KARACHI: Pakistan is wooing Chinese investors to set up factories in Karachi and eastern Punjab province to manufacture lithium-ion battery cells, an official said on Wednesday, as Islamabad eyes increasing battery exports to generate foreign exchange, create jobs and slash its import bill.
Pakistani industrial conglomerate Saigol Group and China’s Juhang Energy Technology Group signed a memorandum of understanding (MoU) last week, which state media reported would pave the way for lithium-ion batteries to be manufactured in Pakistan.
Pakistan’s Engineering Development Board (EDB) CEO Hammad Ali Mansoor said the government was preparing a policy to promote the local manufacturing of lithium-ion battery cells, which are basic building blocks used to assemble battery packs for electric vehicles and energy storage systems.
The policy aims to make Pakistan one of the largest exporters of the battery in the region and cater to a limited demand for lithium-ion batteries, the official said. Officials estimate the demand for the batteries to be at 65 gigawatts to 100 gigawatts by 2030, depending on how fast the South Asian country’s economy grows.
“This policy is designed so that we eventually can go to cell manufacturing as soon as possible,” Mansoor told Arab News, adding that the objective was to help Pakistan shift from assembling batteries to manufacturing battery cells locally.
Pakistan has several battery assembly plants but lacks lithium-ion cell manufacturing facilities, he explained. Most batteries currently assembled in Pakistan are used in Battery Energy Storage Systems (BESS), which are increasingly being installed alongside solar power systems or in other energy storage applications.
The policy mirrors Islamabad’s recent efforts to boost its foreign exchange reserves, which declined by $1.31 billion on Jun. 19 to $15.9 billion due to external debt repayments.
Producing cells locally would help Pakistan slash its import bill, encourage the transfer of technology, create employment opportunities and capitalize on the country’s engineering and information technology workforce, the EDB official said.
Mansoor said the policy was designed with exports as its primary objective rather than serving only domestic demand.
“This policy does not tend to manufacture battery cells for Pakistan only,” he said. “Its main focus is exports, because labor in Pakistan is much cheaper than in our regional peers like India, Sri Lanka, etcetera,” he added.
Mansoor declined to provide a timeline for when the battery manufacturing factories would be completed or when Pakistan will be able to export lithium-io batteries. However, he said the policy still required the prime minister’s approval before it could be formally announced.
Chinese investors were closely involved in developing the policy framework.
“This project is beneficial and that’s why some of China’s big investors are coming to Pakistan to set up cell manufacturing factories,” he disclosed.
The official said that ultimately the investors will decide where the factories will be located. However, the factories are expected to be built in Karachi and multiple locations in Punjab, including the industrial hub of Faisalabad.
‘SUBSTANTIAL INVESTMENT’
When asked about the expected value of Chinese investment, Mansoor said discussions were still at an early stage.
“Again, this is the MoU stage, and the MoU stage is very nascent,” he said. “This is a very initial stage. But if I can put a word to it, it is a very substantial investment that will be coming.”
He said the investment would help make Pakistan one of the largest producers of lithium-ion cells in the region.
A senior official at Pakistan’s Ministry of Industries and Production also confirmed that multiple agreements related to lithium-ion batteries were signed with Chinese companies following Sharif’s recent visit to China.
“There are a lot of Chinese companies involved when the prime minister had recently visited China,” the official told Arab News, seeking anonymity as he was not authorized to speak to the press.
“We are trying to bring a policy in the name of Battery Energy Storage System, BESS. A lot of Chinese investors want to come to Pakistan for the lithium-ion factories.”
He also declined to disclose the expected value of the Chinese investment, but said the interest from Chinese firms was “significant.”
He said one of the planned lithium battery projects would be established at the Karachi Industrial Park’s Special Economic Zone (SEZ) under a public-private partnership model.
“That is a Special Economic Zone where there are some facilities,” he said. “There is some benefit of income tax, there is some benefit of import. So, it will be there.”
