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Powering Gwadar for future

The China Pakistan Economic Corridor (CPEC) is poised to reshape the economic landscape of Pakistan in addition to opening multiple avenues for foreign direct investment. In this regard, Gwadar holds a pivotal importance. The development of Gwadar is a sine qua non for Pakistan’s development.

Eversince the materialization of the CPEC, Gwadar was able to gain a significant importance in Pakistan’s political landscape. The representatives from Balochistan in Parliament have been raising local issues. In this regard, a number of issues related to Gwadar have been resolved or are in the process of getting addressed. The ongoing construction of an international airport in the area will not only allow access to potential investors or businesspersons but will serve as a gateway for tourism. The drinking water issue is in the process of getting resolved. The construction of desalination plant has been contributing towards increasing drinking water demand.

However, the city, often described as ‘future of Pakistan’, faces a considerable power shortfall despite the inception of the CPEC more than five years ago. The existing deficit is going to act as an impediment in months and years to come with the increase in economic activities in the city. By 2030, the actual power demand will reach 778 MW against the current power supply of 142.5 MW. Therefore, it is important that Gwadar becomes self-sufficient in power generation to cater not only its present and future energy needs but is also able to compensate power shortfall across Balochistan through a national grid system.

Currently, the existing power supply to the Makran region is 142.5 MW. A large chunk of power supply (104 MW) is imported from Iran. However, Iran’s power supply is not optimally available due to Iran’s own energy demand. The average supply from Iran hovers around 40-70 MW. Additionally, 30 MW is generated by captive/domestic generators and 8.5 MW by generators at Gwadar Free Zone. The heavy reliance on Iran for Gwadar’s power demand is strategically unstable and unreliable in addition to technical mismatch and high tariff.

Due to technical issues, Gwadar electricity network is different from the national grid system. The former is feeding Gwadar, Turbat and Panjgur with a meagre 35 MW. Consequently, 12-14 hours of load shedding is common in the area. On the other hand, if the Makran region which includes Gwadar is connected to Pakistan’s national grid, it will not only be able to compensate power shortfall in Gwadar but will be able to contribute in satisfying existing power shortfall in Balochistan. Meanwhile, the current demand of Gwadar region is about 247 MW.

In November 2017, Joint Coordination Committee meeting on the CPEC proposed to review the Gwadar plan in order to deal with the power shortage issue. Additionally, a separate high-level meeting occurred on the development of Gwadar coal power project. It was proposed that a 300 MW coal power project should be constructed to satisfy power demands from Gwadar and Makran region. A leading industry investor was tasked with implementing this plant by both the governments.

In September 2020, CPEC Authority in a meeting decided to finalize the pending matters for the signing of the Power Purchase Agreement for the coal power project. It was mutually agreed during the meeting that pending matters related to Power Purchase Agreement shall be resolved internally at Power Division level within a week. However, the progress on the project remains at a slow pace.

Availability of sustainable electricity is the main demand of industrialists who wish to build industries in Gwadar. However, the unavailability of power has forced several industrialists to not go along with their planned investments in the region, which has already deprived the region of losses amounting to millions of rupees if not billions.

The Gwadar Port and Free Zone operation totally relies on China Overseas Ports Holding Company Pakistan’s (COPHC) generators in the past years due to lack of power supply. This has not only increased the operation cost of the operator but also negatively affect the operation of the port and free zone development. It is already estimated that around 242 MW will be required for Gwadar Free Zone. Therefore, it is not possible to provide such amount of power to the industries by COPHC’s generators by that time. In other words, the Port and Free Zone development is dependent on the schedule of the proposed coal power project.

The availability of power will usher in economic activities in the region and consequently generate job opportunities. The delay in the production of Gwadar power plant is delaying the progress of Gwadar Port City as potential investors await the availability of sufficient power supply in the region. Therefore, concerned authorities should prioritize this issue and take the necessary measures.

Kahuda Babar, "Powering Gwadar for future," Business Recorder. 2020-10-07.
Keywords: Economics , Economic landscape , Political landscape , Economic activities , Balochistan , Pakistan , CPEC

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