POWER RESOURCES UNDER UTILIZED IN PAKISTAN

An overview of energy in Pakistan

TAUQIR HAIDER
June 11 - 17, 2007

The main utilities in Pakistan are the WAPDA, and the Karachi Electricity Supply Corporation (KESC), which serves Karachi and surrounding areas. Together, WAPDA and KESC transmit and distribute all power in Pakistan. Over half of the electricity goes to household consumers, about one third to industrial consumers, and the rest to commercial and government consumers. Rates are determined by the National Electric Power Regulatory Authority (Nepra).

Pakistan has 18 gigawatts (GW) of electric generating capacity. Thermal plants using oil, natural gas, and coal account for about 70 percent of this capacity, with hydroelectricity (hydro) making up 28 percent and nuclear 2.5 percent. Pakistan's total power generating capacity has increased rapidly in recent years, due largely to foreign investment, ultimately leading to a partial alleviation of the power shortages Pakistan often faces in peak seasons.

Rotating blackouts ("load shedding") are, however, still necessary in some areas. Transmission losses are about 30 percent, due to poor quality infrastructure and a significant amount of power theft. Periodic droughts affect the availability of hydropower. In the short-run, Pakistan has some excess power, but after 2007, estimations are an annual shortfall of at least 1,000 megawatts (MW). This shortage will be met through alternate energy sources. Presently, much of Pakistan's rural area does not receive electric power and about half the population is not connected to the national grid. Alternative Energy Development Board has been given the task to use solar, wind and biomass sources to provide electric power to such villages which are away from the national grid.

The Pakistan government continues to seek reform in the state-held electric companies, but efforts in that direction continue to stall. Plans have been made to transform WAPDA into three generation companies, eight distribution concerns and a transmission entity with the hope of seeing it privatized.

Reasons of low production (load shedding) of this sector

* Under-utilization of resources is a major hindrance in the self sufficiency of Power Generation in Pakistan.

* New Experiments like Import of Electricity from IRAN will further make the system dependent on other countries.

* Shifting Burden on IPPS (Independent Power Producers) rather than internal generation facilities.

* A static behavior of Tariffs when compared with the increase in price with Oil, Gas and other inputs.

* A continuous increase in Furnace oil & gas.

* Avoidance of new techniques like solar energy & nuclear energy utilization & biomas.

* Lack of government support in terms of Subsidies to this sector.

* Line losses never below 20% with dependency on outdated transmission lines.

* An ever increasing number of consumers that are 13.2 million in 2003 and 17.4 million approximately in the current scenario.

* Electrification of new areas without balancing it with new generation.

* Financial problems like no Collection of Bills from many areas like FATA/PATA where collection is merely less than 1% against billing.

* The disputes between KESC & WAPDA on the rate of Tarriff causing a loss of 1,423 Million of merely General Sales Tax to the latter.

* The non performance of many projects like Khushal Pakistan Project.

GOVERNMENT POLICIES

The energy sector is regulated and to a large extent owned and operated by the Government of Pakistan (GOP). GOP has been carrying out institutional reforms in the energy sector for the last 15 years. Besides improving the efficiency of public sector institutions, policies are aimed at increasing private sector participation in the development of energy sector. In line with these objectives, in 1986, the GOP encouraged setting up of private sector power projects on BOO (Build-Own-Operate) basis as a matter of policy, but the response was not very encouraging. The GOP announced comprehensive frameworks in 1994 and 1995 aimed at attracting private sector investments for the development of power sector. In 1998, the GOP announced a policy to increase the role of regulatory body National Electric Power Regulatory Authority (NEPRA) for the power producers. Various policies have also been announced for other sub sectors of the energy sector (e.g. Petroleum, etc.) in order to increase the private participation.

Due to poor response of the 1986 policy a policy package was devised in March 1994 for attracting overseas investment as well as domestic capital for developing power projects. The lucrative terms, with a high rate of return on equity, attracted a large number of foreign investors and created a situation of surplus power in the country, since the economic growth slowed down in the following years and power demand did not grow as projected. The financial position of Water and Power Development Authority (WAPDA) was adversely affected due to high tariffs and guaranteed payments to be made to the IPPs.

