CONSTRUCTION OF DAMS VITAL FOR SUSTAINABLE ECONOMIC GROWTH

SHAMIM AHMED RIZVI
Apr 06 - 12, 2009

The growing menace of load shedding combined with constantly rising of electricity tariffs is turning into a grave national crisis. Unless immediate remedial measures and initiatives are launched on war footing to enhance electricity generation at an affordable cost, the crisis, which has already badly hit the industry and forced the public to resort to agitation could virtually destabilize the government.

Providing electricity to the consumers at affordable cost is not possible through IPPs run on furnace oil, the cost of which is prohibitive. It is possible only through hydle resources for which we will have to build dams-big and small as long and short terms measures. The difference in cost and pricing can be judged from the fact that WAPDA is paying Rs6 to Rs6.50 to IPPs for purchase of one unit of electricity, which is costing only 80 paisas per unit produced from Turbela and Mangla Dams. Coal is used through out the world for generating electricity at a comparatively much cheaper cost comparing to thermal power. United States is meeting 80% of electricity needs through coal. Pakistan has been blessed with vast coal reserves-fifth in the World. Nature has been most kind enough to our country to bless it with tremendous resources of coal that can produce more than four times the present production of about 20,000mw and suffice to meet our growing demand by at least 100years.

We have known and researched hydro cites to produce more than 30,000MW at 1/5 of the cost of thermal power. Coal reserves in Thar deserts alone are capable to produce more than 40,000MW of electricity at a much cheaper cost. It is our misfortune that because of the flawed price we have failed to make use of this huge potential. It is a fact that despite tall claims and rhetoric usually made at the highest level, nothing concrete is visible on the ground to ease the worsening power shortage in the country. The power policy-2002 announced by the then government with a big fanfare and which was supposed to serve as a better replacement of the 1994 power policy has failed to deliver. No doubt, generation of hydropower is a lengthy process, but there has been a dead silence on major dams despite all earlier rhetoric. The work has not yet started even on the Diamir Bhasha dam, which was inaugurated by the President about 15 months back. A blanket hush has also overtaken the government about Kalabagh dam in spite of the former President's assertion that misunderstandings and misconceptions about the reservoir have been removed. The government has been talking of importing electricity and gas but practically there has been no progress on any of the several projects. Similarly, despite huge potential of alternative energy, we have been extremely slow in exploiting the potential.

According to experts, Pakistan is blessed with immense resources. It has a hydro electricity potential of about 50,000MW while only 6500MW is being utilized at present. We have a potential of producing over 40,000MW of electricity through our high quality coal reserve in Thar alone. Its use at present is negligible, it is estimated that Pakistan can producer about 50,000MW through wind, a source recently was developed to produce energy in the coastal areas of Sindh and Balochistan. Nuclear energy is the cheapest source but it is still in a state of infancy in Pakistan. Efforts are on to start second nuclear energy plant Chashma-II of 500MW capacity in Karachi with Chinese help, who had built Chashma-I about 25 years back.

The growing water shortage and in its resultant effects on extreme decline in the production of hydel electricity has created an alarming situation in Pakistan threatening its future economic growth. We have reached this stage because of the negligence of successive governments during the last 3 decades, which failed to construct new dams and water reservoirs in the country. Adequate energy at an affordable cost is must to sustain the level of annual economic growth. Thermal power produced through furnace oil is an immediate remedy but its production cost has almost become unaffordable. Coal fed and the hydel source of energy seems to be only alternative but it is a much longer process. Nuclear energy is the ideal solution but this concept is still in its infancy in Pakistan. Hydropower at almost 1/5th of the cost compared to thermal power is the only option.

