Energy Crisis in Pakistan 1 E NERGY C RISIS IN P AKISTAN E DITOR D R N OOR UL H AQ A SSISTANT E DITOR K HALID H USSAIN
2 IPRI Factfile C ONTENTSPreface v1. Pakistan: Power Crisis Feared by 2007 12. Major Energy Crisis Feared 33. Pakistan’s Quest for Energy Security 44. Waste to Energy is Needed in Pakistan 75. Type of Energy 106. Thermal Energy 107. Hydel Energy 128. Wind Energy 139. Rising Oil Prices 1510. Pakistan Coal Reserves be Explored 1711. Pakistan Iran Agree on Gas Pipeline Project 1712. ECNEC Approves Energy Projects 1813. Energy Crisis in Pakistan-I 1814. Energy Crisis in Pakistan-II 2115. Pakistans Energy Crisis to Worsen in Next Two Year 2216. Wind Power: Solution to Energy Crisis 2317. Energy Crisis may go from Bad to Worse 2618. Asian Development Bank Considering Loan for Small Hydro Projects 2719. US Advise Pakistan to Purchase Electricity from Central Asia 2720. Energy Strategy 2821. Pakistan Urged to Import 4,000MW from CARs 3022. Fuel Shortage may Worsen Power Situation 3223. Energy Crisis: Serious and Worsening 3324. Energy Crisis in Pakistan is Growing Rapidly 3525. Efficient Household Appliances to Mitigate Energy Crisis 3826. Coping with the Energy Crisis 4027. Iranian, Pakistani Presidents Resolve Pipeline Issues 4328. Ties with Iran 4429. Power Crisis & Alternate Energy Technology 4530. Government Calls IPPs Meeting to Tackle Power Crisis 4731. Competing Firms Complete Feasibility Reports 4832. Government to Invite Businessmen to Discuss Power Crisis 50
Energy Crisis in Pakistan 333. Entangled in Energy Web 5134. Meeting Held to Discuss Pakistans Energy Crisis 5435. Government Taking Steps to Overcome Energy Crisis 5536. Energy Conservation Plan to Combat Shortage 5637. Demand-Supply Gap Increases Dramatically 5738. Pakistan Facing Acute Power Shortage 5839. Renewable Resources Must to Counter Energy Crisis 5940. Load Shedding: Part of Conspiracy 6041. Coal Power Plants to Help Overcome Energy Crisis 6242 Government to Ensure Indiscriminate Load Shedding: PM 6343. Pakistan Puts Clocks Forward, Hopes to Save Electricity 6444. The Option for Solar Power 6545. Advancing of Clocks Creates Confusion 6846. Iran can Help Pakistan in Energy Sector 7047. SAARC Members Asked to Sign Energy Treaty 7048. Subsidy on Use of Up to 200 Power Units Stays 7249. Load Shedding becomes a Nightmare for Karachiites 7250. Severe Fuel Crisis Hits Frontier 7451. Shortage of Fuel at Petrol Pumps Causing Concern 7552. Shortage of Petrol Products Tormenting Consumers 7553. No End to Electricity Meter Shortage 7654. Peshawar Transporters Threaten to Besiege Oil Depots 7755. Diesel Shortage Affecting Operation of Tube-wells, Tractors 7856. Load Shedding Increases as KANUPP Trips Again 7957. Fuel Stations Run Short of Diesel 8058. Frequent Power Shutdowns Bringing Grades Down 8159. New Energy Order 8360. Power Plants Top Gas Supply Priority List 8561. Resolving Power Crisis a Priority 8662. Authority Set Up for Thar Coal Mining 86
4 IPRI Factfile P REFACEPakistan is presently facing a serious energy crisis. Despite strong economicgrowth during the past decade and consequent rising demand for energy, noworthwhile steps have been taken to install new capacity for generation of therequired energy sources. Now, the demand exceeds supply and hence “load-shedding” is a common phenomenon through frequent power shutdowns.Pakistan needs about 14000-15000MW electricity per day, and the demand islikely to rise to approximately 20,000 MW per day by 2010. Presently, it canproduce about 11, 500 MW per day and thus there is a shortfall of about 3000-4000MW per day. This shortage is badly affecting industry, commerce anddaily life of people. All possible measures need to be adopted, i.e., to conserve energy atall levels, and use all available sources to enhance production of energy. Itseems that the government is considering importing energy from Iran andCentral Asian Republics and using indigenous sources, such as, hydel, coal,waste, wind, and solar power, as well as other alternate and renewable energysources, besides nuclear power plants for production of energy. Needless tosay that if the country wishes to continue its economic development andimprove the quality of life of its people, it has to make serious efforts towardsframing a coherent energy policy. The Factfile includes selected articles and news items on the subjectappearing in the media from 2nd July 2004 till 10th July 2008.July 10, 2008. Noor ul Haq
Energy Crisis in Pakistan 1 P AKISTAN : P OWER C RISIS F EARED BY 2007The country may plunge into energy crisis by the year 2007 due to risingelectricity demand which enters into double digit figure following increasingsale of electrical and electronic appliances on lease finance, it is reliably learntThursday. “The country may face energy crisis by the year 2007 followinghealthy growth of 13 per cent in electricity demand during the last quarter,which will erode surplus production in absence of commissioning of any newpower generation project during this financial year,” informed sources toldThe Nation. As per Pakistan Economic Survey 2003-04, electricity consumptionhas increased by 8.6 per cent during first three-quarter of last fiscal year.However, a top level WAPDA official maintained that electricity demandsurged up to 13 per cent during last quarter. The survey said household sector has been the largest consumer ofelectricity accounting for 44.2 per cent of total electricity consumptionfollowed by industries 31.1 per cent, agriculture 14.3 per cent, othergovernment sector 7.4 per cent, commercial 5.5 per cent and street light 0.7per cent. Keeping in view the past trend and the future development,WAPDA has also revised its load forecast to eight per cent per annum asagainst previous estimates of five per cent on average. Even the revised loadforecast has also failed all assessments due to which Authority has left noother option but to start load management this year, which may convert intoscheduled load shedding over a period of two year, sources maintained. The country needs a quantum jump in electricity generation inmedium-term scenario to revert the possibilities of load shedding in futuredue to shrinking gap between demand and supply of electricity at peak hours. According to an official report, the gap between firm supply andpeak hours demand has already been shrunk to three digit (440 MW) duringthis fiscal and will slip into negative columns next year (-441 MW) andfurther intensify to (-1,457 MW) during the financial year 2006-07. The report maintained that the difference between firm supply andpeak demand is estimated at 5,529 MW by the year 2009-10 when firmelectricity supply will stand at 15,055 MW against peak demand of 20,584MW. Chairman WAPDA Tariq Hamid at a Press conference early thisyear warned about the possible energy crisis and stressed the need for‘quantum jump’ in power generation. The experts say it could only bepossible through a mega project of hydropower generation; otherwise thegap between firm supply and peak demand will remain on the rise.
2 IPRI Factfile They said the power generation projects, which are due tocommission in coming years are of low capacity and will not be able toexceed the surging demand of the electricity. They say no power generation project will commission during thisfiscal year and the total installed capacity of electricity generation will remain19,478 MW to meet 15,082 MW firm supply and 14,642 MW peak demand. Giving details of projects, the sources said Malakand-lll (81MW),Pehur (18MW) and combined cycle power plant at Faisalabad (450MW) areplanned to be commissioned during the year 2007. Mangla Dam raisingproject would also add 150 MW capacity to the national grid by June 2007. Besides this, Khan Khwar (72MW), Allai Khwar (121MW), DuberKhwar (130MW) and Kayal Khwar (130MW) are expected to be completedin 2008 along with Golan Gol (106MW) and Jinnah (96MW). Moreover,Matiltan (84MW), New Bong Escape (79MW) and Rajdhani (132MW) areexpected by 2009 while Taunsa (120MW) is likely to be completed by 2010.Sources say WAPDA has also planned to install a high efficiency combinedcycle power plant at Baloki (450MW), which is expected to be completed by2010. In addition of these, power plant 1 & 2 of 300 MW each at Thar Coalwith the assistance of China are also planned for commissioning in 2009,sources said. Moreover, efforts are also under way with China NationalNuclear Corporation for the construction of a third nuclear power plant witha gross capacity of 325 MW at Chashma, they added. When contacted, a WAPDA official said there is no power shortagein the country at present as the Authority still has over 1,000 MW surpluselectricity. However, he admitted that the shortage may occur in the year2007 and onward and said the Authority will utilise all options includingrunning of IPPs plant at full capacity to avert any possible crisis. About the system augmentation to bring down line losses, theofficial said the Authority would spend Rs 3.5 billion on augmentation ofdistribution lines this fiscal while another Rs 5 billion will be consumed ontransmission lines. “We have been negotiating Rs 9 billion loan with aconsortium of local banks to upgrade and augment the power transmissionsystem,” he disclosed. The official further said that five new transmissionlines of 220-KV would be installed by the end of 2004, that would ensuresmooth supply to the consumers. He expressed full trust on presenttransmission and distribution system and said it could easily sustain the loadof total installed power generation in the country. July 2, 2004 http://www.energybulletin.net/883.htm
Energy Crisis in Pakistan 3 M AJOR E NERGY C RISIS F EAREDPakistan is most likely to face a major energy crisis in natural gas, power andoil in the next three to four years that could choke the economic growth formany years to come, official estimates and energy experts suggest. Pakistan’s total energy requirement would increase by about 48 percent to 80 million tons of oil equivalent (MTOE) in 2010 from about 54MTOE currently, but major initiatives of meeting this gap are far from turninginto reality, said a former petroleum minister on condition of anonymity forthe simple reason that he had also served the present government. Major shortfall is expected in the natural gas supplies, he said.According to official energy demand forecast, he added, the demand fornatural gas, having about 50 per cent share in the country’s energyconsumption, would increase by 44 per cent to 39 MTOE from 27 MTOEcurrently. Partly contributed by gas shortfalls, the power shortage is expected tobe little over 5,250MW by 2010, he said, adding that the oil demand wouldalso increase by over 23 per cent to about 21 million tons in 2010 from thecurrent demand of 16.8 million tons. This would leave a total deficit of about nine million tons of dieseland furnace oil imports, he said. Since the gas shortfalls were expected to bemuch higher, the country would need to enhance its dependence on importedoil, thus increasing pressure on foreign exchange situation, he added. Last year’s oil import bill amounted to about $6.5 billion comparedwith about $3.5 billion in 2004-05, mainly because of higher international oilprices - a burden expected to be even higher in future as a result of growingMiddle East crisis. Current year’s oil import bill has again been projected by thegovernment at about $6.5 billion on last year’s average prices, which havestarted to rise in the recent days. According to the former minister, the government had planned fivemajor initiatives to meet these energy requirements. They included three gasimport pipelines, Gwadar port as energy hub and LNG import. However, fourof these measures, including the three import pipeline projects, show no signsof progress for various reasons while concentration on energy facilities inGwadar would chiefly depend on security situation, besides oil and gas importpipelines. Planning Commission sources said the government had planned toadd an overall power generation capacity of about 7,880MW by 2010. Of this,about 4,860MW is to be based on natural gas, accounting for 61 per cent ofcapacity expansion.
4 IPRI Factfile However, the gas-based power expansion of about 4,860MW wouldremain in doubt since these estimates were based on gas import options forcompletion in 2010, 2015 and 2020, said the sources. The fifth initiative of LNG import was on schedule and would startdelivering about 0.3 billion cubic feet of gas (BCFD) by 2009 and another 0.5BCFD by 2015, said the sources. Petroleum ministry officials are not ready to speak on record aboutgas import options and resultant overall energy shortfalls because of recentpolitical developments on Iran-Pakistan-India pipeline project and securitysituation in Afghanistan and non-certification of gas reserves in Turkmenistan. According to World Bank estimates, a demand gap (supply shortage)of about four per cent of the total demand, is expected in 2010. Even thoughthis gap would be met by LNG imports, it would again increase to 20 per centof the total demand. The bank said the indigenous gas supply would fall from32.6 MTOE in 2010 to 20.7 MTOE in 2025 while the ‘gas supply-demand gap’would rapidly increase as demand is expected to grow continuously,quadrupling in 2025. As per the World Bank estimates, the gas imports will representalmost 67 per cent of natural gas supply in 2025. One can, therefore, gauge thequantum of shortage in case import pipelines are not materialised. Pakistan’s gas reserves are 32.8 TCF at present, with reserve-production ratio in the order of 27 years, considering that domestic productiondoes not grow substantially. Power sector demand represents 41 per cent oftotal gas consumption, general industries 24 per cent, fertiliser 7.8 per cent anddomestic-commercial 22.8 per cent, cement 1.5 per cent and CNG 2.8 percent. Demand growth has been up to 8.5 per cent in recent years and isexpected to be seven per cent with power industries and domesticconsumption accounting for 82 per cent. Gas demand already displaysseasonal pattern with national demand growing in winter beyond transmissioncapacity. Therefore, supplies to large users mainly industries and power plantsare curtailed during winter months to ensure supplies to domestic, commercialand small industries. Annual production at present is about 1.16 TCF. Khaleeq Kiani, Dawn, July 28, 2006 http://www.dawn.com/2006/07/29/top16.htm P AKISTAN ’ S Q UEST FOR E NERGY S ECURITYEnergy has become an important prerequisite for the economic developmentof a country. On one hand it is used for the industrial and agriculturalpurposes and on the other hand it is required for domestic use of the citizens.Natural gas is the fastest growing primary energy source. Globally
Energy Crisis in Pakistan 5consumption of natural gas is projected to increase by nearly 70 percentbetween 2002 and 2025, with the most vigorous growth in demand expectedamong the emerging economies. Consumption of natural gas worldwideincreases in the forecast by an average of 2.3 percent annually from 2002 to2025, compared with projected annual growth rates of 1.9 percent for oilconsumption and 2.0 percent for coal consumption. The electric power sectoraccounts for almost one-half of the total incremental growth in worldwidenatural gas demand over the forecast period. South Asia is important to world energy markets because it contains1.3 billion people and is experiencing rapid energy demand growth. AfterIndia, Pakistan and Bangladesh are the next largest South Asian countries inthese categories. Economic and population growth in South Asia have resultedin rapid increases in energy consumption in recent years. The major energyissues facing South Asian nations today are keeping up with rapidly risingenergy demand. Agency for energy consumption has projected that by the year2010 South Asian countries shall be consuming more than double the currentlevels of primary commercial energy. Pakistan’s largest energy source is natural gas, with demand andimports growing rapidly. Currently, natural gas supplies 49 percent of Pakistan’s energy needs.According to the Oil and Gas Journal (OGJ), as of January 1, 2005, Pakistanhad 26.83 trillion cubic feet (Tcf) of proven natural gas reserves. Pakistan islooking to increase its gas production to support increasing consumptionthrough Pipelines from Iran and Turkmenistan. Currently, Pakistan ranks thirdin the world for use of natural gas as a motor fuel, behind Brazil andArgentina. In addition, Pakistan hopes to make gas the fuel of choice forfuture electric power generation projects. Pakistan ambitiously seeks toincrease oil production through new alliances with foreign companies.Pakistan’s net oil imports are projected to rise substantially in coming years asdemand growth outpaces increases in production. Pakistan will see power shortages by 2007 unless actions are taken toincrease generation and reduce transmission losses. Pakistan has 18 gigawatts(GW) of electric generating capacity. Thermal plants using oil, natural gas, andcoal account for about 70 percent of this capacity, with hydroelectricity(hydro) making up 28 percent and nuclear 2.5 percent. Pakistans total powergenerating capacity has increased rapidly in recent years, largely due to foreigninvestment, ultimately leading to a partial alleviation of the power shortages.Pakistan often faces load shedding in peak seasons. Transmission losses areabout 30 percent, due to poor quality infrastructure and a significant amountof power theft. Periodic droughts affect the availability of hydropower. TheGovernment is understandably engaged in a vigorous effort to expand thenation’s power generation capacity through building of dams and invitingforeign investors for establishing thermal units in the country. The things are,
6 IPRI Factfilehowever, seemingly getting out of its hand due to the yawning gap betweensupply and demand of electricity. Coal currently plays a minor role in Pakistan’s energy mix. However,Pakistan contains an estimated 3,362 million tons, sixth largest in the world.President Musharraf has stated that coal should make up more than thecurrent 1 percent of electric power generation in Pakistan. The PakistaniMinistry of Industries and Production has granted a Chinese company to buildtwo coal-fired power-generation plants to supply 600 MW of electricity. Asidefrom power plants generated by coal, Pakistan is also working to expand theuse of wind turbines. For instance, the Pakistan Alternative EnergyDevelopment Board (AEDB) recently approved New Park Energy Phase I, a400-MW wind project near Port Qasim. Energy cooperation is the key to regional development. Pakistan’sgovernment is working on plans to build an Iran-Pakistan-India (IPI) pipelinethat spans from Iran’s massive reserves to Indian markets across Pakistaniterritory. Russia’s biggest gas producer, Gazprom, has recently shown interestin the $7.4 billion pipeline project and has indicated its desire to invest in it.While Iran and Pakistan have made agreements to move forward, India stillremains reluctant due to its recent nuclear deal with USA. Iran has offered tocover 60 percent of the construction costs of the pipeline and Pakistaniofficials have stressed their ability to safeguard the pipeline. Iran will lay thepipeline from Pars to Pakistani border. Islamabad will build the pipeline fromthe Iranian border to its Central Pakistani city of Bhong in District RahaimYar Khan. Both countries have discussed the gas pricing formula, projectstructure, its feasibility, gas off-take volumes and the gas sales and purchaseagreement. In spite of US pressure for not building IPI pipeline, Pakistanremains determined for the pipeline. In fact, in the face of the US pressureagainst IPI, now two pipelines from Iran are under "active consideration" —one for Pakistan and the other for India, through Pakistan. If India participatesin IPI project, Pakistan will be entitled to transit fee. But, if Pakistan builds thepipeline from the Iranian to the Indian border, then it will also be entitled totransportation charges. This is the great vision of President Pervez Musharraf and PrimeMinister Shaukat Aziz according to which Pakistan is going to become anenergy corridor for China. Islamabad’s negotiation for a second transnationalgas pipeline from Turkmenistan to Pakistan via Afghanistan (TAP) alsoentered a final stage because experts are of the view that Pakistans fastgrowing energy demand requires laying two gas pipelines. Washingtonsupports the TAP project and has assured the pipeline’s security throughAfghanistan. It also holds good prospects for other South Asian users,depending on the size of supplies that Turkmenistan can arrange. The plans tobuild a third transnational gas pipeline from Qatar to Pakistan and India—-Gulf-South Asia Pipeline (GUSA)-—seem to have slowed down because of
Energy Crisis in Pakistan 7the gas availability issues. "The plan to import gas from Qatar is not, however,shelved," maintained by Jahangir Khan, spokesman for Ministry of Petroleum& Natural Resources. With the development of Gawadar Port, Pakistan can provide thetrade and energy corridor for the whole region especially to China. In thisperspective president has rightly remarked so, “When Karakoram Highwaywas built, the world called it the eighth wonder, and we can create the ninthand tenth wonders by establishing energy pipelines and railway linkagesbetween the two fast growing economies.” China and Pakistan agreed towiden KKH for larger vehicles with heavier freight. The rebuilding of KKHwill enable China to ship its energy supplies from the Middle East fromGwader Port in Balochistan through the land route of KKH to western China,which is its development hub. This alternative energy supply route will reduceBeijing’s dependence on the Malacca Straits. Pakistan also wants to set up a“crude transit route” through Gwader Port for Beijing’s energy shipmentsfrom Iran and Africa. For this reason, Pakistan is building oil refineries, naturalgas terminals, oil and gas equipment, and transit facilities in Balochistan. Chinahas agreed to help Pakistan with its plans for the development of its oil andgas industry. With this planned elaborate energy infrastructure, KKH hasassumed an added significance as an alternative land link between China andits energy sources, of which Iran is at the top. The recent Pak-China energyforum in Islamabad was a major step in formulating future strategy to ensureenergy security of both countries. Muhammad Munir, Pakistan Observer, 20 May 2006 W ASTE TO E NERGY IS N EEDED IN P AKISTANGrowing urbanisation and changes in the pattern of life, give rise to generationof increasing quantities of wastes and it’s now becoming another threat to ouralready degraded environment. However, in recent years, waste-to-energytechnologies have been developed to produce clean energy through thecombustion of municipal solid waste in specially designed power plantsequipped with the most modern pollution control equipment to cleanemissions. Yet, solid waste management practices differ for developed anddeveloping nations. In developing countries like Pakistan, institutions chargedwith the responsibility to make decisions on solid waste management, operatein the enormous information, policy and strategy vacuum and lack thereforethe ability to address this looming environmental disaster. The perfect ‘case study’ of information gap in selection of appropriatemethodology to dispose municipal waste exhibited by the apex civic authorityof Pakistan is when the capital development authority has finally decided tosolve the ever-increasing volume of municipal waste by landfill in groundwater
8 IPRI Factfilerecharge area. While in developed countries, landfills are now bracketed as‘obsolete’ and ‘mines of the future’ after observing several problems likepollution and contamination of groundwater by leachate and residual soilcontamination after landfill closure and simple nuisance problems. This is thevery reason why in the United States sanitary landfill techniques have steadilydecreased from 8,000 in 1988 to 1,767 in 2002. Extensively focusing onturning waste to energy, municipal authorities in USA have realised thecontribution of waste to an increasing electricity shortage. Today in America, 2500 MW are solely generated by the waste-to-energy plants. Many other countries in the world, Sweden, Japan included,have applied this technology since the last 20 years. In the sub continent, Indiainstalled three projects to produce electricity from waste with a total capacityof 17.6 MW. Although these ‘made in India’ power plants are generatingelectricity by direct incineration, causing pollution and must be upgraded bysophisticated monitoring systems to check pollution. These examples areenough to establish that CDA’s ignorance of modern technologies is surelynot simply a lack of ‘access to information’, but questions the professionalcapabilities of the planners within its corridors. The site selected for the landfill project is at Kuri, an ancient city ofPotwar and its aerial distance is hardly five kilometres from sector G-5, knownas the nucleus of Islamabad. Though, in July 2003, the same site wasconsidered for a landfill project but UNDP out rightly rejected and warnedthat environmental cost would be considerable, besides air pollution,contamination of groundwater if Kuri was selected as a landfill project. JICAin 1988 also compiled a detail investigation report, which established that thearea is the recharge zone of the aquifer catering for more than 50 per cent ofthe twin cities’ drinking demand. Based on these serious environmentalconstraints, as its location is up a slope and within the flood plain of GumrahRiver, the recharge-basin of the twin cities aquifer, the site was rejected.Recent floods substantiated the finding of all the reports, as the site isdefinitely within the flood plains of the Gumrah River and would need to beprotected on a priority basis, especially as water shortages is now a permanentproblem of the twin cities. Whoever selected and approved the site for the ‘disaster of the future’,showed ignorance of the above reports and absolute ignorance of the adverseenvironmental impacts this project would create. Is this ignorance simplyunawareness of the planners or is it complete apathy towards anything old,which rejects that Kuri is recorded as an ancient city of the Potowar Region.As CDA is constantly focusing on developing tourist attractions, why notpreserve this historical area? Aware of the unprofessional management atCDA’s varied directorates one anticipates leachates from the landfills,polluting the amazingly still clean groundwater table, while the wind will carry
Energy Crisis in Pakistan 9waves of leaking gases towards the G-5 Sector, farther adding to the prevalenthealth hazards of the capital. ‘Access to clean water’ has been given the ‘top priority’ flag by thepresident. Selecting a site along the Gumrah River, known to recharge thegroundwater along its winding course through Chak Shehzad and Kannashows the warped priorities of the planning commission that approvesprojects, the ministry of interior responsible for CDA affairs and the CDAitself. Had CDA only followed the minutest details provided in the FederalCapital Commission Reports of 1960 by the earlier planners of the capital city,Islamabad today would have been a model for the rest of Pakistan. The CDA ignored the most recent seismic zoning report of the regiontoo. According to EPA US regulations, duly adopted by Pakistan’s EPA, thereshould be no significant seismic risk within identified landfill sites. Kuri iswithin a highly sensitive earthquake zone, according to new seismic zoningmaps prepared after the earthquake 2005. An earthquake having a magnitudeof 4.2 was recorded on July 7, 1989 and its epicentre was at a distance of 10kilometres from Kuri. Had the spread of this infectious disease the ‘vacuum of information’been contained in time, CDA would surely have been able to diagnose that theestimated cost of two billion rupees for the landfill site, would have sufficedfor setting up an ‘energy-to-waste’ plant in the city. With load-shedding apermanent crisis in Pakistan, adding some extra megawatts through waste-to-energy could have solved many ills in the rapidly growing energy needs. A vacuum of information has not allowed the CDA to communicateeither with the alternate energy development board, established by the federalgovernment in 2003. This board was given the mandate to solve the energycrisis that is facing this country through renewable technologies. Althoughadvertisements in the printed media asked for feasibility studies of ‘waste-to-energy’ units for ten cities of the country, the twin cities were ignored. Hadmutual interactions been part of the government systems, the funds availableto the CDA for the ill-fated sanitary landfill, and the technical know-how ofalternate energy development board (AEDB), Islamabad could have prideditself of being the first ever waste-to-energy unit in the country today. The decision to construct a landfill project at extremely sensitive areasneed not only to be reviewed but also need to empower the AEDB to generateelectricity from waste to cope with the energy demand in the lines ofinternational environmental commitments avoiding violation of the KyotoProtocol and Stockholm Convention. Now decision-makers have to choosewhether to allow the CDA to go ahead with the landfill project, to dump wastefor adding more pollution and contamination of groundwater or to allowproduction of environment friendly energy. Arshad H Abbasi, November 9, 2006 http://www.alternative-energy-news.info/waste-to-energy-pakistan
10 IPRI Factfile T YPES OF E NERGYEnergy can be differentiated as 1. Kinetic energy 2. Potential energyKinetic Energy 1. Sound 2. Wind 3. Mechanical for example moving piston in a cylinder 4. Electrical energy. Electricity, lightning 5. Thermal Energy, Heat, hot water, steam 6. Light , microwaves, x-rays , solar, ultra violet raysPotential energy 1. Gravitational energy. Hydro power, ball above ground 2. Spring . stretched rubber band 3. Magnetic planetary poles 4. Nuclear , fission, fusion, heavy water uranium 5. Chemical , gasoline, batteries, oil natural gas, gun powder, coal, wood 2007 http://www.energy.com.pk/energytypes.htm T HERMAL E NERGYThermal Energy is the oldest type of energy. With all known history available,Wood was always used for heating and cooking. In 2nd world war fossil fuelsentered in the form of coal to get the energy, until liquid fuels were discoveredand because of their convenience of transportation they took over as majorcontributors of the energy source. Once the steam engines were invented then the coal or liquid fuel wasburnt in the boilers and the heat produces steam which is used to driveelectrical generators, or any other mechanical device. Rudolph diesels invention of diesel engine revolutionaries the energyconcept and today we see sine the majority of machines moving on dieselengines. Diesel engines can be 2 stroke or 4 stroke type. They can be in line orarranged in V or even W shape. They can be single acting or double acting. Another method of converting thermal energy to mechanical energy isby the gas turbines. Turbines are also used to run by steam or hot gases whichare produced by igniting fuel.
