German firms show no interest in 600mw solar project at Muzafargarh

German renewable energy companies have shown a lack of interest in Pakistan’s 600 MWp solar power project in Muzaffargarh, citing too much risk in comparison to European markets, according to Gerd Schober, team leader at GIZ REEE II Project, Pakistan. The assertion was shared in response to a letter from Secretary Power Division Rashid Mehmood Langrial. The Power Division had proposed areas of interest in promoting and developing alternative and renewable energy technologies in Pakistan. German private sector participation had been sought in the development and deployment of solar energy under the fast-track solar initiatives, especially in the competitive bidding for the 600 MWp solar PV project at Kot Addu/Muzaffargarh.

Schober noted that the renewable energy market in Pakistan is not yet mature, and the country is currently facing a difficult political-economic environment. Furthermore, the benchmark price is too low, interest rates have risen drastically to combat inflation, and credit conditions have tightened. Previous experiences have led some companies to leave the Pakistani market, but some top-tier companies such as Siemens, ib Vogt, and Sowitec remain interested in developing projects there. Schober suggested that a positive sign and success of active German companies in Pakistan would help regain trust from EPC companies and investors in Germany.

To address this, M/s GIZ has recommended building good relationships with German companies during international fairs and events. Recently, officials from Pakistan’s public and private sectors visited the Berlin Energy Transition Dialogue to exchange information about the clean energy transition undergoing in their respective regions. AEDB representatives also met with German private sector developers of solar power plants during the BETD. M/s GIZ has assured the Power Division of its continuous effort to build connections between the Pakistan and German renewable energy markets. The company also suggested that German participation in competitive bidding to be carried out by DISCOs for development of small solar PV projects across the country could be an interesting segment for German companies.