“Energy Crisis
in Pakistan”
CONTENTS
1- Abstract
2- Introduction
3- Climax of the Content
4- Conclusion
1- Abstract:
Energy
Crisis in Pakistan is one of the severe challenges the country is facing today.
Electricity,gas, water and fuel are essential parts of our daily life and its
outage has severely affected the economy and overall living of ours. Thousands
have lost their jobs and businesses, our daily life has become miserable.
Pakistan is currently facingupto18 hours of electricity shortage a day, and is
expected to face more if not dealt with in time.
The
purpose of this study is to analyze the nature of this crisis and to propose
some short-term as well as long-term solutions to this problem.
This
study is exploratory in nature. I have done my best to conclude and sketch up
some recommendations in the light of identified hurdles in the way of
implementing the appropriate solution to the problem.
This study finds some major
wholes in our system, if they are covered up we can’t only overcome the
deficiency of electricity in our systems but also we would be able to export it
to our neighboring countries.
The basic flaws that this
study identifies are related to circular debt, and the inadequate capacity of
our electricity production and distribution systems. I also emphasized on some
prospective alternatives to our electricity production that are cheaper and
they provide more clean electric energy as compared to those energy plants
which run on fossil fuels.
2- Introduction:
Pakistan has been facing an
unprecedented energy crisis since the last few years. The problem becomes more
severe during summers. However, this winter was no different. During the peak
crisis there was a power shortage of 3-4 hoursevery day. People without
generators and UPS faced tremendous problems. The prices of both continued to
increase due to a sharp increase in their demand.
Almost
two years ago, the then WAPDA Chairman who happens to be a caretaker minister,
admitted that WAPDA cannot meet the current demand for electricity. It’s
surprising that such a senior and experienced person took so long to find this
out. On top of that, the Government which talked about Pakistan’s supposedly
booming economy failed to understand the gravity of the situation. General Pervaiz
Musharraf (R) after becoming Chief Executive used to talk about building dams
especially Kala bagh Dam. This was one of the many promises he failed to keep.
Even after that, very few power plants have been set up to meet the demand of
electricity.
During the second Government
of Benazir, some independent power plants were set up. The policy makers of
Pakistan have so far failed to understand one thing. They talk about making
dams and setting up nuclear power plants but why they not understand the
importance and benefits of alternate energy sources such as solar, windmill
energy etc. They are cheap and quick methods for producing electricity.
Pakistan is a very blessed country because solar energy is available in most
cities round the year,similarly wind energy is readily available in the coastal
areas. These energy sources if tapped can be of great help in reducing the current
demand-supply gap.
Pakistan is facing power shortage,
natural crisis
and oil crisis. In a report, it is claimed that Pakistan has faced 1000 to 2000 MW shortage of power. And it will face 3000MWshortage next year. Pakistan is facing 80 million tons of oil shortage according to its need. And is
lacking behind the needs of natural gas at about 27 million ton of energy in current year and this ratio will rise
in upcoming years.
3- Climax of the Content:
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 that the Governmentis responsible
for this inflation. Government
gave the blunt gift of inflation, unemployment, terrorism and energy crisis to
the public. The Governmentoffended the masses. Some Economists argue that such
type of increase in prices had never seen before the Government of PervaizMusharraf.
The prices of essential domestic commodities have touched the psychological
boundaries. The fixed income employees and creditors are affected by this
inflation.
During 5 years, the prices of Red Chili increased by 62.7%, flour 66.2%
vegetable oil 120%, sugar 30.9%, rice 69.9% and other essential domestic
commodities like vegetables, chicken etc. also showed increasing trend of
prices. According to official reports, the inflation rate is 7.2% and according
to non-official reports like UN 8.6%,World Bank 8.9% and Asian Development Bank
9.1%. This inflationary pressure has psychologically affected the employees and
employers. Some renounced economists argue that the reason of this increasing
inflation rate is the standard year 2001 according to which inflation rate is
measured. In 2001 the foreign aid was given to Pakistan, therefore, low
standards were made to measure the inflation rate. Although the increasing
trend in the prices of fuel and other things in the international market is
another factor but the standard year is also a factor.
