The deficit in generation capacity is expected to grow in coming years if existing capacity is not revamped and new capacity is not added speedily


Feb 07 - 13, 2005



Despite adverse conditions, electricity load shedding this year in the country has been avoided by sheer determination of the federal government and the support particularly from the Sindh Government as well as the Indus River System Authority (Irsa). Earlier, Wapda on December 24th of last year, presumably viewing the projected demand-supply scenario of electricity and non-availability of water from storage dams for hydro electricity generation on closure of irrigation canals, had announce load shedding to the Distribution Companies. However, immediate coordinated actions by the Federal Minister for Water and Power averted the menace of load shedding.

There were apprehensions that most parts of the country will start facing major power shutdowns from January 1, 2005 for about a month due to reduction in hydro electric generation on stoppage of water discharge for irrigation from two major reservoirs Tarbela and Mangla for about a month. The apprehensions were well founded as normally in such a situation there is no water discharge exclusively for power generation.

In the meantime, presumably to ensure additional supply to the domestic sector during winter season, SNGPL, the gas utility in the north, had started gas load shedding for Gadoon Aamazi Industrial Zone and other upcountry industrial consumers. The gas supply to Gadoon was reportedly disconnected completely and reduced up to 60 percent for the rest of the industries in the upcountry. Gas load shedding or low pressure supply is a cause of serious concern to the industries, which for continuing production are obliged to switch over to costly fuel sources like furnace oil.

The Minister finding Wapda's load shedding plans announced without prior approval of his Ministry, put load shedding in abeyance and called an emergent meeting of the stakeholders including Wapda. He said it was not in the national interest to carry out load shedding in the country as commercial and industrial activities could not be allowed to come to a halt because of power shortage. Moreover, it might damage the country's image abroad, which the government has built internationally as an attractive destination for investment. The Minister chaired the meeting, attended by senior officials from NTDC, Wapda, Irsa, the provinces and Discos. The meeting reportedly reviewed critically the power shortage in Wapda system and its causative factors such as non-availability of gas, low pressure, overhauling and shutdown of a number of IPPs and other thermal generation plants including three units of Tarbela Dam due to non-availability of gas and water.

After the meeting, it was announced that there would be no load shedding in winter. Electricity shortfall would be met through hydro electricity generation under special arrangements for controlled release and storage of water. Also, the generation companies and IPPs were asked to carry out maintenance work in a manner not to cause power shortage in the country. Three power generation units in Quetta, Lahore and Faisalabad were non-functional because of gas shortage, the minister also took up this matter with the petroleum minister. Supply of additional furnace oil was also lined up by PSO for which the federal government was willing to consider finances to reduce the power shortage.

To overcome the crises, the Minister had reportedly sought opinion of Irsa Chief who suggested release of 1500 cusecs of water from Tarbela for enough electricity generation to avoid load shedding. The averting of load shedding has been made possible because Sindh, as a gesture of goodwill, allowed the use of 1500 cusecs of its water share from the Tarbela dam to generate power. The plan is to take Sindh's water out of Tarbela dam, use it for generating electricity and water so discharged in the meantime to be stored at Chashma Barrage, from where it would be released in February 2005 for meeting the province's irrigation requirements.



The water level at Chashma reached maximum storage capacity sooner than expected, more due to rains, and there were apprehensions that the release of water for hydro electricity generation might cause suspension of the ongoing rehabilitation work at Sukkur Barrage. Due to higher flow downstream Chashma mainly due to rains, Irsa divert about 22,000 cusecs to Chashma-Jhelum Link Canal and onward to Punjnad. Thus, water would reach Sukkur Barrage in a longer time and allow more time for rehabilitation of the Barrage. The rain reportedly improved considerably the water level of the water storage reservoirs.

The President, the Prime Minister and the Standing Committee of Senate on Water and Power had reportedly shown serious concern regarding impending load shedding. However, prolonged load shedding of electricity was narrowly avoided this year. In the coming years, the government might not be so lucky if remedial measures are not mounted now to ensure availability of adequate supply of electricity to fully meet demand during winter when there is little hydro electricity generation.

The Minister of Water and Power has been quoted saying that his ministry is making concerted efforts for uninterrupted power supply to the consumers for industrial and economic growth and for comfortable living of common man with total elimination of load shedding by the power utilities. Following important measures in this regard are submitted for consideration.

1. Our existing overall generation capacity is short by international standards. The deficit in generation capacity is expected to grow in coming years if existing capacity is not revamped and new capacity is not added speedily. Present per capita consumption of electricity, a measure for assessing level of economic development, is very low in Pakistan. Availability of reliable electric power, essential for Information Technology and quality value-added exports, would increase if the existing thermal generation plants are fully revamped, are operated well and fuel supply is assured on long-term basis. Purchases of electricity from the IPPs have to be optimally efficient. Transmission and distribution networks might be well maintained. In case of audit of energy efficiency, it would be revealed that many industries and commercial enterprises are using electricity very inefficiently. With more efficient plants, power motors, pumps, lighting, etc substantial electricity would be conserved and thus reduce the need for additional generation capacity. All these activities are important for the economy and must not be ignored by diverting all attention to setting up of new generation capacity.

2. Wapda is and would remain the parent body of NTDC, GENCOS and DISCOS for policy decisions. However, for averting of load shedding, the government might make NTDC as the focal point, which might initiate appropriate measures in coordination with other stakeholders. The government is also urged to review the Power Policy-2002 with participation of all stakeholders within the framework of proposed long-term energy plan.

3. The provincial governments are looking for higher rates of royalty on oil, gas, coal, etc and for hydel electricity generation. It is suggested that the royalty issue might be looked into by the federal government with more compassion. Due to accrual of larger royalty amount for development purposes, additional employment opportunities and meaningful participation in all phases of the development projects, the provincial governments are expected to help accelerate exploration for oil, gas, coal and hydel power generation, etc and facilitate their production by providing basic infrastructure and improving law and order situation in the respective areas.

4. It is about time that the country aims at avoiding usual load shedding of natural gas throughout the country during the three cold months December, January and February. All industries and gas-based thermal power plants might get regular supply of gas throughout the year. This is imperative if the country has to be competitive and succeed under WTO regime. Moreover, the entire gas scenario including gas discoveries awaiting exploitation, existing gas reserves, gas committed to the existing as well as proposed power generation plants, fertilizer and other factories, large commercial houses, captive power plants, etc might be reviewed in a planned manner and remedial actions initiated.

5. Hydel power generation helps stabilize the tariff and keeps the overall tariff within affordable limits. Also, generation of electricity from nuclear power plants provides big relief and therefore might be factored in the overall power situation. The IPPs based on furnace oil, IPPs based on non-pipeline quality gas and coal fired thermal generation plants can play an important role in the country to balance electricity supply with peak demand at times when water is low for hydro generation and so is gas for power generation. These sectors might be provided funding and encouragement on timely basis.

6. Power plants are highly capital-intensive and need large loan financing in addition to equity funds. Funding is easier to arrange when most of the security package agreements including tariff and government approvals are in place. Long-Term Credit Fund (earlier known as Private Sector Energy Development Fund), currently managed by National Bank of Pakistan, might be in a position to meet part of the loan requirements. However, the funding needs for accelerated implementation of new power plants and related infrastructure might require larger funds beyond the present capacity of the LTCF. There might be justification for restructuring and revamping of LTCF to help meet the present day challenges of power sector and infrastructure finance.