Energy Crisis in Pakistan 11 For converting thermal energy to electrical energy alternators are usedto drive on constant RPM. The choice of gensets strictly depends on the requirement of theclient, before ordering a power plant following points to be considered 1. Expected demand of the power. 2. Type of fuel required 3. Space available for the power plant 4. Avilability of genset 5. Avilability of local service back up and stock of parts 6. Price is paramount importance and hidden expenses should be looked carefully The major manufacturers and suppliers of Gensets based on internalcombustion engines are given below 1. MAN 2. Wartsila 3. Caterpillar 4. Jen Bacher 5. Waukesha 6. Mitsubishi 7. Detroit Diesel 8. Rolls Royce Internal combustion engine can obtain 30-50% thermal efficiency. Itmeans that around 50% energy is wasted in the form of exhaust gases , coolingsystems and radiation. Therefore for larger plants heat recovery systems areutilized. In Pakistan due to attractive gas prices this is a general trend that gasoperated power plants are preferred if gas connections are available. The gas gensets are available from less than 1 MW sizes to 6 MWconfiguration. Normally they are V type and 12,16 18 and 20 cylinderconfiguration. In addition some models are available on duel fuel technology whichcan be operated simultaneously on gas and furnace oil. The price of a 3 MW gas genset can be expected around 1 Million $.However low RPM engines will be more costly Unit cost of fuel on gas gensetcan be evaluated as followsFuel Cost Rs 2.7 (depends upon the genset )Maintenance Rs 0.20Lubricating Oil Rs.0.10Chemical R Rs. 0.02General stores Rs. 0.01Labor Rs.0.10Overhead +Insurance Rs.0.07Financing 0.20
12 IPRI FactfileTotal Rs. 3.40The engines which are running the fuel cost is only variable and can becalculated by multiplying fuel cost by a factor of 225. (225 grams / KWHR isan average net fuel consumption expected.) 2007 http://www.energy.com.pk/THERMAL_%20ENERGY.htm H YDEL E NERGYWater flowing in the rivers has kinetic energy. Once they are used to drive theturbine and produce electricity the power generated as Hydel Energy. Power produced by the turbines depends on quantity of waterflowing/minute and the head of water available. Mostly river flows by melting glaciers on high mountains. Once thewater start flowing in the valleys it changes its head very rapidly. This energycan be converted into electrical energy. Two method are normally used:- 1. Dams 2. Run of River projects. In case of Dams the water flow is restricted by making a huge storagedevice and the head of water is increased, the water then is allowed to flow bymeans of gates and pass through the turbines, the head of reservoir level ismaintained to provide uniform power, and the water stored in peak seasonadditionally is used for irrigation purposes in dry seasons. In run of river projects the water is diverted through the tunnels andonce it gains the head allowed to fall and pass through the turbines and backto river. the water in these projects is continuously flowing and not beingstored. Geographical situation is paramount importance in choosing asuitable site for the hydro project and it evolves a very serious time and moneyconsuming study. Once a site is located further detailed feasibility study is requiredbefore proceeding any serious effort to start the work. The feasibility study should include following field work. 1. Detailed Mapping of the area 2. Topographic study of the area 3. Seismic refraction study 4. River flow data 5. Weather data containing, Temperatures, pressures, rain humidity 6. Water sampling and testing 7. Environmental study 8. Social impact
Energy Crisis in Pakistan 13 9. Wild life and fish study 10. Identification of stake holders of the area 11. Coring and getting samples of the soil at 50-200 meters depth 12. Laboratory testing of the cores samples 13. Tectonic study to evaluate earth quake dangers 2007 http://www.energy.com.pk/hydel.htm W IND E NERGYPakistan is facing acute shortage of energy. with 7% increase of its economythis short fall soon to slow down its economic growth and will shatter itsdream to become one day a developed country. Most of its energy demand is being met with either Hydro power orthermal units. Pakistan is spending a very large amount of foreign exchange topurchase the furnace. The gas reserves already start depleting and oil marketsare sky rocketing. To overcome this shortage Government take a initiative toinvestigate Alternate energy resources in Pakistan developed Alternate EnergyBoard AEDB. The Board is headed by Retd Air Marshal Shahid Hamid.identified 50,000 MW energy potential from wind resource Pakistan is blessed with a large resource of wind corridor. AlthoughPakistan meteorological Department was gathering wind data for quite longtime But recently United States provided wind energy map for Pakistan whichconfirms a strong wind corridor in Sind coastal area. AEDB issued about 80 LOI to the investors List of LOI holders )todevelop 50 MW wind farms. Out of which 15 are already issued the land andfeasibility reports and financial closings are in progress.The following is a brief road map for developing a wind form 1. submission of proposal by sponsor 2. Review of proposal by AEDB 3. Posting of Bank Guarantee 4. issuance of letter of intent ( LOI ) 5. Feasibility study 6. Generation License 7. Tariff Determination 8. Submission of Performance Guarantee 9. Tariff determination by NEPRA 10. Submission of performance guarantee 11. Issuance of Letter of support
14 IPRI Factfile The first requirement of conducting feasibility study is to install awind mast. The three major manufacturers of wind data are listed below. Thisdocument explains the method for installing weather station. 1. www.wilmers.com 2. www.ammonit.de 3. www.environdata.com.au Geological, seismic, tectonic and environmental studies will berequired along with Digital mapping and topography of the site for preparing abankable feasibility study. A confirm EPC cost will also be needed forcalculation of tariffs.Some large manufacturers of wind turbines are given below1. Denmark (27.9%)2. GE Wind, US (17.7%)3. Enercon,Germany (13.2%)4. Gamesa, Spain (12.9%)5. Suzlon, India (6.1%)6. Siemens, Denmark (5.5%)7. Repower, Germany (3.1%)8. Nordex, Germany (2.6%)9. Ecotecnia, Spain (2.1%)1 Mitsubishi, Japan (2.0%)WIND ENERGY BASICSPower developed by a wind turbine can be mathematically shown in followingformulae1/2xdensity of air x effective area of rotor blade x cube of speed ofwind
Energy Crisis in Pakistan 15The lay out and designing of the wind form can be done by wind energyplanning and project software available in market in a reasonable price . Onesuch software is Wind Pro which is a very convenient tool for projectmanagement.Environmental Protection agency require a detailed environmental impactstudy of the project. The following issues should be discussed detail 1. Birds collision or alteration of their migration routes 2. Noise impact 3. flickering 2007 http://www.energy.com.pk/Wind%20Energy.htm R ISING O IL P RICESAll predictions now failing and the oil prices are rising and now about to reach100 $ level. who knows that in market trading if even the customers are buyingthe oil on +100 $. the reason being given for this enormous rise is the US oilreserves are depleting and therefore customers are ready to purchase the oil atany price available. The future prospects also not very encouraging. All trading is beingmade on +90 $. OPEC promised to raise its out put but with out any
16 IPRI Factfilesignificant effect. for the time being the prices were dipped but risen again onmuch higher values. The winter is just arriving and nobody knows that these prices willsettle at what level. Rising tension between US and Iran is one reason. Some sources arepredicting the attack on Iran is imminent. If the condition continues like thiswho is going to be benefited. Emerging economies and developing will suffer most. Their economyis dependent on energy resources. how can survive and how can they meettheir production commitments. In recent months oil surged from 70$ to 92$ and still rising. Thoseindustries which consumes more energy will suffer with maximum. It will leadto rise of inflation shutting down in efficient industries and rising unemployment in third world countries. When come to individual the poor will suffer most .High incomegroup will survive and it will not effect on their livings. But the strains comingon poor in third world countries will transform to social unrest and hence willcause instability in the region. Pakistan economy is already under intense pressure. On one hand ithas the competitors like China and India giving cut throat fight. Another end ithas continuous problem on its western borders draining its resources andcausing political chaos. The election is just three months away and the resultsexpected are the change of government to Pakistan Peoples Party. Pakistan exports and its all economic activities are dependent ofuninterrupted energy supplies for its energy requirement maximum share stillof furnace which is imported from Middle East countries. Rising prices willbring a wave of inflation. Already many textile mills closed down due to higher production costswhich make it un economical. further increase in oil prices will definitely bringmore strain on existing working units. In election environments it will bedefinitely a difficult decision for Prime Minister Shaukat Aziz to authorize thefuel prices in Pakistan. But he has no other option. How far the Government continues toabsorb the fuel bills eventually it has to increase the prices. And again who willsuffer simply the poor Today only there are news that Pakistan is going ahead 2000 MWpower plant based on furnace oil. Now we have to look for the future andsustainable economic activity. Development of Renewable energy resources are not moving aheadbeyond symposiums and conferences or in other crude words lip services.Pakistans future as economic leader in the region is at stake if sustainablecheap energy resources are not developed on priority.
Energy Crisis in Pakistan 17 So the solution is not so simple. Renewable yes. The hurdles shouldbe identified and removed on priority.One area which we want to emphasize is the conservation of energy. We haveto persuade all concerned that all possible measures to be taken to save energyso it can be used for future. Energy efficient plants and machines are the recipe for our survival. 2007 http://www.energy.com.pk/risingoilprices.htm P AKISTAN C OAL R ESERVES S HOULD BE E XPLOREDThe energy shortage is increasing day by day and the resources of Pakistan arelimited and this year we are witnessing increasing of imported fuel bill. This istime that Pakistan should explore all its available resources. We see a limited progress in alternate energy sector. But so far littleefforts are being made to explore and use the coal reserves in Sind. This is claimed that coal quality is inferior and having low BTU. Thisis a challenging task. Today technology and boilers are available that can burnany kind of coal. Therefore all possible measures should be adopted to utilizeexisting resources. The smaller size power plants near the coal mines which can get directfeed and connect to National Grid will be an ideal configuration. 2007 http://www.energy.com.pk/news%20and%20views.htm P AKISTAN I RAN A GREE ON G AS P IPE L INE P ROJECTThis week very good news coming in energy sector that Iran and Pakistanfinally agreed to go ahead with the project. The gas project which was initiated by Iran India and Pakistan washaving many constraints and was continuously under pressure from US. Indiawas asking more time to make the decision and therefore the project wasdelayed. Finally Iran and Pakistan decided to continue with the project andwhen ever India decides it can be accommodated in the project extension. The major issue which is now resolved is the gas price which is nowrelated to petroleum prices as per the international practice. For all practicalpurposes the gas purchased will be based on BTU values as agreed by bothpartners. For Pakistan it means that the gas will be on higher price than thedomestic supply which is subsidized for common house hold users.
18 IPRI Factfile The gas is prime energy source for domestic usage as well as fertilizersand power generation companies. This is expected that the average price when fixed for local consumerswill take care for common users as well as industrial usersIran wants quick decision for Gas PipeIran asking India to make the decision of joining Gas Pipe Line projectsoonest, otherwise the project will be started with Pakistan.Reluctance of India to make a firm decision is understandable due to Geo-Political Scenario. However this project is vitally important and profitable forIndian sustainable economic growth. Therefore a positive outcome is expectedsoon. 2007 http://www.energy.com.pk/pakiran.htm ECNEC A PPROVES E NERGY P ROJECTSThe Executive Committee of the National Economic Council ECNECapproved 23 projects worth 116.5 Billion Rs. The meeting was the last on thechairman ship of Prime Minister Mr. Shaukat Aziz whose term is expiring inthree weeks. Energy sector was given prime consideration and the development ofnuclear power projects approved. Pakistan facing acute shortage of energy andthis is a wise decision to focus on nuclear energy which is renewable, cheapand environment free. with furnace reaching 100$ Large Hydel projects having socialconcerns ,wind turbines not available in market, and gas reserves depletingnuclear becomes most attractive option. 2007 http://www.energy.com.pk/ecnec.htm E NERGY C RISIS IN P AKISTAN - IWe have written many blogs on this subject. But we never thought that thesituation will reach to such disastrous condition so soon. Last week we saw a series of disasters in energy sector. Pakistanelectrical energy production sustain shortfall of 3000 MW. Actual figure isslightly controversial as we have seen various statements emerging fromvarious sectors. Production units were shut. There was severe load shedding through-out the country. APTMA was forced to accept volunteer load shedding of 5hours each day on all units. And the residential areas were with out power
Energy Crisis in Pakistan 19maximum time of the day. The situation was worsened because Sui Gas Company alreadystopped the supply of industrial units and was going through a system of loadshedding it self. Therefore captive units were shut off due to non avilability ofthe gas. The IPP who were operating on furnace could not get the regularsupply of furnace and they did not bother to keep enough stock forcontingency therefore stop shutting. And then naturally the blame game started, starting from the watershortage in Dams to furnace oil transportation problem, violence in Sind andmaintenance activity in some independent power producers. Now it is officially declared that in last 10 years not a singles MW wasadded. We have seen hundreds of seminars, conferences and events on energyissues in Pakistan. The money wasted there if utilized then at least we can addfew hundred MW of Power. The fact is that Pakistan is sustaining an acute shortage of Power. Itsdemand is increasing and production is declining due to aging of the plants. And no solution is in sight. The projects which are in pipe line willnot come in line before 2009. And even the magnitude is such that it will notbe able to fulfill the demand of today. WAPDA is in favor of large dams and thinks that the delay ofconstruction of large dams was the basic reason for the shortage of power.The issue is very controversial subject and it is not expected to resolve soon.Moreover the construction of the dam will take at least 10 years and if thesituation persist our economy will then come to a stage where it will need anypower any more. The situation demand an urgent decision. A decision which is vital forthe safety, stability and survival of Pakistan. Energy is a key factor for the stability and prosperity of Pakistan. Ifour production units keep on shutting then un employment will rise and hencestreet violence will rise. This is the time to restructure our energy policy. In our opinioninstead of many agencies one central ministry should look after the energyissues in Pakistan. This is utmost important that an environment should be createdwhere the investments are made in energy sector. Recently Government isadvocating a policy of promoting the investment in Private Sector. Althoughthe response is favorable but the out come is very slow. Now Government has to make a huge investment in energy sector.And the investment has to be in direct purchase of power plants,manufacturing main and auxiliary units, The objective should be utilization of diversified energy resources. Itis imperative that renewable energy resources should be explored but stillconventional thermal and coal fired power plants should be established.
20 IPRI Factfile The strategy should be to explore indigenous local resources. Forexample furnace oil plants are best suited in Karachi where the port andrefinery facilities are available. Gas plants to be installed in Baluchistan, Sindand N.W.F.P near to existing gas fields. N.W.F.P should explore medium,small and micro size hydro projects. Sind must use its Coal reserves. Windturbines to be installed in coastal belt, and Punjab must explore bio-gas andcity waste plants. From US and Europe we should borrow and purchase the technologyto manufacture various power plants in Pakistan. For example if we startbuilding 1-3 KW micro hydro, wind or solar power plants in Pakistansufficient to provide energy to one home we can sell to individual familiesdirect at low installments. The cost will be recovered in utility billscompensation. For the furnace IPP and captive power plants should be allowed toimport furnace oil duty free. Then existing laid up power plants will againbecome operational. All efforts to be made that Iran Pakistan gas pipeline project isimplemented soonest. Moreover one additional pipe line for crude oil to beinstalled to reduce our dependence on sea route. Pakistan is in need of energy very badly and urgently. Pakistan shouldlook for nuclear energy possibilities. Pakistan is one of seven countries in theworld who has an indigenous capability to operate the nuclear power plant forlast forty years. Pakistan should look all alternatives to increase its electrical energyproduction by 10,000 MW in two years. This is a very challenging and difficulttask. But if it fails its target then all other indicators will go negative leavingbehind a disastrous situation. A dedicated campaign of energy conservation is needed to spread theawareness of energy conservation programs. This is also believed that ingeneral major energy consumers have little or no awareness of energy savingprocedures. The machinery when purchased a very little emphasis is given onelectrical or mechanical efficiency of the plant. The result is that ourproduction units are consuming much more energy than their competitorsresulting their product cost high and it is not competitive in internationalmarket. Energy conservation is indeed energy production. So if an investmentis made in this sector then it will pay back in 3-5 years. This is the responsibility of Government to start various energyconservation programs suited for various industries. 2007 http://www.energy.com.pk/energy%20disastor.htm
Energy Crisis in Pakistan 21 E NERGY C RISIS IN P AKISTAN - IIA very common question asked in Pakistan is about the most burning issue inPakistan? The answer you will get may be a list of hundreds of issues whichstart from Kashmir and will end on terrorism or militancy etc etc. Recently Mr. Mansha in an interview in CNN replied same questionby giving a simple answer that water and energy are two most valid problemsin Pakistan. Energy is a most problematic issue in the world. Whereas oil pricesare steadily rising and no stability is seen in near future. Demands of energyfrom the emerging markets like China and India are growing day by day.Pakistan with official figurers of growth rate of 8% will have a definite rise indemand of energy for minimum 3% In USA the Gulf of Mexico is famous for oil producing and refiningfacilities. The prosperity of Houston is only due to oil industry beingflourished. However the weather is not so kind on this area and hurricanes andtornadoes commonly hit the southern part of USA and Caribbean. Such is the volatility of fuel market now that just news of onehurricane developing in Caribbean shoots the oil prices in the world. A fewyears before oil was being traded on 20$ and no body ever thought that theweather conditions in the gulf can effect the oil market. Politically the Iran situation is deteriorating day by day where as Iraqcondition is not stabilizing. Oil today is being traded around 65 $/, and themost vital question now is what will happen if the prices rises to 75 $ or evenone hundred $/barrel. Pakistan with small manufacturing market, surrounded by majoremerging economies like China, India, Malaysia, Indonesia, Philippines andBangladesh will be worst effected with the rise of energy prices. As a rule of thumb modern day manufacturing industries utilize atleast 33% production cost in terms of energy prices. An increase of energycost will effect their production cost and will force the manufacturers thateither to reduce the labor cost or to remain competitive in market byimproving the quality standards. Major giants China and India will benefit with this condition andsmaller economies will suffer badly. Are our policy makers in Islamabad thinking for the gravity ofproblem which is now just standing on our door step? On famous oil embargo days a lot of research in Europe was carriedout to find the alternate source of energy. The findings are available even incollege books. However with the drop of oil prices such alternatives wereuneconomical and therefore shelved.
