Pakistan's energy requirement is increasing for the last 5/6 years at the rate of 10 to 12 percent per year

SHAMIM AHMED RIZVI, Bureau Chief, Islamabad
July 03 - July 09, 2006

Pakistan has started feeling the pinch of power shortage through out the country with no immediate remedy in sight. Mega city Karachi, the industrial hub of Pakistan is the worst sufferer of the power shortage facing scheduled unannounced daily load shedding for hours adversely affecting the industrial out put besides causing immense miseries to people at large in the present abnormally hot summer.

Pakistan's energy requirement is increasing for the last 5/6 years at the rate of 10 to 12 percent per year to sustain its level of economic growth against almost static supply position. Experts had warned last year that the country may be facing a shortage of about 1000 MW by 2006 which may rise up to 500 MW by 2010 and 10,000 MW by 2020. To meet the feared shortfall in 2006, the already functioning Independent Power Producers (IPPs) were asked to enhance their existing capacity by about 1000 MW by end 2006. So far there has been an increase of about 400 MW, source in the Private Power Infrastructure Board (PPIB), told PAGE on condition of anonymity.

According to him Pakistan is blessed with immense resources to produce power at affordable cost, which can look after our energy needs for over 100 years. Pakistan has a hydro electricity potential of about 50,800 MW while only 6500 Mw is being utilized at present. We have a potential of producing over 40,000 MW of electricity through our high quality coal reserve in Thar alone. Its use at present is negligible, but efforts are now being made to make use of these potential sources. It is estimated that Pakistan can producer about 50,000 MW through wind - a source recently developed to produce energy - in the coastal areas of Sindh and Balochistan. Nuclear energy is the cheapest source but it is still in a state of infancy in Pakistan. Efforts are on to set up second nuclear energy plant Chashma II of 500 MW capacity in Karachi with Chinese held who had built Chashma 1 about 25 years back.

Currently oil and gas are two of the major components of Pakistan's energy mix contributing more than 84 percent to the total fuel share, while hydro electricity represents 10 percent, coal 4.8 percent and nuclear energy represent 1.2 percent in the total energy production.

Pakistan depends mainly on imported oil and the demand for oil and petroleum products are growing at an annual consumption growth rte of 5 percent. Oil is consumed primarily in transport at 47.3 percent, power 37.2 percent, industry 9.5 percent, government 2.7 percent, domestic 2 percent and agriculture 1.3 percent. Around 38 percent of the total supplies to the country's energy mix are met through imported oil. Oil pries have been fluctuating briskly in international markets and this in turn impacts domestic prices and ultimately leads to inflation.

The government, in view of these fluctuations, is promoting a shift to alternative energy sources that is gas and coal. Two major projects under consideration for gas imports are the Iran, Pakistan and India (IPI) and Turkmenistan, Afghanistan and Pakistan (TAP) pipelines. The IPI is a 2600 km gas pipeline, which is expected to be finalized this year at an estimated cost of $ 7 billion. However India's participation in the project is doubtful after the US-India nuclear agreement. Second irritant is the disagreement between Iran and Pakistan is about the gas price.

Coal currently plays a relatively minor role in Pakistan's energy mix, but the discovery of large volumes of low-ash, low sulfur lignite in the Tharparkar (Thar) Desert in Sindh could increase its importance. Thar reserves are being developed under the jurisdiction of the provincial Sindh Coal Authority and have enormous economic potential. The Authority's policy is to develop the reserves primarily to fuel large electric power plants to b e built in tandem with the coalmines. A feasibility study was recently carried out for the construction of a coal-fired power plant near Thar coalmines.

The cheapest way of producing electricity is through wind. The government has showed interest in is utilizing climatic conditions of the coastal areas of Sindh and Balochistan for producing wind electricity. It is estimated that there is a potential of producing 50,000 MW of electricity in this area. Three local and one foreign company are interested in installing windmills for this project and the work will start in the near future. In the first phase 3500 MW of electricity will be produced in Sindh and capacity will be increased gradually. Nuclear energy is a hot issue these days. Iran's nuclear issues the US-Indo nuclear corporation and China-Pakistan nuclear energy deals are enough to highlight the importance of nuclear energy in the present era. Currently Pakistan is just producing 1 per cent nuclear energy and this needs to be improved. President Musharraf during his visit to China inked two agreements for building two atomic power plants. Expansion work is underway at the Chasma nuclear power plant.

The growing water shortage and in its wake extreme decline in the production of hydle electricity has created an alarming situation in Pakistan threatening its future economic growth. We have reached this stage because of the negligence of successive governments during the last 3 decades, which failed to construct new dams and water reservoirs in the country. It goes to the credit of the present government, which took notice of the looming crises and took various measures to ease the situation. But unfortunately the speed is slow and has not gained the required momentum necessary to ward off the looming threat to the economy.

