Resolving the energy crisis in Pakistan

Humayun Akhtar Khan

The total installed power-generation capacity in Pakistan is about 20,000 MW. At any point in time, only about 75 per cent of it is operational. Pakistan`s demand is around 15,000 MW. The operational capacity and demand seem to match. Why is it, then, that we are only able to produce a little over 10,000 MW these days, to suffer the huge load-shedding and industry closures?

There are a variety of factors. Pakistan`s hydel sources have the potential to generate the 6,000 MW, but they are not producing more than 2,200 MW due to the water shortage. Gas shortages for IPPs and Gencos have resulted in another 1,000-MW shortfall. The circular debt owed to power producers, oil marketing companies and gas utilities is another factor.

From 2002 to 2007, Pakistan`s annual GDP growth averaged seven per cent, per-capita income and exports more than doubled. But while the economic planners were doing a good job, the energy planners of that government could not keep pace. Under the new government, which blames the previous government for all the country`s ills, the only energy policy we have seen is rental power plants (RPPs). This policy has been declared non-transparent and incapable of meeting the shortages of power by the Asian Development Bank.

All the ten new IPP plants currently being commissioned were financially closed during the last government, despite the fact that the IPP policy of that time left the entrepreneur at the mercy of NEPRA for tariff determination. The IPP policy of the PPP government in the mid-1990s might be considered non-transparent, but the fixed tariff basis on which proposals were solicited is something we should move towards. Six hydroelectric power plants on which work is in progress started in the previous government. Five of them are in the public sector.

A flawed policy of the last two decades was successive governments disallowing WAPDA to upgrade its existing generation infrastructure or set up new power plants, while waiting for it to be privatised. This, coupled with an inadequate IPP policy and lack of political will to start large hydroelectric projects, has landed us in the current state of affairs.

The RPPs were supposed to generate 2,250 MW of very expensive energy. To-date, not one MW has come on line. The government has not formulated any plan to utilise the vast Thar coal resources. Nor has it made an effort for additional gas production. Not a single project in thermal, gas, coal and hydel power generation or development of primary energy sources has been initiated by this government.

Meanwhile, there has been no progress towards trans-national pipelines (from Iran, Turkmenistan or Qatar). India at first manoeuvred its way into the Iran-Pakistan-India (IPI) pipeline project, to use it for extracting the civil nuclear power deal from the US. Now that it is no longer interested in this pipeline deal, Pakistan has been pushed back by at least five years in the completion of this project. The US has now publicly advised Pakistan to drop the IPI gas pipeline.

The previous government brought together the world`s leading energy consultants to work on the Mashal LNG project. It floated the integrated project, which would have provided LNG on a long-term basis and eventually have resulted in an LNG terminal in Pakistan. Two major international LNG players came forward. After proper consideration, one bidder was recommended. For over two years, the new government has failed to award this project and is still sitting on it, even as the country suffers enormous gas shortages.

What the government did do eventually was to issue a tender for short-term purchase of LNG. Nowhere in the world is LNG sold or purchased through such tenders. In 2007, the LNG market was a buyer`s market and if the new government had awarded the contract, considerably cheaper LNG could have been available in Pakistan. This act of the government has undermined the entire LNG project.

Even after the Supreme Court decision nullifying this contract, we would be lucky if global LNG companies are still be interested in Pakistan. Without such supplies we are clearly heading for gas load-shedding, which will be worse than the load-shedding the country is facing now. What is required now is to have an optimum energy mix based on maximisation of indigenous coal and hydel power generation. Priority should also be placed on renewable energy sources like wind and solar energy, particularly in remote and rural areas.

The country`s current energy mix is: oil, 31 per cent; natural gas, 51 per cent; coal, 5 per cent, hydroelectric power, 12 per cent; and nuclear power generation, 0.7 per cent. What we should strive for is: oil, 20 per cent, natural gas, 51 per cent; coal, 15 per cent, Hydel 20 per cent; nuclear power generation, 4 per cent; and renewable sources, 1 per cent.

Optimal capacity utilisation from IPPs must be ensured. The IPPs set up in the mid-90`s are beyond the front loading periods of their tariffs. Also, the more the power is purchased from them, the lower will be the tariff. The popular belief is that Thar coal is of inferior variety. But technology exists in the world where such coal can not only produce energy but also, in the process, natural gas. At the same time, the brackish water in the Thar area can be converted into potable water during the process. Up to 10,000 MW can eventually be generated from Thar coal.

Every sugar mill in Pakistan is capable of producing energy which can be sold to PEPCO, based on a process called co-generation. Co-generation uses technology where bagasse, a by-product of sugar manufacturing, and coal can be used to generate energy. As a modest estimate, 2000 MW can be added to the system through this source. The tariff for such energy projects should be attractive enough for entrepreneurs and financial institutions to finance them.

Pakistan has an estimated hydel potential of close to 50,000 MW. Only a little over 6,000 MW has been installed. The big dams in the pipeline are Basha, Bunji and Dasu. Pakistan should have built a big dam every decade. Mangla was built in the 1960s and Tarbela in the 70s. Unfortunately, in the last three decades not a single big dam has come into existence. If the various political parties of this country can arrive at a consensus on as controversial an issue as renaming of NWFP, could they not have reached a consensus on Kalabagh? One large dam is required just to overcome the losses due to silting in the existing dams. More dams would enhance the water storage capacity of the country.

Almost 8,000 MW can be generated through small/medium hydroelectric units on rivers and canals. Pakistan has developed good capability of nuclear energy both for peaceful and strategic purpose. We must explore ways and means of increasing the share of nuclear energy from 0.7 per cent to 4 per cent per year. Seeking a civilian nuclear energy agreement from the US should be our top priority.

All the water and power sector projects like Gomal Dam, the raising of Mangla, the Thal Floodwater Canal, Kachhi Canal, Rainee Canal, Satpara Dam, Kurram Tangi Dam, Mirani Dam, Sabazkai Dam, Jinnah Barrage, Allai Khawar, Khan Khawar, Duber Khawar, Malakand III and Neelum Jhelum Hydro Electric Projects, were initiated during the last government. There are a number of other sites, in various stages of study, for water reservoirs and power generation, both on the Indus and Jhelum Rivers, and off-channel, which should be pursued vigorously. Also, there are small and medium storage sites in all provinces of Pakistan which must be pursued.

But all this needs vision and capacity in a government, which is not to be seen anywhere at present.

The writer, a former federal minister, is secretary general of the Pakistan Muslim League-Q. Email: hua khan@gmail.com

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