22 IPRI Factfile This is the time that Pakistan now asses very carefully that in case ofoil prices rising to 75 $ what actions it should take to conserve energy and tofind the alternate source of energy. A volunteer option for all energy users is to conserve energy. To makethe plants more efficient and to see that each drop of petrol is saved .If wemake serious study on this subject then we may achieve up to 20% saving inenergy ,hence saving in our production cost and making our products moreattractive in international market. Of course the energy conservation programs cost money. Howeverthe investment will be rewarding and will be beneficial in long terms. Pakistan’s thermal units are day by day become aging, reducing theiroutput power. With the rise of demand very soon we will see an acute shortageof energy and hence load shedding and shutting of the industrial units. Thiswill seriously affect our competitiveness in the international market. A liberal and progressive policy with less bureaucratic approachtowards energy producing units will help and bring attractive investment inPower sector. This is the responsibility of government to look for the alternateoptions for finding the energy resources. This investment can only be made bythe federal government. This is the time of survival. Only the countries which are prepared forthe worst will have a prosperous future. 2007 http://www.energy.com.pk/energycrisis.htm P AKISTAN S E NERGY C RISIS TO W ORSEN IN N EXT T WO Y EARSThe Pakistani government is anticipating the energy crisis to worsen in thecoming two years due to a 50% increase in the demand and a rather slowimprovement in the supply, the leading Pakistani newspaper DAWN reportedMonday. The power shortage, estimated to be 1000 to 2000 MW during thecurrent year, is likely to hit 3000 MW next year and to increase to about 5300MW by 2010, said the report. The overall energy requirement of Pakistan is expected to be about 80million tons of oil equivalents (MTOE) in 2010, up by about 50% from the 54MTOE of the current year, it said. A government official told DAWN that the energy shortage wassevere and widespread in almost all areas, and natural gas, power, and oilshortages were all posing risks to the economic growth in medium to longterm period.
Energy Crisis in Pakistan 23 Another official, quoted by the report, said that the development ofwater resources would resolve the problem in the long run but in the shortterm, there was a limit to constructing costly thermal power projects giventheir high economic costs. A major shortfall is expected in natural gas supplies, as an officialenergy demand forecast indicates that the demand for natural gas, whichmakes up about 50% of Pakistans energy consumption, would increase by44% to 39 MTOE from 27 MTOE currently, DAWN reported. The government had planned five major initiatives, including three gasimport pipelines, the Gwadar port as energy hub and the LNG import to meetthese energy requirements. But four of these measures, namely the three import pipeline projects,are uncertain at present, while concentration on energy facilities in Gwadarwould chiefly depend on security situation, besides oil and gas importpipelines, said the report. Xinhua English Newswire, January 9, 2007 http://tdworld.com/news/pakistan-energy-crisis W IND P OWER : A S OLUTION TO E NERGY C RISISTO encourage private investment inpower sector, the governmentformulated power generation policy(2002). However, progress incommissioning of new power plants hasbeen slow. In the four years since therevised policy was implemented, onlyone 225 MW gas-fired power plant hasachieved financial close. The extended time lag is not entirely unusual as power projects basedon natural gas and furnace-oil involve prolonged negotiations to securecontracts guaranteeing uninterrupted supply of fuel over the life of the project.Up till now, these contracts were entered into with state-owned energycompanies such as PSO and OGDC. As these corporations are to beprivatised, the government-guaranteed fuel-supply contracts might not beavailable for new projects. This will make project financing more difficult since a privateenterprise is more likely to default on its fuel-supply obligation over the 25-year life of a power project than a state-owned corporation. This couldpotentially result in further delays in implementing thermal power projects.
24 IPRI Factfile As Pakistan’s energy needs are immediate , thermal and large hydro-electric plants may not be the solution because such projects may take between4-12 years to become operational. In order to meet the energy requirements,the best option is exploiting wind energy because wind power projects canstart generating electricity within two years. This is why wind energy is the fastest-growing source of power in theworld and its globally-installed capacity has risen from 20,000MW in 2001 to70,000MW in 2006. USA alone is installing 4,500MW per annum and Chinaplans to install 20,000MW by the year 2020. India offers a good example of a country that has embraced windenergy and has added substantial electricity generation capacity within a shortperiod of time! It’s cumulative wind power generation capacity is 6,018MW, ofwhich 4,500MW was installed in last five years! If Pakistan can realise half thegrowth that India has achieved, it can add 2,250MW to its electricity supply inthe next five years, much more than possible by pursuing thermal powerprojects. In fact, wind energy can go a long way in meeting our acute energyshortage. It has also the following additional benefits. First, thermal electricity production ignores certain “negativeexternalities”. Externalities are implied costs which are not reflected in theprice of a service. For example, a power plant running on natural gas willdivert its limited supply from domestic consumption as well as vital industrialuse. The total supply of natural gas is fixed and so its usage for powergeneration could result in a shortfall in other sectors of the economy. Anexample being the recent shut-down of 11 cement and two fertilizer plants dueto gas-supply shortage. The economic loss resulting from deficiency of naturalgas due to excessive reliance on gas-fired power generation is a negativeexternality. Similarly, in event of war or terrorism, supply routes of oil-tankers/gas-pipelines will require extensive military protection. This extra cost ofsecurity is also a negative externality of thermal power plants. The exclusion ofnegative externalities understates the true cost of thermal power generationand makes it appear cheaper than it is. Compared to thermal powergeneration, wind power provides a secure and independent source ofexternality-free energy. Second, Pakistan’s current account deficit for FY2006 was recorded at$5.7 billion. The deficit is likely to worsen next year when it is expected toexceed $8 billion. The large increase in the current account deficit is mainlydue to a 66.6 per cent surge in oil-imports, a large portion of it is due toincreased demand from oil-fired power plants. Any strategy to cut current account deficit has to deal with cutting oilimports and this can be achieved by reducing reliance on power-generationfrom furnace oil. Here again, wind energy offers an effective alternative to oil-fired power plants which will help reduce the current account deficit.
Energy Crisis in Pakistan 25 Third,, thermal power tariff is vulnerable to spikes in oil prices similarto the one in early 2006 when the crude-oil prices jumped to $78. As the tariffregime compensates the IPPs for the cost of fuel, any sustained increase in oilprices will feed into the tariff calculation and result in higher cost of electricity.Exploiting wind energy makes economic sense since wind is free and it willmake cost of electricity generation less vulnerable to temporary or permanentincreases in oil prices. Lastly, wind power plants will be able to claim carbon-credits(certified emission reductions or CERs) for producing clean energy. CERs arealready trading on European commodities exchanges and a global tradingmechanism is being developed. Recently, an investment bank (Morgan Stanley)invested more than $3 billion in CERs. Therefore, CER prices are expected to rise as they continue to attractinterest. Under the renewable energy policy, the CERs will be shared betweenthe IPP and the government. This will have the effect of reducing the net-costof wind power since revenues generated from sale of government-ownedCERs will off-set a portion of the tariff paid to the IPP. Exploiting wind power offers the best route for attaining sufficiencyin electricity production and reducing reliance on gas and imported furnace oil.Though wind power requires greater investment per mega-watt produced,however, unlike thermal power generation wind power avoids negativeexternalities such as additional cost of protecting fuel supply routes. Wind energy will help reduce the country’s oil-import bill and the costof power generation less vulnerable to fluctuations in oil prices. In addition toall these benefits, windfall from sale of carbon credits will make wind poweran economically attractive proposition for meeting our electricity demand at anaccelerated pace. Pakistan has a huge potential to develop wind power. The “windcorridor” in the coastal area of Sindh alone has the capacity to generate50,000MW and AEDB has put in place a `renewable energy policy that is oneof the most comprehensive and investor-friendly in the world. However,progress towards first wind power plant has been handicapped by a severeshortage in supply of wind turbines. The experience of other countries is thatonce the first project is executed, subsequent additions to capacity take placeat an accelerated pace. This should be the case with Pakistan as well. It is important that the government continues to provide incentives toprivate investors in the form of an attractive tariff. This support is essential forthe development phase of wind power sector and to realise its potential.Exploiting wind resources is not only in our economic interest, but serves oursecurity interest as well! Malik Ahmad Jalal, Dawn, January 29, 2007 http://www.dawn.com/2007/01/29/ebr13.htm
26 IPRI Factfile E NERGY C RISIS M AY G O FROM B AD TO W ORSEThe country may witness an aggravated energy crisis in the years to come asthe proposed thermal power house at Chichuki Maliyan with a capacity togenerate 500 megawatt electricity is in the doldrums, as the project has beenwithdrawn from Wapda in a strange development, The News has learnt. Right now power consumers are facing a massive power shortfall ofabout 2,000 megawatt and this crisis will persist in the years to come as theChichuki Maliyan power project will get delayed. Earlier the government had decided that the Chichuki Maliyan powerproject would be initiated in the public sector and Wapda had been assignedthe task. Wapda conducted the international competitive bidding (ICB) andreceived the lowest bid from the Japan-based Marubeni Company. Under theagreement, the Marubeni Company was also to invest in the project and to thiseffect it had arranged a loan from the Japan Bank for InternationalCooperation (JBIC). Wapda was to complete the thermal plant at Chichuki Maliyan with340 megawatt production in August 2008 and another 160 megawatt by Dec2008, and it was strong perception that this project would give a massive reliefto the common man and wriggle the country out of load-shedding and powercrisis. Confirming the shocking development, a senior Wapda official fromLahore said that the top decision makers in the country have taken a U-turnand decided that the private sector would complete this project of paramountimportance. “But under the new decision, the project would be inordinatelydelayed,” he feared. The price of the project has also increased by Rs 100million because of the delay, and this a very shocking decision. “The earliercost of the project was Rs 2.6 billion.” In the wake of the decision, Wapda had to stop all the spadework toinitiate the project. “The government has taken the new decision as the QatarInvestment Authority (QIA) will initiate this project,” the official said. The Board of Investment (BoI) has managed to bring the QatarInvestment Authority in the country and persuaded it to invest in this project.However, sources in the BoI confided to The News that Saifur Rehman, aclose aide to former Prime Minister Nawaz Sharif, was a partner of the QIAand had 25 per cent equity in it. The official said that in the last two months the BoI has held abouttwo meetings with QIA officials and Pakistan has inked an MoU with Qatar tothis effect. “Under the MoU, the Qatar Investment Authority has to come upwith financial close within three months,” the official said.
Energy Crisis in Pakistan 27 Asked about the status of the project after the government decided towithdraw it from Wapda, he said that Wapda was about to start the projectand the Japanese company had been short-listed and its terms and conditionswere also evaluated. But after the new decision, all the activities have beenstopped. Replying to a question, he said that in case the QIA failed to come upwith financial close within the stipulated time, the project would be furtherdelayed, escalating the project cost further, and worsening the power crisis. Khalid Mustafa, The News, June 13, 2007 http://www.thenews.com.pk/top_story_detail.asp?Id=8465 A SIAN D EVELOPMENT B ANK C ONSIDERING 250 M ILLION $ L OAN FOR S MALL H YDRO P ROJECTS IN P AKISTANIndeed a very positive development if the terms of this loan finalizes soon.Pakistan is heading for acute shortage of energy and therefore all measureswhich can enhance the countrys ability to produce clean energy will bewelcomed by all quarters. The important question which should be looked is that how this loanwill be distributed. We suggest that small packaged turbines of 10-50 KW tobe assembled or manufactured in Pakistan and these turbines distributed toLocal residents on easy loans. Since the turbines will be providing electricityfor small group of houses therefore transmission expanses will be cut. This addition of power will not affect the existing shortage ofelectricity. Because beneficiaries will be mostly those people who does nothave an electrical connection. But a lager saving will be in the form of forestwood which is now used for heating and cooking. September 9, 2007 http://www.energy.com.pk/news%20and%20views.htm US A DVISE P AKISTAN T O P URCHASE E LECTRICITY F ROM C ENTRAL A SIAThe recent story in Daily Dawn reconfirms US advice to Pakistan to purchaseelectricity from central Asia. We are of view that US should be persuaded to provide technical andfinancial assistance to manufacture Wind Turbine technology in Pakistan aswell as boilers and turbines manufacturing facility which can burn low qualitycoal available from Sind Province. Self reliance in Energy requirements is a key element for sustainableeconomic growth of Pakistan.
28 IPRI Factfile Pakistan should have a fair treatment to explore all possible energyresources including nuclear energy for its growing energy demand. September 9, 2007 http://www.energy.com.pk/news%20and%20views.htm E NERGY S TRATEGYUpdated 9th November 2007Few weeks before when oil started rising we predicted that no need for panicand the oil will maintain a position between 70-76$/barrel. We were proved tobe wrong. But not us. Just last months there was not much anxiety all around theworld. But now, what it looks, the world is again heading towards an energycrisis similar to 1970. So far the surge in markets always pointed to OPEC which wasblamed for throttling the production valves to regulate the market. Short termcrisis were related to speculations of war and political disturbances in shippinglanes transporting the fuel. Now the situation is different. OPEC is helpful more than ever to pump maximum oil it can deliverbut the demand is growing steadily. One reason is the change in life stylewhich came with the increase of net income in Asian countries due toeconomic growth tempting them to spend on luxury transportation andelectronic goods. But, the major source is the rising economic growth of Chinaand India as well as other emerging markets which need more fossil fuels tokeep their industries running. The future outlook, therefore, is the worst than expected. There ispanic all over the world to explore renewable energy resources but due to highdemand of machinery the delivery time is quite long. Pakistan is caught up between a crisis. On one hand it wants to catchthe growth rate at par with the region and on other hand it has already beenfacing the acute shortage of energy. There are many reasons for slow growth in energy sector. But onesimple reason is that many departments are responsible for energymanagement in Government. There is Water and Power Ministry, Oil and GasMinistry, OGRA, AEDB, NEPRA, PPIB, WAPDA, NTDC, SHYDO andmany more. To streamline the system, this is suggested that one unified energyMinistry has to be made responsible for all energy issues and different desksare made in one roof for developers and end users. For developers, paper work has to be made simple. The investorsshould be offered up front tariff and can only appeal if their real cost isenhanced by some reason. Presently, before the construction starts, investors
Energy Crisis in Pakistan 29have to go for lengthy processes. The government should invest substantialamount for wind and solar energy and once the projects are matured then canprivatise.Updated on 3rd November 2007ECC on Wednesday approved 5.89 cents as an upfront tariff for Hydelprojects. This is a revolutionary step taken by Pakistan Government topromote and encourage the investors in Hydel sector. In fact, this is the mostlogical and wise step adopted by the government for energy sector. This willencourage investors to come forward in Hydel sector. Pakistan is blessed with high mountains covered by glaciers and therivers flowing across the country. PPIB, so far, processed 19 Hydel powerprojects to produce 4900 MW energy. Now we request honorable Minister to further persuade allgovernment agencies to facilitate that these projects can be commissionedearlier than scheduled time. For this purpose, all red tapes are to be removedas far as possible. We learnt from reliable sources that Asrit-Kedam 209 MWpower project is moving with record speed and the sponsors, Yunus Brothers,are highly committed to complete the project by 2011 instead of scheduledtime 2014. RSWI, the consultants, are confident that the project is verypromising and can be completed ahead of schedule. October was a month to be remembered when world oil prices shotup at record level and at the end of the month it was staying at 94$ level. Itwas almost certain that OGRA will allow the price hike for petrol and dieselfrom 1st November. However a cabinet meeting in the chairmanship of PrimeMinister Shaukat Aziz overruled this decision and kept the prices same. However, furnace prices were raised all time high by Rs 4210 /ton fordomestic market. The price now stands on 34000 Rs./ton. This price hike can be justified in the light of rising crude oil pricesbut for domestic market the fuel tariffs now are not so realistic. The diesel and furnace prices are now standing at almost same level. Alittle intelligent power house manager can start using diesel instead of furnacewhich is cleaner and easier to burn or even can mix the diesel with furnacelowering its viscosity and make it more comfortable to burn. Those diesel generators, which were running as standby generatorsand were less efficient, will be more attractive for end users and the furnacepower plants will be shut down. For those IPPs which run their plants on furnace, this increase will beshifted to utility company which is purchasing the power and hence toWAPDA, which is already deep in trouble.
30 IPRI Factfile Meantime power shortage in whole country remained forcing theutility companies for load shedding. Mr. Liaqut Jatoi, Minister for water andpower, called a press conference and expressed his views. He acknowledged the shortage of 1500 MW which will continue innext summer also. He told reporters that 13 memorandum of understandingshave been signed to overcome the shortfall of 1500 MW power with foreigninvestors and an investment of 200 billion $ will be made in power sector. Healso told that government is allocated 140 billion Rupees for the developmentof power sector including Bhasha Dam. He also told that 100 MW electricitywill be imported from Iran. Presently we have three different critical problems in energy sectorswhich all need immediate attention:- 1. Current shortfall in production and availability of no standby power to meet any emergency. 2. Long term increase of shortfall with increased energy demands. 3. Rising fuel prices making the production cost high. The projects in pipeline will start commissioning from 2014.All planning of Hydro and alternate energy is for next five years. So the biggestquestion now is what to do for the current situation. This is itself promising news that in spite of political uncertaintyhonorable Minister finds an opportunity to address the energy sector. In ouropinion, situation now is so critical that it needs a diversified approach. Wehave to look for all options of existing as well as alternate energy resources. As earlier been written our existing machines are less efficient. Theend users should be persuaded to replace with more efficient machines. Wehave to discourage use of larger cars and should develop mass transit systemsin mega cities to avoid use of one car/person. November 9, 2007 http://www.energy.com.pk/strategy.htm P AKISTAN U RGED TO I MPORT 4,000MW FROM CAR SThe World Bank has advised Pakistan to start working on import of 4,000MWof cheap electricity from Central Asian states, besides working on domesticsources to overcome electricity shortage owing to a 43 per cent expectedincrease in demand to 20,000MW by 2010. The World Bank estimates that Pakistan’s peak demand now exceeds14,000MW and the present installed capacity of 19,500MW has becomeinadequate on account of the wide variations in the water availability, whichgreatly reduces the firm capacity available. “Electricity demand at the generation level is forecast to grow at 7-8per cent per year to about 20,000MW by fiscal year 2010 and 44,700MW by2020,” a government official told Dawn quoting fresh World Bank estimates.
Energy Crisis in Pakistan 31 The country that had a comfortable supply position during the lastseveral years has already started experiencing shortages during peak periodsand “it is anticipated that if no new capacity is added, firm power shortagewould amount to 5,500MW by fiscal year 2010.” The World Bank understanding that besides improving supplyefficiency, demand management, addition of new hydro and thermal powerstations, Pakistan should expedite importing 1,000MW from Tajikistan andKyrgyz Republic in the first phase and then increase such imports to 4,000MWin the second phase. These imports, the World Bank believes, have two major advantages.First, the cost of supply from Sangtuda, Rogun, Talimardjan and Kambaratapower stations in the CARs would range between 2.26 cents to 3.75 cents perunit compared with existing average generation cost in Pakistan at 5.6 centsper unit. Pakistan is now entering into contracts with independent powerproducers (IPPs) for thermal power generation at a tariff as high as 14 centsper unit. Second, the attractive feature of the imports form CARs is thatPakistan’s peak demand occurs in summer, when the Central Asian powersystems have large surpluses from their hydroelectric generation stations. The WB says that international financial institutions like AsianDevelopment Bank, Islamic Development Bank and USAID and privatesector companies like AES Corporation of USA and RAO UES of Russia havealready indicated to be part of the project once feasibility studies currentlyunderway are completed. According to the government of Pakistan estimates, the country ismost likely to face a major energy crisis in natural gas, power and oil in thenext three to four years that could choke the economic growth for many yearsto come. Pakistan’s total energy requirement would increase by about 48 percent to 80 million tons of oil equivalent (MTOE) in 2010 from about 54MTOE currently, but major initiatives of meeting this gap are far from turninginto reality. Major shortfall is expected in the natural gas supplies, the sourcessaid. According to official energy demand forecast the demand for naturalgas, having about 50 per cent share in the country’s energy consumption,would increase by 44 per cent to 39 MTOE from 27 MTOE currently. Partly contributed by gas shortfalls, the power shortage is expected tobe little over 5,250MW by 2010, a little lower than World Bank’s estimates of5,500MW. Simultaneously, oil demand would also increase by over 23 per centto about 21 million tons in 2010 from the current demand of 16.8 million tons. This would leave a total deficit of about nine million tons of dieseland furnace oil imports, sources said.
