contribute $75 million.

Key challenges facing Pakistan’s power sector are a shortage of generation capacity and increasing constraints in the transmission and distribution systems due to inadequate maintenance and demand growth, resulting in regular system outages and supply interruptions to customers. System losses averaged 20 percent in 2006, ranging from 39 percent in the worst case to 10 percent in the best case.

The project envisages providing additional power generation, transmission, and distribution capacities to ensure adequate and reliable electricity supply to meet a projected 8 percent per annum growth in demand over the next ten years. This will include the supply of an additional 12,000 GWh of power through the national grid annually and the provision of access to electricity to an additional 30 million people. The DISCOs will be required to adhere to regulatory requirements and comply with the security standards.

Other targets are a 30 percent reduction in outages by 2011 and an annual reduction of system losses by 10 percent over the previous year’s losses. Distribution bottlenecks will be removed by 2013 with metered energy sales to customers, and electricity tariffs will be continually adjusted to cost recovery levels.

The executing agency of the project is the Pakistan Electric Power Company (PEPCO), which was established as the agency responsible for the restructuring of the power sector.