Pakistan: Harnessing Sun, Water And Fossil Fuel
Megha Bahree, 03.05.10, 09:00 AM EST
Forbes Asia Magazine dated March 15, 2010
Lahore native Nadeem Bbar brings his energy ambitions back to bear on Punjab's power shortage.
Nadeem Babar is addressing Pakistan's severe power shortage right where it's needed the most: in the wheat and cotton fields and the textile factories spread across the vital Punjab province. Under Babar's tutelage the Punjab government is installing several small hydro and solar power plants. The former will generate electricity from the runoff of the 25,000 miles of irrigation canals mostly set up by the British in this agriculture belt. The latter will utilize the sun that shines here for most of the year.
It stems from a happy confluence of factors: Babar, 46, is a Lahore native who's returned from a career abroad as an energy banker. His family has long agribusiness roots. And troubled Punjab has an active development plan being pushed by a leader from another well-placed clan.
The scheme involves 48 hydro projects that will generate 450 megawatts of electricity and two solar plants that will produce 50mw each, all at an estimated cost of $1.25 billion. Punjab's robust canal system offers the chance to reclaim much of the power (part of which comes from diesel-fueled generators) used to draw up irrigation water beyond that available from gravitational flow. The solar sites will also be near the canals.
This not only can aid farming but also feed power to nearby villages. "Unless these small hydro projects are done, we are wasting an existing resource," says Babar.
Pakistan needs to add 800mw of capacity each year for the economy to grow a minimum 4%, and this project can yield a decent chunk. Most of these hydro plants can produce from 2mw to 7mw (excepting one 120mw plant) and cost roughly $5 million to $18 million. Given the low consumption of power in rural areas, a 5mw plant is sufficient for a town of about 70,000 people.
Until five years ago Babar was an energy banker in the U.S.; he now owns two power plants in Pakistan unrelated to the hydro plans. He joined the energy desk at Drexel Burnham Lambert in 1988 with an undergraduate degree in engineering and economics from Columbia and an M.S. in engineering management from Stanford. He quit a year later--ahead of Drexel's collapse triggered by prosecution of its junk-bond operation--to do boutique-finance deals that eventually led him to Houston billionaire Robert McNair's Cogen Technologies (which sold most of its plants to Enron just before that giant's collapse).
By 2001 Babar was heading the international division of El Paso Corp. ( EP - news - people ) But this was soon after the demise of Enron, and El Paso was first in line for scrutiny. Within 24 hours its ratings were slashed four notches, to junk status, recalls Babar. "I've been a banker all my life," he says. "I knew the next step would be to sell these assets." Within a couple of years he was casting about again, and after a career stopover in Dubai found his way back to Lahore looking still for an energy opportunity.
An American citizen, he straddles both worlds and has a partner in Houston--Pyramid Petroleum--where he maintains a home and where both his children were born. Despite spending his entire adult life in the U.S., Babar was still familiar with the Pakistani farm economy, thanks to his family, which owns the country's largest processor of grains and seeds and also includes flour mills, animal feeds, poultry farms and edible oils (canola, corn and sunflower). Its privately held National Group had sales of $275 million last year.
He had his opening: "I told them [the government and private sector back in 2004] that a major power shortage was coming up, but no one really listened," Babar recalls. Now they are. About a year ago Babar got a call from the office of Punjab Chief Minister Shahbaz Sharif, whom he didn't know, asking him to lead a pro bono task force on energy for Punjab. The brother of former prime minister and now opposition party leader Nawaz Sharif took over in Punjab in 2008.
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