The GOP revised the power policy in July 1998. This policy envisages power generation additions in future through competitive bidding for specific sites and types of plants and gives priority to indigenous fuel based (hydro and local coal) projects. Competitive bidding amongst power suppliers is likely to keep the tariff low. In the mean time efforts are being made to solve the problem of surplus power by revival of the sick industry. The present policy of the government is not to use public sector funds for power production, except for hydro generation.

Growth in power generation in recent years has come primarily from new independent power producers (IPP's), some of which have been funded by foreign investors, and a few WAPDA hydroelectric dam projects. The two largest private power plants in Pakistan are the Hub Power Company (HUBCO) and the Kot Addu power company (KAPCO). HUBCO, with a 1,300-MW capacity, is owned by a consortium of International Power (UK), Xenal (Saudi Arabia), and Mitsui Corporation. The Kot Addu plant, with a 1,600-MW capacity, was privatized in 1996 (from WAPDA). International Power holds a 36 percent equity stake in the Kot Addu plant, while the government holds a soon-to-be divested 64 percent stake. Both of these plants, as well as a few other small private operators, sell power to the national grid currently run by WAPDA.

New methodologies like, Solar Cells Manufacturing (Solar Homes),Solar Water Geysers/Cookers, Solar Thermal Power Generation, Solar Stilling Engines, Wind Turbines, Biogas/Bio Diesel, Fuel Cells and Micro Hydel can change the fortune of this sector.

WAPDA at the moment is working on the construction and feasibility of 'DIAMER BASHA DAM' , 'KURRAM TANGI' , 'SEHWAN BARRAGE' , 'CRBC' and 'AKHORI DAM' out of its resources costing nearly Rs. 2,121 Million.

The Pakistani Ministry of Industries and Production has granted a Chinese company to build two coal-fired power-generation plants to supply 600 MW of electricity. The plants will be located in industrialized areas of Pakistan to provide an inexpensive source of energy. Officials also hope to exploit the large, untapped coal reserves in Tharkparkar. At present, coal accounts for less than a 5 percent share in overall energy production.

The federal government should involve in the root causes and than should work out the problems rather than beating about the bush and lingering that unresolved matter for months & years. A financial crunch of WAPDA & KESC is the root cause for mismanagement of electricity

ALTERNATIVES

Karachi city is considering installing a 'bio-gas' plant in Cattle Colony, Landhi, where tons of buffalo manure is generated daily and is just drained in nullas.

A New Zealand firm have started doing surveys in the Cattle Colony for installing a bio-gas plant in order to generate electricity through animal waste. The process of conversion to bio-gas is simple and yields a gaseous product consisting of 55-60 per cent methane and the remaining carbon-dioxide gas.

The heating value of bio-gas is approximately 600-800 btu/ft3. Bio-gas of this quality can be used to generate electricity and may also be used as fuel for steam boilers, space heaters and refrigeration equipment. Bio-gas is also combustible which can be used in cooking.

The buffalo manure emits large quantities of methane, carbon-dioxide and hydrogen sulfide into the atmosphere. This pollutes the air and atmosphere around Cattle Colony where pollution level has exceeded those laid down by NEQS (National Environmental Quality Standards).

Pakistan has one of the world's largest animal populations. According to an estimate, around 1 million cattle are present in three different locations of Karachi. Brief data analysis shows that a 38MW power plant can be installed by using cow dung.

Several small scale biogas plants have been installed in villages to provide gas to the residents of the villages for their cooking needs. Due to lack of maintenance, most of these biogas plants are not operating on full capacity.

Pakistan, like other developing countries of the region, is facing a serious challenge of energy deficit. Renewable Energy (RE) resources can play an important role in bridging this deficit. More importantly, RE can take electricity to remote rural areas, where it is needed the most. Realizing the importance of RE, the Government of Pakistan created the Alternative Energy Development Board (AEDB) in May 2003 to act as the central national body on the subject of Renewable Energy. The main objective of the Board is to facilitate, promote and encourage development of Renewable Energy in Pakistan with a mission to introduce Alternative/Renewable Energy at an accelerated rate to achieve 10% share of RE in the energy mix of the country. The current initiate is directed towards creating a market-based environment that is conducive to private sector investment and participation. One of the mandates of the Board is also to play a pivotal role in establishing international linkages and engaging in the transfer of the state of the art know how on renewable energy technologies to local research institutions and industries in Pakistan.