ENERGY SECTOR

Passing through a transitionary period in Pakistan

By AMANULLAH BASHAR
May 10 - 16, 2004

Despite being vibrant, the energy sector, having attracted reasonable investment, was still passing through a transition period, especially the power generation and distribution sector in Pakistan. The transaction of the power sector into a privatized, competitive electricity industry will be an evolutionary process over a period of time. Initial steps during the transition period will include active solicitation of offers to build new generation plants, selling power under contract initially to public sector utilities that can later be assigned to privatized distribution companies.

The power sector offers tremendous opportunities for investment as safely speaking over 50 percent of the population still need access to the electricity. The combined generation capacity available in the public and private sector is not sufficient to meet the current demand of electricity hence the situation calls for faster growth in power generation to meet the future demand of electricity.

Actually, the energy policy 2002 offers attractive incentives for hydel power projects, coal and gas fired power generating units to the private sector to overcome the shortfall in the urban centers and cater to the electricity needs of the rural areas. Under this policy only cheaper fuel such as coal, hydro electric and gas fired power units are being encouraged. In fact, it is sky high prices of the fuel oil which left no option but to find cheaper source of energy in Pakistan. The electricity prices is yet another prime issue which has gone beyond the reach of the common man and also counter productive for industrial purposes as it enhances the cost of productive thus leaving the manufacturing sector uncompetitive in the world market.

Although the 1994 energy policy had greatly helped overcoming the power shortage as the power producers adequately added to the power generation capacity of the country, but the tremendous increase in electric prices, however, an adverse side effect of that policy was.

Taking lesson of the past experience, the policy makers are preferring private sector investment in power generation based on coal and gas fired systems besides development hydro power project in Northern areas and Azad Kashmir.

Pakistan has two vertically integrated public sector power utilities i.e. WAPDA and KESC. WAPDA supplies power to all of Pakistan, except the metropolitan city of Karachi, which is supplied by KESC. The systems of WAPDA and KESC are interconnected through 220 kv double circuit transmission line. Out of a total generation capacity of about 17,664 MW in the country, 9949 MW is owned by WAPDA, 1756 MW by KESC, 437 by MW the Pakistan Atomic Energy Commission and 5,522 MW by Independent Power Producers (IPPs).

KARACHI

Every body, whether in the public or private sector, calls Karachi as the industrial and commercial hub of the country. While calling it as an industrial and commercial hub, people forget the most important factor that Karachi is the only city of this country where the population growth is over 6 percent as compared to less than 3 percent elsewhere in the country. The 6 percent population growth is not because of excessive fertility but it is because abnormal influx of population not only from the upcountry but from the neighboring countries like Afghanistan, Iran, India, Bangladesh and other parts of the region and there is no exaggeration in this calculation.

It is unfortunate that the policy maker usually ignore this formidable growth in population while making allocations of funds for social development of this city. The available infrastructure was obviously insufficient to cater to the need of the gigantic population both in regular and slums. The phenomenal growth in population was the real cause for rapid growth in slums right in the heart of the city and in suburbs of the town which is one of the major cause for theft of power through Kunda system, theft of water by breaking the water pipelines and above all increase in the crime rate because people living in the slums, out of frustration for not having a decent living usually indulge in serious acts of crime and also become tool of the so called political parties and pressure groups.

As usually, this year too, the summer has become a torture for majority of the population who cannot afford to buy their own power generation to face the agony of daily power break downs, load shedding and power fluctuation. There are incidents of lawlessness in different parts of the city because of power failures which entail other problems like water shortage as the side effects of the power failure. At Present KESC has an installed capacity of about 1750MW while the actual generation was even less than 1000MW because the system has already come to its age. Actually, the KESC is living on the borrowed electricity as it imports over 500MW from WAPDA, 250 mw from two IPPs and from some public sector entities like Pakistan Steel and KANNUP in a bid to satisfy its over 17 lakh official consumers. The situation calls for an immediate solution to overcome the power shortage and the ready but practical solution is to establish a direct lin.