32 IPRI Factfile Since the gas shortfalls were expected to be much higher, the countrywould need to enhance its dependence on imported oil, thus increasingpressure on foreign exchange situation, more so as international marketcontinues to go up. Planning Commission sources said the government had planned toadd an overall power generation capacity of about 7,880MW by 2010. Of this,about 4,860MW is to be based on natural gas, accounting for 61 per cent ofcapacity expansion. However, the gas-based power expansion of about 4,860MW wouldremain in doubt since these estimates were based on gas import options forcompletion in 2010, 2015 and 2020. None of these projects could achievethese deadlines. According to World Bank estimates, the indigenous gas supply wouldfall from 32.6 MTOE in 2010 to 20.7 MTOE in 2025 while the gas supply-demand gap would rapidly increase as demand is expected to growcontinuously, quadrupling in 2025. Khaleeq Kiani, Dawn, November 17, 2007 http://www.dawn.com/2007/11/17/ebr4.htm F UEL S HORTAGE M AY W ORSEN P OWER S ITUATIONThe electricity shortage that currently fluctuates between 1,000 and 3,000megawatts is likely to worsen in a few days because of problems oftransporting furnace oil and diesel through the railway system and othermeans. Petroleum Ministry sources told Dawn that Pakistan State Oil (PSO)has sought federal government’s permission to invoke force majeure clauses ofits fuel supply agreements (FSAs) with independent power producers (IPPs)because of its inability to meet fuel requirements because damage caused torailway tracks and fuel-carrying bogies was much more than originally believed. Force majeure clauses in FSAs and power purchase agreements allowsuppliers to announce in advance that they would not meet contractualobligations because of natural calamities or conditions beyond their control. “Availability is not a problem, all products are now in abundance butstorage and movement (of oil products) is a serious dilemma,” said a seniorofficial. PSO sources also confirmed that force majeure notices had beencommunicated to all independent power producers as a protective measurebecause a default in supply contract attracts large financial penalties that couldalso be a problem for the government which guaranteed these agreements.These notices would enable IPPs to serve similar notices to power companies,but hopefully the situation would improve a crisis situation averted. The
Energy Crisis in Pakistan 33sources said that the PSO supplied more than 40,000 tons of fuel to powercompanies every fortnight through train but problems were also being faced inthe pipeline system. The problem was compounded by non-availability oftanker lorries, the PSO sources said, adding the force majeure notices wouldavoid imposition of financial penalties. The sources said that the PSO had written to the government that therailway authorities had informed them that they would not be in a position torepair the damaged infrastructure in less than 20 days, hence it would not bepossible for the PSO to meet its contractual obligations. The sources, however, said the secretary petroleum was working incoordination with the ministry of defence to make alternate arrangements,including engaging the National Logistics Cell and even the private sectorbecause of the limited capacity of NLC. The sources said prolonged disruption in the movement of fuel oilcould also lead to shortage of other products because of 20-25 per centreduction in capacity utilisation of refineries. Since the uplift of fuel oil and diesel stocks and their transportationemerged as the real problem, the storage capacity of refineries was filled to thebrim. As a result, they had reduced their refining capacity that could eventuallylead to shortages of products in the market. Munawar A. Baseer, managing director of Pakistan Electric PowerCompany (Pepco) which looks after corporate generation and distributioncompanies formerly run by the Wapda, told Dawn that fuel shortage was aconcern but not a crisis. He said that public sector generation companies had enough fuel forabout 20 days. Khaleeq Kiani, Dawn, January 01, 2008 http://www.dawn.com/2008/01/01/top11.htm E NERGY C RISIS : S ERIOUS AND W ORSENINGSerious energy shortage, massive load-shedding and lowest ever strategic oilreserves are emerging as major risk to the economy. The situation, it appears, will not be any better in the days ahead giventhe political uncertainty and policy planning failure over the last few years. Combined with multi-layered risks including current account deficit,the critical shortage of energy — an ingredient that fuels the economic growth— has the potential to choke economic growth. The shortfall in electricity generation did not emerge suddenly but wasdeveloping over the years as the development of cheap and indigenous energysources was discouraged for lack of any vision. Sponsors of hydropowerproducers who were offered a tariff of 4.7 cents per unit under the 1997 policy
34 IPRI Factfilewere practically blocked from developing their plants at this tariff rate andoffered a much lower rate of 3.3 cents per unit in 1999. Same happened with development of coal resources. A Chinese firmthat had agreed to set up a 600MW project at Thar for 5.79 cents per unit wasforced to quit when the authorities refused to offer a tariff of more than 5.39cents per unit. As a result, no power project could be set up in the last eightyears. The regime never tired of criticising political governments for signingcostly energy contracts (at the average rate of 5.7 cents per unit). But it allowedsigning of contracts for thermal power project at a much higher tariff of up to15 cents per unit, although none of these projects would be available to theeconomy in the next 6-12 months. Likewise, the recent revelation of the country’s strategic oil reserves ata precarious level clearly exposed the government’s lack of vigilance andfailure of energy companies to meet their contractual obligations. The strategicoil reserves for defence had also been consumed to meet shortage and thus thecountry’s security has been exposed to great risks. Under the fuel supply and power purchase agreements, the oilmarketing firms and power generation companies - whether in the public or inthe private sector – are required to maintain a minimum of 21 days of theirfuel requirements. Non-compliance of such contractual obligations is subjectto heavy penalties under the law. The government, too, is required under thestandard operating procedures defined in the official Blue Book to ensure thatit has oil stocks for at least 21 days of consumption to meet any eventuality,either a natural calamity or war or any such event. The imperative of maintaining stocks for 21 days was highlighted bythe blocking of communication routes during the violent protests followingthe tragic killing of former Prime Minister Benazir Bhutto. The entire episodeled to disruption of fuel supply chain that included railway, pipeline and roadtransport. In varying degrees, it came to light that neither the independentpower producers, nor the oil marketing companies including those in thepublic sector had maintained sufficient stocks as required under the law. The result would be more load shedding in the days ahead. Theexport growth that is already stagnating would be hit if enough energy – gasand electricity – is not ensured to the industrial sector. The power shortage that had officially been estimated to remain in therange of 1000-2000MW during the current year has already touched 3600 MW.The economy is being run at almost 30 per cent energy shortage, which couldworsen if oil supplies continue to remain short or the current disruption of oiltransportation prolongs. Wapda estimates that the country could face a power shortage ofabout 5,500MW by 2010. Overall, Pakistan’s total energy need is expected tobe around 80 million tons of oil equivalents (MTOE) in 2010, up by about 50per cent from the current year’s 54 MTOE. And since at least four out of five
Energy Crisis in Pakistan 35major initiatives, originally planned for meeting this demand, are uncertain atpresent or significantly behind schedule, the shortage estimate could beanybody’s guess. Even the closure of business after sunset and reduction in streetlightening did not get the desired results, leading to a massive load shedding ofalmost daily four hours across the country. Most of the industrial andcommercial sector has also been deprived of the natural gas since the adventof winter. Energy shortage is severe and widespread in almost all areas, whiledifferent sectors contribute to each other’s problems. “Natural gas, power, andoil shortages were all posing risks to the economic growth in medium to long-term period,” a government official said. A major shortfall is expected in natural gas supplies. According to anofficial energy demand forecast, the demand for natural gas, having about 50per cent share in the country’s energy consumption, would increase by 44 percent to 39MTOE from 27MTOE currently. The government had planned toadd an overall power generation capacity of about 7,880MW by 2010. Of this,about 4,860MW was to be based on natural gas, accounting for 61 per cent ofthe capacity expansion. However, the gas-based power expansion of about4,860MW would remain in doubt since these estimates are based on three gasimport options for completion in 2010, 2015 and 2020. A major part of about 4,860 gas-based plants may not be available andthe difference may be met through other costly options. Even if the physicalwork is started today, it will take at least seven years to complete a pipelineproject and it was not clear if construction of Iran to Pakistan pipeline projectcould be taken in hand in the near future. Partly contributed by gas shortfalls, the power shortage is expected tobe little over 5,500MW by 2010, said a Planning Commission official, addingthat the oil demand would also increase by over 23 per cent to about 21million tons in 2010 from the current 16.8 million tons. This would leave a total deficit of about nine million tons of dieseland furnace oil imports. Since gas shortfalls are expected to be much higher,the country would need to enhance its dependence on imported oil, increasingpressure on foreign exchange balances. Khaleeq Kiani, Dawn, January 07, 2008 http://www.dawn.com/2008/01/07/ebr2.htm E NERGY C RISIS IN P AKISTAN ARE G ROWING R APIDLYPresident recently claimed that construction would soon begin in Karachi onone of the tallest buildings in the world. The project, according to thepresident, would show the world that Pakistan is a “progressive and dynamic
36 IPRI Factfilecountry and we are second to none”. But unless Pakistan can light thatbuilding, President claims will look silly. Robust economic growth-rates over the past several yearshave encouraged Pakistan to ignore fundamental weaknesses in the economy. Yes, Pakistan’s economy is growing; that’s the good news. The badnews is that with this growth comes higher energy consumption and greaterpressure on the country’s energy resources. Unless Pakistanis — thegovernment, but individual citizens as well — act now, the country’s futurewill indeed be dark, in more ways than one. At present, demand for energy exceeds supply. Power outagesand planned power cuts (euphemistically termed “load-shedding”) are, formany, an everyday occurrence. In addition to their economic costs, energyshortages foster political instability. Last summer angry public protests inKarachi and riots in Liaquatabad demonstrated how close many Pakistanis areto reaching the limits of their patience. A widespread power outage affectingmuch of the country last September triggered panicky rumours of a coup. Earlier this year, the opposition and the ruling parties staged nearlysimultaneous protest walkouts from the Senate following a disagreement overhigh domestic oil prices. This unrest may be only a foretaste of things to come.Absent drastic action, Pakistan’s energy situation is expected to get far worsein the years ahead. According to the government’s own figures, by 2015, eightshort years from now, energy demand in Pakistan will be nearly 22 percentgreater than projected supply. By 2030, this energy shortfall will be 64 percent. What do these figures mean for Pakistanis? Higherprices, fewer jobs in a slowed economy, reduced opportunities, less comfort,heightened political turmoil. A Pakistan with serious energy shortages will not be a pleasantPakistan. Today, oil and natural gas supply nearly 80 percent of Pakistan’senergy needs. However, the consumption of those energy sources vastlyexceeds the indigenous supply. For instance, Pakistan currently produces lessthan 20 percent of the oil it consumes. This fosters a dependency on importedoil that places considerable strain on the country’s finances. While the presentsituation with respect to natural gas production is not nearly as critical,Pakistan’s projected natural gas needs are expected almost to double (from2004 levels) by 2010. On the other hand, hydropower and coal are perhapsunder-utilised today, as Pakistan has ample potential supplies of both, at a timewhen these resources provide for relatively little of Pakistan’senergy needs. Pakistan’s proven coal reserves are the world’s sixth largest,and the government intends to increase the share of coal in the overall energy
Energy Crisis in Pakistan 37mix from 7 to 18 percent by 2018 — a course that may make sense from anenergy standpoint, but which carries troubling environmental implications. Meanwhile, provincial rivalries and widespread publicopposition have significantly slowed the government’s plans to build damscapable of generating electricity. Many Pakistanis argue that largehydroelectric projects should be a last resort, after low-cost energyconservation measures have been fully utilised. Nuclear power at this point accounts for barely one percentof Pakistan’s energy consumption. The government has announced plans todevelop a generating capability of 8,800 megawatts (MW) of nuclear energy by2020, compared to the country’s current output of less than 450 MW. But thisgoal is unlikely to be reached unless Islamabad is able to persuade the UnitedStates and other western countries to help it develop civilian nucleartechnology, an idea certain to meet with resistance in the West. Pakistan’s renewable energy potential — hydro, wind, and solar — issubstantial, although presently this potential remains largely untapped. Escalating petroleum prices in recent years have given Pakistan anadditional incentive to invest in renewable energy technologies. In 2003, thegovernment ambitiously declared that by 2015, 10 percent of the country’stotal energy supply would come from renewable energy sources, andestablished the Alternative Energy Development Board to coordinaterenewable energy promotion. Modest steps in the direction of greater relianceon renewable energy have already been taken. Nonetheless, renewable energy labours under severe handicapsin competing with conventional energy — hidden subsidies that allow forlower conventional energy generation costs, for example, and policies thatpermit conventional energy to disregard the costs of the pollution it createswhen pricing power. Unless renewable energy is given a level playing field, amajor expansion of renewable energy generation is unlikely, and thegovernment’s goal of 10 percent by 2015 will not be met. Rural areas across India, Bangladesh, Sri Lanka, and Nepalhave all implemented successful clean and renewable energy initiatives.Bangladesh, for instance, has experienced considerable success with solarhome systems financed through micro-financing. Pakistan’s neighbours havesomething to teach Pakistan, if only it will listen. Pakistan’s minister for petroleum and natural resources has identifiedenergy as the most important input for the country’s economic development.The uninterrupted supply of energy to fuel the nation’s economy, he hasdeclared, should be the highest priority for the country’s economic managers. Yet the record of past governments does not induceconfidence. Its said by one of Pakistan’s most distinguished economicanalysts, has written of “a colossal failure of public policy” over six decades,which has left the country with “weak institutions, inappropriate pricing
38 IPRI Factfilepolicies and insufficient public-sector investment that [has] contributed towhat appears to be an inexorable march towards another crisis”. Pakistancannot afford a repetition of this sorry history. The good news is that Pakistanis are not being asked to finda cure for cancer, or to discover entirely new methods or technologies in orderto meet their energy needs down the road. There already exists widespreadagreement on at least the broad outlines of an energy strategy for Pakistan.Pakistan’s energy managers know what needs to be done. But solemn promises and soaring rhetoric will not do thejob. Preparing for Pakistan’s energy needs over the next quarter century willrequire long-term vision, a national commitment widely shared among thecountry’s political and business leaders, inspired leadership sustained fromone government to the next, and most of all, political will to make and carryout difficult choices. Pakistan — the country, not just the government of the day — needsto decide that muddling through is not enough. Pakistan,as a country, has to get serious about creating an energy strategy, and then —and this is the hard part — about implementing it. Pakistan will not find itself alone in this task. Islamabad’sfriends around the world believe that it is in their own national interests forPakistan to succeed — which means, among other things, that Pakistansucceed in its quest for energy security. At the end of the day, Pakistanisthemselves must solve the problem of energy insecurity, but the outside world— both the private and the public sectors — can and will help. Energy matters for Pakistan. If Pakistan is to succeed in its ambitiousplans for economic development, if it is to raise the grossly inadequate livingstandards of its people, if it is to achieve the economic growth necessary toensure political stability, if it is to begin to address the many environmentalproblems that up to now have been largely ignored, and which have a hugelyadverse impact on the daily lives of Pakistani citizens, if it is to live in peacewith its neighbours, several of whom are directly impacted by Pakistanidecision-making in the energy sector, if Pakistan is to move towards all thesegoals, Pakistanis must get serious about energy. Emma-Gill, January 24, 2008 http://www.articlealley.com/article_460564_22.html E FFICIENT H OUSEHOLD A PPLIANCES TO M ITIGATE E NERGY C RISIS The federal government has entrusted Engineering Development Board(EDB) the task of adopting strategies in collaboration with relevant private
Energy Crisis in Pakistan 39sector industries to enhance the efficiencies of different energy consuminghousehold products being produced in the country. As per the government’s initiatives to overcome the energy crisis inthe country, the EDB held separate meetings on Saturday with leading localmanufacturers of fans and pumps and finalised a strategy which would helpenhance the efficiency of these domestic products. The increased efficiencywill result not only in reducing consumption of energy and help conserveenergy. The discussions focused on different aspects of the productsincluding general design, quality of input material and the relevantbenchmarks. EDB General Manager Zahid Yaqub, who chaired the meeting,informed the private sector representatives about the initiatives being taken bythe government to overcome the energy crisis. One of the strategies adopted isto enhance the efficiency of different energy consuming household products. The meeting was informed that the electricity consumption during2005-06 was 67,603GWh, out of which 45.4 per cent was consumed by thedomestic sector. It was estimated that every household in Pakistan has aminimum of two to three fans and based on this figure, the total strength offans was over 30 million. The President of Fan Manufacturers Association (FMA) called forreducing the rate of sales tax on various components of fans. Currently, thecountry has four leading manufacturers of fans as compared to nearly 200small units manufacturing fans in different parts of the country. The FMA president alleged that the small units were usingsubstandard components in order to keep the price low and ignoring energyconservation. According to the FMA statistics, the industry was manufacturing fivemillion fans every year, out of which one million fans were exported fetching$30 million. The FMA also called for banning export of copper, the maincomponent used in fan manufacturing. The meeting on pumps was told that the enhancement of efficiency ofmotors used in domestic industrial and agricultural sectors can save 3 to 5 percent of the total electricity consumption. It was felt that quality of copper wireand silicon steel being used and manufacturing of motors and pumps shouldbe increased by reviewing the standards developed by the PSQCA. The federal government has also decided to introduce standards forthe manufacturing of gas geysers in order to enhance their efficiency and saveenergy. The Pakistan Standards and Quality Control Authority (PSQCA) hasdrafted the required standards for the production of gas geysers. The standardswere being sent to all chambers of commerce and industry and manufacturersfor their views before finalisation.
40 IPRI Factfile The decision to this effect was taken at a meeting chaired by EDBGeneral Manager Zahid J. Yaqub and attended by leading manufacturers ofgeysers, representatives of government agencies and senior officials ofSNGPL. The meeting was informed that the energy efficiency of local geyserswas much lower than the world standards. Therefore, research anddevelopment (R&D) was necessary to achieve global standard. The industry emphasised the need of duty-free import of variouscomponents of instant water heaters in order to introduce quality products inthe market. Some manufacturers showed their willingness to produce highquality products, if investment on R&D was made by the government. ENERCON Managing Director Fareed Ullah Khan informed themeeting that the government was ready to accept any practical proposal fromprivate sector for energy conservation. Addressing the meeting, the EDB general manager said that thegovernment was undertaking initiative to minimise the magnitude of theenergy crisis. One of the strategies adopted is to enhance the efficiencies of thedifferent energy consuming household products. He added that the crisisshould be converted into an opportunity to introduce high quality product inthe market. Another area, which needs to be looked into, is the phasing out ofinefficient incandescent bulbs in favour of more energy-efficient compactfluorescent lamps (CFLs) that reduce greenhouse gas emissions and cuthousehold energy costs. While CFLs are more expensive to buy than incandescent bulbs, theypay for themselves in lower power bills within a year. The switch to CFLs willresult in household lighting costs falling by as much as 80 per cent, and thecountry’s annual greenhouse gas (GHG) emissions falling 2 million metrictons starting in 2010. Additionally, national electricity demand is expected to fall by 2,000megawatts, or the equivalent of electricity generated by six power plants. Amin Ahmed, Dawn, February 10, 2008 http://www.dawn.com/2008/02/10/ebr11.htm C OPING WITH THE E NERGY C RISISOne of the major problems facing the new government, the energy crisis,is intense, costly and multi-dimensional. The infuriating electricity and gasdisruptions and soaring fuel prices in turn pushing the cost of living havemade life difficult for people. The even before it took office the newgovernment was greeted with two jumps in fuel prices, accounting for a15% rise in two weeks. Meanwhile, crude oil prices have been registering
Energy Crisis in Pakistan 41all-time-highs, shooting 40% in the past year. The undeniable reality isthat that this global spike will somehow have to be accommodated inenergy prices in Pakistan. There is no quick solution to electricity shortage and the trend ofsurging prices is irreversible. There is very little the new government cando on this in the immediate term. At best, the problem can be preventedfrom aggravating until a sustainable solution is struck. Tough decisionswill have to be made, and executed with commitment. The starting point of any remedial efforts should be anacknowledgement of the fact that the crisis is a self-inflicted one. Itcannot be denied that something has been wrong down the line thatcaused this crisis. The country has nearly gone energy bankrupt while atotal disaster appears to be round the corner unless pragmatism is shown.It is also important that lessons be learnt from the past mistakes on partof relevant circles. The crisis is still addressable as long as there is duevision and devotion. The golden age for energy in Pakistan has been 1960s and most ofthe 1970s, that is when Tarbela and Mangla dams were put into operationand other dams, including Kalabagh, were actively pursued. In subsequentyears, action in the field of energy has been utterly recklessness. Theprevalent crisis is a consequence of imprudent energy policies over the lastthree decades. One of the major limitations that have hindered energy prosperityin the country is short-sightedness. There has not been a meaningful andcoherent energy policy in place over this period. The approach has been"project-oriented," rather than "goal-oriented." Almost every regime hasdealt with energy on an ad hoc basis. Long-term and sustainable planningof energy have been an alien concept. The reason is fairly simple; energyprojects usually require huge investments and commitment, making themundesirable to any regime. The attitude of delaying new projects, as far aspossible, has been the common practice and is in fact the recipe of thepresent crises. In doing so, when things start getting out of control,haphazard and quick-fix measures are sought. A typical example is theIndependent Power Producers (IPPs) saga of the 1990s. In an attempt toavert an approaching energy crisis, as a result of negligible capacityaddition during the 1980s and the early 1990s, the regime in 1993-94decided to go for thermal generation through the IPPs. Undoubtedly, theIPPs provided a very healthy contribution at the supply end, enhancingpower generation capacity by more than 5000MW. Nevertheless, thispower addition cost the country a fortune – apart from the controversialtariff structure, the move was against the spirit of energy sustainability andsecurity for the country. The fact that the IPPs were set up at the terms ofthe investors suggest that it was a move made in panic.
