June 09 - 15, 2008

Pakistan is passing through these days worst crises in its history in many spheres of life including the power shortage which is most agonizing during the current extremely hot summer. Even Islamabad considered being the most privileged city is facing both announced and unannounced load shedding for 6 to 8 hours a day. The situation in other parts of the country is still worst.

The main responsibility lies on the previous government which despite lot of talking on the subject during the last 8 years, practically did nothing to enhance power production. They often claimed, as a credit, that due to accelerated economic growth, the demand for power was increasing by about 8 percent per year as against normal 5 percent annual increase in demand. Despite this full knowledge they criminally failed to augment the supply side. It is claimed that not a single megawatt was added to power generation despite tall rhetoric at the highest level during the last 6/7 years.

The elected government which assumed power about 10 weeks back has inherited daunting challenges on the economic front as well as the worst ever energy crises. The new government has started claiming that they would rid the country from present agonizing load shedding by the end of next year. In view of the bitter experience in the past it sounds unbelievable. But the way the new government has started and reaffixed its priorities, it seems possible.

The government has drawn three plans of action-short term, mid term and long term-and simultaneously moved on three of them. Short term action plan aims at adding about 4000 MW to our power generation capacity by end 2009 and rid the country from load shedding. The mid term plan spread over 4 to 5 years envisages producing another 5000MW hydel power through a large number of small dams serving twin purpose of water storage for irrigation purposes beside producing electricity at a comparatively much cheaper cost.

The long term plan comprising of a period of 8 to 10 year envisages the construction of four big dams (excluding Kala Bagh, which has been shelved by the present government) and develops Thar coal reserves for use in electricity production. The four dams namely Diamir Bhasha, Munda, Satgrah and Akhori besides Neelum in Azad Kashmir, with a combined generation capacity of electricity of about 15000 MW besides almost doubling our water storage capacity to meet adequately our irrigation requirement of the agriculture sector.

Presently the country is facing a shortage of 3500 MW electricity which is estimated to mount to about 4500 MW by end 2009. In view of the gravity of the situation the new government, in addition to its long term programme of constructing dams for hydel power, use of coal reserves for producing energy and using alternate methods like wind and unclear energy, has developed a crash programme which can provide additional power of four to 5000 MW by the end of next year.

Negotiations have been finalized to buy electricity from Iran. The Iranian President who visited Islamabad last week has agreed to provide 1100 MW of electricity to Pakistan to help it overcome its shortage. In addition to this the government has decided to purchase electricity from the captive power plants installed at various cougar Mills and textiles factories. These plants can easily expand their capacity against a guaranteed sale for a period of 5 to 10 years. Independent power houses have also been asked to expand their Power production capacities.

A source in the ministry of water and power told Page that sugar and textile mills can produce about 3500 MW of electricity at a comparatively cheaper coast by using factory waste as fuel. The industry has suggested banning the export of molasses and utilizing the commodity for power generation. The government is inclined to accept the suggestion.

The source told this correspondent that the government has evolved a policy for the sugar mills to produce electricity and currently it is receiving 22 MW from two sugar mills. If the tariff issue is resolved and the sugar millers are facilitated then around 2500MW can be produced in one to two years. Textile sector has also shown willingness to provide around 200MW to Karachi Electricity Supply Company if it pays for fuel. The source said, "Though the policy for buying electricity from sugar mills has been established but yet it needs implementation". The sugar millers have to replace their ordinary boilers with pressure boilers. In sugar industry, electricity would be produced adding sugarcane waste with coal.

Pakistan sugar Mills Association (PSMA) Vice Chairman, Iskandar M Khan, said that the government finalized its policy of buying electricity from PSMA and now only tariff issue is impeding the electricity production. He said that sugar mills are self sufficient in electricity generation and "If the government provides us with sufficient finance then the current power shortage would end in one year". There are around 84 sugar mills in the country and at least 74 are in operation. "Each mill can produce around 25 to 50 MW of electricity," he added. The government has planned to generate power from 1500 MW to 2000 MW from cheaper sources like molasses under the power co-generation policy by the sugar mills.

The national Economic council in its meeting held in Islamabad approved the national plan of small dams as a part of its mid-term plan to over come power shortage. Under this programme the government will construct 314 dams capable of 5 to 6 thousands MW of electricity across the country within the next 4 to 5 years. According to the document approved by the NEC, 23 Small dams will be constructed in NWFP, 43 in Punjab, 23 in Sindh, 215 in Baluchistan and 10 in federal areas with a capacity to produce electricity from 25 to 200 MW. The hydro potential will also be significantly enhanced. The programme will help in storing water besides power generation. The NEC also identified development of Thar Coal reserves as one of the major projects included in the annual development programme 2008-09. It approved Rs 127 billion for water and power project in the PDSP for the next year.

