Cleantech market in Pakistan

Pakistan is a developing country with a population of over 200 million that is burdened by growing energy needs such as:

• insufficient transmission capacity to meet demand
• high technical & commercial losses
•  an over-reliance on fossil fuel imports

The government abolished the generation license requirement for net metering in Nov 2021.

The National Electric Policy was approved in 2019, proposing a customs duty of 1% on all Electric Vehicle (EV)-related parts and a 1% sales tax.

The State Bank of Pakistan doubled their green financing for wind, solar energy from 1 billion PKR to 2 billion PKR in 2020.

Key opportunities for Canadian cleantech companies in Pakistan:

• Engineering Procurement and Construction (EPC), consultancy, and operation and maintenance (O&M) opportunities for upcoming hydro power, solar and transmission line projects
• Supply of solar equipment, panels, Information Technology (IT) (solutions for grid efficiency improvement) and battery solutions
• Upgrade of transmission infrastructure (IT, O&M, EPC)
• EV charging stations, EPC and equipment supply opportunities

Notable challenges for Canadian cleantech companies in Pakistan:

• Government of Canada's travel advisory
• Limited EDC coverage, regulatory risks and bureaucratic hurdles
• Strong competition exists from China, Europe, and US suppliers

Pakistan business landscape:

• Pakistan has a population of 207 million people, Gross Domestic Product (GDP) of over $300 billion, rising domestic energy consumption, a shortfall of at least 4-6 Gigawatts (GW) of production capacity and growing. Pakistan's power sector has a well-developed regulatory framework for Independent Power Producers.
• For international investors, Pakistan has had a long history of successful completion of independent power producers (IPPs) over 20 years. There are 36 IPPs with an installed capacity of 9GW in operation, and an additional 18 IPPs with an installed capacity of 5GW are under construction.
• Pakistan's primary energy mix comprises of natural gas, oil, hydropower, coal and nuclear energy.
• China is implementing its $64 billion Belt and Road Initiative Project in Pakistan, with an energy component of $34 billion.
• International financial institutions like World Bank, ADB, Islamic Development Bank and AIIB are actively funding numerous hydropower, solar, water/wastewater treatment and transmission upgrade projects worth billions of dollars.

Upcoming projects and events

• CASA-1000 - $1.3 billion (Kygyz-Tajik-Afg-Pak transmission line project)
• Sindh off-grid Solar Project – 400 MW ($100 million)
• Upgrade of transmission infrastructure (around $700 million)
• Industrial Trade & Investment Fair 2022
• POGEE 2022

Summary

Pakistan is an attractive market for cleantech investment, offering rich geological potential, government regulation and potential for 20-to-30-year power/energy purchase agreements. Given the contractual security and payment security provided to IPPs, the Pakistan electricity market has attracted a number of the world's Development Finance Institutions (DFIs), private power corporations, and institution-backed private equity funds.

The market fundamentals are also supportive of renewable energy, as it is priced at a discount to both the market rate of electricity and other sources of generation.

For more information on cleantech in the Pakistan market please contact Trade Commissioner, Zohaib Khan, zohaib.khan@international.gc.ca.