Adequate energy at an affordable cost is a must to sustain the present level of 7 to 8 percent annual economic growth. Thermal power produced through furnace oil is an immediate remedy but its production cost has almost become unaffordable. Coal fed and the hydle source of energy seems to be only alternative but it is a much longer process. Nuclear energy is the ideal solution but this concept is still in its infancy in Pakistan. Generation of hydle power at almost 1/4 of the cost compared to thermal power is the only option.

On the other hand Pakistan is on the thrash hold of acute water shortage. According to the World Bank report "Pakistan water economy running dry" per capita availability of surface water has been gradually dwindling and has come down from 5400 cubic meters in 1951 to only 1000 cubic meters by 2005. This is bound to hit Pakistan's agriculture badly, which is the backbone of countries economy. With utilization of only half of hydro potential through construction of mega dams and water reservoirs, we can ensure adequate water supply to our agriculture for the next 50 years.

With all its good intensions the present government made hectic but futile efforts for almost three years to build up consensus on construction of mega dams specially the Kalabagh. President Musharraf who was in favour of starting with Kalabagh as all the preparatory work relating to the project was complete, however, changed his priorities about the construction of big dams on the recommendation of the federal cabinet and in his address to nation on the issue on January 17 last he announced to start construction on Bhasha and Munda first and defer Kalabagh until the reservation of Sindh and NWFP were addressed. He however, declared that all the 5-mega dams including Kalabagh would be built in the next 20 year to ensure adequate water and electricity supply to the nation at an affordable cost. Work on Munda is already on but the formal launching of Bhasha, was also made by the President in April last. In the budget 2006-07 a sum of Rs. 10 billion has been provided for the purchase of lands required for these dams (except Munda) including Kalabagh and the provincial government have been given the task of acquiring the land. In case of Munda required land is owned by the state.

Keeping all these factors in mind the government has drawn up a 25-year plan (2005-2030) for increasing energy production in the country. This major energy development plan is accompanied by initial cost estimates, which will be $ 37 billion to $ 40 billion that has to come tin the form of foreign aid or foreign investment.

The Energy Development Plan includes the construction of 5 mega Dams including Kalabagh, Bhasha, Akhori and Skurdu. Financing of these dams during the next 15 to 20 years will not be not be problem as World Bank and Asian Development Bank have already approved their feasibility to find funds for other dams will not pose and offered assistance for Diamir Bhasha and Kalabagh. The construction of these mega dams and other smaller dams will not only adequately meet our energy requirements, at a comparatively much cheaper cost for the nest 3 decades, it would provide much needed water for irrigation for increasing our agriculture products.

The authorities should focus on plans to provide electricity at the affordable cost. It is not possible through thermal power. It should concentrate on hydle power, coal fired power station, increasing nuclear power and using alternative sources of energy. Recently at an international coal conference held in Islamabad it was highlighted both by Pakistani and international experts that Pakistan could produce huge electricity at a very cheap cost by using its coal deposits. Pakistan has large deposits of coal mainly in Thar, which could produce over 40,000 mw of electricity. This should farm a part of long term planning.

In response to the Energy Policy 1994, Consolidated Electric Power Asia Ltd of Hong Kong signed an memorandum of understanding (MoU) for developing a 1425 MW capacity integrated power projects based on Thar coal. But it did not materialize. Related activities on the part of the government however, continued on priority. From 1993 to 2001, the GSP conducted comprehensive exploration, assessment evaluation and appraisal studies of the Thar coal resources, establishing technical and commercial viability of confirmed reserves of 175.5 billion tons of coal. The Thar coal, classified as lignite A-B, contains low ash and sulfur contents and is suitable for power generation, which would not have relatively less adverse environmental and ecological effects. Thar coalfields covering an area of 9000 sq. km has been divided into four blocks of coal demarcation for administrative and logistic purposes.

The pioneering efforts however were made by President Musharraf who took personal interest in developing these coalfields on a fast track basis, and asked the Chinese, who have demonstrated strong commitment to participating in economic development of Pakistan, to come forward to invest in this mega project. In April 2002, a state-run Chinese company Shenhua Group Corporation, was asked by the government to develop block one of the coalfields, accepting its proposal to establish a 600 MW power generation plant at the mine-mouth with associated captive coalmines. Subsequently, Shenhua Group, in association with the GSP, carried out studies related to coal geological and hydro geological investigations, and a feasibility report for the project was completed. The cost of these studies is estimated to be $7 million dollars. Based on these studies, the agreements were signed by the sponsors with the government for the construction of power plant, as well as for land use right, coal-mining license and use of underground water resources etc. The proposed project to be undertaken on build, operate and transfer (BOT) basis was to be located at Tharparkar and was scheduled to generate electricity by the year 2009, extracting required quantity of six million tons of coal annually. The project, for which groundbreaking ceremony was scheduled in January 2005, ran into snags, primarily on the issue of electricity tariff. Efforts at the highest level were made, until November last year, to salvage the project without yielding any positive results.








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TOE- Tons of Oil Equivalent
Source: Hydrocarbon Development Institute of Pakistan.