Not only these factors caused hyper-inflation but also energy crisis played a
vital role in this hyper change in the prices of daily use domestic and capital
commodities.
There are 3 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 is 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 5-10 hours of load
shedding, but sometimes it hits the level of 18 hours. Even the industrial
capital of Pakistan, Karachi, is suffering from the same situation.
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 WAPDA
is enjoying the monopoly but Government has to pay 2 rupee/unit as incentive.
Our neighboring 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 9 millionUS $ is now functionless due to delay in the
construction of Kala Bagh Dam, Some scientists predicted that in next 10years, 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 5th largest treasure of the World. Pakistan has signed a contract with
China to generate 300 Megawatts by coal deposits in 2003, but due to some
reasons, it has not been completed till now.
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 110US
$/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).
There are a lot of expectations with the new Government as Nawaz Sharif pledged
that if he came in rule he will fix the prices of domestic commodities like
vegetable oil, flour, sugar and rice for 2 years. Now the new Government should
take basic steps to eradicate inflation. I think energy crisis is the real
cause of this inflationary pressure. We are hopeful that new Government will
take some positive steps to fulfill its promises and public expectations.
Hydero Energy and its Crisis in
Pakistan
The energy crisis starts from 1990 and
still Pakistan is in the crisis of these all as before. The latest and perhaps
the most troublesome crisis faced by the Pakistani nation these days is the
shortage in supply of electricity. The country is facing a huge electric power
crisis these days. Though it has been more than a year since when the country
is facing these crisis, but till now no proper solution has been made to this
problem neither any proper planning has come into existence since the symptoms
and begging of this short supply of electricity. While rolling blackouts or
load shedding, as it is locally known, has always been a staple of daily life
in Pakistan, the problem has become acute in the last couple of years.
This
crisis appears insurmountable in the near or even long-term future, unless
proper understanding and correct implementation is undertaken on priority
basis. At present, total power production capacity in the country is about 19,500
MW, out of which Hydel Power is only 6,500 MW, balance of 13,000 MW is thermal
either using Natural Gas or Furnace Oil. Small capacity of 450 MW is Nuclear
and only 150 MW is through coal.
It
is very important to understand the consequence of the prevailing situation.
Current price of furnace oil is about Rs.49, 000 per ton, which amounts up to Rs.49
per kg. On an average, 1 kg of furnace oil produces 3.8 kWh of electricity.
Thus, the cost of furnace oil for generating one unit of electricity is about Rs.13.
On top of this, the fixed cost of a thermal plant works out to be about Rs.3per
unit. Therefore, one unit (kWh) of the electricity produced by all thermal
plants using furnace oil is Rs.16 per unit. According to WAPDA/IPP agreement,
the private power producers will charge WAPDA the actual fuel cost for which
they have a direct contract with PSO. As we all know that WAPDA tariff charged
from the consumers is about Rs.5 per unit (kWh).
The
production cost of furnace oil electricity is Rs.16 per unit, add to it the
transmission, distribution cost (including losses), the total cost of such
electricity works out to approximately Rs.22 per kWh. The difference between
WAPDA tariff and the furnace oil electricity is Rs.17 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.425Billion.
If WAPDA has to balance its books, it would require 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 can’t 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, and it is also not feasible to increase the power tariff very
much. Therefore the power crisis is far greater than what is being perceived.
In the absence of extremely heavy subsidy, WAPDA is delaying payments to IPPs
and also to the oil companies. The result is that IPPs are now producing much
less electricity than their capacity.
Crisis of Thermal Energy
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.
Not now but in the future. And that the prices will escalate enough for them to
make a killing. If one looks at the real picture, there is no shortage of oil,
there has been no shutdown of any major producer, nor has there been a sudden
jump in the import from any large consumer. The Chinese import for their
industrialization is not more than 10 % annually. This is certainly not enough
for the huge jump in the World crude rates. This jump is matched by the
phenomenal profits of the oil companies and of course the oil producing
countries. The thirst for profits of the oil traders has benefited the oil
producers - Iran being a major beneficiary.