42 IPRI Factfile The last few years provide a perfect example of failure to make atimely response to the growing energy needs. A threefold increase inenergy demand over the last two decades has been responded to with anill-proportioned increment at the supply end. Consequently, with theadvent of 2008 the gap between demand and supply grew to 4,500MWindicating a 40% deficit of electricity. The prevalent energy crisis has notappeared overnight -- the omens were evident for a number of years butthe authorities failed to react in time. Senior WAPDA officials claim thatin 2002 the government was officially warned about the approachingelectricity crisis and was asked to take immediate measures to enhancegeneration capacity. The timely warning failed to receive any appreciation.The attitude of the relevant authorities has thus indirectly contributed tothe growth of the dire crisis. Another example worth quoting here is thatof the 969MW Neelam-Jehlum hydroelectric project. It was to beconstructed in 2003 at a cost of $1.5 billion. It got abandoned until thepresent power crises intensified towards the end of 2007. The revisedestimate is around $2.25 billion. The delay is costing the country a fortune– an extra $750 million in terms of project cost, apart from enormousmonetary dents inflicted by the five-year delay. It is also noteworthy thatWAPDA has traditionally pursued the major projects of national interestbut failed to get the due positive response from the policy- and decision-makers. Interestingly, WAPDA plays the role of a scapegoat, because thecommon man blames WAPDA for his sufferings. It is also important to plant relevant and qualified people at thekey policy and decision making positions. Quite often, these positions areoffered to utterly irrelevant, ill-qualified and incompetent people. Thetrack record suggests that energy offices are amongst the most covetedones in any regime, simply because they are considered to be the mostlucrative ones. There are examples when undergraduate and utterlyirrelevant people have been appointed to run energy offices. There arealso cases when the crucial positions have been used as incentives duringpolitical bargaining. The unhealthy attitude towards sensitive energypositions is enough to explain how the field of energy has beentraditionally toyed with. Another aspect of the bankrupt policies is politicisation ofprojects of national interest. The paramount example is that of KalabaghDam. It has been politicised to such an extent that its orchestration nowappears to be next to impossible. Evidences suggest that the issue hasbeen used to serve the vested interest of regimes and certain political andethnical forces. With the emerging post-lection sense of nationalreconciliation on the political arena, it is expected that such projectswould be looked into with cool heads. It is time to move on. Thetechnical issues, if there be any, have to be addressed on the drawing
Energy Crisis in Pakistan 43board, rather in processions. It has to be realised that the delay in projecthas not only made the country suffer but also people that come from allprovinces. In order to tackle the existing crisis and ensure a prosperousenergy future, the backbone of the future energy policies would have to bereliance on domestic resources (hydropower, coal and solar and windenergy) and energy conservation. Decisions on energy projects shouldrevolve around national interest rather than naïve political and personalgains. Energy offices should be run by qualified, committed and deservingpeople equipped with due mandate. Relevant ministries and departmentsshould also be overhauled. The News, April 17, 2008 http://www.thenews.com.pk/daily_detail.asp?id=107244 I RANIAN , P AKISTANI PRESIDENTS RESOLVE PIPLINE ISSUESIranian President Mahmoud Ahmadinejad and his Pakistani counterpartPervez Musharraf on Monday cleared all hurdles over a gas pipeline to Indiaand agreed to sign a deal soon, state media said. Ahmadinejad discussed the7.5-billion-dollar project to transport Iranian gas across the subcontinent whilemaking a short stopover in Islamabad on the first leg of a whirlwind tour ofSouth Asia. “The two leaders expressed satisfaction over the resolution of allissues that had delayed a final agreement,” Foreign Minister Shah MahmoodQureshi was quoted as saying by the official Associated Press of Pakistan.Qureshi added that the Iranian and Pakistani presidents had tasked theirforeign ministers to agree on a “mutually convenient date for signing theagreement” after their hour-long talks in Islamabad. Iran also agreed toprovide 1100 MW of electricity to Pakistan to help it overcome a recent powershortage, particularly in areas adjoining Iran, the news agency said. Musharrafand Ahmadinejad also discussed the situation in neighbouring Afghanistan,which is battling a Taliban insurgency, and “stressed that peace and stabilitywas vital for the region”, APP reported. Ahmadinejad later held talks with newprime minister Yousaf Raza Gilani, his first meeting with an official from anew government that took power last month after defeating Musharrafs alliesin elections. The Iranian president arrived on Monday morning at ChaklalaAirbase in Rawalpindi, a garrison city adjoining Islamabad, and was greeted byan air force honour guard and received bouquets from a young boy and girl.He is on his way to Sri Lanka later Monday and will also visit India in comingdays. Dawn, April 28, 2008 http://www.dawn.com/2008/04/28/welcome.htm
44 IPRI Factfile T IES WITH I RANThe decision reached in Islamabad on Monday between the visiting IranianPresident Mahmoud Ahmadinejad and President Musharraf to sign the accordon Iran-Pakistan-India (IPI) gas pipeline augurs well for all concerned. Thelongstanding project delayed by reservations expressed by India and disputesover tariff and transit fees can now finally take off the ground. Pakistan’s risingenergy needs face a shortage, and in addition to future gas supply, Iran’s offerto wire in 1,100 MW of electricity is godsend. At Pakistan’s initiative, anothertrilateral deal envisaging the supply of gas to China through this country is alsoa good omen for regional cooperation that will work to everyone’s benefit. Onthe political front, the pumping of Iranian gas into Pakistan, India and Chinaat a time when the US opposes such dealings with Iran’s Islamic regime issignificant. It is an assertion of independence in international relations on thepart of the countries concerned and their refusal to be dictated to byWashington, because it arguably works against their own economic anddiplomatic interests. The accord reached with Iran also dispels the impressionthat Pakistan’s earlier signing of another gas supply deal with Turkmenistan viaAfghanistan was an alternative to the IPI deal. All this has profound implications for Pakistan and South Asia. Iran isan important neighbour with which the people of the subcontinent haveenjoyed historical relations. It is a major regional player in the borderingMiddle East commanding a naval presence in the strategic Strait of Hormuzfrom where the bulk of the world’s oil passes. On the other side of the fence,even the US, despite all its opposition to Tehran’s Islamic regime and itsnuclear programme, cannot deny the importance of engaging Iran if it wantsto cool off tensions in Iraq. It is a measure of the failure of American foreignpolicy that Russia and China should continue to carry out their dealings withIran, including in the controversial nuclear energy sector as far as Moscow isconcerned, and India should snub Washington’s suggestion, as it recently did,to ask Iran to roll back its nuclear programme. Tehran has insisted all alongthat its programme is for peaceful purposes. President Musharraf’s reiterationof support on the subject to his Iranian counterpart is reassuring. Recent developments taking place in the region whereby Americanefforts to diplomatically isolate Iran have been snubbed should be seen in thecontext of growing interdependence of countries upon one another and not asbeing geared towards furthering the imperatives of a unipolar world — asWashington wishes to see it. All this means that there will be quite a bit ofcatching up to do for the post-Bush American administration if it wants totake the rest of the world along on many global issues. Dawn, April 30, 2008 http://www.dawn.com/2008/04/30/ed.htm
Energy Crisis in Pakistan 45 P OWER C RISIS & A LTERNATE E NERGY T ECHNOLOGYThe Energy Minister’s statement that country will have to face the currentenergy crisis for next three years shows that he is unable to alleviate the miseryof average Pakistani family and expects them to conduct daily routine choresin extreme summer heat without eight to sixteen hours of electricity. It bringsus to : 1) Energy Minister has failed to come up with a solution to end energycrisis including nationalization of energy sector and adoption of alternateenergy. 2) Which law permits country’s rulers to enjoy uninterrupted supply ofelectricity while the public who they serve suffers due to load shedding for nofault of their own? Can PM justify uninterrupted supply of electricity in VIP pocketsacross the country while average Pakistanis face unending power rationing?Similarly, will the rulers clarify for the ordinary people which law allowsbackup generators for hundreds and thousands of such VIPs nationwidewhose number is growing by the hour? Shouldn’t the country’s law lords betaking suo moto notices to end generator culture by unveiling number ofgenerators being used for the VIPs, how much they cost to the nationalexchequer annually and which law authorizes the procurement, maintenanceand fueling. There is no provision in country’s laws that authorize spendingand regularization of billions of tax-rupees being wasted on the procurement,running and maintenance of these illegal generators. It is hoped concerned including Public Accounts Committee, citizenwatch groups, legal fraternity will help country’s courts and PM to end wastageof tax dollars amidst reports that current 522 billion fiscal deficit will climb to957 billion by the end of fiscal year 2007/8 and an another impending fuelprices increase before June 30. Thereby rendering immediate borrowing ofsome three billion US dollar loan to sustain country’s (failing) economy. Thesefigures, energy minister’s statement of requiring three-year gestation period forpermanently ending long hours of load shedding and instead calling foradoption of energy conservation measures mandate PMs intervention to endthe misery of an average Pakistani who has been forced to face summer heatand humidity for no fault of his own and pay for national policy failure andcorruption. PM to show genuine support for people’s plight and as part ofausterity drive should ordering following steps to end corruption in electricityand gas departments: 1) Inclusion of all VIP areas across the country includingIslamabad into the current load shedding schedule. 2) Across the boardremoval of generators and air-conditioning/heating systems from govt. officesand residences to end VIP culture and save energy consumption. 3) Withdrawsubsidized/free electricity/gas for public servants, office holders and govt.departments because it encourages waste and negates basic spirit of country’s
46 IPRI Factfilelaw. Otherwise, also lawmakers and govt. employees as public servants cannothave free gas and electricity paid by tax money, which is not extended to themasses. 4) The energy consumption of country’s domestic sector is less thantotal consumption of free electricity given to govt. sector. Therefore, PMshould direct energy minister to save 500 MW by withdrawing free electricityfrom VIPs instead of forcing load shedding at grassroots. In fact the nationalleadership to set a personal example should share equal hours of load sheddingif not more. Energy Minister in his statement on the floor of the house said that50/100 MW of electricity will be generated from wind turbines. The amountreflects PPPP’s flawed energy policy stressing on long and midterm plansthereby failing to provide immediate relief to masses. PM should issueimmediate directions to incorporate feasible alternate energy technology basedon alternate energy mapping for following reasons: 1) it can provide quick andsustainable solution for domestic sector that consumes less than 13% of totalgenerated electricity. 2) In- step with international policy replace 20-25 percentof fossil fuel based current energy generation with alternate energy. 3) Cutfossil fuel imports to reduce foreign currency expenditure. 4) the ‘plug andplay’ and main grid compatibility of these alternate energy options can alleviatemisery of masses suffering the heat at grassroots due to 8/16 hour protractedload shedding schedules. Therefore, it is need of the hour to permanently shift country’sdomestic and agriculture sectors to alternate energy to permanently end loadshedding, reduce electricity bills and cut costs on import of ever increasing fuelprices. In this regard, state of the art affordable wind turbines, solar panels,photovoltaic panels can play an important role to help realize the objectives: 1)The ‘plug and play’ and ‘grid ready’ alternate energy technology can bringimmediate relief at grassroots and end three year waiting period. 2) Thesealternate energy solutions are cheaper because: (a) Due to their proximity toconsumers it reduces line losses, which in turn reduces energy cost. Forexample, the alternate energy helps cut line losses internationally acceptedstandards of 5-7% against Pakistan’s reported line losses exceeding 45 percentof total production, (independent observers put at 65%), which in turn forcesper unit electricity prices increase to recover cost of lines losses and thefts.(b)It will allow energy generation at districts, tehsils and individual level, which inturn will help end corruption at all levels and cut over head costs. 3). Cheaperenergy will promote small/medium industrial and manufacturing setups withmultiple advantages including generation/sustenance of millions of jobs. 4)Cheaper sustainable alternate energy solutions will support and sustaincountry’s agri-sector offering critical advantages including produce increaseand increasing employment opportunities. 5) Reduce energy related disputesbetween federation and provinces. The fact of the matter is alternate energy ashighlighted in my article ‘time for nationalized energy sector’,
Energy Crisis in Pakistan 47http://pakobserver.net/200804/17/Articles03.asp is a cheaper and with50,000 MW growth potential is the sustainable way forward to end loadshedding, provide relief at grassroots and meet international standards of‘greener earth’ as part of cleaner global environment. However, it is themindset than actual challenges in energy field that needs to be addressed ashighlighted in my article ‘energy crisis and corruption nexus’ dated 7 Jan.http://www.pakobserver.net/200801/07/Articles04.asp. PM need to help endcorruption and stakes blocking adoption of alternate energy to provide reliefto masses, uplift agri-sector and facilitate country’s economic progress.In this regard Nawaz Sharif can play an important role by promoting adoptionof alternate energy in Punjab. The model in turn can be copied by the rest ofthe country to provide relief to masses, sustain and generate growth and jobsin country’s agri-sector. In short 4200 MW can be generated by 1600 windturbines with each generating of 3 MWs. The shift to alternate energy can helpPakistan save 300 billion rupees (4.6 billion dollars) being paid in annualsubsidies to energy companies at the rate of 25 billion rupees per month. Thepurchase of 1600 wind turbines should cost around 0.192 billion dollars (1600x $1,20,000 per piece) which is not only fraction of 4.6 billion dollars beingcurrently paid under subsidy head but will also cut expenditure on import ofcostly furnace oil and ease pressure on foreign reserves etc. Logically, theadoption of alternate energy technology should reduce per unit cost with everypassing year. All this makes sense in wake of growing oil prices. Finally, it is need of the hour to provide relief at grassroots byincorporating available alternate energy technologies in national energy policy.It will help agri-sector and the industrial sector can be facilitated to adoptalternate energy technology. It will help reduce expenditure on fuel importsand foreign reserve. The nationalization of energy sector and adoption of alternationenergy technology can go hand in hand with already approved long andmedium term policies and projects based on traditional resources of energygeneration. Rizwan Ghani, Pakistan Observer, May 3, 2008 http://pakobserver.net/200805/03/Articles04.asp G OVT C ALLS IPP S M EETING TO T ACKLE P OWER C RISISThe coalition government has called a high level meeting of chief executives ofall Independent Power Producers (IPPs) to seek their assistance in tackling theissue of power shortages prevailing in the country. The meeting will be held on Friday (today) at Pakistan Private PowerInfrastructure Board (PPIB) and would be chaired by Federal Minister forWater and Power, Raja Pervez Ashraf. Water and Power Development
48 IPRI FactfileAuthority (WAPDA) and Pakistan Electric Power Company (PEPCO)officials would also attend the meeting. IPPs are still generating around 4,000MW to 4,500MW per day against5,728MW power per day as agreed with government. During last year, thepower generation by IPPs stood at 5,500MW per day that has dropped duringthe current season. The country is said to face a power shortfall of over 3000MW per dayas the demand of electricity had shot up to 15,000MW per day. TheIndependent Power Producers (IPPs) are generating 4,500MW power per dayand hydel generation stands at 3,500MW per day whereas the total powergeneration stands at 11,500MW per day. Sources said that with the passage of time, the power generationcapacity of the IPPs is declining, the major reason of power shortfall. Sourcessaid that IPPs would be asked to generate power as per agreement with thegovernment and also to extent their operations to overcome the powershortages. Sources said that the IPPs defaults have piled up to Rs 25.3 billionand they have demanded the Federal Government to intervene for payingimmediately. Sources said that Independent Power Producers (IPPs) havethreatened PEPCO for suspending power generation. Sources said that themeeting would review the payment of dues to IPPs. Due to circular debt among different stakeholders including PakistanState Oil (PSO), PEPCO, KESC and Federally Administered Tribal Areas(FATA) have become the main reason for low generation of power in thecountry, sources said. Hub Power Company (HUBCO), the major powergeneration and supply company has threatened PEPCO to pay its arrears onthe account of purchasing power otherwise it would suspend the powersupply. HUBCO is to pay Rs 2 billion dues to PSO for the provision offurnace oil to HUBCO. PSO had resumed the fuel supply to HUBCO afterobtaining the letter of comfort from Water and Power Ministry. On the otherside, HUBCO claims that it has to receive billion of rupees dues from thePEPCO for provision of power, sources added. Zafar Bhutta, Daily Time, May 9, 2008 http://www.dailytimes.com.pk/default.asp?page=2008%5C05%5C09%5Cstory_9-5- 2008_pg5_4 C OMPETING F IRMS C OMPLETE F EASIBILITY R EPORTSThe two international firms in fray for constructing a 1,000MW power plant,which will use imported coal as fuel, have completed feasibility studies, anofficial told The News on Saturday.
Energy Crisis in Pakistan 49 AES Corporation of US and Japanese Mitsui Group were short-listedin December 2006 to prepare two separate feasibility reports for Pakistan’sfirst such power plant. “Negotiations for power tariff will get underway in a couple ofweeks,” said the official, who works for Private Power Infrastructure Board(PPIB). “I cannot specify how much that is going to be, but it will be aroundNEPRA’s tariff for indigenous coal-fired power plants.” Pakistan is facing an electricity shortfall of 3000MW per day, andspends billions of rupees annually to import fuel oil to run its thermal powerplants. The decision to generate power using imported coal was based onassumptions that not only will it help in meeting demand, the cost of coal willalways be lower than oil’s. National Electric Power Regulatory Authority (NEPRA) has given anupfront tariff of US7.8 cents per kilowatt hour (kWh) for Thar coal-firedpower plants. However, this tariff differs greatly from what the investors willwant for a power plant based on imported coal. Landed cost of imported coal has surged to $130 per tonne from $60a year ago. Any tariff based on this coal will reflect the price fluctuation, unlikethe upfront tariff offered by NEPRA. NEPRA’s tariff has been calculated on the basis of a report preparedby a German firm RWE in 2004. RWE has recommended a leveled tariff of7.1 cents per kWh for 40 years. Abdul Basit Mehta, a local representative of RWE, said the tariff wascalculated after taking into consideration the costs associated with mining andgeneration. There is no variable component in the tariff, he added. NEPRA’s tariff seems lucrative from RWE’s point of view, butHassan Associate, which has proposed the mining of Thar coal and using it fora 1000MW power plant, sees it unfeasible. “Cost of machinery and equipment has increased manifolds in the lastfew years,” a company official said. “Anything below 10.5 cents will beunacceptable.” The company had initially demanded 11.1 cents, but had to revisedown the tariff after the government’s refusal. It is prudent to recall again, that back in 2005 a Chinese company hadagreed to undertake the capital-intensive project at 5.7 cents. That tariff wasrejected and the company left. Pakistan is fighting to catch the elusive dream of utilising cheapsource of energy since 1992, which was the year when it was discovered thatThar District is sitting over 175 billion tonnes of coal reserves. The News, May 11, 2008 http://www.thenews.com.pk/print1.asp?id=111829
50 IPRI Factfile G OVT TO I NVITE B USINESSMEN TO D ISCUSS P OWER C RISISFederal Minister for Kashmir Affairs, Northern and Information TechnologyQamar uz Zaman Qaira has said the government has decided to convene aspecial Cabinet meeting to cope with ongoing energy crisis. “All the relevant experts and chambers would also be invited forsuggestions over the issue which now has started taking its toll,” he expressedthese views while speaking at Lahore Chamber of Commerce and Industry(LCCI) on Saturday. Minister said the present government was taking all possible measuresto bridge the gap between demand and supply of electricity. Due to acuteshortage of power, not only the industry, the common man was also suffering. He said all the issues had been discussed threadbare in all the fourCabinet meetings held so far. He said to develop IT infrastructure, the government has divided thecountry into 14 regions and aggressive investments would be made to equip1400 cities and villages with Information Technology that do not have accessto IT. He said the government has introduced scholarships for thepromotion of Information Technology. On the issue of Kashmir, the Federal Minister said that sometimes,informal diplomacy can do the miracles and business community should useits good offices for a breakthrough in this regard. Federal Minister said steps were on way to promote trade betweenIndian occupied Kashmir and Azad Jammu Kashmir that would definitely helpbring the people of two sides further closer. He said special attention was also being given towards vocationaltraining and skill development, as the industry was heavily suffering because ofthe shortage of skilled labour. Referring to atta prices, he said there was an anomaly in the provisionof subsidy. Equal subsidy was being given on atta used by the rich and thepoor. Things are being sorted out to ensure benefit to the poor alone. LCCI president, Mohammad Ali Mian stressed the need for earlysolution of Kashmir issue. He said no Confidence Building Measure (CBM)would work unless the issue of Kashmir is resolved. Daily Times, May 11, 2008http://www.dailytimes.com.pk/default.asp?page=2008%5C05%5C11%5Cstory_11-5- 2008_pg5_16
Energy Crisis in Pakistan 51 E NTANGLED IN E NERGY W EBCommendable developments have materialized lately on various avenuesof energy sector in Asia with countries fostering forward theircollaborations for fulfilling their energy requirements. The dream ofmaking Asian gas grid could transform the quest for energy by Asianeconomies into a cooperative, not conflictive enterprise. Regional actorsentangled subjectively in energy web of interdependence, could generatefar-reaching effect on the security, stability and development of theregion. Hence, locking their positions by working together in a manner ofcomplex correlation. The outcome of this interconnectedness would determine thefuture course of economics, politics, inter-state relationships, economiccooperation and security status of the region as a whole. With growing oilprices skyrocketing, Asian countrys thrust for cheaper imported gas hasacquired a greater urgency than ever before. In order to fulfill energyrequirements, countries like Pakistan, India, Iran and China have leanedtheir thrust even to develop civilian nuclear technology to meet the needsof ever expanding economies. Nowadays, we are totally dependent on anabundant and uninterrupted supply of energy for living and working. It isa key ingredient in all sectors of modern economies. It is high time thatwe must secure our future in the growing state of depleting energyresources. As the new energy world order dawned with momentum in Asia,several key benchmarks have been achieved on aspired projects of IPI(India-Pakistan-Iran) and TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipelines. These pipelines can be more appropriately called as"life lines" to the industry and economies of Asian subcontinent andbeyond. Countries involved in both either IPI or TAPI had seriousreservations involved, which had descended them to remain reluctant inpursuing the projects. We are still in the state of wilderness as yet theprojects, which have actually set foot in early 90s or later failed tomaterialize as yet. Both projects got badly snagged in international andregional politics. But latest signing of "Government FrameworkAgreement" in Islamabad to initiate TAPI project, readmission of India inIPI, workable agreement between Pakistan and India on transit fee, recentagreement on IPI to draft the final phase of the project and finally signingan accord, depicts active assertion of the stakeholders to remove theimpediments on the way. Both projects (IPI) and (TAPI) would provide the gas to theAsian developing countries including Pakistan, India, China and beyondthe region. These states have limited oil/liquid reserves to meet their
52 IPRI Factfiledemands. With rocketing prices and limited supply of oil, signifies theoption of gas which is cheaper, cleaner and plentiful, and in anincreasingly environmentally conscious world, developed countries seethis as an attractive alternative to oil and mineral fuels. Hence, oil-producing states of Persian Gulf are striving to develop their gas suppliesto supplement their dwindling oil reserves. While the landlocked ElDorados of Central Asia offer the energy hungry burgeoning economies toinvest and evolve effective methods to transfer the resources. These stateshave abundance of proven and unproven gas and oil reserves anticipatingto be explored. It is quite mandatory for the states to develop the nationalstrategies for robust exploration of not only indigenous resources butrequire enhancing by trans-national energy options to meet theconstraints. TAPI gas pipeline project, would begin from the Dauletabad gasfield (Turkmenistan), and runs through Herat, Kandhar (Afghanistan),Quetta, Multan (Pakistan) and the final destination of the pipeline will bethe Indian town of Fazilka, near the border between India and Pakistan.The total length of the pipeline would be 1,680 kilometer will be built andoperated by a consortium of national oil companies from the fourcountries, furthermore the cost of the project was just over 3$billion in2003; today it is $7.6billion. The pipeline is to begin its operations in 2015,if all the contending issues are to be resolved. The pipeline will transport33 billion standard cubic meter (scm) gas from the Dauletabad gas field.There will be six compressor stations along the entire length of thepipeline and it will have to be guarded by the states they pass through,apart from the pipeline. The largest stretch will fall to the share ofPakistan, between Quetta and Multan and the Indian border. ADBprovided the financial assistance of 1.0$ million for the feasibility study ofthe project. Several major risks were proving as impediments in materializingthe TAPI project. Security of the pipeline is the most important in thisregard, as it passes through the tumultuous region of Afghanistan, wherethe security situation is far more satisfactory. Turkmenistan requested UNto adopt a new convention guaranteeing pipeline security. The proposalrepresents the abandonment of fiercely nationalist policy adopted byNiyazove. Turkmenistans claims of having reserves of more than 25trillion cubic feet need to certify through an independent auditor. Issueslike that of consortium formation, legal and regulatory framework, andissues of gas sales and purchase agreements need to be resolved at earnest.Political discords among the regional and international powers related toUS support to TAPI project due to contentious relations with Iran,Pakistan and Indias conflicts and disagreements on various issues and
Energy Crisis in Pakistan 53Pakistans constrained relations with Afghanistan are proving as hindranceon the way. The rival IPI (Iran-Pakistan-India) pipeline, conceptualized in1989, have the potential to link Persian Gulf with roaring economies ofFar East. The proposed pipeline would deliver gas from Assalouyeh insouthern Iran through Balochistan and Sindh provinces of Pakistan andthen to India. This pipeline was smudged and hampered by conflictingissues ranging from security to pricing and finalizing the framework.Length of pipeline runs 1700 miles with 3.2 billion cubic feet per day ofIranian gas to Pakistan and 2.1 billion cubic per day to India by 2011moreover the cost of the project is nearly 7-8 $billion. To settle the majorissues apropos of pricing, Iran demands that clause to revise the gas priceevery three years to be incorporated into the agreement, which both Indiaand Pakistan disagreed. If substantiate effectively, then IPI pipeline would also assert anddepict independent foreign policies adopted by Pakistan and India onissues of high priority related to energy with certainly wanting to breakfrom the pressure to abort the plan. With sever warning to India againstjoining the project by the US because of Iran, still it demonstrated sign ofthrust to move forward for the project. Even US lured India to have themuch-aspired civilian nuclear deal to meet its growing energy demands.However later early this year, when India shows reluctance in the IPproject, Pakistan declared that China would become part of the projectand convert into (IPC). This proclamation sent quaver to India. Whiledepending on the feasibility of the project, China illustrated keen interestin making this a reality with having necessary expertise and resources.With growing demand at domestic markets soaring, and involvement ofChina led India to participate with revised sense of urgency. For India and Pakistan, it is difficult to show the same level ofconsent on the IPI because of the divergent foreign policies and prioritiesinvolved. Pakistan has deep rooted and closer relations with Iran andsupport on various issues either nuclear or forming a regional energy grid.Pakistan clearly realized that Iran sees the IPI as both a source of valuableforeign exchange as well as warding off the mounting US and otherwestern powers to isolate Iran on its nuclear enrichment foreign policy.For both states, it would be appropriate to understand the emergingreality that in near future the solution to Afghan problem is far from beinga reality and TAPI project is less likely to be practically implemented.Even option was propounded that instead of TAPI, a revised TIPI(Turkmenistan-Iran- Pakistan -India) may be plotted. This is actually morefeasible and viable solution, with less troubles for the project. Analysis reveals that on one hand if IPI project carries greaterpolitical price for both Pakistan and India than on the other TAPI had
54 IPRI Factfilebeen put on hold because of security and sensitive areas on the way. Butthe fact remains that nearly all roads which provides energy security inAsia lead from Tehran. Irans ability to act as an energy corridor for thesub-continent and salient importance of Iran is indisputable. In the rapidlyintensifying international energy competition, Iran holds the master key tothe most staggering political and economic roadblock that impedes theeconomic growth. The problems wont be solved while isolating Iran butclose and competitive environment leads to prosperity of theConclusively, the fact remained which must be kept in mind is that TAPIand IPI would be operational in domains of disorder lying betweeneconomically upward regions. Afghanistan as reluctantly been controlledbut still has the seeds of insurgency expected to be blossoming thissummer as illustrated by the attack on President Hamid Karzai with loudand clear message of " strike any where in the world". On the other handPakistan present shaky coalition government has been involved in settlingthe domestic political instability with paying merge attention to resolve theeconomic issues. Therefore it can be concluded TAPI and IPI could notbecome good devices of leverage unless and until Pakistan is to set itshouse in order and become a normal, democratic and stable state. Farhat Akram, The Nation, May 12, 2008 http://www.nation.com.pk/pakistan-news-newspaper-daily-english- online/Business/12-May-2008/Entangled-in-energy-web/1 M EETING H ELD TO D ISCUSS P AKISTAN S E NERGY C RISIS Pakistans federal cabinet yesterday convened a special meeting here to discussthe worsening energy situation and decided that all commercial markets will beclosed at 9 pm while clocks will be set one hour ahead from June 1 till the endof August. The objective of the whole exercise is to save energy in the peaksummer season. The move of setting the clock an hour ahead that had failedtwice first during the term of prime minister Banazir Bhutto and then in thelast government headed by President Pervez Musharraf is now being triedagain to get the desired goal of saving energy. This means the sun rise in Islamabad will be at 6:05 am instead of 5:05am and sun set at 8:05 pm instead 7:05 pm. Presided over by Prime MinisterYousuf Raza Gilani, the cabinet also decided that international bids will beinvited to generate 1,200 mega watts (MW) of electricity on fast track basis. The industrial zones across the country will start observing holidayson rotation basis to share the load on electricity while air conditions (ACs) inall government offices will not be turned on from 8 am to 11 am during thisperiod. Half of the street lights will also remain off on alternative basis during
Energy Crisis in Pakistan 55these three months. The government will also import 10 million energy savingbulbs to promote the culture of energy conservation.This summer (June-August), Pakistan is facing 4000MW of electricityshortages worse than the last year after a 50 per cent (2500MW) drop in hydelgeneration due to less water in rivers and slower melting down of snows onthe mountains, Water Minister Raja Pervez Ashraf said while briefing thenewspersons on the cabinet meeting. He said from July international bids willbe invited for production of 1200 MW on fast track basis. These bids will be offered at the existing rates (considered cheaper) ofthe National Electric Power Regulatory Authority (NEPRA) in order to attractinvestment. However, this offer will be closed as soon as the government achievedthe generation target of 1200 MW. The water minister said the power generation tendering andproduction process took three years or more, but the government has decidedto accomplish it within a year-and-a-half. Khaleej Time, May 16, 2008http://www.khaleejtimes.com/DisplayArticleNew.asp?section=business&xfile=data/ business/2008/may/business_may560.xml G OVT T AKING S TEPS TO O VERCOME E NERGY C RISISThe government is taking all necessary steps to overcome the ongoing energycrisis, as it is well aware of the sufferings of masses and the difficulties beingfaced by the industry, said Raja Riaz, a senior Punjab Minister. At closing ceremony of two-day LCCI SME Fair 2008, he said, a crashenergy conservation plan had already been rolled-out by the federalgovernment to bridge demand-supply gap. He squarely blamed the previousgovernment for the energy shortage, “Had a go-ahead been granted to smallerpower projects around 600 MW electricity in yester years, the situation wouldhave been far better.” Look at India, it had built scores of dams during allthese years, he added. He said LCCI SME Fair and the seminar would help furtherconsolidate businesses in Pakistan. Mohammad Ali Mian urged Minister toevolve all the future business policies after having due consultation with thestakeholders as in the past this practice was hardly seen anywhere. He said a number good policies in the past could not give desiredresults for want of due attention towards their implementation. On energycrisis, he urged the Minister to tap alternate energy resources because it wouldhelp curtail government’s import bill, which was going up with every passingday due to high oil prices in the international market.