Thar coalfield is one of the biggest coalfields of the world, having 175 billion tons (95 percent) of 185 billion tons of total coal resources of Pakistan. In spite of the huge coal reserves, presently coal constitutes only 7.0 percent of primary energy supplies and less than 1 percent share in power generation. As against this, the world coal average share is 26 percent (Primary Energy) and 40 percent (Power Generation). Further, the coal shares in the electricity generation of the countries are: China (79 percent), India (68 percent), USA (51 percent), and Germany (51 percent).

The coal exploitation had totally been ignored in the past, and no serious efforts had been made for the development of coal, especially mechanized coal mining techniques for large scale coal mining. Now the efforts are being made to develop Thar coalfield on fast track basis and work to formulate National Coal Policy is underway which is expected to be completed by end-2008.

The Thar Coal Infrastructure Development Project has already been completed with a financial package of Rs 1.57 billion, having Federal Government financing to Rs. 1.10 billion. Six blocks have been appraised in detail, of which four by Geological Survey of Pakistan (GSP), at estimated cost of Rs. 337.893 million, and two by Government of Sindh. The Government of Sindh has awarded five blocks to private sector to generate initially 2500 MW.

Feasibility Study on Gasification on Thar Coal to ascertain techno-economic viability of Thar Coal for gasification is being undertaken at an estimated cost of Rs 104.01 million. The present government is now setting up an integrated Thar Coal Development Board, to be headed by Sindh Chief Minister, and including Federal representatives. An institutional roundtable on Thar coal is planned to be held in Washington in July 2008, to be followed by road shows before mining and power generation contract are awarded through public bidding.

Besides seeking assistance from world donor agencies the government will also seek private sector's help in implementing its programme to over come power crises. The World Bank has already assured that it would provide about $3 billion for construction of dams. The bank is the main funding partners along with others in the proposed dams at Turbela and Kohala besides Munda Dams works.

There is little disagreement on that we need to build both small and large dams to prevent water wastage and to generate cheap hydel power to meet this country's fast growing energy deficit. The last government has been long on the rhetoric vis-a-vis a number of dam projects and, regrettably, short on action. As a press report points out, the plan was to build Diamer-Bhasha, Munda, Kurram Tangi as well as Kalabagh and Akhori dams by 2016. But there is little progress on any of these projects. So far as the Kalabagh dam is concerned, of course, it remains deeply controversial. NWFP has certain reservations about Akhori dam as well. These projects must wait until the government is able to address the concerns of NWFP and Sindh and build a consensus on the subject. However, the snail-paced movement on the other projects is unacceptable at a time the country faces a serious energy crisis and scarcity of irrigation water is a major cause of inter-provincial acrimony. It is also worthwhile to heed the fact that experts world wide are warning of water scarcity assuming crisis proportions in not-too-distant a future, underscoring the need for governments to undertake effective water conservation strategies.

Press report reveals that most of the funding earmarked in the PSDP for the various dam projects during the last two years has remained unspent. Which means while the work remains at a standstill, the project costs are fast increasing? In fact, according to the report, the projected cost of Diamer-Bhasha dam estimated at $6.5 billion in 2005 has now gone up to $8.505 billion. It is going to increase further due to delay in land acquisition for the dams. Notably, a sum of Rs. 10 billion was earmarked in the PSDP 2007-08 to acquire land for five dams, including Munda, Kurram Tangi and Kalabagh. Most of this money too remains unutilized.

If the new government's stated resolve is to be trusted, this unhappy situation is about to change. It is getting ready to formally start a campaign to build all these projects, save for the much criticized Kalabagh with which, it has been wisely decided, it is best to deal through a slow and careful process of persuasion. Considering that currently the ANP-the strongest critic of the two controversial dams - is part of the ruling coalition at the Center as well as in the NWFP, and the PPP heads the government in the province of Sindh -the other opponent of Kalabagh - it may be an opportune time for addressing these two provinces' concerns about the dam. For now, the government must go ahead with its planned campaign aimed at securing funding commitments from foreign donors and local sources for dam construction. It hardly needs saying that these funds must be spent in a timely fashion, showing discernible on-the-ground progress. All efforts must be made to ensure that, with the exception of Kalabagh, all other dams are completed on schedule i.e. between 8 to 10 years.