Energy Crisis in Pakistan

Introduction

The dimensions and consequences of the ongoing energy crisis in Pakistan are much in numbers and awful. Citizens are facing up to 20 hours of load shedding, a situation they could have never imagined. Official reports acknowledge that over 450,000 industrial workers have lost their jobs and the industrial sector of country is facing an annual monetary loss of over Rs. 240 billions and this is just a brief view of the destructive socio-economic impact of the issue. Even more alarming is the fact that the phenomenon of load shedding appears to be beyond arrest even in a couple of years. Violent demonstrations because of load shedding have been taking place across the country since 2006. The current surge in the problem is a clear indication of the dismal scenarios that can go from bad to worst in near future if meaningful measures are not adopted to bring about a reasonable level of change. It is time for the policymakers of country to come to terms with reality, they have to realize that their traditional tactic of beating about the bush by emphasizing non-issues while ignoring the real problems is no longer an option. If they continue to do this, matters may rapidly spiral out of control, resulting in deep confusion and causing irreparable damage on many fronts. The first and by far the most important step towards addressing the existing energy crisis is the identification of its root causes. The correct solution cannot be formulated unless the factors that created the problem are identified. The record of supply and demand for past few years is elaborated in graph.

Energy Crisis in Pakistan

Historical Background

Any sincere attempt to examine the anatomy of the energy crisis would reveal that it has not emerged overnight. In fact, it was fostered by bankrupt policies followed by various regimes over the last three decades — although the greatest responsibility rests on the shoulders of the Musharraf dispensation. The energy crisis is a self-inflicted problem that has been allowed to reach worst downfall even though the country lacked neither energy resources nor the opportunities to exploit them meaningfully.Amongst the greatest tragedies the sector has suffered were the lack of vision and the unwillingness to shoulder responsibility of governments and political leaderships. An examination of the country’s energy history shows that other than the regimes of the ’60s and ’70s, none of the rulers of country did justice to this important sector. During the second government of Madam Benazir Bhutto some independent power plants were set up. Had they not been setup then we would have had a much bigger crisis with life almost coming to a standstill. The track record of governments over the past two decades has by and large been disappointing since they tended to rely on makeshift arrangements instead of working on long-term, goal-oriented projects.Even in the few cases where farsighted policies were formulated, the resolve to ensure their implementation was simply not in evidence. Other major factors contributing to the downfall of the energy sector include the pursuance of personal and political interests, political interference in energy departments, financial and administrative irregularities, corruption and nepotism. All the dimensions of the existing energy crisis, such as severe levels of load shedding, unaffordable electricity and gas prices and dependence on foreign energy supplies, are the direct consequences of this worst sort of malpractice. Although the country experienced over 100 per cent growth in terms of installed capacity over the last two decades, it has not been smooth sailing. Hardly any value-engineered projects were developed over this period. Other than the 1450MW Ghazi Barotha project and a couple of nuclear power plants, there is not much to be satisfied about. Meanwhile, the list of blunders in terms of the dumping of essential projects and the orchestration of unviable and counterproductive projects is very long. The independent power producers’ (IPPs) Programme of the 1990s, for example, could have been quite beneficial but ultimately turned out to be counterproductive due to issues such as the lack of transparency, excess-generation capacity, high-tariff structures and unviable power-generation technologies. Interestingly the World Bank, one of the key players in the IPPs


Programme, has also acknowledged the existence of issues such as the lack of transparency, political influence in the award of contracts and excess generation capacity. Therefore, although the IPPs brought one of the few periods of electricity prosperity, they ended up with grave economic implications for the Water and Power Development Authority (WAPDA) and the country. Some of the other crucial setbacks inflicted on the energy sector during this period include the dumping of Wada’s power development Programme in the 1980s, the binning of the State Engineering Corporation’s plan to indigenize power plants in the 1990s, barring WAPDA from thermal power generation in the 1990s, the persistent shelving of the Kalabagh dam project, the failure to institute large new hydropower projects and growing reliance on thermal power. This sequence of irrational and absurd decision-making, either by incompetence or by design, gradually put the energy sector in trouble.Ironically, even in the midst of a devastating energy crisis, the same mistakes are being repeated: evidence of this is the rental power Programme that is now actively being pursued. This, once again, is an attempt to divert attention from the real issues and to pursue other agendas.


