Pakistan to Approve $1 Billion Boost for Wind Energy Production

By Ben Edwards and Haris Anwar for Bloomberg News

Pakistan is ready to approve a Norwegian company’s request to build a 150-megawatt wind farm, the first part of a $1 billion plan that could boost by a third the announced capacity for clean-energy power plants.

Pakistan is seeking to diversify its energy supplies away from oil and gas and boost electricity production. The nation has a power deficit of 3.6 gigawatts a day, or more than the output of two nuclear reactors, triggering 12-hour blackouts that cause riots and close factories in cities nationwide.

The Alternative Energy Development Board is willing to allow a project proposed by NBT AS, a Lysaker-based clean energy company that plans to build the facility in the Sindh province “wind corridor” north of Karachi, according to Said Arif Alauddin, chief executive of the government agency.

“They came to us saying they have got the money and relationship with the Chinese and they want to invest,” Alauddin said from the port city of Karachi. “As soon as they pay the fee, we will issue that letter to them. We will be able to give them the land if we can see they can deliver.”

Pakistan has almost 1 gigawatt of projects under construction or with financing agreed and 498.5 megawatts more of wind programs announced, according to Bloomberg New Energy Finance data. Only 6 megawatts of wind energy facilities are operating in the nation. It’s the ninth-poorest in the Asia- Pacific region with a 2009 gross domestic product per capita of $2,609, according to Bloomberg data.

Chinese Financing
NBT Chief Executive Officer Joar Viken said he plans to tap financing for his project from one of three Chinese turbine makers that his company is talking with about supplying machinery for the facilities.

“We think Pakistan is a very good environment and has a very good framework,” Viken said in a phone interview from New York. “Because we get everything in U.S. dollars, we don’t have a huge currency risk.”

Viken said NBT would issue a tender to Goldwind Science & Technology Co., Sinovel Wind Group Co. and China Energine International Holdings Ltd. (1185) to supply the turbines. Each of the companies have credit lines with the China Development Bank Corp., a state-owned lender.

“Goldwind now is actively seeking more cooperation opportunities with domestic as well as foreign wind farm developers to expand Goldwind’s presence in overseas markets,” Thomas Yao, a spokesman for the company, said in an e-mail. “Norway’s NBT AS is among the international opportunities we are currently considering.”

A spokesman for China Energine, who asked not to be named in line with company policy, said he doesn’t know about the talks and can’t comment. Officials at Sinovel couldn’t be reached.

Financing ‘Feasible’
The financing arrangements are “feasible” because the Chinese turbine makers would not develop the projects themselves, said Eduardo Tabbush, an industry analyst at Bloomberg New Energy Finance in London.

“This is something we’ve seen happening more and more,” Tabbush said.

NBT envisions developing as much as 650 megawatts of wind power in Pakistan over the next few years. It already has purchased land suitable for 50 megawatts in Sindh province and is seeking a partnership with Zulfikar Ali Bhutto Institute of Science and Technology, a university in Karachi, for land for the other 100 megawatts, Alauddin said.

Support Mechanism
Alauddin said NBT has proposed to install as much as 250 megawatts of capacity over the next two years. He said the government board is working “very hard” to provide the Norwegian company with an “upfront tariff” that would help guarantee a price for power sold from the wind farms.

The last tariff it approved was worth about 13 U.S. cents a kilowatt-hour, he said.

The board could approve an additional 500-megawatt project if NBT is able to line up funding from a Chinese partner where it has existing wind developments.

NBT already has two wind power projects working in China with AEI China Power Ltd. and China Datang Corp. Renewable Power Co., Viken said. Another is under construction, and further developments are planned.

Pakistan is seeking to derive at least 5 percent of its energy from renewable sources by 2030, the development board said in March. Last year, 53 percent came from natural gas, 30 percent from oil and the rest from coal, nuclear and hydropower, according to data from BP Plc. The London-based oil company didn’t measure any sources of renewable energy there.

The country’s electricity shortfall reaches as much as 3,628 megawatts per day, according to demand-supply data available on the ministry of power and water website.

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