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Pakistan's energy scenario.

Byline: Rizwan Ghani

Pakistan is facing many challenges, and acute energy shortfall tops the list because if the trend is not arrested, our industry could come to grinding halt. It was in this backdrop that the government held three-day conference on energy conservation in April 2010, and a consensus plan for energy conservation was unveiled whereby federal government had taken all the stakeholders into confidence to share power shortage equitably. Prime Minister Syed Yousuf Raza Gilani had announced a ten-point strategy to bring an end to unscheduled load shedding and also reduce scheduled load shedding by 33 percent.

He announced that the Federal Government will provide Rs 116 billion to clear the circular debt, which was one of the reasons for the energy crisis. The salient features of the comprehensive plan were five-day working week for six months, staggered industrial closure once a week, suspending commercial activity at 8 pm and partial diversion of gas from industries to power-generation. It was expected that the measures would reduce the electricity demand by 2,400MW, almost half of the official demand and supply gap on any given day.

But with increase in temperature in June, the demand for electricity has increased, which has neutralized the effect of the demand management and the shortfall today stands around 4500 mega watt. It was expected that the situation would further improve with melting of glaciers and monsoon rains in the coming months, which would help increase hydel power generation.

With the reduction of circular debt, another 2,225 MW of electricity will be generated through the fast-track completion of approved thermal projects over the next six months. As a result, the net shortfall will reduce to around 1,000 MW or so by the end of this year. Conservation measures must also be implemented in a uniform and non-discriminate manner in all regions and sectors of the economy. The federal and provincial governments should work as a role model to inspire all strata of society to implement the measures suggested in the conference. The redeeming feature of the conference on energy conservation was that WAPDA's briefing had radiated an aura of optimism.

The representatives of WAPDA had told the meeting that there were identified hydropower projects of 25,000MW in Azad Kashmir, Gilgit-Baltistan, Khyber Pakhtunkhwa and Punjab. The WAPDA also proposed that multi-purpose and run-of-the- river hydropower projects be given top priority because they would ensure water availability for agriculture besides producing cheap electricity and reduce dependence on imported fuel.

About seven run-of-the-river hydropower projects (without dams) were currently under implementation with a total generation capacity of 1,505MW, including 969MW Neelum-Jhelum project in Azad Kashmir, four projects in Khyber Pakhtunkhwa and one in Punjab. Neelum-Jhelum project would be completed in October 2016 while all the other projects before October 2011. Recently, Pakistan and Iran have signed Pakistan-Iran gas pipeline agreement, and the project is planned to be completed by 2014, which would take care of additional demand for gas and energy. But US Congress is finalizing legislation to further tighten sanctions on Iran over its nuclear programme, which Washington believes is being used to develop nuclear weapons.

If Pakistan is obliged to drop Pakistan-Iran gas pipeline through UN sanctions, energy-starved Pakistan is likely to suffer the most, especially when the US has refused to ink civil nuclear agreement with Pakistan. On a question from the reporter regarding impact of the US sanctions that were under consideration, Prime Minister Gilani said: "If the US imposes sanctions, these will have international implications, and Pakistan as a member of the international community will follow them. He perhaps buckled under pressure or he mixed up the UN sanctions with the proposed US sanctions. However, the next day he changed his stance and said that the US sanctions would not affect Iran-Pakistan gas pipeline.

Meanwhile, Pakistan and China have inked an agreement for two more nuclear power projects. Despite America's criticism, China and Pakistan are poised to go ahead with these projects. Through Nuclear Suppliers Group, America is trying to stall Pakistan's nuclear agreement with China; however China opines that agreement with Pakistan is within the parameters of the IAEA.

Pakistan has 19,439 Megawatts (MW) of total installed generation capacity from hydroelectric, thermal, and nuclear sources. The Water and Power Development Authority (WAPDA), Karachi Nuclear Power Plant (KANUPP) and Chashma Nuclear Power Plant are the three major public sector organizations.