The US Government must be wondering at the irony of this windfall benefiting a
prime enemy of American and Israeli interests at the cost of millions of
innocent citizens of the US and Europe, engineered by the greasy gnomes of the
oil trade. There is no threat of an oil embargo, nor of a war, it’s just pure
speculation, funded by the huge mountains of American and European cash at the
disposal of the Soroses of the Oil trade. They stand to make a killing at the
expense of hopeless citizens of the World. As I had written in an earlier piece
as far back as 2005, when an attack on Iran was imminent, that the rise in oil
at 100 $ a barrel would impact on the food prices has proved prophetic with the
current sky high prices of bread in Europe and America.
In the meantime we poor Pakistanis are suffering with 50 % living below the
poverty line, and many more being pushed under thanks to the current oil crisis
which has managed to create tsunami that is a threat Worldwide. With no remedy
in sight, electricity riots are already a common sight but the frequency of
breadlines breaking into riots is increasing daily, not just in Somalia but in
parts of the third World where we thought wheat was never in critical shortage.
The riots in Pakistan are for two reasons. Firstly, the price - a Worldwide phenomenon, and secondly,
a physical shortage mainly due to incompetence in the many layers of our Government.
ALTERNATE
ENERGY RESOURCES AND THEIR SOLUTION
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. Nuclear power is safe, economical and
environment-friendly.
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.
Natural gas
import:
The IPI
(Iran-Pakistan-India) 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.
Even if Pakistan starts building the pipeline on priority basis, it may take 5
years to complete the project, and it may plug the energy gap only thereafter.
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.
Coal:
Pakistan has enormous coal
reserves (probably the 3rd 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.
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. The issues confronting the wind power sector are as under:
(a)
Scarcity of equipment: Wind power equipment is in short supply, all over the World.
Propelled by GDP growth needs, demand for energy has been growing globally, and
as cost of energy derived from fossil fuels has increased two-fold during the
last three years, the demand of wind power equipment has also grown manifold.
(b)
Due to growth in demand and increase in the cost of metals, especially steel
and its products, the price of equipment required for wind power has also
increased manifold.
(c)
Although the cost of equipment and know how is high, the advantages of wind
power are quantifiable, and after a number of years, electricity generated by
this technology would become the cheapest compared to alternate sources of
energy at that point of time.
To
install this initially expensive, but eventually very economical technology, in
the first instance Pakistan may start importing and installing the equipment to
generate electricity but in the long run it must encourage domestic production
of the equipment. If Pakistan can replicate the sophisticated machinery and
equipment for Uranium enrichment and also can produce or cause to be produced
very high RPM centrifuges, machinery, electric circuits, vacuum valves and
allied equipment then, probably, then it also has the capacity to produce
equipment for wind power. In this regard, Pakistan can also enter into
technology transfer agreements with foreign manufacturers.The considerations
that place wind energy on top of the list is mainly due to the fact that
generating energy using this technology requires no fuel, and the energy
production process does not pollute the environment.
4- Conclusion:
Owing to rich reserves nature bestowed
Pakistan, this country has flexibility in energy mix. Fortunately, coal, the
best World resource is abundant in the country and stands the first choice in
solving the energy crisis. Agriculture is the backbone of Pakistan’s economy, so
the second best choice is Hydro resource. Thanks to nature again that Pakistan
has rich gas reserves adding another very important energy resource. Yet small,
medium and long-term measures include the up gradation of existing resources
and incorporating solar, wind, wave and fossil fuels energies to resolve the
threatening issue of energy crisis.
WE DOES NOT TAKE
ANY RESPONSIBILITY THAT WHAT HAS BEEN WRITTEN IN ABOVE TERM PAPER
Submitted By:
IRFAN TARIQ (UMT LAHORE)
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