Japan is ready to help Pakistan overcome the country's chronic power shortages, but at the same time it seeks comprehensive power sector reforms, a senior official from the Japan International Cooperation Agency said Friday.
In an interview with Kyodo News, JICA's chief representative in Pakistan, Mitsuyoshi Kawasaki, said the agency has already singled out four 400-megawatt power turbines at Mangla Hydro electric power station in Pakistan-administered portion of divided Kashmir and a coal-fired power plant in Thar in Sindh province for replacement with Japanese assistance.
Development of hydroelectric and coal-based power plants is central to Pakistan's plans to overcome power shortages.
Pakistan has been faced with power outages across the country, with some parts having experienced blackouts for up to 18 hours.
Overcoming the power crisis in two years was one of the election promises by the Pakistan Muslim League Nawaz, which has emerged as the biggest force in last week's general election.
It is also top priority of Imran Khan's Tehreek-e-Insaf party, which is planning to set up a provincial government in Khyber Pakhtunkhwa, a province with large hydropower potential.
Both parties have declared development of coal-based power plants and hydropower plants as a top priority to literally "steer the country out of darkness."
Pakistan boasts to have one of the largest coal reserves in the world, enough to generate tens of thousands of megawatts of electricity for 200-300 years.
N.A. Zuberi, head of Pakistan's Private Power and Infrastructure Board, said Thursday at a meeting that his organization has prepared blueprints for setting up 10,000-megawatt coal-fired power plants.
Half of the coal would have to be imported, he said.
The majority of plants will be set up by the private sector or as private-public partnerships.
Kawasaki said JICA is financing and engineering the study of coal-based mega-thermal power plants and also examining the possibility to locate a power plant on the Indus River.
He said Pakistan has almost "infinite reserves of coal," spread over 900 square kilometers. Development is, however, complicated, he said.
The development of coal mines and power plants entails billions of dollars in expenditure, a budget well beyond Pakistan's means. The country would therefore need foreign assistance from international financial institutions, which advocate comprehensive power sector reforms.
Asked about the nature of reforms JICA and other donors want Pakistan to undertake, Kawasaki pointed out that a Pakistani delegation that visited Washington in April discussed the feasibility of a bailout by the International Monetary Fund. Possibility of a bailout would be crucial for reforms.
"We will have a clear picture of the government discussions with the World Bank and Asian Development Bank by June this year," Kawasaki said.
Pakistan should have a new government by June this year, which could then decide whether or not to go for an IMF-World Bank bailout, Kawasaki said.
An essential part of the power sector reform is rationalization of tariffs and its impact on the general public.
Kawasaki pointed out that power tariffs in Pakistan are on the same level as tariffs in Japan, or nearly 15-16 cents per unit.
Experts and political parties have maintained, however, that an increase in tariffs is not sustainable.
Since Thar coal is poor-quality lignite, environmental studies have shown that the project would violate a code set up by the Pakistan Environmental Protection Agency.
Kawasaki said a JICA study has recommended mixing 20 percent imported coal with Pakistani coal to mitigate carbon emissions.
The ADB and the U.S. Agency for International Development have already committed to finance the conversion of the 675-megawatt Jamshoro oil thermal plant to a coal-fired plant.
Jamshro comprises four units, of which one is supplied by Japan and three by China.