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Pakistan's energy crisis what new government can do updated


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Pakistan's energy crisis what new government can do updated

  1. 1. Pakistan’s Energy Crisis: What the new government can do ? Akhtar Ali CEO-Proplan Associates 6th June 2013
  2. 2. About the Author Akhtar Ali is an engineer (B.E, M.S.) energy consultant, advises public and private sector clients on energy policy, investments and tariff issues and has authored a number of books on the subject. He has been a visiting Professor of Energy at IoBM and teaches energy management to MBA students. He has held senior management appointments in Pakistan’s public and private sector. His last appointment in public sector was as Chief Executive, Karachi Pipe Mills, a unit of State Engineering Corporation. He was Research Fellow Energy at Harvard University’s Kennedy School of Government. His professional career spread over more than over three decades includes management consultancy& training and company management. He is an author of eight books on various subjects such as energy, governance, political economy and resources. He heads Proplan Associates, a consulting company having a current focus on Energy. He is also Chairman (REAP) Research on Economy and Politics of Pakistan, a think tank that brings out research publications on national issues. Books by Akhtar Ali: The Political Economy of Pakistan: an Agenda for Reforms. (1994). Pakistan’s Development Challenges :Federalism, Security and Governance 2010 Pakistan’s development; economy, resources and technology,2012. Pakistan Nuclear Dilemma: Energy & Security Dimensions. (1984). Pakistan Energy Development: the Road Ahead.(2010). Pakistan Issues in Energy Policy, 2012. Nuclear Politics and Challenges of Governance. (1998) South Asia: Nuclear Stalemate or Conflagration. (1987). Pro-plan Associates, Karachi, Pakistan:tel,0213-5845359, Mob;0345-2447714;
  3. 3. Time Horizon- no Time  Immediate  Short Term Measures  Medium Term  Long Term
  4. 4. Immediate Solutions • Task force on Energy-Professionals and political • Inject cash reduce circular debt • Ban on 1000 cc and up CNG Cars, CNG price enhancement • Demand management measures like day light working hours for shops • Conservation like Air Conditioners usage limitations, 26 deg C etc • Crack down on Gas and Electricity theft, Collection of receivables, disciplining energy company workers and executives
  5. 5. Medium Term-technical • Convert GENCOs and other ST Plants to Coal • Relocate IC Engine Power Plants near Dairy Farms and run on Bio –Gas ;expand Biogas generally • Convert Fertilizer Plants to Thar Coal • Launch Thar Coal:1000-5000 MW • Wind Power Auctions -500 MW + per year • Solar Tube wells and other Solar, Solar Geysers and Heating; target 100 MW +per year initially, • Introduce Bio-CNG and Phase out CNG • Fast track Bhasha
  6. 6. Medium Term_Institutional • Marketize Energy sector • Bring in Transparency and openness • Re-organize Energy Sector as a whole • Privatize • Rationalize and marketize energy pricing • Political and politics
  7. 7. Marketize Energy Sector • New Energy Policy • Change Business Models;Replace one (government/central buyer)model • Large Consumer Choice /Buyer-seller arrangements; Third Party access rules and facilitation • Solicited projects based on tender and auctions • Replacement of Cost-plus and take or pay • Promote Energy Market and supply companies
  8. 8. Reorganize Energy Sector • Coordination among MPNR and MoWP and others through PM’s advisors office on Energy or a National Energy authority under Cabinet division • Overhaul regulatory apparatus ;merge NEPRA and OGRA • Introduce dual Board /Supervisory Board ala Europe • Divide Large distribution companies into smaller ones; both gas and electricity • Privatize initially as contracting out rather than asset ownership
  9. 9. Energy Pricing • Target 10 cents(upper limit) per kwh for all new power projects • Target 10 USD per MMBtu for gas import projects ; try to avoid oil linkage in imported gas • LNG arbitrage as a tool for cheaper LNG; relocate redundant LNG regasification Plants in USA along with the contracts; bargaining chip with U.S. vis-à-vis IP project • No wind Power beyond 8 cents; no solar beyond 12 cents • Enhance power rates gradually • Enhance gas rates faster both retail and producer price for new gas sources; producer gas price new 10 USD /MMBTu
  10. 10. Political and Politics • Political reconciliation in Balochistan to enable • Energy exploration • Rationalize 18th ammendment • Consensus on Royalties esp Hydro royalty • Cooperation with India bilaterally or/and under SAARC in energy sector, esp Wind Power and Coal • Pursue China actively: bring them back in Thar coal; seek support in gas exploration as well
  11. 11. Long Term • Resource development ; Local Gas and Hydro • Thar Coal to 20-25000 MW • Thar Coal Gasification • Solar 10,000 MW from the year 2020; 1000 MW per Year • Wind 10,000 MW; 500-1000 MW per year to be launched immediately and continued long term • Pursue Energy imports; power and gas at affordable terms