REDEFINING ENERGY STRATEGY
Emphasis should be on promoting indigenous sources of energy
SHABBIR H. KAZMI
Dec 03 - 09, 2007
Pakistan is grossly deficient in fossil oil and despite the best efforts daily crude oil production has remained significantly low compared to the demand. Till yesterday gas was a low cost fuel but linking of wellhead price to crude oil has resulted in constant hike of its tariff. Failure in construction of new dams and hydro power plants has increased reliance on thermal power plants. It seems certain that onwards crude oil prices would remain above $50 per barrel and may go as high as $100 per barrel. Therefore, it is necessary to take into account country's energy reserves and come up with a new strategy to meet the emerging crisis.
Globally, key sources of energy are fossil oil, natural gas, coal, electricity and nuclear power. The alternate energy sources are solar and wind power and bio-fuels. However, all these alternatives are very costly compared to the traditional sources. Therefore, the developed countries are trying to keep crude oil prices above $50 a barrel to facilitate development of alternative energy sources. However, they blame OPEC for rising crude oil prices.
Till recently, no one was ready to accept that crude price movement has nothing to do with demand and supply. It took years to convince that hedge funds are responsible for the hike in price. Traditionally, funds have been investing in precious metals and currencies but lately realized that crude is the best option. Its price could be easily maneuvered by creating hype about unrest in the Middle East, attacks on oil installations in Nigeria, uranium enrichment activity of Iran and the list goes on.
While one could see persistent increase in oil production, global refining capacity has not increased in the same proportion. The analysts say that almost all the countries in general and the developed countries in particular have increased their crude oil storage capacities manifold.
The developed countries are gradually shifting from thermal power generation to nuclear power. They are also closing down smaller refineries by terming these inefficient but the real reason is pollution being spread by the refineries. These countries are also busy in promoting use of bio-fuels, as these are environment friendly.
Some of the analysts also say, "As a first step the US got control on oil supplies of the Middle East and Arabian Peninsula. As follow up strategy it is busy in acquiring control on energy supplies of Central Asian States. The level of US interest can be gauged from the fact that it has emerged the biggest opponent of Iran-Pakistan-India (IPI) gas pipeline. The US is also promoting Turkmenistan-Afghanistan-Pakistan (TAP) pipeline and expressing its willingness to extend it up to India.
In an attempt to demolish IPI pipeline the US has been trying to convince India to enter into an agreement for nuclear technology for civilian use. Realizing the US desperation, Indian government has not signed the agreement as yet. However, the prospects of realizing 'peace pipeline project' are being marred with the passage of time.
Tough, IPI offers win-win situation for Iran and Pakistan, the project could not materialize, resulting in loss of revenue for Iran and Pakistan being forced to create infrastructure for import and handling of liquefied natural gas (LNG).
Despite enjoying tremendous potential for hydel power generation, Pakistan could not construct any dam over the last 30 years. Water storage capacity of the existing dams is contently on the decline. Inadequate water storage facilities also result in floods after rains and drought-like situation during the remaining period. However, now it is expected that construction of couple of mega dam projects would help in overcoming the twin issue, water storage and power generation.
Despite having trillions of tones of coal reserves, the treasure could not be exploited for various reasons ranging from, who cares attitude to dismal allocation of funds for the development and exploitation of coal reserves. Similarly, not much has been done on the development of solar and wind energy.
Pakistan is an agrarian society and sugarcane is a major cash crop but the real benefits have not been realized as yet. One of the by-products of sugar industry is ethanol, a major raw material for bio-fuel. Though, a number of sugar mills have added refineries for the production of ethanol, the dream of using it as fuel could not be realized.
It is believed that oil marketing companies are opposed to the idea of blending of oil with ethanol. The stated reasons are non-availability of technology, hazardous nature of blended fuel and absence of storage and dispending facilities. However, analysts are of the view that the west does not want Pakistan to excel in this technology but keep on exporting molasses.
Ironically, Pakistan's policy planners are often accused of toeing the policy of multinational and transnational companies. They fall prey because policies of international financial institutions are also influenced by the multinational and transnational companies.
At one time the international donors were keen in funding hydro electric projects but later on refused to provide fund to WAPDA for construction of dams and instead insisted on establishment of thermal power plants by the private sector. Now they offer incentives for developing alternate energy sources.
If Pakistan wants to overcome its energy related issues, its policy planners have to develop and implement home grown plans. Construction of dams and hydro power plants should be the top priority. All the existing powers plants have to be switched over from gas and furnace oil to coal. Public transport should be allowed to run on CNG and/or bio-fuel.