The back-breaking rates of thermal power will only generate more corruption in future

From SHAMIM A. RIZVI, Islamabad
Jul 06 - 12, 1996

As many as 35 thermal power plants in private sector (including 20 captive plants — small capacity plants set up by various industrial units mainly to meet their demands) will be operative by June 1998 adding over 3500 MW to our present electricity supply of about 11000 MW in the country. This would not only rid us of the curse of load shedding but would be sufficient to meet the growing demand upto the year 2003/2004

Till last year the average growth in yearly demand was about 8 percent but during the year 1995 it fell to 5 per cent mainly because of the frequent increases in power charges. This sudden fall compelled the authorities to cap the thermal power production by about 3500 MW. As a result, all MOUs which were in the initial than stages were cancelled. In the ear future the growth rate is not expected to be more 6 percent as another increase in power charges is on the anvil.

Consequent upon the attractive incentives offered to investors in the new energy policy — which included import of machinery free of any duty or surcharge and a guaranteed sale of electricity produced at a very attractive price of 6.5 cents per unit for an initial period of 10 years — there was almost a beeline of applicants, both foreign and domestic with foreign collaboration. The Private Power and Infrastructure Board (PPIB) originally received 116 applications for production of a total of 26,000 MW through thermal system with financial involvement of over 30 billion US dollars. Only 75 out of 116 received letters of intent representing 20,977 MW and later only 31 applicants constituting 7,199 MW managed to get letters of support. Out of these 31, only 15 reached the stage of purchase agreements.

Following are the 15 commercial power projects which have either seen financial close or are near that stage and are actively working on the project. Some of them which are in advanced stages of work may be commissioned before Dec. 1997 to earn the bonus of paisa 7 per unit. All of them are expected to be operative by 1998 with an investment of over 3 billion US dollars.

Project Location Capacity

1. AES Lal Pir Limited Lal Pir, Punjab 365 MW

2. AES Pak Gen.(Pvt). Ltd. Lal Pir, Punjab 362 MW

3. Davis Ahmed Energy Fim Kassar, Chakwal 10 MW

4. Gul Ahmed Energy Ltd Korangi, Karachi 136 MW

5. Habibullah Energy Ltd Quetta, Balochistan 140 MW

6. Japan Power Generation Raiwind, Lahore 120 MW

7. Kohinoor Energy Ltd. Raiwind, Lahore 131 MW

8. Power Generation System Patoki, Punjab 116 MW

9 Rouch(Pakistan) Power Sidhnai, Punjab 412 MW

10. Saba Power Company Sheikhupura, Punjab 109 MW

11. Saba Shipyard (Pakistan) Korangi, Karachi 288 MW

12. Southern Electric Power Raiwind, Punjab 115 MW

13. Tapal Energy Ltd West Karachi 126 MW

14. Tri-Star Energy Mauripur, Karachi 110 MW

15. Uch Power Limited Dera Murad, Balochistan 586 MW 3146

Following are the 20 captive power plants which will produce about 400 MW. Most of them are in operation and some are nearing completion and will be operative within this year.

1. Lucky Power

2. Crescent Power,

3. Gutron Power of Gatron Industries

4. Regent Power of Mohib Group

5. ICI Power of ICI

6. Gulistan power of Gulistan Textile

7. Maple Leaf Electric of Maple Leaf Cement

8. Zeshan Power of Zeshan group

9. Kohinoor Genertech or Kohinor Mills

10. Enertech Pakistan

11. DG Khan Electric

12. Soonire Power Limited

13. Cherat Electric Limited

14. Kohinoor Power Limited

15. Ellahi Electric Co Ltd.

16. Genertech Pak Limited

17. Ibrahim Energy Limited

18. Nishat Tek Limited

19. Sitara Energy Limited

20. S.G. Power Limited

By the end of 1998, we will have additional power of over 3500 MW against our additional requirement of about 2500 MW by that time. Ghazi Brotha which is likely to be completed by the year 2003, will produce additional hydel power of 1450 MW. So, we will be surplus in energy by the beginning of the new century. It means abandoning of almost all the MOUs signed with American investors during the much publicized visit of US Secretary for Energy, Hazel O'Leary in the beginning of 1995.

The government should, therefore, not entertain any fresh applications for thermal power generation (which is too expensive) and should concentrate on hydel power. While the work on Ghazi Brotha project is on, the government should, without any loss of time, try to build up a consensus on Kalabagh Dam which has been described as a must for our survival. A Chinese expert on energy commented some time back that the building of the Kalabagh Dam was a matter of survival for the Pakistani nation. He said "In my opinion, it is a pity that every day the water of the enormous Indus river goes into the sea without being put at work in Kalabagh, the country is losing about 4 million US dollars per day on electrical power, not to speak about the benefit of irrigation.

It has been estimated that Pakistan has the potential of producing about 40,000 MW of hydel power while it is producing only 6000 MW. The prime minister should personally intervene to depoliticise the issue of Kalabagh Dam and develop consensus of the federating units on the issue to ensure that work starts on Kalabagh Dam during her present tenure. Resorting to thermal power production can only be justified as an emergency measure — as hydel projects take much longer time for completion and require much heavier investment than thermal projects. But the cost of production is almost 3 times more for thermal units than hydel ones. The purchasing price offered by the government, 6.5 cents per unit — about Rs. 2.25 at current conversion rate — to investors for thermal power generation is almost 4 times the cost of one hydel unit incurred by WAPDA which is about 65 paisa per unit.