Power Policy IGCEP 2022-2031 has envisaged to add electricity generation installed capacity of 27,449–MW to the system by the end of ten-year plan period, with an estimated investment of $53 billion. The plan emphasizes the use of indigenous energy resources optimally, such as hydropower, coal, solar-power and wind power. The government however has no strategy to develop and promote indigenization of machinery and equipment for power plants.
Power Policy IGCEP 2022-2031 has envisaged to add electricity generation installed capacity of 27,449–MW to the system by the end of ten-year plan period, with an estimated investment of $53 billion. The plan emphasizes the use of indigenous energy resources optimally, such as hydropower, coal, solar-power and wind power. The government however has no strategy to develop and promote indigenization of machinery and equipment for power plants.
Net generation capacity addition by 2031 will be 13,702-MW based on a low-demand scenario, excluding the ongoing projects and cross-border electricity purchases. This includes power plants to be established, of various types and technologies, of 3,865-MW wind power, 3,245-MW hydropower, 2,300-MWp solar feeder and 990-MW coal-based, besides the solar utility (metering) 3,302-MWp. The program provides a significant market for machinery for power plants. It is understood that all machinery, equipment and accessories will be imported without any major manufacturing contribution by the local industry.
Pursuant to the recently approved Framework Guidelines for Fast Track Solar Initiative 2022, the government is expected to announce shortly a “national solar energy policy”, whereas draft of “solar panel & allied equipment manufacturing policy” though prepared since June last year, has yet to be finalized. Meanwhile, import of inverters, lithium-ion batteries and other accessories has been exempted from custom duties to support domestic solar panel producers, however the scope of localization of solar PV technology should be widened within the short-term to cover the complete range of solar equipment and accessories.
Likewise, non-availability of wind turbines and allied equipment locally can seriously hamper the efforts to develop the wind power systems at large scale as planned. All components of a wind turbine such as blades, controller, gearbox, shafts, rotors, towers, etc. can be manufactured by the domestic industry under technology transfer arrangements. A large volume of power generation equipment related to thermal, hydropower, solar power and wind power installations is currently being imported. Local fabrication of power plants should therefore be an important feature of the energy development plan with focus on use of indigenous machinery, equipment, components and accessories, explicitly declaring that maximum indigenization shall be promoted in construction of new power plants based on different technologies whether in public or private sector.
Local engineering industries should be supported through institutional and regulatory framework providing financial and fiscal measures to promote optimal indigenization, and encouraged to form joint ventures with foreign companies in order to develop on-going or planned power projects. Unfortunately, the local industry has also not come forward to avail the opportunity offered to exploit new business potential in the emerging domestic power equipment market. At the same time, the project sponsors and their engineering, procurement and construction (EPC) contractors are reluctant to place orders for locally produced machinery for the respective power projects, resorting freely to imports of almost cent per cent required plant machinery items. In some cases, domestic technical services primarily for the operation and maintenance (O&M) of power plants have been secured.
A reasonable engineering and manufacturing base for the production and supply of machinery and equipment for power plants, which is capital and skill intensive in nature, exists in the country. The industry, in formal and informal sectors, is currently producing transformers, generators, power boilers, electric motors, circuit breakers etc., and is in a position to achieve indigenization level to the extent of 30-35 per cent by value and much higher by weight, for various power projects. Many industrial units have the facilities to deliver mechanical and electrical equipment, at competitive prices and of international quality.
The industry will require balancing, modernization, rehabilitation and expansion (BMRE) of its existing facilities, under a phased program, to achieve optimal indigenization of plant machinery in future. The government should devise ways and means to promote indigenization. These measures will aim at overseeing that not only a substantial share of orders for manufacturing and supply of machinery is obtained by the local industry, but also, the opportunity to assimilate requisite modern technology is availed fully by the local industry, and to develop capacity and capability to supply and install plants on turnkey basis in future.
In the past, industry has produced equipment for thermal power plants installed in Karachi and Muzaffargarh in collaboration with the renowned manufacturers of Japan and Germany, and the Chinese. The equipment supplied by the domestic companies to thermal power projects includes utility boilers (covering high pressure parts for utility boiler such as headers, economizer, preheater, super-heater, membrane walls, high-pressure piping, and almost all the non-pressure parts), steam condensers, vessels and tanks, heat exchangers, pumps, cooling towers, ducts and piping, cranes and steel structure.
In addition, a number of spare parts have been produced to meet emergency demands of various power stations. These power projects are based on various thermal power technologies, such as diesel engine, gas turbine, steam turbine, combined cycle, and small-size hydropower and coal-based power generation units. Most of the equipment was supplied in technical collaboration with foreign partners under strict quality control and as per international codes, duly tested/checked and or witnessed by third party inspection authorities operating globally.
Equipment and components have also been supplied to medium-size hydroelectric power stations, such as WAPDA’s Warsak and Ghazi Barotha hydropower plants. The list of supplies includes a variety of electrical equipment such as transformer, switchgear, control panels, cables etc., besides components of turbine, gate equipment, cranes and other mechanical equipment and accessories of a hydropower plant. Since each hydropower project has to be designed and engineered according to selected technology, configuration and site conditions, the technology for major equipment, however, has to come essentially from foreign sources.
Long ago the government was committed to strengthening domestic manufacturing and achieving self-reliance particularly in strategic areas including the energy sector. In pursuance of these policies a number of initiatives were taken at that time by the public sector as well as private entrepreneurs to venture into indigenization of machinery and equipment for power generation. Contracts were signed with General Electric (GE), Cockerill Mechanical Industries (Belgium), Deutsche Babcock, and the Chinese, for joint manufacturing of a variety of thermal power plants, including coal-based, and with Sulzer-Escher Wyss for small hydropower projects. Also, agreements were concluded with Kenetech Wind Power (USA) and Vestas Wind Systems (Denmark) to set up windpower equipment manufacturing facilities in Karachi.
But the strong “import mafia” prevailed, the government policy changed, and efforts to manufacture and supply complete power plants in collaboration with foreign partners were thwarted. Today there is not a single company in Pakistan who could offer major machinery and equipment either for solar-power or wind power or coal-based power plants, either for greenfield projects or for rehabilitation & refurbishment schemes, and the country continues to depend largely on imported sources.
Energy is an important sector of the economy that plays a vital role in socioeconomic development. It is therefore imperative for the government to launch a phased program for indigenization of equipment for renewables to achieve desired results of affordable and sustainable electricity and import substitution. In many developing countries, like Iran and India, manufacturing of machinery and equipment for power plants, in particular renewable energy, has become a major priority. More than a dozen major companies manufacture all equipment for solar-power and wind power in India. Iran’s largest solar module manufacturing plant has a 500-MW annual capacity.
The writer is retired Chairman of the State Engineering Corporation
