Earlier than expected Pakistan will face severe load
shedding due to water touching 'dead level' in major dams. On the one
hand the country will experience electricity shortage and, on the other
hand, the prospects of earning extra dollars from export of furnace oil
will not be realized. The much talked about and said be
'incentive-studded' Power Policy announced in 2002 has not yielded the
desired results as yet. The million dollar question is, can the country
succeed in averting emerging power crisis?
It seems almost certain that during the calendar year
2004 Pakistan will face severe load shedding, similar situation
prevailed prior to announcement of Power Policy in 1994. One may have
all the criticism on the said Policy, but the investment attracted as a
result is the largest in the history of Pakistan. All the subsequent
Power Policies failed in attracting even one-tenth of the quantum of
investment achieved through Power Policy 1994.
Recently, Waseem Haqqui, Chairman, Board of
Investment, said that in response to Power Policy 2002 the government
had received 33 Expressions of Interest (EoIs) for a total 5,500 MW
power generation capacity in the private sector. However, a closer look
at the progress of these EoIs does not show that any of the plants would
become operational by year 2006.
At present 15 independent power plants (IPPs),
including HUBCO, are operating in the country. However, it must be kept
in mind that investment in HUBCO was committed much earlier than the
announcement of Power Policy 1984. HUBCO is an entirely different
project for which international lenders had provided funds. The
remaining 14 IPPs are the outcome of Power Policy 1994. Since then, in
more than one decade, not even one IPP has become a reality.
The blame of emerging power crisis should only go to
those who have been propagating the philosophy of surplus electricity
generation capacity in the country. Even the document released by
Private Power & Infrastructure Board (PPIB) at a recent presentation
made at Karachi, says that surplus capacity still prevails and year
2005-06 onwards the demand of electricity will surpass the supply.
It seems a little surprising that the PPIB officials
are still talking about surplus electricity generation capacity in the
country. The basic premise, taking installed hydel capacity as
dependable capacity, is not correct. The dependable hydel generation
capacity should never be considered equal to the installed capacity. The
dependable capacity should always be taken at historic average or at the
minimum water availability. Since the forecast about water availability
may change from year to year, the dependable capacity, should always be
based on the minimum and not the maximum. Simply because whatever
installed capacity may be there it can operate only if sufficient water
The point seems most credible if one looks at the
present situation. There may be still surplus capacity but it would
operate at less than half because of water level. The water level in
dams has already reached the dead level. The situation is expected to
get further precarious in the winter. Therefore, the installed hydel
generation capacity of 6,500 MW becomes totally irrelevant.
One of the factors responsible for poor financial
health of WAPDA is the growing share of thermal power generation in
total number of units generated. At present, WAPDA produces only 30% of
its generation from hydel plants. Most of the power plants IPPs are also
oil fired. The change in mix has not only been causing losses to
state-owned power generation and distribution companies but is also
responsible for persistent increase in electricity tariff.
However, the most unpleasant situation arises when
the utility companies start implementing 'load management', a decent
replacement for 'load shedding'. Most of the industrial and commercial
activities are undertaken from 9 in the morning to 6 in the evening. If
the utility companies opt for load shedding during this period, it
causes colossal losses to the companies.
Business community has learnt the lesson and most of
the bigger industrial units have installed stand-by generators. However,
the worst victim of load shedding are medium and small industrial units,
which cannot afford to install stand-by generators. Many experts go to
the extent of saying that despite stand-by generation facilities, the
business community cannot remain fully immune to the forthcoming
electricity crisis. They will need generators which are capable of
running up to 16 hours, at the minimum.