On the other hand, Pakistan is on the threshold of acute water shortage. According to the World Bank report, "Pakistan water economy is running dry" per capita availability of surface water has been gradually dwindling and has come down from 5400 cubic meters in 1951 to only 1000cubic meters by 2005. This is bound to hit Pakistan's agriculture badly, which is the backbone of countries economy. With utilization of only half of hydro potential through construction of mega dams and water reservoirs, we can ensure adequate water supply to our agriculture for the next 50years. Realizing the gravity of the situation, the incumbent government has taken some initiatives in this regard. The main purpose of President Zardari visits to Iran and China was to seek their help in Pakistan's efforts to overcome these crises. The government is working on two plans of action-short term to be completed by the end of 2010 to produce additional 4000MW to meet the likely difference of 4to4500MW between supply & demand by 2010, and to develop our hydle resources being a potential of over 20,000MW of electricity by 2020. For this purpose President Zardari, during his visit to China last month, signed an agreement under which China will provide technical assistance to Pakistan to develop its hydropower projects. The Government is trying to establish a consortium of all major multilateral and bilateral donors led by the Asian Development Bank (ADB) by next month for arranging $12billion funding for the construction of Diamer Bhasha dam before the next year. The World Bank may also join the consortium.

Hydropower is globally recognised as a renewable, cheap and reliable resource of energy. It generates electricity with zero emission and produces no waste. There is no requirement of fuel, operating cost is much lower and hydropower plants have longer economic lives than thermal fired plants. While installed hydropower capacity remains 6,493 MW, enormous potential exists to exploit this huge indigenous resource of energy. According to estimates, it is possible to generate some 34,000 additional MW from 150 sites, which have already been identified.

In fact, the share of hydroelectricity in the overall energy mix is persistently decreasing from 57 percent in the 1980s to 42 in the 1990s to current 32 per cent of the total installed capacity. The good news is that the government plans to increase it to the level of 20,000 MW by 2017. Because of recent restructuring, the Pakistan Water and Power Development Authority (WAPDA), re-named as Water Resources and Power Development Authority, is focusing on implementing multipurpose water projects, including medium and mega hydropower generation projects, either reservoir-based or run-of-the-river type.

In addition to expediting various on-going hydropower projects and rehabilitating/ modernising the operational power stations, WAPDA has recently embarked upon a series of new hydropower projects. WAPDA Chairman Shakeel Durrani told reporters at a briefing that the Authority is on target to increase hydropower generation three times from current 6,500 megawatts to over 20,000MW by 2017, which would bring hydropower generation on a par with thermal electricity. He said the projects which would be completed during that period included 969MW Neelum-Jhelum project, 4,500MW Diamer-Basha, 4,710MW Bunji and 3,700MW Dasu. Barring Neelum-Jhelum, he added, all these projects would be located on different sites of River Indus. In addition, about 1,000MW would be added to Tarbela by installing new turbines on one of its tunnels.

"It is imperative for Pakistan to exploit its hydropower generation potential as it is the cheapest source of power. WAPDA has speeded up this process which will go a long way in bringing cost of electricity to a reasonable level." He hoped hydroelectricity generation, if accompanied with expected exploitation of coal potential, would substantially reduce dependence on gas and furnace oil and bring down cost of power generation. "Arranging finances for hydro-electric generation is relatively easy as multilateral agencies give positive signals to hydro-electric projects because these projects are environment-friendly and commercially viable. Investment in these projects can be recovered in a short period," he added.

Durrani said financial resources required for $2.1bn Neelum-Jhelum hydropower project had been arranged. WAPDA would generate $1 billion from 10 paisa per unit surcharge, which was allowed to consumers for seven years. Besides that, the Islamic Development Bank, Kuwait, Saudi Arabia and Abu Dhabi funds and the Organization of Petroleum Exporting Countries, have promised $750 million financing to Pakistan. China would arrange the balance of $448 million in the form of supplier credit. He said a residential colony and offices for the contractor and consultants of Neelum-Jhelum project were almost complete, adding work on two tunnels had started. "The Chinese are also imparting on-job training for constructing tunnels to Pakistani engineers." Durrani said WAPDA would need $11.5 billion for construction of Diamer-Basha dam, including $3.5 billion mark-up, which would accumulate during the construction of the project. The amount, he added, would be payable in installments after the dam became operational. The payments would pose no problem, as the dam would generate its own resources. "Actual amount needed to complete the dam is $8 billion."