logo
Indigenisation policy yielding results: Leghari

Indigenisation policy yielding results: Leghari

Express Tribune24-05-2025
Listen to article
The National Grid Company of Pakistan (NGC), formerly the National Transmission and Despatch Company (NTDC), in collaboration with the LUMS Energy Institute, convened the National Consultative Workshop on the Power Sector Indigenisation Roadmap at the Lahore University of Management Sciences (LUMS).
The high-profile event brought together senior leadership from the power sector, manufacturing industry, regulatory bodies, policymakers and academia to chart a cohesive national strategy for accelerating the localisation of Pakistan's electric power equipment manufacturing ecosystem.
Federal Minister for Energy (Power Division) Sardar Awais Ahmad Khan Leghari addressed the workshop through video link and commended the joint initiative, stating, "NGC is the first national entity to implement an approved indigenisation policy and its strategic procurement model is already delivering tangible results."
He urged the Water and Power Development Authority (Wapda), distribution companies (DISCOs), K-Electric and state-owned and private power generation plants to adopt indigenisation as a strategic imperative and not as a corporate social responsibility, but as a core procurement principle aligned with the National Electricity Plan 2023-27.
The minister noted that the independent system and market operator had been made fully functional and the Energy Infrastructure Development and Management Company would also be made functional soon.
A key milestone of the workshop was the launch of Pakistan's first Power Equipment Manufacturing Dashboard, developed by the LUMS Energy Institute with input from power sector stakeholders. This real-time digital tool will monitor localisation progress, assess vendor capacity and identify strategic investment opportunities under the power sector indigenisation plan.
About the dashboard, the federal minister said that its launch was a welcome step and it would help in power sector indigenisation.
NGC Board of Directors Chairman and LUMS Energy Institute's Senior Adviser Dr Fiaz Ahmad Chaudhry stated, "NGC's indigenisation strategy – anchored in policy reform and targeted educational orders – has already saved over $10 million in foreign exchange through import substitution."
He added, "Pakistan's market for static transmission and sub-stations is currently valued at around $8 million. This figure, however, does not reflect the true scale of our potential. We must work to expand this market at least threefold through strategic development, innovation and local industrial growth."
At the same time, he said, "we should set a clear target of achieving no less than $16 million in exports from this sector. That is the level of ambition we must embrace to position ourselves competitively on the global stage."
He said that under the 10-year Integrated Generation Capacity Expansion Plan (IGCEP) and the Transmission Exposition Plan, an investment of $8 billion would be needed in the transmission sector. NGC Managing Director Engineer Muhammad Waseem Younas outlined the tangible progress under the indigenisation policy. Since 2022, NGC has placed over Rs2 billion in local orders, including Rs781 million in educational orders aimed at building the industrial capacity.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Proposed amendments to NEP Strategic Directive-87: PD facing strong resistance from provinces
Proposed amendments to NEP Strategic Directive-87: PD facing strong resistance from provinces

Business Recorder

time10 hours ago

  • Business Recorder

Proposed amendments to NEP Strategic Directive-87: PD facing strong resistance from provinces

