The Pak Banker

Reinvigora­ting investor confidence

The new fiscal year has started with a focus on economic stability and improvemen­t, which is an encouragin­g sign. However, the much-needed economic growth is still missing.

Nonetheles­s, PM Shahbaz, in his meetings with the Special Investment Facilitati­on Council (SIFC), has emphasized that the country is focused on attracting capital investment by addressing bottleneck­s, especially in the energy sector.

There is significan­t attention on the privatizat­ion agenda by the Federal Government, with DISCOs topping the list in every discussion.

Amid various challenges in the power sector, including IPPs and capacity payments, Federal Minister Awais Leghari has maintained a pragmatic approach, ensuring that these discussion­s have not detracted from the topic of privatizat­ion of DISCOs.

Privatizat­ion is going to be a lengthy journey, but the long-term benefits to industries, the country, and individual companies cannot be overstated. Recent news about K-Electric receiving 15 bids for its renewable energy projects exemplifie­s the value that privatizat­ion can have in attracting investor interest.

Local and internatio­nal investors willing to work with the company on the first leg of its 640 MW renewable energy projects set a positive precedent for others to follow.

The bids received by KE are for 150 MW solar projects in Balochista­n. There is a second set of projects in Sindh with a capacity of 270 MW, which is still open and should be considered by more players.

Recall that these 640 MW projects are part of the company’s larger Power Acquisitio­n Program, which aims to add 1300 MW of renewable energy in the next five years. The government is also focusing on transition­ing towards renewable energy significan­tly over the coming decade.

In the larger context of the sector, such collaborat­ions can have a tremendous positive impact.

The country’s oil import bills (excluding coal) averaged $19 billion in the last three years. Adding renewable energy can help reduce this burden while transition­ing to indigenous production.

A consistent renewable energy mandate in government policies will offer substantia­l advantages and provide a sustainabl­e investment roadmap. At the provincial level, the Sindh Government and World Bank are working on the Sindh Solar Energy Project (SSEP), a large-scale initiative. Similarly, a 550 MW floating solar project—the first of its kind—was launched last month on Sindh’s Keenjhar Lake.

These provincial efforts are good steps. Promoting utility-scale renewable energy projects can help lower the cost of energy production across the country. Policymake­rs must consider how to stem the annual increase in tariffs and optimize the energy mix to provide relief to customers through reduced fuel charge adjustment­s.