FUNDAMENTAL POWER SOURCE- ELECTRICITY
(CURRENT SCENARIO AND EXISTING RISKS AND OPPORTUNITIES)
MULAZIM ALI KHOKHAR
Research Analyst, PAGE
Jan 21 - 27, 2008
Electricity is the back bone of any developing economy as it plays the role of soul in the body of industry and technology. Pakistan is a developing country with rapidly growing industrial sector which is heavily dependant on electricity power mainly provided by public sector.
The industrial sector especially the large scale manufacturing sector which has been growing at an average 8% growth rate and having private capital formation of about Rs. 400 billions consumes more than 40% of total energy in Pakistan. With the feared energy shortage it will be hurt the most. On the other hand Textile sector was already under performing for the last two to three quarters and now it is more likely that it will operate at its worst if the power supply provided to them is not adequate.
CURRENT PRODUCTION SCENARIO
Currently Pakistan's total installed electricity generation capacity is around 19,478 MW of which 70% is generated by public sector and 30% by private sector. The private sector involvement is increasing and it is budgeted to cross the public sector production within coming 10 years.
CURRENT & FUTURE POWER POSITION
After 5 years
After 10 Years
Source: Hydrocarbon Development Institute of Pakistan.
Of total electric energy production is Pakistan the thermal units produce 64%, Hydel 33%, and nuclear 2%. The thermal units consists 34 units of which 14 belong WAPDA, 4 to KESC and 16 with IPP (Independent Power Producers). WAPDA with 16 stations is the sole producer of Hydel energy. There is increasing surge of installing coal stations to generate electricity and it is highly expected that soon WAPDA and KESC will start the production. Feasibility study of various such projects is under way and Sindh having immense amounts of coal will witness major surge in this regard. Budgeted electricity production is to reach 24600 MW within 5 years and further increase more 35000 MW in next 10 years. This is according to very favorable scenario if the sector attracts enough private investment and the dams are constructed within due time.
CURRENT DEMAND AND ELECTRICITY SHORTAGE
SYSTEM PEAK DATA
Total System Demand
Peak Load Sharing
Export to KESC
Today as on 16th Jan 08 the total supply is 8492 MW while the total system demand stands at 11554 MW and hence translates in to a shortage of 3062 MW. At this time the situation is expected to persist or even worsen in coming few months. It will start improving in the summers when the snow will start melting increasing the flow of water in dams.
The current demand is increasing at a 5 year CGAR of 4.83% while the supply is increasing at the same period CAGR of 1.55%. It is widely estimated that the power shortage will remain in the range of 1000 to 1500 MW during the current year. It is likely to cross 3000 MW next year and will increase by 5500 MW approximately in 2010 if the production is not increased. Since four out of five major initiatives planned by the authorities to meet this decrepit supply are still uncertain, the shortage can be anybody's guess.
INTIMIDATION, NEEDS AND OPPORTUNITIES
The greatest need of the time is the proper use of existing electric power as it can neither be enhanced at once nor it can be imported from the regional countries. The government and people both need to join hands to reduce the unnecessary consumption in homes at streets in the night. The Dams need to be constructed and the related national consensus should be attained as soon as possible.
It is the need of time for the private sector to participate sincerely in the industry as there exist greater opportunities to explore. Studies show that Pakistan can produce way more than it's existing and up surging power needs in future if it utilizes its existing coal and Hydel sources of energy for electricity production. Currently, there are 16 IPPs in the country, which have been implemented on a Build, Own and Operate ("BOO") basis, mainly under the private power policy announced.
If the existing energy crisis are not maintained properly, the industrial sector will be hit severely especially textile (already in calamity), and fertilizer and leather sectors and many more ones. This shortage will increase the cost of production substantially and while the subsequent less production will further aggravate the inflationary pressure and all this hit the economy badly.