ISLAMABAD: The Power Division is facing strong resistance from provincial governments over proposed amendments to Strategic Directive-87 of the National Electricity Plan 2023–27, which aim to open the electricity market to competitive access for up to 800 MW, well-informed sources told Business Recorder. The Sindh government has raised constitutional and practical concerns, asserting that Article 157 of the Constitution empowers provinces to develop, transmit, and distribute electricity within their jurisdictions. Therefore, any federal directive must respect this mandate and not impose structural or pricing mechanisms that hinder provincial rights or market competition. In comments submitted to the Cabinet Committee on Energy (CCoE), Sindh Secretary for Energy, Mushtaque Ahmed Soomro, highlighted concerns around 'stranded costs' during the market transition. He noted that linking these costs to the full generation capacity charges of the Supplier of Last Resort (SoLR) renders open access economically unviable, undermining the very purpose of market liberalization. NE plan, SEC rules: Nepra concerned at proposed amendments Sindh has proposed the following remedies: (i) adopting a phased or tapered approach to stranded cost recovery;(ii) ensuring efficiency gains are factored into stranded cost calculations; and (iii) conducting third-party validation of the stranded cost methodology with provincial input. Sindh also criticized the proposed 800 MW cap for open access over five years, arguing that it disproportionately restricts industrial zones—particularly in Karachi, which holds the country's largest industrial load. The province called for this cap to be determined dynamically by the regulator based on grid capacity and market signals, and for provincial quotas to ensure equitable access. The provincial government further emphasized that proposed frameworks and auction mechanisms will directly affect industrial policy and economic development. To ensure fair implementation, it recommended: (i) formal provincial representation in auction framework design and oversight; and (ii) regular consultations between ISMO, the Ministry of Energy, and provincial governments for transparent auction design and demand quantum allocation. Soomro reiterated that any move toward market liberalization must align with Article 157. 'The goals of open access and market liberalization may be supported,' he stated, 'but not through a policy that discourages competition, restricts industrial growth, or marginalizes provincial participation.' To that end, Sindh recommended key changes to Strategic Directive-87, proposing the following: (i) open access charges, including grid usage, metering, and cross-subsidy fees, should be recovered from consumers opting for open access for the duration of the NE Plan or as amended by the government; (ii) the federal government must consult provinces in developing policy frameworks for stranded cost recovery, incorporating market realities and introducing incentives for competitive transparency; and (iii) for intra-provincial bilateral trading, the relevant provincial government should define the open access charge frameworks. Sindh further emphasized that capacity allocation is a regulatory function and should remain with the regulator. Where no framework exists, stranded costs should be shared by all bulk power consumers of a competitive supplier, based on the generation capacity charges applicable to similarly situated consumers of the SoLR. The Balochistan government also raised objections, particularly over the financial burden imposed on export-oriented industries. It argued that under the Competitive Trading Bilateral Contract Market (CTBCM) framework, open access should be limited to Use of System Charges (UoSC). Including stranded costs or cross-subsidies would distort fair market competition, escalate electricity prices, and deter investments in renewable energy and local projects. In a formal letter, Balochistan Secretary for Energy Dawood Bazai stated that the province does not support the inclusion of cross-subsidies or systemic inefficiencies in the open access tariff, warning that such an approach would render CTBCM ineffective and unaffordable for the province's industrial and export sectors. He further recommended that: (i) open access allocations be determined based on comprehensive market needs assessments in consultation with provincial stakeholders; and (ii) a structured, time-bound plan be developed to phase out cross-subsidies from industrial tariffs to promote sustainable energy access and economic growth. According to sources, the Khyber Pakhtunkhwa government also conveyed its concerns through official channels. However, it received the CCoE summary only hours before the meeting — chaired by the Prime Minister — that approved wheeling charges of Rs 12.55 per kWh. Copyright Business Recorder, 2025

Chinese team shows keen interest in energy-related industries
Chinese team shows keen interest in energy-related industries

Business Recorder

time31-07-2025

  • Business Recorder

Chinese team shows keen interest in energy-related industries

ISLAMABAD: A Chinese business delegation, led by Yi Jiang, Director of the All-China Federation of Industry and Commerce (ACFIC), met with Federal Minister for Energy Sardar Awais Ahmad Khan Leghari at the Ministry of Energy. The meeting held detailed discussions on investment in Pakistan, relocation of Chinese industries to Pakistan, technology transfer, and potential cooperation in the energy sector. The Chinese delegation informed the Federal Minister that ACFIC, a representative organization of China's private business community, is now actively exploring business opportunities and forming partnerships in 155 partner countries. The delegation stated that they have come with practical plans for major initiatives, including the relocation of Chinese industries to Pakistan, engagement with the local business community, and technology transfer. Team comprising over dozen Chinese companies arrives in Pakistan The delegation expressed particular interest in energy-related industries, such as electric vehicles, charging stations, solar products, and lithium storage. Praising the Matiari transmission line project as a successful model, the delegation noted that investment in Pakistan can meet not only local but also regional needs. Regarding crypto mining, they referred to it as a potential means to introduce flexibility in the national grid. Welcoming the delegation, Federal Minister Sardar Awais Leghari stated that the Government of Pakistan is fully prepared to facilitate industrial cooperation and technology exchange. However, he clarified that given the current financial situation the government cannot afford to provide electricity to any industry at subsidized rates. He advised the delegation that if there is a proposed model that does not require government subsidies, it should be presented with complete data and details. He also said the government would consider all proposals that demonstrate clear financial benefits and align them with the national interest. Copyright Business Recorder, 2025