56 IPRI Factfile He said Federal government should immediately start construction ofbig water reservoir including Kalabagh Dam. Daily Times, May 17, 2008http://www.dailytimes.com.pk/default.asp?page=2008%5C05%5C17%5Cstory_17-5- 2008_pg5_18 E NERGY C ONSERVATION P LAN TO C OMBAT S HORTAGE : M INISTERSenior Punjab Minister Raja Riaz has said the government is well aware of thesufferings of masses and the difficulties being faced by the industry. In thatregard, he said, a crash energy conservation plan had already been announcedby the federal government to bridge the demand-supply gap. The minister was speaking at the closing ceremony of a two-day SMEFair-2008, organised by the Lahore Chamber of Commerce and Industry, atthe LCCI late on Thursday night. The minister squarely blamed the previous government for the energyshortage, saying in 1994 a plan was chalked out to produce 600 megawatts ofelectricity by building small power projects on canals but the plan could notget go ahead due to unknown reasons. “Had a go-ahead been granted to these smaller power projects inyesteryears, the situation would have been far better.” Look at India, it hadbuilt scores of dams during all these years, he added. Speaking on the small and medium enterprises, the minister praisedthe Lahore Chamber for supplementing government’s efforts for bringing aneconomic turnaround. The LCCI SME Fair and the seminar would helpfurther consolidate businesses in Pakistan, he added. In his address, LCCI President Mohammad Ali Mian urged the seniorminister to evolve all future business policies after consultation with thestakeholders as in the past that practice was hardly seen anywhere. He said anumber of good policies in the past could not give desired results for want ofdue attention to their implementation. On energy crisis, he urged the minister to tap alternative energyresources because it would help curtail government’s import bill which wasgoing up due to high oil prices in the international market. Due to the shortage of electricity, he said, not only the industry washeavily suffering but it was feared that the unemployment graph could furthergo up. Mohammad Ali said infrastructure played an important role in theindustrial growth of any country and there was a need for the government to
Energy Crisis in Pakistan 57expedite up gradation of infrastructure that would not only encourage localinvestors but would also help attract foreign investment. The LCCI president also suggested to the minister to widen the scopeof Businessmen-Police Liaison Committee by including all the industrial areasin it as an improved law and order situation was a prerequisite to investment. The News, May 17, 2008 http://www.thenews.com.pk/daily_detail.asp?id=113008 D EMAND -S UPPLY G AP I NCREASES D RAMATICALLY TO 415MWThe electricity demand-supply gap in the city increased phenomenally to 415Megawatts (MW) on Tuesday, after Karachi lost electricity from its nuclearpower plant at KANUPP, officials concerned told The News. This shortfall is probably the highest recorded here during the currentseason. The total demand of power in Karachi during the last 24 hours was2,228MW. A KANUPP spokesman said that the plant, which supplies 80MW tothe Karachi Electric Supply Company (KESC) tripped at around 10:20 a.m.Tuesday due to the loss of KESC transmission lines. Meanwhile, KESC officials said that Unit no. 6 of the Bin QasimThermal Power Plant has also been non-functional for the past couple of days,but would be online soon after the requisite repairs and maintenance. The ever-widening demand-supply gap means that almost everyresidential and commercial part of Karachi has been coming under prolongedand multiple spells of power load-shedding lasting over two-and-a-half hourseach. These continue toll late into the night. Moreover, several areas of the city have experienced prolonged andrecurring spells of power breakdown since Monday evening because systemoverload has caused the transmission and distribution mechanisms for electricsupply in those areas to go haywire. Probably the worst electric supply situation during the last 24 hours inthe city was in Federal B. Area Block-20 near the Edhi Centre. Residents ofthe area suffered power breakdowns after midnight Monday, and the electricitysupply had not been restored until 05:00 p.m. Tuesday. Another complainant from Grey River Flats near the Korangi Creeksaid that the residential complex had gone without electricity from 01:00 p.m.to 05:00 p.m. on Tuesday. This was after recurring and prolonged powerfailures from Monday evening till Tuesday morning. Moreover, several parts of Malir, DHA, Lyari, PECHS, Gulistan-e-Jauhar, and Gulishan-e-Iqbal reportedly suffered hours-long power failures till
58 IPRI FactfileTuesday evening due to serious faults in the systems and installations of powertransmission and distribution. In addition to this, several sprawling residential areas of the city,especially in the suburban parts, have been running dry for past couple of daysbecause the prolonged spells of power breakdown and load-shedding haveequally affected the water supply installations of the Karachi Water &Sewerage Board (KWSB). The News, May 21, 2008 http://www.thenews.com.pk/daily_detail.asp?id=113882 P AKISTAN F ACING A CUTE P OWER S HORTAGEPakistan is facing an acute power shortage that is hurting the economy, theminister of water and power warned, noting the need for conservation. Raja Pervaiz Ashraf said the shortage comes with the onset of severesummer, the state-run Associated Press of Pakistan reported Wednesday. Because of the shortage, electricity supply to homes is cut for severalhours a day, further raising the peoples misery index. Some estimates say theshortage may be as much as 4,000 megawatts, at a time when Pakistan is alsogripped by soaring food prices. Ashraf, a member of Pakistans new ruling coalition that took over inMarch after months of violence and political instability, said the government isdetermined to resolve the issue. Under an energy management plan to conserve power use, allcommercial centers and markets are to be closed by 9 p.m. Ajmal Baloch, president of a trade union, told APP that during thesummer, shoppers prefer to come to markets at night and a 9 p.m. closingtime would greatly inconvenience them. He said people do not come to markets on official holidays, and thegovernments decision to close them on Fridays instead of on Sundays wouldfurther hurt business activities. Despite attractive investment opportunities in a country of 160million whose political climate is improving, rating agencies seem reluctant toraise their numbers on Pakistan because of the continuing insurgency,especially in tribal areas suspected to be Taliban and al-Qaida hideouts,residual political uncertainty and macroeconomic problems includingshortages, growing fiscal deficits and soaring inflation. Iranian Energy Minister Parviz Fattah is due to visit Pakistan later thismonth to discuss a proposal to supply 1,100 MW of electricity to the SouthAsian nation. Irans state-owned Islamic Republic News Agency has said during therecent visit of President Mahmoud Ahmadinejad to Pakistan, Iran renewed its
Energy Crisis in Pakistan 59offer to supply 1,100 MW of electricity to help meet Pakistans energy needs,especially at the Gwadar port in Balochistan province and neighboring areas. Iran currently provides 35 MW of electricity along the Pakistan-Iranborder. IRNA said Pakistans conservation measures are designed to save 500MW. It said Pakistani industrial units are being told to stagger their weeklyholidays. May 21, 2008 http://www.upi.com/Energy_Resources/2008/05/21/Pakistan_facing_acute_power _shortage/UPI-42941211408928/ R ENEWABLE R ESOURCES M UST TO C OUNTER E NERGY C RISISTapping of renewable energy resources of wind, solar and bio-fuels isnecessary to resolve the prevailing energy crisis and reduce the growingtrade deficit. Environment Protection Department Additional Secretary DrZafar Abdullah stated this while speaking at a seminar on Clean Energyfor Safe Environment and Sustainable Development here at a local hotelon Wednesday. EPD Director General Dr Shagufta Shahjehan chaired theseminar. Dr Zafar said that renewable energy resources were cost efficientand environment friendly. He said that only technology was needed to tapthese resources available in abundance. Former NESPAK General Manager Sabir Ali Bhatti said thatpower shortage was resulting in economic loss of 3 billion dollars perannum. The country was facing power shortage of over 4,000 MWswhereas it could generate 10,000 MW from coal alone. China wasgenerating 80 per cent of power required by it from coal but Pakistan wasyet to acquire the technology. He said that Pakistan was not utilising its hydel power potentialalso. Water flowing from Tarbela Dam can be easily stored by building adam at Kalabagh. Wapda was forced to purchase thermal power fromprivate companies at much higher rates on the pressure of internationalfinancial institutions. He said that Indus River System alone had hydlepower potential of 35,000 MWs but the country was facing a shortage of4,000 MW. Wapda was losing Rs 52 billion per annum by purchasing fuelat the rate of Rs 35,000 per ton and supplying it to the IPPs at the rate ofRs 5,000 per ton under a forced agreement. He said that the World Bank had opposed execution of hydelpower projects by Wapda because these would have affected import of
60 IPRI Factfilepower generation equipment from the developed countries. Pakistan hadthe third largest coal reserves in the world and could use the same forgenerating power like Iran, India and China by acquiring the technology. Pakistan Council of Renewable Energy Technologies DeputyDirector Irfan Yousaf said that a 700 MW wind power generation projecthad been launched at Gharo in coastal area of Sindh. Solar energy projectswere being launched in Northern Punjab and Sindh. India was generating9,000 MNWs from wind whereas Pakistan had a potential to generate50,000 MW from its 1046 kilometre coastline. NCA Professor Dr Sohail Qureshi said that historical buildingswere energy efficient and environment friendly because of utilisation ofindigenous materials and technology. The old building tradition had,however, made synonymous with backwardness and replaced by the newone causing maximum energy wastage. Sustainable architecture wasrequired to be energy efficient. The Nation, May 22, 2008 http://www.nation.com.pk/pakistan-news-newspaper-daily-english- online/Regional/Lahore/22-May-2008/Renewable-resources-must-to-counter- energy-crisis L OAD S HEDDING : P ART OF C ONSPIRACYPakistan is facing multivariate problems nowadays; price-hike, wheat crisis andunending load shedding are among the top most problems. Load shedding is aserious issue as it not only hampers the domestic, business and industrialactivities but also spoils one’s mood, even one’s behavior. Pakistan experiencesserious power-shortage resulting in serious power deficit that hampers notonly the development process but also poses serious threat to national growth.Heavy load shedding of power across Pakistan creates major problemsespecially for all categories of users. The most affected user of electricity underthis crisis is the households followed by industrial users. In the pastdevelopment plans focusing on electrification of villages, power connection tonew industrial units and to agricultural producers were put on hold till powerinstallation and generation was undertaken. Rapid rise in population andincrease in number of households and its demand for electricity was not fullyaccounted in development plans. That’s why now the production and supply istoo low according to the demand. Lack of proper power policy and planningevolves major area that requires government’s initiative. The countrywide loadshedding has proved the inefficiency, mismanagement and governance issuesrelated to policies and practices of our successive governments. Allah has blessed our country with natural resources that can beutilized to create electricity. We have plenty of wind and sunshine to create
Energy Crisis in Pakistan 61energy from them, but it will take political will on part of our government aswell as politicians to invest in for the country’s better future. We have thermalpower base electricity. Though Pakistan is well endowed with water resources,yet hardly any development projects have been visualized. Apart from lack ofdevelopment, the province also suffers from manipulations. The presentenergy crisis in the country is because we have failed to build large dams.Water is rapidly becoming one of the defining crises of the 21st century. Wehave two conspiracies related to water shortage in the country. One is nationalconspiracy and the other is international one. National conspiracy is that our provinces blamed each other for waterrelated crisis for example Sindh attributing the scarcity to theft and wastefuluse by Punjab. After that Sindh traditionally has had two complaints againstPunjab – one that in the dry season, when Sindh needs water, Punjab does notrelease enough downstream; and during floods, when Sindh does not needwater, Punjab flushes out surplus water downstream. The Kalabagh Dam isalso under this controversial approach. The other is international conspiracyrelated to Pakistan’s water resources that United States and India spoilingPakistan’s water resources they don’t won’t Pakistan to have much resourcesto combating its energy crisis. They create hurdles for Pakistan in this regard. United state indulgingPakistan to its security related problems in Tribal Areas and divertingPakistan’s attention towards major issues related to energy and Indiacommitting itself to theft Pakistan’s water resources which comes to Indiahere is the example of Baglihar Dam. Recently Government of Pakistan paysattention to that crisis and takes different measures to tackle that crisis.Government made an agreement of “Nelam power project” of about 130millions. This agreement is between Pakistan, America and Norway. OnPakistani side this is on WAPDA and NEEPAK. This would be completed with the help of China. It generates 969megawatt of electricity. 15-18 thousands of thermal electricity would beproduced in upcoming five years. Government makes sure that the workwould be started on Kalabagh Dam. The work would be started on BhashaDam next year which generate four and a half thousand megawatt electricity.On short term basis government also take different actions like Markets andShopping Malls would be closed at 9 o clock. Bill boards would be closed.Holiday should be on Friday. In governmental offices air conditioners wouldbe started at 11 O’ clock. Energy savers would be used. So through these stepswe can reduce the consumption of electricity. But this could be on short termbasis in order to solve this issue of load shedding we need a permanentsolution though constructing more power plants. It may surprise to see thatover the last 8 or 9 years there hasn’t been A SINGLE MEGAWATT increasein generation capacity.
62 IPRI Factfile So on long term basis we need the national strategy to address thecrises focuses to make use of all options to meet the current and future powerrequirements. This included hydro, thermal and nuclear sources. Severalthermal powers were installed which resulted in two problems: import of fuelto meet power generation requirements, and resultant significant rise in powergeneration cost and cost to user shot up manifolds. Hydropower generationwas strongly advocated to not only supplement power generation but also at amuch lower cost. For thermal power we need to have more water resourceslike Dams and rivers etc. Over the years we have neglected other sources. Take coal forexample, Pakistan has the 7th largest coal reserve in the world (in Thar area)and we only produce 0.2% of electricity from it! Coal is one of the cheapestways to produce electricity, that’s why countries like Australia produce 77% oftheir electricity from coal. And please don’t give me the crap about pollution,because work is being done to make it as pollution free as possible. We are one of the few declared nuclear States of the world, yet weproduce a fraction of power from nuclear as other countries do. We can useour nuclear power in peaceful means or purposes mainly in generatingelectricity. Then after that there is solar (and every part of Pakistan hasabundant sunlight throughout the year), the Government can encouragepeople to install solar water heating and solar photovoltaic on their rooftop.And we must also not forget wind, out neighbour India is the world’s 4thlargest wind power producer in the world!!! Shocking, it’s it, but alas, none ofour governments has seriously looked into it, therefore Pakistani people arebeing blessed with the gift of load shedding with the advent of New Year! So,where does a GDP of 8% stand? So our government’s paramount objective must be to provideadequate facilities for the generation, transmission, and distribution ofelectrical energy keeping in view the future power requirements for theindustrial, agricultural and economic development of the country. Fozia Shahnaz, Pak Observer, May 23, 2008 http://pakobserver.net/200805/23/Articles04.aspC OAL P OWER P LANTS TO H ELP O VERCOME E NERGY C RISISA high-powered World Bank delegation, led by Vice President for SouthAsia Region, Praful C Patel, held a meeting with Chief Minister SindhSyed Qaim Ali Shah at Chief Minister House here on Monday. In the meeting Chief Minister informed the delegation thatpresent government will fully implement the party manifesto and addressto problems of people in the education, energy and environment sectorsbesides unemployment on priority basis.
Energy Crisis in Pakistan 63 He appreciated the World Banks assistance program, particularlyin education, water, health and power sectors. He said that Shaheed Quaid Mohtarma Benazir Bhutto hadinitiated a eight billion dollars power project for Sindh to generate 5000MW of electricity, but the same, in later governments was left unattendedwith the result that not only the countty but Sindh province speciallysuffered where industrial sector was badly affected. Chief Ministerspotlighted the importance of Thar Coal reserves and stressed that withcoal based power plants, the power crisis in the country will be solved. Hesaid the project will also help overcome un-employment and bringprosperity and development in the area. The WB Vice President for South Asia Region, said that WorIdBank will fully assist in projects for of furtherance of education,strengthening and improving Irrigation system in Sindh and also supportother sectors like health etc. He said that previously, project under Sindh Development Forumwas launched in the year 2001 and now a similar programme will berevived so as to achieve the targets of development in Sindh. SeniorMinister Education Pir Mazharul Haq informed that Sindh province lagsbehind in the education & health sectors, specially in rural areas. Chief Secretary Fazal-ur-Rehman emphasized the need for payingattention on social sector together with special attention towards powergeneration. World Bank team stressed the need for ensuring progress ofcommunity as other schemes are also implemented on matching grantswith community/Government of Sindh to bear 50% expenses of theprojects. The meeting was attended by Additional Chief Secretary NazarHussain Maher, Secretary Finance Ghulam Ali Pasha, Secretary HealthShafique Ahmed Khoso, Secretary Education Rizwan Memon, SecretaryIrrigation & Power Shuja Junejo, Secretary (Services) Iqbal Durrani,Secretry Mines & Mineral Younis Dhaga and other senior officials. The Nation, May 26, 2008 http://www.nation.com.pk/pakistan-news-newspaper-daily-english- online/Business/27-May-2008/Coal-power-plants-to-help-overcome-energy- crisis G OVT TO E NSURE I NDISCRIMINATE L OAD S HEDDING : PMPrime Minister Syed Yousuf Raza Gilani Friday said the government wouldensure that load shedding was done judiciously and without discrimination,and people in remote areas were not unduly suffered. Talking to a delegation
64 IPRI Factfileof representatives belonging to different walks of life, he said it would beensured that load shedding is shared equitably and fairly by different parts ofthe country. He called upon the people to observe conservation measures andsupport government’s 100-day programme which focuses on bettermanagement of existing resources to overcome energy shortage in thecountry. The Prime Minister said that the government is fully aware of thehardships being faced by the people. Despite unenviable economic conditions, the government has takenseveral measures to improve the lot of the common man and rid them of thewheat and electricity shortages, he added. … APP, May 30, 2008http://www.app.com.pk/en_/index.php?option=com_content&task=view&id=3985 6&Itemid=2 P AKISTAN P UTS C LOCKS F ORWARD , H OPES TO S AVE E LECTRICITYPakistan put its clocks forward an hour on Sunday while shops have beenordered to close early as the country struggles with an acute electricityshortage. Setting clocks forward by an hour, to six hours ahead of GMT, shouldenable the country to take advantage of an extra hour of daylight in theevenings and save power. Shopping centers have also been ordered to close at 9 p.m. (1500GMT) from Sunday while government offices have been told not to turn onthe air conditioning for the first three hours of the working day. Pakistan tried moving to daylight saving time in 2002, but abandonedit as many people, particularly in rural areas, ignored the switch. Some people doubted the time change would work this time. "Its bound to fail. Half the people arent aware of it and the other halfdont care," said Adnan Hadi, a television producer in the southeastern city ofMultan. Pakistan is grappling with a shortfall of 4,500 MW of power andthroughout the country electricity is cut, usually for an hour at a time, severaltimes a day. Water and Power Minister Raja Pervez Ashraf said on the weekendthe government planned to overcome power shortages within a year bygenerating an extra 6,000 MW.
