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IBM-UET
Abubakar Mehmood
MBA 1.5
IBM-UET
SOCIO-CULTURAL ANALYSIS: Electricity is one of the commodities having almost inelastic demand
This imbalance between cost of generation and distribution, and the final tariff.
Wastages and deliberate inefficiencies being the principal factors.
LEGAL ANALYSIS: Power Purchase Agreements (PPA) between producers and government ensures
consistent income stream for producers.
PPA also provides a hedge against exchange rate depreciation; power projects cash flow
increases with the exchange rate depreciation.
Power projects are usually considered to have an Internal Rate of Return (IRR) of above
13-14%.
Huge potential of coal-based electricity production.
TECHNICAL ANALYSIS:
Absence of technology and infrastructure and line loses.
Lacking of effective managerial resources and Inefficient production units
Renovation, rehabilitation, capacitor installation and strengthening the distribution
system network are a continuous process for controlling wastage of power
Pakistan Atomic Energy has been assigned the task of installing 8,800 MW nuclear
power capacity by the year 2030 with increasing share of indigenization
ECOLOGICAL ANALYSIS:
Floods and earthquake effects power stations, power distribution and transmission and
other energy infrastructures were damaged.
Refineries were threatened by rising waters and had to be shut down.
CONCLUSION:
Given the supply-demand gap, potential for private investment in the sector is huge. GoP also
has a very supportive power policy in place to encourage private power generation. In addition,
Enhanced Partnership with Pakistan Act (2009), approved by US Senate in October 2009, also
encourages public private partnership in energy generation projects.
Abubakar Mehmood
MBA 1.5