ISLAMABAD – Pakistan’s former ambassador to China Naghmana Hashmi said on Thursday that developing an expert-led long-term strategic energy plan and monitoring mechanism was essential to ensure equitable access to energy and eradicate energy poverty.
She was speaking at a policy dialogue on “Transforming the Power Sector: Exploring the Prospects of China-Pakistan Just Energy Transition Partnership (JETPs)”, organized by the Sustainable Development Policy Institute (SDPI) and the Pakistan China Institute (PCI), according to a press release. ..
She expressed that by reforming the economic and energy policy structure, energy availability for industry and rural economy can be improved and exports and economic growth can be catalyzed.
The head of the political section and press department of the Embassy of the People’s Republic of China in Pakistan, Wang Shengjie, said that energy inflation during the Russia-Ukraine conflict triggered a global change in energy policy to “justify” and “adjust” the energy transition.
He suggested that Pakistan currently needed a moderate and flexible energy policy to ensure adaptation of the energy transition, introduce supply-side reforms and diversify power generation for sustainable energy supply.
He added that Biomass and Waste to Energy were overlooked areas with huge energy production potential.
Energy efficiency was critical to addressing the circular debt issue that was the biggest obstacle to foreign investment, he said.
Senior Adviser and Researcher, SDPI, Dr Hassan Daud Butt, who highlighted the huge energy financing opportunity for BRI countries, urged the government to tap it to increase access to clean and affordable energy and for international financial institutions to introduce cheaper clean energy technologies in developing countries .
He added that Pakistan needs to address the headwinds to create a true, sustainable and easy business environment to attract foreign investors in Pakistan.
Director of the Green Finance and Development Center, Fudan University, Dr. Christopher Nedophil said Pakistan was among the top five recipients of China’s energy financing that had expanded coal-fired generation from 0.15 GW in 2015 to 7.2 GW in 2023 under CPEC, reducing import dependence and outflow of foreign exchange reserves.
Despite the economic costs of clean energy, the renewable energy transition in Pakistan is hindered by policy inconsistency and local political economy.
Executive Director, PCI, Mustafa Hyder Said emphasized that political will, bold decision-making and concrete policy actions were essential to catalyze the clean energy transition.
He further added that attracting foreign investment in energy and addressing the climate and meeting the 30% emission reduction commitments required the development of technical capacity of public bodies in the energy sector to formulate policies for competitive tariff structures.
He stressed that the gap in policies and follow-up measures must be bridged by launching a pilot project on transition from fossil fuels to renewable energy sources and using data to encourage Chinese investors to relocate their industries amid increasing global competition.
Managing Director of Moony Holdings, Moeen Abbas, highlighted that the biggest challenge in the energy transition was risk-reward misalignment for power companies as the production reward was 73% while the distribution reward was 10%.
The slow recovery of investment in the energy sector and problems with payments from production companies tarnished relations between Paket and China, he added.
Research Fellow, SDPI, Dr Khalid Waleed emphasized that Pakistan needed USD 50 billion by 2030 and USD 80 billion by 2040 for clean energy transition with an additional USD 30 billion required for coal phase and suggested adding Pak-China Just Energy Transition Partnerships (JETPs) ).
He suggested strengthening inter-ministerial collaboration with academia and the private sector and an integrated and guiding energy development plan that was not only focused on the power sector but on the entire energy landscape.
Senior Research Associate and Lead, Energy Unit, SDPI, Ubaid ur Rehman Zia said Chinese investment of $12 billion was also locked in thermal assets and this investment needed an exit facility.
There is thus a strong economic case for transitioning to sustainable energy, in line with both countries’ green development commitments, as the energy sector’s environmental portfolio has deteriorated due to a rapid expansion of the 6600 MW coal fleet in recent years; thereby threatening the flow of climate finance.
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