Energy Crisis in Pakistan 65 He did not elaborate on how the extra power would be generated butofficials have said Pakistan hoped to import second-hand generatingequipment. Power cuts, as well as food shortages and inflation, have fuelled angerand contributed to a landslide opposition victory in a February generalelection. Early this year, the government shut steel melting units across thecountry for two weeks and ordered hundreds of textile mills to reduceoperations to cope with the power shortage. In April, textile workers staged violent protests against power cutsthat have crippled their mills. Pakistans installed capacity is about 19,845 MW, of which about one-third is produced by hydro-electric plants. Much of the rest is generated bythermal stations, fuelled primarily by gas and oil. But no new capacity has been installed for the past decade despitestrong growth and rising demand for power. China Post, June 2, 2008http://www.chinapost.com.tw/asia/pakistan/2008/06/02/159152/Pakistan-puts.htm T HE O PTION FOR S OLAR P OWERFor Pakistan, 2008 will prove to be a long and hot summer. In April, some ofthe major cities were being put through six hours of load shedding every day.In May, power interruptions had increased to seven hours a day. Another hourmay be added in June. Some relief may come in July as the reservoirs begin tobe filled up by the monsoon rains but once the dry season arrives, the durationof load shedding will begin to increase again. The government estimates the supply-demand gap at 4000 MW. Thisis not likely to be cut down since no new generation capacity is in the worksfor at least another one to two years. In the meantime, the price of oilcontinues to increase. New records are being set almost every day. This willincrease the cost of generating electricity since a significant amount of power isgenerated by oil-fired stations. How to deal with this problem? The question has some urgency as there are serious economic andsocial costs for letting the energy shortage go unaddressed. For someinexplicable reasons Pakistan never treated the energy sector as deserving ofserious attention by the policymakers. The sector was an area of residualconcern even when the country treated economic planning and strategising oneconomic issues as high priorities area for the policymakers. Power houses atMangla and Tarbela were the byproducts of the Indus Water Treaty with India.The decision to invite the private sector to invest in energy generation wastaken in the early 1990s when the country was faced with a growing supply-
66 IPRI Factfiledemand gap. In other words, the policymakers have turned to the sector ofenergy only when opportunities have arisen as a result of other developmentsor when there is a serious crisis. There is a crisis at this time. How willIslamabad react? This may be a good time to develop a comprehensive approachtowards the sector, factoring in policies aimed at affecting demand, supply andenvironmental concerns. In looking at supply, the country should seriouslyexamine alternative sources for generating electricity than those that have beentried in the past. In this context is solar energy a serious option for Pakistan?Have the recent technological advances achieved by the industrial world madethe sun a viable source of energy for a sun-drenched country such as Pakistan?If the technology that converts solar energy into electric power still moreexpensive than other sources of energy could subsidies be provided to attractprivate investment into this sector? Some recent developments in converting solar power into electricityhave begun to provide some answers to these questions. Surprisingly theanswers come from the work being done in Germany. It is useful to look atthe German experience to draw some lessons for Pakistan. Although Germanyis wreathed in clouds and is therefore an unlikely candidate for becoming apioneer in this field, it has become a leader because of the design of publicpolicy to encourage the use of the sun as a source for generating electricity. In 2007, Q-Cells, a German company surpassed Sharp, a Japanesecompany, to become the world’s largest manufacturer of photovoltaic solarcells. Thanks to the work done by Q-Cells, Germany has by far the largestmarket for photovoltaic systems which convert sunlight into electricity. It hasabout one-half of the world’s total installations. It is the third-largest producerof solar cells and modules, after China and Japan. Once the United States andJapan were the rising solar stars where the private sector was taking advantageof government subsidies. But these became less enticing as the government’sinterest in developing the industry waned. According to Mark Landler writing for The New York Times, “thedebate over solar subsidies is a test of how an environmentally minded countrycan move from nurturing a promising alternative energy sector to creating amass-market industry that can compete with conventional energy sources onits own footing. [But] it is a tricky transition, even with a sympatheticpopulation.” Thanks to a policy that encouraged the development of solarenergy, more than 40,000 people now work in the photovoltaic industry inGermany. Investors have come in from many countries including those fromCanada, Norway and the United States. Many investors have come from theplaces that had developed the needed technology but where the governmentswere less supportive than the one in Germany. All the heart of the debate in Germany is the Renewable EnergySources Act which requires power companies to buy all the energy produced
Energy Crisis in Pakistan 67by alternative systems, not only solar but also wind and ocean waves at a fixed,above-market price for 20 years. This has proved to be powerful incentive forinvestors including those working with solar panels. The Act locked in thecustomer base for the electricity produced by alternative systems. They canearn reliable returns on their investment. The amount of electricity generatedby these systems rose 60 per cent in 2007 compared with 2006. Most of theincrease has come from wind systems, which now provide 6.4 per cent for thetotal electricity produced in Germany. The share of solar energy is still very small – only 0.6 percent of thetotal. The small share of solar is understandable. The country gets only 1,528hours of sunshine a year, less than a third of the total daylight hours. Londonhas about the same exposure to the sun, but it has one third fewer sunshinehours than in the cities in Europe along the Mediterranean and one-half of thecities in western United States. Most cities in Pakistan receive between 2,200and 2,500 hours of sun, 60 to 70 per cent more than that of Germany. Germany is a good example of how public policy can overcomenatural disadvantages. The Renewable Energy Sources Act has contributed tothe country’s far lower dependence on hydrocarbons for generating electricity.In 2007, it derived 14.2 per cent of its electricity from renewable sources,ahead of the 12.5 percentage adopted by the European Union as a target. The German Act, while mandating the utilities to buy the electricitygenerated by alternative systems, allows them to pass on the additional cost tothe consumers. There is no limit on how much electricity can (or should) bepurchased by the utilities from the alternative systems. This has caused utilitybills to increase but for the time being by modest amounts for an averagedomestic consumer. The additional cost was only $1.70 a month in 2007. Thiswill double by 2014. By that time the solar industry will scale up to $185 billionin terms of public support. This is about the same amount being provided tothe superannuated coal industry. The debate about the cost of solar and other renewable sources ofenergy has created pressures on the government to make the current law lessgenerous. There are proposals to cut down the period over which subsidieswould be provided, from the current 20 to 15 years. There is also as effort tosharply reduce the above-market price allowed to the producers. Fears thatsuch proposals would be enacted into law, are forcing some Germanycompanies to move to other countries. Signet is building its next factory inChennai, India; Q-Cells is building one in Malaysia. What are the lessons for Pakistan in the German experience and thework being done in other industrial countries? One, Pakistan needs a structureof incentives to get power generated from such renewable sources as the sun.A purchase price guaranteed for a fairly long period that ensures good returnsto the private sector would help. Two, this may be a good time to encouragethe development of domestic industry that would produce the needed
68 IPRI Factfileequipment for developing generating electricity from renewable sources. Thetechnologies are still in their infancy and there is an opportunity fornewcomers in the area to create niches for themselves. Some work is going toreplace silicon in photovoltaic cells with plastics. At this time, the efficiency of plastic photovoltaic cells is only five percent while that of conventional silicon cells is 15 to 18 per cent. Evencountries such as Pakistan could invest in the industries needed to developalternative sources for generating electric power. Three, it may be anappropriate time to fix some targets for encouraging the use of renewablesources for generating power. The EU is working on a target of 12.5 per cent.In the United States, the two candidates for the Democratic ticket wantrenewable energy to generate 25 per cent of electricity by 2030. This is the time for action by the government and it should look at allpossible avenues for solving the current crisis. Shahid Javed Burki, Dawn, June 2, 2008 http://www.dawn.com/2008/06/02/ebr8.htm A DVANCING OF C LOCKS C REATES C ONFUSIONFirst of June was perhaps a very confusing day in the lives of the people aseverything went almost haywire after the smaller hand of clock was forwardedone hour. On June 1, the clocks jumped an hour ahead to save the day light timeand extract the maximum possible work potential but it brought a lot ofconfusion and inconvenience for the people of the country in general and thecitizens of the Provincial Metropolis in particular. The list of confusions is considerably long since the people are not yettuned up to the required level to except such ‘innovative & noble’ ideas as yet. It needs a most of prior practice and a complete step-by-step-campaign to get the people acclimatized with any new idea, but as usual, this‘brilliant’ figment of a very scientific mind was shoved down the throat of thepeople without assessing the ground realities in a land where the literacy rate isstill under 23% even after six decades of independence. Saturday, 1st of June was a day in the history of Pakistan which hadno mid night. Throughout the country the clocks directly jumped to 1 amimmediately after 11 pm. All daylong women, men and specially children spent all their daywaiting for the ‘fateful hour’ when they will witness a unique happening. Andwhile waiting anxiously for the night all eyes were regularly gazing on theirwatches and clocks religiously.
Energy Crisis in Pakistan 69 The most frequent questions asked by the kids were” What willhappen to their school time tables? Will the van driver who picks and dropsthem also know about this change of time? Thousands of students appearing in the Lahore Board’s SecondarySchool Examination were utterly confused whether they would go for examsaccording to which time table since the board officials never bothered to senda public service message to this effect in the media. The parents had to face confusion when they were makingpreparations for sending their children to school. Many Lahorites were of the view that the government should havetaken initiatives to overcome the prevalent power crisis instead of forcing thewhole nation to change the small hand of their watches an hour ahead. Theyargued that the people would have to change their daily schedules in a bid tomaximum utilization of the sunlight energy. They urged the government tokick-start energy-related projects without any procrastination. The mindless load shedding in the city, a permanent irritant in thelives of the people of Pakistan now, made this otherwise a productive andpositive initiative on the part of the government, a miserable addition in thelives of the people. No sooner the clock struck midnight, the lights in variousparts of the city went out due to the on-going load shedding. This wassomething not accounted for by the already anticipating public which hadoverlooked this ‘peace time blackout’. Many household were found groping inthe dark for a candle since they had ignored this ‘after effect’ of modernitycompletely. The other pinching aspect of the time change was the devastatingeffect of the load shedding the scorching heat since the clocks had goneforward which also ‘saved the heat of the sun’ and the sizzling day seemedquite long on 1st June to the poor folks. The people habitual to say their five times prayers in mosques werealso found confused. The patients who had appointments with the doctorsalso faced difficulties to get adjusted to the new ‘timings’. All said and done, the people were of the view that every good thing isnot necessarily ‘good’ for every society since a society has to be brought to acertain level of awareness before being introduced to an innovative idea.However, it is also felt by some segments of the society that by extending thetime to another hour there will be an excessive hourly advantage for all thosewho know how to make good use of their time in productive and positivemanner. Shahab Ansari, The News, June 2, 2008 http://www.thenews.com.pk/daily_detail.asp?id=116166
70 IPRI Factfile I RAN CAN H ELP P AKISTAN IN E NERGY S ECTORIranian Ambassador to Pakistan Mashallah Shakri has said his resource richcountry can help Pakistan address its energy crisis in the long run. Talking to this correspondent here, he said Tehran can initiateventures with Pakistan other than the IPI (Iran-Pakistan-India) gas project tohelp Islamabad overcome its power crisis. He said there were many fields of mutual interest especially in theculture, energy, shipping and trade sectors in which both the countries canexpand relations. He said Pakistan had good manpower for shipping industrywhile Iran possessed good fleet and if the two countries formed a jointshipping company it would help enhance trading in the shipping sector. He said by expanding rail network, Pakistan could export its fruits,especially orange and mangoes, to Turkey via Iraq. He said Pakistan produced two million tons of good quality kinnosthat could be exported through rail network to Iran and Turkey. Responding a question, he said both Pakistan and Iran were boundedin centuries-old relations due to similarities in their cultural, religious and socialtraditions. He said with expansion of economic, trade and tourists activities theserelations could be further expanded and strengthened. Dawn, June 3, 2008 http://www.dawn.com/2008/06/03/nat2.htm SAARC M EMBERS A SKED TO S IGN E NERGY T REATYEnergy experts from Japan and member states of the South Asian Associationfor Regional Cooperation (Saarc) Wednesday proposed the signing of an‘Energy Charter Treaty’ to promote regional cooperation in energy sector. In their recommendations on the conclusion of the two-day Japan-SAARC Symposium on Energy and Connectivity, the participants said Japanand Saarc member states should expedite energy cooperation in the region,with greater sense of urgency, recognising the tremendous energy resourcepotential, and vital role of energy in economic, social, human development andpoverty reduction. They said the Saarc member states for this purpose should continueto make use of the technical assistance from bilateral and multilateral sourcesfor capacity building, technology transfer, energy efficiency and specificproject formulation. Information on progress, technical know-how, needs,barriers and possible solutions must be mutually shared by the states.
Energy Crisis in Pakistan 71 According to the experts, Japan and Saarc members should continuethe dialogue for possible means and cooperation to improve regionalconnectivity in energy sector. They said efforts should be made for fostering private and publicpartnership, Research and Development; and cooperation with academics, civilsociety and the media. They were of the view that priority areas of energy cooperation in theSaarc region included energy infrastructure development, regional trade ofenergy, sharing of hydroelectric resources and demand-side management. They stressed that the parties engaged in the current projects forconstructions of gas pipelines connecting one or more Saarc countries toexternal energy sources in the region urgently address outstanding issues. The participants said Japan and Saarc member should make efforts topromote public awareness of the need for regional energy cooperation, addingthat programmes and activities of Saarc Energy Centre should be stronglysupported through provision of human, financial, infrastructural, technical andmaterial resources. They said Saarc member states should consider establishing an inter-governmental framework for implementing the agreed programme of action inenergy cooperation. The symposium was jointly organised by the Institute of StrategicStudies, Islamabad, and the Government of Japan, and was attended by theenergy experts and some government officials from Bangladesh, India, theMaldives, Nepal, Pakistan, Sri Lanka, Japan and the Saarc Energy Centre, aswell as audiences invited from various sectors in Islamabad. Speaking at the concluding session of the symposium, Ismail Qureshi,secretary Water and Power, said that energy sources in Saarc region and itsneighbours were huge, unevenly distributed and undeveloped. Cross-borderinvestments in energy and promotion of regional energy trade are essential forachieving economic growth of the Saarc countries. The factors curtailing suchregional cooperation are political tension, poor infrastructure and pooroperational efficiency, he added. Dawn, June 12, 2008 http://www.dawn.com/2008/06/12/nat9.htm S UBSIDY ON U SE OF UP TO 200 P OWER U NITS S TAYSMinister for Water and Power Raja Pervaiz Ashraf on Monday said that thegovernment would not withdraw subsidy on electricity up to 200 units to giverelief to poor people. Talking to journalists here, the minister said only the privileged classusing over 200 electricity units would share the burden while the deprived
72 IPRI Factfilesegment will be given subsidy. He said the country is facing severe power crisisand the government was taking short, medium and long-term measures tocombat the menace of load-shedding. He said load-shedding hours would be reduced within a few days as1,500MW additional power has been added to the system due to sincereefforts of the government to overcome the situation. The minister added additional power generation has been achievedthrough system optimisation. Pervaiz Ashraf said that Prime Minister SyedYousuf Raza Gilani has approved an amount to bear expenditures on oilsupply to thermal power plants for smooth functioning. He said a major chunk of the export-oriented industry has beenexempted from load-shedding while power supply is also being increased toother sectors. He added in order to give boost to the agriculture sector 10hours continuous power supply is being provided at night to get maximumproduction while the textile industry is also being provided 100 per cent supplyof power. He said power-looms are also being provided continuous spells ofpower to increase productivity, as this export-oriented industry is a majorcontributor to foreign exchange reserves. The minister said sufficient amounthas been allocated in the budget for the water and power sector keeping inview the increasing demand in these sectors. He said due to the energy conservation plan additional power is beingreceived while the government is also planning to get electricity fromalternative and renewable energy resources. Earlier, in an open kutchery theminister received applications from applicants and issued orders to theconcerned officials on the spot. Addressing the party workers and applicants, the minister saidPakistan Peoples Party’s government is committed to resolving the problemsof country’s people. He said government would change the life of commonman by giving basic amenities of life. The News, June 17, 2008 http://www.thenews.com.pk/daily_detail.asp?id=118835L OAD SHEDDING B ECOMES A N IGHTMARE FOR K ARACHIITESThe Karachiites continue to suffer with prolonged power outage while riotserupted in various areas on Tuesday. The temperature of the City has increased up to 37C as Karachiitessuffered with sizzling heat till the evening and also faced unannounced loadshedding in several localities. Inhabitants of various localities act violently against the KESCofficials and showed anger in many areas. In Lyari and Chakiwara, people
Energy Crisis in Pakistan 73protested against KESC and burnt tyres on the roads. The Lyariites weresuffering with 12 to 15 hours long power outage due to some technical cablefaults in the area. The residents of FB Area, Shah Faisal Colony, Malir,Liaquatabad, PECHS, Gulshan-e-Iqbal, FC Area, Akhtar Colony,Mehmoodabad, Punjab Colony, DHA, and Gulistan-e-Johar also claimed ofsuffering 10 to 12 hours long load shedding. Life has become a nightmare,said Hassan Gul from Golden Town. "The frequent load shedding has notonly made our lives gloomy but has also disturbed the routine life. The worstaffected are children, especially toddlers. Even students are suffering as theycant study for their ongoing examinations," he said. The situation was synonymous with the conditions in MansehraColony and Landhi. Khurram Amman, a resident, said that the entire locality,comprising of over 50,000 residents, was facing three hours load shedding formore than three times a day. "The entire locality belonged to middle classpeople, living in small houses. Most of the houses have no proper ventilationsystem thus load shedding brings severe problems for them," he said. "KESCshould pay more attention to the slums as people living in the Citys affluentareas can afford generators." Furthermore, the power breakdowns didnt affect residents alone, butalso affected the workers of different industrial zones. "Most of the industrialunits were forced to leave workers early due to power disturbance. Butworkers have been asked to come in on Sunday and thus they are paying theprice for KESCs bungles," Iqbal Khan, an electrician at a cloth mill in SiteIndustrial Area said. The total demand of electricity has reached to 2500MW in the city dueto the increasing temperature and KESC was lagging behind with 400 to500MW. KESC had earlier announced five hours load shedding butcommitting 8 to 9 hours load shedding in various localities. KESC could notovercome the technical faults across the city and compelled the inhabitants tocome on roads in protest against power outage. Meanwhile, two units of Bin Qasim power plant remained close dueto some technical faults and as far as restoration of supply from the units isconcerned it would take three to four more days while the supply fromKANNUP also couldnt be restored. The Nation, June 18, 2008 http://www.nation.com.pk/pakistan-news-newspaper-daily-english- online/Regional/Karachi/18-Jun-2008/Loadshedding-becomes-a-nightmare-for- Karachiites
74 IPRI Factfile S EVERE F UEL C RISIS HITS F RONTIERSevere fuel crisis has hit the NWFP, as around 90 per cent of the fillingstations have been closed down due to the acute shortage of diesel. The diesel shortage continued in the province for several days, forcingmost of the transporters to park their vehicles in their homes. Long queues ofvehicles were seen outside petrol pumps Wednesday to get a few litres ofdiesel. A few filling stations where the commodity was available in a limitedquantity, sold it at Rs60 per litre against its official price of Rs52.Transportowners opined that the main cause of petroleum products shortage in theprovince was massive smuggling of the POL product to Afghanistan whereminimum price of diesel is Rs75 per litre. The filling station owners have alsoexpressed serious concern over the shortage of POL, saying that it hasseriously affected their business. The Sarhad Petroleum Cartage and Dealers Association Wednesdayvoiced concern over petroleum products’ growing smuggling to Afghanistan,saying 90 per cent of the filling stations have been closed down due to non-availability of the petroleum products. “The government pays huge amount to make the petroleum productsavailable on subsidised rates to compensate the poverty-stricken citizens butthe facility is not being availed by them after huge smuggling of subsidisedpetroleum to Afghanistan,” SPCDA chairman Mansoor Sharif told a pressconference here. He said the filling stations of Pakistan State Oil (PSO), Shell andCaltex companies across the province have 2.5 million litres per-dayrequirement. However, the growing smuggling to Afghanistan reduced receiptof petroleum products to the oil companies to about 0.7 million litres. He held the Khyber Agency political administration responsible forthe continued smuggling of petroleum products to Afghanistan, which, hesaid, allowed the smugglers to take the product across the border. Mansoor also said the previous government had issued marketinglicences to ‘ghost companies’ which had no storage depot and proper offices.“These ghost companies get fuel on fake invoices and smuggle it through theiragents, therefore, the government should take action against such companies,”he urged. He said the owners of the filling stations were faced with multipleproblems and worried about the future of their multi-millions businesses. Hecalled upon NWFP governor, chief minister and political administration totake serious note of the fuel smuggling to Afghanistan via Khyber Agency toensure availability of its required quantity in the filling stations. Qaiser Khan Afridi, The News, June 19, 2008 http://www.thenews.com.pk/daily_detail.asp?id=119363
Energy Crisis in Pakistan 75S HORTAGE OF F UEL AT P ETROL P UMPS C AUSING C ONCERNThere was a shortage of petrol and diesel at various petrol pumps in the cityon Thursday. Petrol pump officials said the reason for the shortage was thatthey were not receiving any supplies. A Cavalry Grounds petrol pumpemployee said that a shortage was persisting and therefore supplies to endusers were not materialising. The petrol pumps in Cavalry Grounds, GardenTown, Model Town and other areas closed operations temporarily. PunjabPetroleum Dealers Association President Majeed Malik said that oil companieshad reduced supplies to dealers and it was causing problems. He said that thegovernment owed billions of rupees to the oil companies and this had createdproblems for the end users. “The oil companies have reduced supplies by 50percent, as they claim that they have not been paid for their product,” headded. Majeed said that the government should come to the aid of usersotherwise the shortage could cause huge problems for the people. Daily Time, June 20, 2008http://www.dailytimes.com.pk/default.asp?page=2008%5C06%5C20%5Cstory_20-6- 2008_pg13_5 S HORTAGE OF P ETROL P RODUCTS T ORMENTING C ONSUMERSSeveral petrol pumps, affiliated with different Oil Marketing Companies(OMCs), have stopped selling oil products in the city due to the shortage ofsupply since the last couple of days. The shortages of oil products at petrol pumps have caused consumersto suffer, particularly in those areas where the petrol pumps are in limitednumbers. Besides Karachi, the supply shortage has been reported in othercities of Sindh and NWFP. Many petroleum dealers said that they have not been receiving oilproducts from OMCs since last week that created petroleum shortage at thepumps. They were reluctant to provide any details on this issue and passedblamed the OMCs. A couple of weeks earlier, President Petroleum Dealers AssociationAbdul Sami Khan had already warned the possible shortage at several petrolpumps as according to him, the OMCs were not providing them enhancedproducts when the demand was high. Some dealers also warned that their oil stocks have been diminishedand left for a couple of days. The supply should be resumed by the OMCsbecause the demand of diesel and petrol has surged on the petrol pumps onthe back of shutting of other outlets and enhanced usage in power generators.