The Karachi Electric Supply Company (KESC), with a 1,756-MW capacity also involved in generation, transmission, and distribution of electricity in the Sindh province was privatized in November 2005; a consortium led by Hassan Group holds a 73 percent equity stake, while the remaining 27 percent shares are with the government. The Independent power projects (IPPs) are involved in power generation only. The total installed capacity of WAPDA stood at 11,298 MW during July-March 2006-07, of which, hydroelectric accounted for 6,463 MW, thermal accounted for 4,835 MW, followed by the IPPs 5,873 MW, KESC (1,756 MW) and nuclear 462 MW. But there is need to harness the coal reserves to save on the foreign exchange spent on import of furnace oil.

Large reserves of coal in Thar can also help generate energy to save billions of dollars spent on import of oil. In the past, many a time it was suggested by experts to prepare a plan for gainful exploitation of the huge coal reserves in Thar for producing electricity but some 'vested interests' in the previous governments were reported to have obstructed the plan.

Given the prohibitive cost of oil, meeting energy needs has become a challenge for both developed and developing countries; and to keep the wheels of industry moving every country is obliged to put this subject on the top of its agenda. Pakistan is, however, endowed with enormous reserves of coal in Thar, Lakhra and other places, but no serious effort has been made to exploit these coal reserves and establish the coal-fired power plants. Of course, there are financial constraints and international pressures on installation of nuclear reactors and generation of electricity. It was in 1992 that the Geological Survey of Pakistan (GSP) discovered huge sub-surface deposits of coal - the second largest in the world - in Tharparkar District, Sindh.

The appraisal studies established technical and commercial viability of confirmed reserves of 175.50 billion tons of coal. During early 1990s, the government had worked out feasibility for harnessing energy through coal but the plan was placed on the backburner due to the reasons best known to it. In April 2002, a state-run Chinese company Shenhua Group Corporation was assigned the job to develop Block-two of Thar coalfields, accepting its proposal to establish a 600-MW power plant at the mine-mouth with associated captive coalmines. Shenhua Group carried out studies related to coal-geological and hydro-geological investigations in the area, and a project feasibility report was finalised.

But one does not know the fate of the project whether it was red-tape that discouraged the Group or it turned out to be a losing proposition. On May 8, 2007, the Private Power and Infrastructure Board (PPIB) had allowed Hasan Associates (Pvt) Limited, Karachi, to establish a 1,000 MW capacity integrated mining-cum-power generation project based on the Thar coal. The project was earlier awarded to an American power company but was later abandoned.

The government is keeping other options also open. President Asif Ali Zardari and his Afghan counterpart Hamid Karzai held a meeting with the World Bank president during their visit to Washington and agreed to facilitate electricity trade between Central and South Asian regions. A joint declaration issued after the meeting said that President Zardari and President Karzai had also agreed to work with the World Bank to improve economic cooperation between the two regions. The two presidents and World Bank chief Robert Zoellick also discussed the development of a Central Asia-South Asia Regional Electricity Market and the Central Asia-South Asia (CASA) Transmission project.

They noted that as a first step towards the development of this market, the CASA 1000 project would allow the export of surplus hydropower from Tajikistan and the Kyrgyzstan Republics to South Asia during summer. But no progress seems to have been made in this regard perhaps due to the current situation in Afghanistan. It goes without saying that unless situation in Afghanistan improves the idea of import of gas from CARs would not go beyond noble sentiments.

The government is trying to expedite the construction of Diamer Bhasha dam, but it will take at least seven years to complete. Therefore, alternatives have to be worked out to over come the crisis. It is too well known that water and energy are matters of life and death for Pakistan, and the construction of Bhasha dam along with other dams is vital not only for our survival but also for enhancing the agricultural out-put, for increasing overall industrial productivity, reducing the cost of production due to cheap electricity and generating new job opportunities. It is estimated that successful completion of the Diamer-Bhasha dam would help develop agriculture and also generate cheap energy for industrial development.

According to one estimate, Pakistan was merely producing 6,000MW electricity through hydel projects against its capacity of generating 40,000MW. Since the delay in starting the Bhasha dam has already resulted in increased cost, it is imperative to expedite the construction of the dam, as any delay could escalate the cost because of the galloping inflation.?
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Publication:Energy Update
Geographic Code:7IRAN
Date:Oct 31, 2010
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