Some Recent Facts and Figures

Installed Capacity:Fossil Fuels --- 12,580 MWHydro --- 6,463 MWNuclear --- 462 MW

Total: 19,505 MW

There are four major power producers in country. WAPDA (Water & Power Development Authority), KESC(Karachi Electric Supply Company), IPPs (Independent Power Producers) and PAEC(Pakistan Atomic Energy Commission).Break up of generation of power amongst these producers is as follows.

WAPDA – 11,272 MWKESC -- 1756 MWIPPs -- 7070 MWPAEC -- 812 MW

These all facts are about the total capacity of generation not what the country is generating at this instant. Due to the variability in total generation by different factors those facts cannot be given correctly.Pakistan is facing power shortage, natural crisis and oil crisis. In a report it is claimed that Pakistan has faced 4000 to 5000 MW shortage of power. And it will likely face 7000MW next year. Pakistan is facing 120 million tons of oil shortage according to its need. On the other hand, international oil prices have not only broken all records but are touching new highs, with every news directly or indirectly affecting the black gold industry. And is lacking behind the needs of natural gas at about 27 million ton of energy in current year and this ratio will raise in upcoming years.


Effects of Load-Shedding I come from the software industry which has been badly hit by the present power crisis. Apart from our sector all the sectors of country are been badly affected by this problem. Pakistan is facing a number of constraints in the path of social economic and political development. One of them is the ever-increasing inflationary pressure on the general public. This inflationary pressure created a social instability and misconception among the messes towards the Government. General public considers the government responsible for this inflation. Government gave the blunt gift of inflation, unemployment, terrorism and energy crisis to the public. The government offended the masses. Some economists argue that such type of increase in prices was never seen before the regime of President Zardari. The prices of essential domestic commodities have touched the psychological boundaries. The fixed income employees and creditors are affected by this inflation. Energy crisis played a vital role in this hyper change in the prices of daily use domestic and capital commodities. There are three main resources used to fulfill the energy requirements Electricity, Fuel and Gas. Despite having the treasure of natural energy resources, Pakistan’s energy production plants are not fulfilling the country’s requirements effectively. The present energy crisis is affecting the economy entirely. Industrial and daily life has paralyzed by this energy crisis. WAPDA is just fulfilling the country’s energy need near to 46% the remaining is fulfilled by the alternative expensive resources. The energy crisis created cost pull inflation in the country, as electricity is the key material for any production plant. There is a general observation of 6-12 hours of load shedding, but sometimes it hits the level of 20 hours. Even the industrial capital of Pakistan (Karachi) is suffering from the same situation. Industrialists due to high prices of electricity use alternative resources (petrol) in electric generators to fulfill their energy needs but, the fuel (petrol) prices in international market cross the psychological limits of US $125/beryl recently. The high prices of fuel and electricity created a long-term cost pull inflation (increase in the prices of raw material of one


commodity cause high prices of other commodities).The production cost of furnace oil electricity is Rs.18 per unit, add to it the transmission, distribution cost (including loses), “the total cost of such electricity works out to approximately Rs.24 per kWh. The difference between WAPDA tariff and the furnace oil electricity was Rs.16 per kWh.” It is estimated that the country consumes at least 25 billion units of electricity produced annually through furnace oil, which amounts to the total deficit of Rs.425 Billion. If WAPDA had to balance its books it was requiring a subsidy of Rs.425 Billion. This deficit is somewhat reduced due to cheap power produced through hydel energy and natural gas, but the deficit cannot change substantially, unless bulk of electricity is produced through hydel energy. Obviously, a deficit of Rs.300-350 Billion cannot be sustained, the government does not have resources to pay such a huge subsidy, this the main reason behind the large increments in electricity tariff by this recent government. The deficit left by the previous government affected the country’s economic growth badly in this era of recession. The oil crisis facing the world, is not about supply or about the increase in demand. It is about the speculators who are pumping huge amounts of money into forecasting a serious shortage ahead.


ALTERNATE ENERGY RESOURCES AND THEIR SOLUTIONS:

1. Nuclear energy: KANUPP was established with the help of the Canadian Government in the 1960’s and nearing end of its lifecycle. The “Chashrna Nuclear Power Plant” has been designed and built in collaboration with People’s Republic of China, and is being operated and maintained by Pakistani scientists and engineers, delivering full power of 300 mw to the national grid. With the Karachi Nuclear Power Plant also operational since 1971, Pakistan is the only country in the Muslim World operating nuclear power plants joint recently by fastest growing Muslim country Islamic Republic of Iran. Nuclear power is safe, economical and environment-friendly.

