A study carried out by the Asian Development Bank (ADB) finds that an electricity link between Pakistan and India will result in huge savings for Pakistan as the fuel cost savings per year will justify the total interconnection investment.
The report says even after allowing for a significant allowance for other costs that may be incurred in upgrading the internal transmission systems on both sides, the interconnection costs should not exceed $ 50 million. Therefore, benefits of the 250MW transfer for a single year would be 6-7 times higher than the costs.
In short-term, 250 MW power transfer between Pakistan and India is possible with the transfer over 220 KV lines. The fuel cost savings amounts to $ 122 million for this level of transfer. The reduction in unserved energy benefits in Pakistan however is much more significant because it reduces 385 GWh of unserved energy that adds more than $ 200 million to the benefits.
It shows the tremendous potential for the link not only to reduce unserved energy but also to reduce consumption of expensive and limited fuel in Pakistan. The fuel cost savings alone for a single year in this case would justify the total interconnection investment.
The total benefit for a 500 MW transfer rises to $ 491 million for this scenario and the level of transfer rises to 3,129 GWh. The total benefit comprises of fuel cost savings of $ 163 million, USE reduction related savings of $ 302 million and capacity deferral related savings of $ 26 million.
Pakistan’s peak-energy shortage is likely to continue in the short- to medium-term till at least 2020. Apart from a shortage of capacity, high cost of fossil fuel fired power generation in Pakistan is also an issue that can justify interconnection projects. This is particularly true because many of the thermal plants in Pakistan are old and inefficient.