IMF puts growth below govt target
IMF puts growth below govt target

Express Tribune

time30-07-2025

  • Express Tribune

IMF puts growth below govt target

Listen to article The International Monetary Fund (IMF) on Tuesday projected Pakistan's economic growth rate at 3.6% for the current fiscal year, below the government's official target of 4.2%. The projection was released in the IMF's latest World Economic Outlook Update report which kept Pakistan's growth forecast unchanged. The government had set a higher growth goal based on expected recovery in agriculture and industrial sectors. However, the World Bank recently estimated that poverty in Pakistan affects nearly 45% of the population. Official data on poverty and unemployment is currently unavailable, though the Pakistan Bureau of Statistics (PBS) is said to be updating relevant surveys. Due to outdated data, the provisional GDP growth rate of 2.7% for FY2024-25 has been disputed by independent economists. The PBS plans to release findings of the latest Agriculture Census next month, which may address some of these queries. On the same day, the federal government also briefed foreign diplomats on recent economic developments and sought support to increase foreign direct investment (FDI), which remains low. The diplomats raised concerns over rising debt costs, heavy reliance on costly commercial loans, tax relief measures, and the sustainability of the Power Division's plan to cut circular debt through Rs1.25 trillion in fresh domestic borrowing. Finance Minister of State Bilal Azhar Kayani and Power Minister Sardar Awais Ahmad Khan Leghari led the briefing for diplomats from the US, UK, EU, Italy, Germany, Canada, Australia, Switzerland, Japan, the Netherlands, and Saudi Arabia. According to a finance ministry press release, officials outlined reforms in taxation and the power sector. Kayani said Pakistan's macroeconomic strategy had shifted from stabilisation to sustained reform. He noted that GDP growth was 2.7% in FY2024-25, and per capita income increased by 10% to $1,824. However, this was based on old and relatively low population estimates. The finance ministry claimed a 3.1% primary surplus in GDP, the highest in 20 years, though it did not clarify in the press note whether this was for the full year or only the first 11 months. Inflation dropped to 4.5%, a nine-year low, while the central bank's policy rate was halved from 22% to 11%. The debt-to-GDP ratio also reportedly declined to 69%, indicating improved fiscal management. Diplomats asked how the government planned to reduce the high cost of external debt. Officials said that the strategy had already been finalised with both the IMF and the World Bank. The finance ministry said the external sector showed resilience, recording a $2.1 billion current account surplus, the first in 14 years and the highest in 22 years. This was supported by strong remittances, higher exports, rising FDI, and stable foreign reserves of over $14.5 billion. Officials claimed this performance was achieved without heavy reliance on foreign borrowing. However, the central bank purchased at least $7.3 billion from the local market between July and April, which kept the rupee artificially low. This sum exceeded the entire three-year size of the IMF bailout package. Diplomats were also told that two credit rating agencies had recently given Pakistan positive reviews, and Moody's is expected to upgrade the country soon. S&P upgraded Pakistan to 'B negative' last week, advising further political and security stability for continued progress. In the energy sector, Leghari told diplomats that significant milestones had been achieved, although questions remained over their long-term sustainability. He said the circular debt, now around Rs2.4 trillion, was being addressed under a plan agreed with the IMF. The government has secured Rs1.25 trillion in commercial loans to pay down a large portion of this debt. The repayment will be funded through a Rs3.24 per unit electricity surcharge, ultimately borne by consumers. Diplomats questioned whether this approach was sustainable. Leghari acknowledged structural problems such as high tariffs and inefficient pricing, which had made electricity unaffordable for households and industry. These issues had also created fiscal pressures. To address them, the government has undertaken broad-based reforms centred on tariff rationalisation, fiscal responsibility and operational improvement. Leghari said progress had been made in stabilising circular debt in FY2025. He also pointed out the need to modernise energy planning to account for seasonal demand shifts, regional supply gaps, and the rising role of distributed generation. Distribution company performance was another key focus. Leghari said infrastructure upgrades and strengthened governance were underway to reduce losses, with reforms implemented to ensure regional equity and institutional coordination. He called on foreign governments and global investors to invest in the energy sector, citing $2-3 billion in potential across grid modernisation, renewable energy, distribution efficiency, and energy services. He also noted that the government aims to privatise electricity distribution companies, with three companies being restructured for privatisation by early 2026. Chairman FBR, Rashid Langrial, briefed diplomats on the FBR Transformation Plan, built on three pillars: people, process, and technology. He claimed that real tax collection had increased by 46% due to improved compliance and enforcement. He also stated that the tax-to-GDP ratio rose to 10.24% in FY2025, up from 8.8% in FY2024. However, Pakistan still missed its IMF revenue target by 0.3% of GDP, despite levying record-high taxes last year.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store