2. Natural gas exploration: Pakistan still has huge untapped gas reserves. If we allocate more resources to their exploration there is a possibility that in the near future part of the energy resource gap may be met from new reserves. The current gas prices and the limits they place on increasing the profitability of this sector would not attract any reasonable amount of investment, whether local or foreign, since the cost of exploration has gone up substantially and current well head prices do not justify further investment at the current rate of return. The other factor discouraging exploration of new gas reserves, which would continue to haunt us, is the law and order situation in most of the areas where gas finds can be a possibility.

3. Natural gas import: The Iran-Pakistan gas pipeline project is also a long story (global political situation is not being discussed for obvious reasons) but the current plan to lay the 54 inch pipeline through the coastal area has a major flaw.


4. Solar energy:At present, except for low-ampere domestic use, solar energy is a distant possibility, although in a country like Pakistan where clouds are a rarity for most part of the year it could be a workable option. There is a simple way of harnessing this energy for the industry, which is dependent on steam generation through oil or gas-fired boilers.

Water can be pre-heated by converging sun rays on tanks made of metals /alloys that can easily absorb the heat. This pre-heating can reduce the cost of producing steam and reduce the energy resource gap to an extent, though negligible Major steps are been taken by recent democratic government of Pakistan People’s Party is this regard as a new solar energy plant is just stated working on 30th May 2012.

5. Coal: Pakistan has enormous coal reserves (probably the third largest in the world) that remain untapped and even the industries that have converted from gas to coal as their energy source have to import coal mostly from


Indonesia, which is again a drain on Pakistan’s scarce foreign exchange reserves.

6. Wind energy: The government is following a policy to encourage investment in wind energy. Two corridors have been identified in Sindh, and land has been allocated to various wind energy projects. Although there are certain problems in this method of power generation but still it’s a cheaper and reliable source of power generation especially in the areas where the wind usually gets twisted and blows throughout the air.


SOLUTIONS OF ALL PROBLEMS

Why in the era of energy reservation Pakistan is not utilizing its energy resources? Pakistan is just relaying on the electricity production by Dams. But Pakistan has not enough dams or water to generate electricity. Although WAPADA is enjoying the monopoly but government has to pay 2 rupee/unit as incentive. Our neighbouring country India has built a number of Dams to overcome the energy crisis but Pakistan government has paid no heed on this issue. Many projects are delayed due to provincialism the glaring example is of Kala Bagh Dam. The costly machinery amounted US $9 million is now functionless due to (rust) delay in the construction of Kala Bagh Dam, Some scientists predicted that in next 10year world has to face the water shortage also.If the government fails to construct dams for the generation of electricity due to Provincialism government should have to adopt alternative options to accomplish the energy needs of the country. As Iran has large treasure of natural energy resources like natural gas and fuel, despite this Iran is engaged in the attainment of nuclear power generation plant. Pakistan, despite being an atomic power does not think about the nuclear electric generation plant. International community is imposing sanctions on Iran due to uranium enrichment but Iran pays no heed to them. Then why is the Pakistani government reluctant to use its nuclear plants to tackle energy crisis?Secondly, Pakistan’s western area especially Thar is enriched by natural coal, which is the fifth largest treasure of the world. The world’s best sight to locate a wind energy utilizing plant is also in this piece of heaven at Jhampir. Further more following few steps should be taken for making the country self-sufficient is energy sector.

Govt. must pay circular debt. Govt. must invest to cover up line losses. Industries that consume 32% of our electricity, must apply Energy

Conservation Systems and Management measures. They can start producing their own energy with their own investment

without depending upon the grid. Industrialists and new investors must consider the Energy Sector as good

an investment as any other. Needs image building. Govt. must convert from inefficient gas plants to efficient ones in order

to conserve electric energy.


Govt. must consider investing in Solar Energy plants to produce Electricity as they provide free energy, and are less mechanical than Wind Energy.

Ironically, even in the midst of a devastating energy crisis, the same mistakes are being repeated: evidence of this is the rental power Programme that is now actively being pursued. This, once again, is an attempt to divert attention from the real issues and to pursue other agendas. The country’s policymakers must learn from their mistakes before it is too late. As the starting point of any meaningful measure leading to a resolution of Pakistan’s energy problems, they have to put an end to malpractices in the system. Weaknesses and inefficiencies have to be checked instead of wasting time and resources in buying unviable solutions. It is time national interests were put before petty personal and political interests, for the change needs to go beyond mere writing or address.


Energy Crisis in Pakistan

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