76 IPRI Factfile Normally, petrol pumps have a storage capacity of 20 to 25 days inthe oil tanks. However, the shortage has been predicated to continue in the comingdays because OMCs, particularly Pakistan State Oil (PSO), claimed that theyhave been facing diesel supply constraints from refineries. PSO said that private run-pump owners or dealers affiliated withother OMCs have been demanding oil products to the state-run OMC thatcaused supply shortage even on its own petrol pumps. It said the share of PSOhas increased to 71 percent of the total market share in June as compared tolast months share recorded at 59 percent. The supply from refineries has been reduced in the past few days thatcaused interruption in supply chain and would take time to come back ontrack, an official said on condition of anonymity. Spokesman of Shell Pakistan Limited (SPL) Abid Syed Ibrahim saidthe OMCs continue constant supply to its affiliated dealers throughout thecountry and it has stopped products supply to those dealers who did not cleartheir advance payments to OMCs. Muhammad Yasir, Daily Times, June 22, 2008http://www.dailytimes.com.pk/default.asp?page=2008%5C06%5C22%5Cstory_22-6- 2008_pg5_4 N O E ND TO E LECTRICITY M ETER S HORTAGEShortage of domestic electricity metres continued in the provincial capital asthe management of Lahore Electric Supply Company (LESCO) failed toprocure the most necessary item on time. Sources in the company claimed that more than 30,000 applicationsfor the issuance of new electricity metres were pending with the company.Sources said the shortage was a direct result of lack of vision and futureplanning of the management especially the high-ups. Sources said that the shortage of domestic metres, electricity cable andtransformers started some five months back and since then the company wasfailed to procure these most necessary items. Shortage of these items clearlyexposed the claims of the LESCO that it was investing a huge sum onimproving its infrastructure and better customer services for the last two years. The shortage of metres has created serious inconvenience to thosewho have deposited their money to the LESCO for replacement of metres orfor getting new connections. A number of complainants termed the shortage acriminal negligence on part of the company. They said the LESCO was alreadyknown for disturbing its consumers in one way or the other and presently thegeneral perception of the people about the company was that the officer class
Energy Crisis in Pakistan 77of the company was not purchasing metres and transformers because theyhave not gotten a ‘good deal’ from the manufacturers. Most of the applicants urged the National Electric Power RegulatoryAuthority (NEPRA), Pakistan Electric Power Company (PEPCO) and FederalMinister for Water and Power to hold an inquiry into the issue. Whoever is responsible for this should be punished, said Khurram, aresident of Faisal Town. He said he applied for a new connection some threemonths back but still he was going to the sub division every day to get a metre.He said many others were also running pillar to post to get new metres in thesame sub division. Following the shortage, the LESCO field staff is openly exploiting theapplicants and minting money from them for getting them metres early. Asenior LESCO official, on the condition of anonymity, said that every sub-division needed average 500 electricity metres per month but presently thecompany was providing them with four to five metres per week.Whencontacted, the call on the mobile phone of LESCO Chief Executive AkramArain was not attended. The company’s PRO admitted that the shortage wasgoing on. He said it would be overcome within weeks. The News, June 23, 2008 http://www.thenews.com.pk/daily_detail.asp?id=119965 P ESHAWAR T RANSPORTERS T HREATEN TO B ESIEGE O IL D EPOTSTransporters claim pumps are selling the commodity at R s65/literLocal transporters Monday threatened to besiege oil depots and filling stationsin Peshawar if the authorities failed to take prompt and effective measures toovercome the prolonged “artificial” diesel crisis in the province. Expressing his concern over the continued diesel shortage in theprovince, president of public transport owners association (legal) HajiIhsanullah said 50% of the transport-vehicle owners have parked their vehiclesin their homes due to prevailing shortage. He added the petrol pump ownerswere fleecing by selling the commodity to them at Rs 65 per liter against itsofficial price of Rs 50, while the authorities were taking no action againstthem. Haji alleged the pump owners had a daily quota of getting 10,000 litersof diesel, but they were purchasing only 4000 and selling the remaining quotato the depots that smuggle it to Afghanistan, where per liter price of thecommodity is Rs 75. Jehangir Afridi, another leader of local transporters, said the dieselsmuggling to Afghanistan was continued unabated without any check on it. He
78 IPRI Factfilelamented the increase in the price of CNG, saying despite the fact that CNGwas produced in the country, its price was showing upward trend. He demanded of the authorities to take effective measures to controlsmuggling, otherwise, they would be compelled to besiege the petrol pumpsand oil depots and the authorities would be responsible for consequences. It merits a mention here that Frontier was faced with acute shortageof diesel for the past two weeks. The vehicle owners had to struggle hard toget some liters of the commodity on higher price. Abdur Rasheed, a private car owner, said he visited more than tenpumps to get some diesel, where he was told that it was not available. At last inone of the pumps, the owner agreed to give limited quantity at Rs 60/literwhile its official price was Rs 50. Due to diesel crisis and unofficial increase inits price, the long route transporters have also increased fares, adding to themiseries of the commuters. The News, June 24, 2008 http://www.thenews.com.pk/daily_detail.asp?id=120209 D IESEL S HORTAGE A FFECTING O PERATION OF T UBE - W ELLS , T RACTORS : F ARMERSThe farmers are facing problems in running tube wells and tractors due to theshortage of diesel, Daily Times learnt Thursday. The shortage of diesel mainly persists in Punjab province as the oilcompanies have stopped the supply of diesel to the petrol pumps, while theshortage would have a negative impact on the sowing of rice and cotton crops,the agriculture sector stakeholders said. The sowing of rice is round the corner while cotton sowing is alreadygoing on in a number of districts. An extreme shortage of diesel was alsowitnessed in cotton growing areas of Southern Punjab in the last couple ofdays. A spokesman of Farmers Association of Pakistan (FAP), IdreesKhokhar said the hoarders have done an artificial shortage of diesel to forcethe government to increase the prices of petroleum products and a summaryhas already been placed on the table of prime minister for approval. “The farmers of Punjab were the main affectees due to the shortageof diesel and non-availability of diesel has shut down more than 0.7 milliontube-wells while 0.5 million tractors have stopped”. He said the government should look into the matter otherwise thefarmers will fail to continue their cultivation and the country may face shortageof every kind of crop, especially rice and wheat.
Energy Crisis in Pakistan 79 Chairman Agri Forum, Ibrahim Mughal said if the government failedto solve shortage of diesel issue, the farmers would fail to sow the rice in thecoming sowing season. It is sowing season of cotton in the southern Punjab areas and thesetwo things are the backbone of agriculture farming and if these are notavailable then one can easily imagine what would be the future of crops. The senior vice president of Punjab Petroleum Dealers Association,Chaudhry Muhammad Sadiq said the oil companies have stopped the supplyof diesel to the petrol pumps. He said the companies have strictly asked the owners of petrol pumpsand dealers not to give diesel in drums and gallons, while the companies havealso supply the diesel against the demand of the pump owners. Hasan Ali, Daily Time, June 27, 2008http://www.dailytimes.com.pk/default.asp?page=2008%5C06%5C27%5Cstory_27-6- 2008_pg5_3 L OAD S HEDDING I NCREASES AS KANUPP T RIPS A GAINThe duration of load shedding suddenly increased from Wednesday night afterthe Karachi Nuclear Power Plant (KANUPP) suddenly tripped. Flaws in the Karachi Electric Supply Company (KESC) transmissioncables connected to KANUPP through the national grid caused the 80MWshortage. There was an additional shortage of 300 MW to 350 MW the sameday. The Pakistan Electric Power Company (PEPCO) is also experiencingsome technical problems in its generation system, causing a shortage, a KESCgeneral manager (GM) told Daily Times. “The PEPCO administrationapproached KESC with a request to accept a shortage of 100 MW for the timebecause of technical problems but the KESC management declined to acceptthis excuse.” The supply from PEPCO continued at 500 MW without anydisruption till 11:00 a.m. Wednesday, until a shortage of 100 MW at around1:00 p.m. However, KANUPP resumed its supply of 70 MW to KESCthrough the national grid by 10:30 p.m., Wednesday, described the GM.KANUPP tripped on May 19, 2008 as well for the same reason. There havebeen eight such incidents since January and last year it happened 11 times.“KANUPP had planned to increase its contribution, taking it to a peak of 90MW in a few days, but the recent tripping has made this doubtful,” the KESCGM said. Reports from a private television channel late night Thursday said thattwo units at the Bin Qasim Thermal Power Plant had tripped due to a gas
80 IPRI Factfileturbine leak. These reports are, however, incorrect as all six BQTPS areoperating and generating around 1,050 MW, the KESC GM added. Daily Times, June 27, 2008http://www.dailytimes.com.pk/default.asp?page=2008%5C06%5C27%5Cstory_27-6- 2008_pg7_27 F UEL S TATIONS R UN S HORT OF D IESEL Fuel stations have run short of diesel, putting motorists in a fix. A fewstations, which have this commodity, are selling it only if a consumer agrees tobuy mobile oil with it. “Diesel is available only at 15-20 percent fuel stations but their ownersare compelling motorists to buy mobile oil or any other commodity if theyhave to get diesel,” Hanif Gujjar, a public transport driver, told Daily Timeson Friday. There are around 24 fuel stations in Islamabad and over 50 inRawalpindi, where diesel is sold. “It is really difficult to get diesel these days so I have minimised use offuel in my car. Diesel shortage has been prevailing since revision of oil pricesby OGRA last time,” a motorist said. Akbar Mian, manager of a fuel station in F-8 Markaz, said dieselsupply at his station had come down from 14,000 litre to 7,000 litre a day. “Diesel supply has been cut by half at Sihala and Chaklala for the lasttwo weeks by oil marketing companies,” he said. Ghulam Abbas, a worker at apetrol pump in Sector F-7, said diesel supply had been delayed for long. Requesting not to be named, some fuel station operators said thegovernment wanted to buy diesel from oil marketing companies at old rateswhile fuel prices have gone up in the international market. They said the government had delayed payment of billions of rupeesto oil companies. “We want to install a diesel generator in the face of load shedding butwe cannot run it because of diesel shortage,” said a citizen. Sale of petroleum products in open containers has been banned bythe government to counter terrorism. Atif Khan, Daily Time, June 28, 2008http://www.dailytimes.com.pk/default.asp?page=2008%5C06%5C28%5Cstory_28-6- 2008_pg11_11 F REQUENT P OWER S HUTDOWNS B RINGING G RADES D OWN* Students say they cannot study properly in dim light* PU boarder says weather problems increase when there is no water* Teachers say relief being given to students following power crisis
Energy Crisis in Pakistan 81* Computer labs at GCU and LCWU closed down during load shedding* Students not expecting good results owing to poor preparationThe hours-long load shedding in the city is giving a tough time to students,especially schoolchildren, during the ongoing examinations. Students said that massive load shedding in the last few months hadadversely affected their studies. They said that they could not study properly inthe dim light and under hot and humid weather, as it gave them a headacheand had affected their eyesight. Some students also said that theirschools/colleges had power backup systems, but the systems were not beingused. They said that they had been compelled to take classes and sit inexaminations with no electricity in the rooms. Students enrolled in semester system courses, especially thosestudying computers and other sciences, said that they had an extra burden ofstudies owing to the semester system. They said that they had to makepresentations and submit term reports and assignments, which was impossiblewith no electricity in town. Teachers also said that they had problems givinglectures during load shedding. The students of intermediate, preparing for their practicals, and othersfor the Pakistan Military Academy (PMA) and Central Superior Services (CSS)examinations have also denounced the Water and Power DevelopmentAuthority (WAPDA) and the government for not complying with thestudents’ demand of uninterrupted supply of electricity. A number of institutions in the city did not give summer holidays totheir students, as they had switched to the semester systems and wereconducting examinations. Institutes like the Lahore College for WomenUniversity (LCWU), Government College University (GCU), FormanChristian College University (FCCU), and the Punjab University (PU) are stillopen and holding exams. Moreover, the students of Kinnaird College,Beaconhouse National University and FAST National University of Computerand Emerging Sciences are still due at the institutes for their assignments andresearch works. Zara, a student of BS (Honours) at the LCWU, said that semesterexaminations were ongoing at different departments of the university, andusually there was no electricity during the examination. “It becomes difficult tosit in the examination rooms due to the heat and poor light, but we cannot doanything about it,” she said, adding that there were no power generators at theuniversity to facilitate the student. She said that students were also havingtrouble preparing for the exams, as they could not frame a proper timetablefor studies owing to unplanned and massive load shedding. Water shortage: Jawaria Ahmed, a PU Hostels boarder, said thatstudents had no choice but prepare for their exams in candlelight during load-
82 IPRI Factfileshedding hours. “The situation gets worse when the hostels run out of water,as we are not allowed to go out in the nighttime,” she said. Adeel Anjum, a Ravian studying computer sciences, said that studentsin his department did most of their work on computers, but the administrationof the GCU had issued orders to close the computer labs at the time of loadshedding. “We have to prepare our assignments and need the Internet for that,but now the computer labs are often closed due to the load shedding and wehave to suffer,” he said, adding that late submission of assignments was alsoaffecting their grades. Tayyab Bhatti, preparing for his CSS exams, said that students takingthe exams usually went to libraries for preparations, but now it had becomedifficult for them to focus on their studies due to frequent power failure asthey could not sit in libraries for long hours without electricity and coolingsystem. Facilitating students: BNU Communication Adviser Arfa Sarfraz said,“Although we have closed the university for summer holidays, students whohave not submitted their research work are still coming,” she said, adding thatevery second student had the excuse that he/she could not complete theresearch work due to load shedding. “I personally believe that students aresuffering the most due to the energy crises.” Khansa Nazim, an LCWU faculty member, said, “The administrationknows that students are disturbed due to load shedding. We have kept thisthing in mind before setting up question papers,” she said. She said thatteachers had also been suffering for the last many months because they usuallyused projectors to deliver lectures, which they could not do properly at thetime of load shedding. Another teacher at the university said that the authorities there toohad directed the computers and science departments to shut down computerlabs and laboratories during load shedding out of fear of getting equipmentdamaged. Expectations not high: Asim Khan, a GCU student, said that powerfailure had always been a problem for students, and that thousands of studentsin the city had taken their matriculation, intermediate, and bachelorexaminations during load-shedding hours. He said that students could notprepare for their exams properly, due to which they were not expecting goodresults. He said that the graph of quality education might fall due to energycrises. “Neither the students, nor the teachers are satisfied with theirprogress,” he said. An official of the Lahore College of Arts and Sciences (LACAS) saidthat students there had suffered a lot during examination days due to frequentpower shutdowns. He said that parents were concerned about the progress oftheir children. “They have complained that students are unable to concentrate
Energy Crisis in Pakistan 83on their studies due to hot and humid weather conditions,” he said. He saidthat the school administration was trying to remove the parents’ concern byinstalling UPS systems and generators at various branches of LACAS. Adnan Lodhi, Daily Times, June 28, 2008http://www.dailytimes.com.pk/default.asp?page=2008%5C06%5C28%5Cstory_28-6- 2008_pg13_9 N EW E NERGY O RDERBY bringing together the world’s major oil producers and consumers inJeddah, Saudi Arabia marked a turning point in the negotiations for a newglobal energy order that is emerging under the weight of soaring oil prices,which are driven by factors other than supply and demand. “It could be asked whether the 140 dollars per barrel price can benegotiated between Opec (Organisation of Petroleum Exporting Countries),the new actor, which is global capital, and the governments of the Group ofEight (industrial powers),” Víctor Poleo, a Venezuelan professor of graduatestudies in the oil economy, commented to IPS. On Thursday, crude oil prices broke through the 140-dollar a barrelbarrier for the first time. The price of oil “can no longer be dictated by Opec,because a significant portion of the price would seem to obey market laws thatare not its own,” said Poleo. Saudi Arabia perceives “the beginning of a transition stage to a newpower order in the world energy system,” he added. In Poleo’s view, “theglobal energy system is witnessing the emergence of a new order. In the oldone, under Opec, the level of prices hovered around 70 dollars a barrel; in thenew system, the increase is of the same magnitude,” and the decisions taken bySaudi Arabia “form part of the new talks.” The informal June 22 meeting of representatives of governments andthe major oil companies in the Saudi Arabian city of Jeddah called for moreinvestment in crude production, as well as greater transparency in oil markets,where futures trading is helping to drive prices up. Producer and consumernations and companies will meet again in Madrid next week, at the 19th WorldPetroleum Congress, and in late 2008 in London. Spain’s Minister of Trade and Industry Miguel Sebastián said that“after enjoying 15 years of low prices, our economies have become addicted tooil, and the world is not prepared for the challenge of a steady rise in prices.”Opec is made up of Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait,Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela,which account for over 75 per cent of global proven oil reserves. Referring to the Jeddah meet, the Caracas newspaper El Nacionalpointed out that the “father of Opec”, Venezuelan lawyer Juan Pablo Pérez
84 IPRI FactfileAlfonzo, proposed half a century ago the creation of an organisation ofproducers and consumers that would regulate the world oil market. The corporations that controlled the oil business, known back then asthe “seven sisters”, scorned the proposal, and Saudi Arabia, Iran, Iraq, Kuwaitand Venezuela went on to found Opec in 1960 in Baghdad. At the time, Venezuela was the world’s leading oil exporter, a positionthat was taken over and has been held for decades by Saudi Arabia, which sentfrom Jeddah a message to its fellow Opec members that it will not favour arise in prices, as indicated by its unilateral decision to boost output from 9.5 to9.7 million barrels a day as of July. Meanwhile, Shokri Ghanem, the head of Libya’s National OilCorporation, said his country was studying the possibility of cutting output toprotest a bill under debate in the US Congress that would empower the JusticeDepartment to sue Opec members for limiting oil supplies. Libya is also fighting a US law that allows the families of victims ofstate-sponsored terrorism to go to court and seek the seizure, as punitivedamages and compensation, of any asset owned by the terrorist-sponsoringcountry, or of money from those governments that is held by US companiesdoing business with them. These remarks pushed prices up to a record highabove 142 dollars a barrel by Friday. Opec Secretary General Abdalla Salem el-Badri said the organisationplanned to invest 160 billion dollars over the next five years to raiseproduction by five million barrels a day. The members presently pump 32million barrels a day, while global demand amounts to 86 million barrels. US economist Joseph Stiglitz, winner of the 2001 Nobel Prize foreconomics, wrote earlier this month that “Only new patterns of consumptionand production — a new economic model — can address that mostfundamental resource problem. “Two factors set off today’s crisis: the Iraqwar contributed to the run up in oil prices, while biofuels have meant thatfood and energy markets are increasingly integrated,” he added. The big oil companies, in the meantime, are raking in tens of billionsof dollars each. With these profits, said Poleo, global capital is financing itspositioning with regard to the shifts occurring in the global energy scenario. The price bubble continues to swell, to the benefit of these interests, although analysts say oil prices will inevitably come down. Humberto Márquez, Dawn, June 30, 2008 http://www.dawn.com/2008/06/30/op.htm#top
Energy Crisis in Pakistan 85 P OWER P LANTS T OP G AS S UPPLY P RIORITY L ISTThe government has decided to give priority to the power sector in allocationof fresh gas supplies in view of the continuous rise in the oil import bill andthe resultant increase in power tariffs. Sources told Dawn that the decision was taken recently by theEconomic Coordination Committee of the cabinet because of the increasingdependence on imported furnace oil for power generation and little progressmade in the development of water and coal-based projects. Pakistan had to pay about $13 billion on account of oil imports duringthe last financial year, and it is estimated to keep rising because of record oilprices in the international market. The government understands that if freshgas arrivals are not dedicated to the power sector the oil import bill couldtouch $20 billion this financial year. As a result, fresh gas supplies from new fields will not be available fordomestic and commercial consumers. Under the existing petroleum policy,domestic and commercial consumers get the first priority, followed by fertiliserplants. Next on the priority list are gas supplies for independent powerproducers and gas utilities which have historic agreements for firm supplies,followed by the general industrial sector and compressed natural gas (CNG)stations. Wapda, KESC and captive power plants, which did not have firm gassupply commitments, used to be on the fifth position and the cement sectorwas the last on the list. The first priority now will be the power sector whenever gas suppliesare available from new fields. Likewise, gas from new fields which are not linked to the nationaltransmission system is supplied to the fertiliser sector as a priority, followed bypower companies having firm gas sale agreements. In this case too, the firstpriority will now be given to power plants. At present, the power sector is the largest user of gas, accounting for a33.5 per cent share, followed by the industrial sector with 23.8 per cent,households 18 per cent, fertiliser 15.6 per cent, transport 5.4 per cent andcement 0.9 per cent. Last year, consumption of gas in the transport sector increased by 28per cent, household consumption grew by12 per cent and fertiliser 3.5 percent. Consumption in the power sector declined by about 1.2 per cent asthe previous government concentrated on providing gas connections to thedomestic sector and promoting CNG for transport.
86 IPRI Factfile Now the government is trying to put the CNG in the back seat alongwith the domestic sector to make sure that maximum supplies are madeavailable for po0wer generation. Khaleeq Kiani, Dawn, July 10, 2008 http://www.dawn.com/2008/07/10/top4.htm R ESOLVING P OWER C RISIS A P RIORITYThe coalition government has undertaken a series of initiatives to steer thecountry out of the debilitating power crisis and the country will overcomeelectricity shortage within a couple of years. In his first interaction with the ethnic media at the High Commissionon Tuesday, the newly-appointed Pakistan High Commissioner Wajid ShamsulHasan said the government was attaching top priority to resolving the powercrisis. He recalled that during the last government of Benazir Bhutto, thePPP government had invested $5 billion in the power sector, leading to theaddition of 4,000 megawatts to the national grid. Mr Hasan said since then not a single megawatt had been added to thegrid which, according to him, had led to the present crisis. He blamed former senator Saif-ur-Rehman for hounding out theforeign investors who were willing to invest further in the power sector inPakistan. On the exploration of Thar coal, he said during the rule of the lastgovernment, a Chinese company had written some 60 letters to the petroleumministry but when no response was received, it withdrew from the country. Dawn, July 10, 2008 http://www.dawn.com/2008/07/10/nat13.htm A UTHORITY S ET U P FOR T HAR C OAL M INING The federal government has set up a provincial coal authority by abolishingtwo federal and provincial agencies to expedite mining and development ofThar and other coal deposits in Sindh. A formal notification to this effect has been issued by the PrimeMinister’s Secretariat, technically empowering the provincial government totake all decisions relating to coal development and power generation inconsultation with provincial and federal agencies. Headed by Sindh chief minister, the authority will comprise thefederal minister and secretary of water and power, a provincial minister, Sindhchief secretary and the managing director of the Thar Coal Authority.
Energy Crisis in Pakistan 87 The authority came into being after the abolition of the Sindh CoalAuthority (SCA), a provincial agency, and Thar Coal Mining Company, a jointventure of federal and Sindh governments. The authority will function as one-stop organisation on behalf of allministries, departments and agencies of the federal and provincialgovernments for mining, development, leasing and sub-leasing of Thar coalarea. It will also be responsible for development of clean coal technologies,research and development and gasification. The authority will also be required to attract investment for coalmining and gasification in Thar and other areas in province for powergeneration. A senior government official told Dawn that the federal governmenthad “handed over” the development of Thar coal project to the Sindhgovernment, mainly to expedite the setting up of a 1000MW coal-fired powerplant. He said hurdle delaying the project had been removed with the centreagreeing to a “supporting role” for itself in the $1.5 billion project and lettingthe Sindh administration “spearhead” and sort out all issues relating to theproject. He said the mining of Thar coal would cost $400 million and thepower plant $1.1 billion. It will be an integrated power plant which willgenerate its first megawatt in six years. He regretted that the project could notbe set up by the RWE company of Germany, Shenhua of China and HasanAssociated of Pakistan because they were demanding a tariff which kept onincreasing from 5 cents to 9 cents for the development of each megawatt andthat too without having any back-up data relating to the project. Ihtasham ul Haque, July 10, 2008 http://www.dawn.com/2008/07/10/nat11.htm