There has to be a shift from imported oil to alternate indigenous sources

Aug 08 - 14, 2005

Among the primary sources of energy, electricity is the most commonly used source. However, countries like Pakistan, which are heavily dependent on thermal power generation, are now facing serious problems. With the rising crude oil prices, cost of generation is skyrocketing. Ironically, Pakistan is capable of meeting bulk of its electricity requirement from hydro power plants but has not been able to achieve the much desired objective. At one time the share of hydel power was very high. However, the situation has reversed and the country is heavily depending on thermal power generation. Pakistan also failed in exploiting alternate sources of energy, i.e. solar, wind, nuclear and coal. The cost of thermal generation is not only high but also a permanent pressure on country's foreign exchange reserves.

Hydel power generation is the cheapest source of electricity in Pakistan. At present the country has about 15,000 megawatts installed capacity and another 40,000 mega watts capacity can be built on the River Indus alone. However, construction of mega projects like Kalabagh dam has not become a reality due to politicization of the project. Strangely if no consensus could be reached during five decades, the policy planners should have found alternative project/site or built smaller dams. Instead, billions of dollars have been invested for the establishment of thermal power plants and billions of dollars are being spent annually on the import of furnace oil to run these plants. Another bad decision has been made to switchover power plants from furnace oil to gas. It may have provided a short-term solution but it is like burning dollars instead on a candle. It is true that history cannot be changed but efforts can always be made to rectify the past mistakes. Crude oil prices are expected to remain around 55 dollars per barrel in the near future. Therefore, the sooner Pakistan makes the decision to establish hydro electric power plants the better it would be for the country.

Despite having enormous coal reserves, the country has not been able to exploit this cheap source of primary energy. One may say that use of coal has become a norm in cement industry, but the fact is that bulk of the coal being used is imported. Except Lakhra thermal power plant, no other power plant in the country is coal-based. The capacity of Lakhra plant is also too insignificant, when compared with total installed thermal power generation capacity. For nearly a decade talks have been going on about exploiting Thar coal, but its use remains a far-cry.

Wind power is pollution-free because it does not use any fuel. Despite having hundred of kilometers long coastline and other windy areas the country has not been able to exploit this gift of nature. Establishment of wind-powered generation facilities in the remote areas can help the country from spending billion of rupees on transmission and distribution network and also saving billions of rupees, being the cost of transmission and distribution losses. Incidentally the critics of wind power have been opposing the technology simply by saying that it is too capital intensive. However, they have been ignoring its advantage of having virtually no operation and maintenance cost. Public sector utilities have discarded this alternative but private sector entrepreneurs must not ignore it.

Pakistan established its first nuclear power plant at Karachi more than four decades ago but then failed to add new units. Technically, the plant has outlived its life but regular refurbishment has kept it in operation. However, now this cannot be considered a dependable source, at the best, it could help in overcoming marginal shortfall or work as stand-by facility. The establishment of Chasma Nuclear Plant has once again brightened the chances of adding a few more such plants. Just the other day ECNEC has taken a decision to enhance nuclear power generation facility but the proposed time frame is too long. Yet another issue which may dampen the prospects is availability of basic fuel.

The review of exiting clearly indicates that Pakistan is highly dependent on imported crude and petroleum products, except furnace oil. While it is a must to encourage more investment in oil and exploration to attain self-sufficiency it is even more important to exploit alternate energy sources. The country also faces glooming shortage of electricity, which needs immediate steps to avoid a situation Pakistan faced in nineties. There has been an unwarranted delay in the corporatization of Power Wing of WAPDA, which was aimed at privatization of these entities, even the donors are not happy with the situation. Unless uninterrupted supply of electricity is ensured at affordable prices the target of achieving double digit GDP growth cannot be achieved.

The government should also review its policy of encouraging switching over of power plants from furnace oil to gas. The country produces surplus furnace oil and with the implementation of expansion plan of National Refinery announced by the new management its output is expected to enhance surplus quantity. Furnace oil is a low value distillate being produced by the local refineries, mainly because they are incapable of producing other higher value-added distillates.

Another key reason for not burning gas at the power plants is that it can be used for producing higher value-added product urea. Low BTU gas is used for the manufacturing of urea and any attempt to divert this to power generation plants is a violation of government's policy. The government has dedicated Mari gasfield for the fertilizer industry in the Fertilizer Policy 2001.

Last but not the least new dams have to be constructed in the country to achieve the twin objective of creation of water reservoirs and hydro electricity. The added advantage is that the electricity produced at these power plants has the lowest cost of generation, around 50 paisas per unit.