Pakistan sees end to routine power outages by year's end

By Drazen Jorgic

ISLAMABAD (Reuters) - Pakistan expects to end electricity shortages by the end of 2017, a senior government official said, in what would be a major electoral boost for the ruling party of Prime Minister Nawaz Sharif.

Sharif's PML-N party swept to power in the 2013 polls by pledging to end crippling power shortages that have hobbled Pakistan's economy and put off foreign investors.

In recent months, Sharif has vowed that a system of scheduled electricity outages, known as "load shedding", will be over in time for the next poll, likely in May 2018.

Mohammad Younus Dagha, the secretary, or top official, at the Water and Power Ministry, said the government was on course to increase generation by 8,000MW this year and plug a 6,000MW deficit.

"We should be able to keep to the timelines and achieve them ... 2018 will be a load shedding-free year," Dagha told Reuters over the weekend.

Scheduled outages in capital Islamabad have been halved to three hours from six hours. Blackouts in major cities were as much as 12 hours a few years ago.

Sharif's energy plans have been boosted by China, which is ploughing more than $36 billion into energy-related projects as part of the $57 billion China-Pakistan Economic Corridor (CPEC), a network of road, rail and energy links connecting Western China to Pakistan's Arabian Sea port of Gwadar.

Critics, however, say the government's desperation to end power shortages led to investors being offered far too generous tariffs, saddling consumers and industry with some of the most expensive electricity in the region.

Dagha said electricity costs should fall when the government begins to phase out expensive imported furnace oil plants and once large hydro projects come online in the 2020s.

"It is a big challenge to replace this expensive capacity with more efficient and low-cost generation. We are trying to do that but it will take a few years before we can compete with regional low prices of electricity," Dagha said.

He added that Pakistan is now in a much stronger negotiating position and will be working to reduce tariffs on new coal, wind and solar projects to try to make electricity cheaper.

"From availability, now we are moving towards affordability and energy security," Dagha said.

Analysts say that while Pakistan may succeed in significantly boosting generation, there are question marks about how well the country's ancient transmission systems will cope with this new influx of energy. The government also plans to invest in several high-voltage electricity lines but it will take more than two years for them to come online.

Pakistan has put a temporary moratorium on awarding contracts for new liquefied natural gas (LNG) plants and imported coal, and will instead focus on developing hydro and indigenous coal energy plants.

(Reporting by Drazen Jorgic; Editing by Adrian Croft)