LOOMING POWER CRISIS

SHAMIM AHMED RIZVI, Bureau Chief, Islamabad
Aug 13 - 19, 2007

A sharp rise in power demand by over 10 percent without any significant increase in electricity generation has resulted in an acute power shortage in the country.

For the first time in its history the country faced power riots during current summer in Karachi the economic hub of Pakistan.

Speakers at a seminar on looming power crisis in Pakistan including Prime Minister's Advisor on Energy Mukhtar Ahmed were of the view that he situation will be worst next year as the production is not coping with the rising demand. According to the Advisor in Pakistan per capita annual consumption of electricity was about 500 kwh as against 4000 kwh internationally accepted minimums consumption to achieve minimum level of human development, Munawar Baseer, Managing Director, Sui Southern Gas Company blamed lack of integrated planning and absence of any coordination between various sector entities for prevailing power crises. Apart from poor planning, the crisis has aggravated due to increased and inadequate demand forecasts, inability to address primary energy supply chain development and a regulatory framework.

Other speakers also blamed the government for its failure to preempt the growing shortage of electricity and taking on time steps to augment the power supply. They have been paying only lip service and indulging in rhetoric's instead of evolving an integrated policy and ensuring its implementation. The Ministry of Water and Power and its attached department like WIPED, PPIB & even now privatized KESC have been blaming each other for the prevailing power crises in the country.

With the advent of the summer the whole country is experiencing power shortage and unannounced load shedding for hours is a common phenomena in most part of the country, but the situation is worst in Karachi because WIPED has suspended the supply of about 400 MWTS of power it used to supply to KESC since its privatization. According to WIPED it has no surplus to sell, as it was itself facing a shortage of electricity and resorting to load management in interior Punjab and Sindh. The new owners of KESC were bound as a part of sale agreement to make fresh investment and enhance their power generating capacity to cater to the demand of Karachi. Experts had warned last year that the country might be facing a shortage of about 1000 MW by 2007, which may rise to 5000 MW by 2010 and 10000 MW by 2020. This basically translates into load shedding on a larger scale in the years to come.

But now realism has begun to dawn on officials and there are significant changes in policies Pakistan's 25 year energy security plan (2005-30) is expected to be substantially altered with the help of international consultants as some key targets proposed under the existing plan seem unachievable, it is learnt. Sources in the government told Page that a new 20-year Pakistan Strategic Energy Plan 2009-29 would replace the existing plan. With the funding and technical guidance of the Asian Development Bank (DAB), the government would establish within 45 days a new planning unit comprising five or six international experts.

The government is anticipating the energy crisis to worsen in the next two years due to a 50 percent increase in demand. The power shortage that had been estimated to remain in the range of 1000-2000 MW this year in fact crossed 2900 MW a few months back. The shortfall is likely to reach about 5300 MW by 2010. Overall, Pakistan's total energy requirement is expected to be around 80 million tons of oil equivalents (MTOE) in 2010, up by about 50 percent from the current year's 54 MTOE.

Since four out of five major initiatives originally planned for meeting this demand are uncertain at present, the shortage could be anybody guess, said a senior government official. Hence, the need for a professional review of the energy security plan based on ground realities was felt instead of relying on mere wish lists, he added.

The Energy Planning Unit would develop the strategic energy plan in one year after reviewing all existing policies. Natural gas, power, and oil shortages were all poising risks to the economic growth in medium to long term period, said an official who would be closely working with the planning unit. The main focus of the policy review is to examine in detail the long term cost of each effort and source of energy in terms of financial, economic, energy supply and various uses, domestic resources, and long term political costs.

The government had planned to add an overall power generation capacity of about 7880 MW by 2010. Of this, about 4860 MW was to be based on natural gas, accounting for 61 percent of the capacity expansion. However, the gas based power expansion of about 4860 MW would remain in doubt since these estimates are based on three-gas import option for completion in 2010, 2015 and 2020. This means that the major part of about 4860 gas-based plants would not be available and the difference would be met through other costly options. Even if the physical work is started today, it will take at least seven years to complete a pipeline project, said a senior petroleum ministry official. T he fifth initiative of the Liquefied Natural Gas (LNG) import is expected to remain on schedule and start delivering about 0.3 billion cubic feet of gas (BCFD) by 2009-10 and another 0.5 CFD by 2015.

In Pakistan, the widening gap between the production and consumption of electricity and its disastrous consequences on the economy are written on the wall. According to reliable estimates, total generation capacity in Pakistan currently stands at 20184 MW while total demand of is calculated at 21000 to reach 28081 MW by 2010. However, when we look at the likely transmission and distribution (T&D) losses, the system will still be left with a shortage of about 8000MW. It seems that the demand of electricity which is rising by about 10 percent per year and other factors like persistent T&D losses would not allow the supply and demand gap to be filled anytime soon.

The power policy 2002 failed to deliver because of 2 mega factors i.e. Non-availability of gas and an upfront tariff determined by NEPRA. As a result, sponsors of six fast track thermal power project of 1450 Mw backed out. This proved a serious blow as it discouraged and disheartened other intending investors. Now a new short term revised policy has been prepared and approved.

The new policy envisages mainstreaming of renewable energy employing small hydro, wind and solar technologies in the development plans of the country. The draft of the policy was discussed in detail and finalized during a meeting held with Federal Minister for Water and Power, Liaquat Ali Jatoi in the chair. Explaining Mr. Liaquat Jatoi told newsmen that the policy lays down very liberal and attractive incentives to attract investment to put Pakistan on the Renewable Energy map of the world. Pakistan is blessed with abundance of renewable energy potential but so far its potential has not been harnessed.

The sources in the Ministry of Water and power told page that KESC has also signed a loan agreement with Asian Development Bank of $ 150 million (52 billion) to implement its program to increase its power generation and improve transmission and distribution system from present 1500 MW by June 2008. At present Karachi needs about 200 MW, while KESC is generating about 1500 MW.