Boston, MA -- (SBWIRE) -- 03/26/2013 -- BMI View: Pakistan's power sector has experienced its greatest upheaval, with the previous Prime Minister Raja Pervez Ashraf forced to resign due to accusations of accepting bribes relating to the building of private power stations. The economy continues to suffer from the shortage of electricity, and at the same time, few steps have been undertaken to reduce the amount of power wastage and thefts. With the unstable political environment and the lack of improvement in its fiscal balances, we believe the country will face greater struggles in its fight against power shortage in the quarters ahead.

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Hopes for a smooth election in 2013 have been dashed as the arrest of Prime Minister Raja Pervez Ashraf for his alleged acceptance of bribes related to the building of private power plants has left the country in chaos, with no permanent solutions to the power shortage in sight for Pakistan. Load shedding across the country continues, and has crippled many industries, including textile and steel companies. The sector continues to battle with huge losses due to poor performance of assets and power theft, which is estimated by officials from the Water and Power Ministry to be close to 45%. Meanwhile, given that the total amount of bills defaulted by both private and public sectors is now at PKR426bn, the government is looking to install pre-paid metering systems to arrest the growth of these unpaid bills. Despite the overall dim outlook, various foreign renewable energy firms continue to see an open door for expansion in this area.

The key trends and recent developments in the Pakistani electricity market include:

- Iran began negotiations with Pakistan in November 2012 on an agreement that would see Iran export 1,000MW of electricity. Mjid Namjou, Iranian Minister of Energy, has further expressed keenness to build another power plant on Iran's border, so that his country could boost the total amount of energy available for export by another 2,000 megawatts (MW). Pakistan's neighbour has further pledge to complete the gas pipeline by 2014, a move which could alleviate the fuel shortages faced by certain states. The two countries are looking at alternative forms of payment given Pakistan's weak fiscal balances and the international sanctions on Iran. These include the former paying for electricity with wheat, as well as payment to an Iranian construction firm operating in Pakistan. Progress on the Iran- Pakistan pipeline project remains slow, stalled by domestic and international opposition to the project.

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