Hit by power cuts, Pakistan opens first private hydro plant

ISLAMABAD Mon Jul 15, 2013 8:38pm IST

A gas-lamp is seen at a fruit stall during a power outage in Rawalpindi June 3, 2013. REUTERS/Faisal Mahmood/Files

A gas-lamp is seen at a fruit stall during a power outage in Rawalpindi June 3, 2013.

Credit: Reuters/Faisal Mahmood/Files

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ISLAMABAD (Reuters) - Pakistan opened its first private hydroelectric power plant on Monday, moving to tackle a deepening energy crisis that has devastated its already struggling economy.

The new government of Prime Minister Nawaz Sharif won an election in May partly on promises to fix persistent power cuts lasting some 12 hours in parts of the nuclear-armed nation of 180 million people.

On Monday, Sharif travelled to the northern province of Azad Jammu and Kashmir to oversee the launch of a new project he says will offer a significant boost to the ailing power sector.

"I hope that because of this and other initiatives, there will be a substantial decrease in power cuts in the coming days," Sharif said in televised remarks.

Built near an existing river dam and developed by a local private company, the 84 megawatt New Bong Escape Hydropower Project is expected to produce electricity at a much lower cost than thermal generated power.

It is also part of a broader plan to overhaul the moribund power sector by handing over parts of it to private hands. The plant's cost of construction was not clear and the company in charge of the project was not responding to phone calls.

Power cuts have worsened in Pakistan in recent years, becoming one of the main sources of public discontent in the South Asian country which generates about 8,000 MW of power - way below its total demand estimated at around 15,000 MW.

The deepening shortages have already sparked violent protests in the past and cost hundreds of thousands of jobs, adding to Pakistan's long list of economic and security woes.

"We have to move from oil to coal, hydro and gas-based power generation to bring down costs," said Miftah Ismail, who has co-authored the Sharif government's new energy policy.

Some, however, are sceptical the project can offer any quick fixes unless the government acts more decisively to tackle rampant electricity theft and pay off debt choking the sector.

(Additional reporting by Syed Raza Hassan; editing by Maria Golovnina and Keiron Hendesron)

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