Mar 23 - 29, 2009

Experts gave various reasons for the ongoing energy crises in the country but agreed on one point that the nation was paying the crippling cost of inaction of the successive governments especially during the last two decades. Despite the growing energy shortage in the country, causing heavy losses in almost all sectors of the economy no unified and well-directed approach was adopted. Last summer people of Pakistan suffered the worst load shedding of its history spread over, on an average, 8 to12 hours. Industrial sector was the worst affected as they had to shut down one shift throwing hundreds of thousand workers out of jobs.

Pakistan today has the total installed capacity of about 20,000MW. However, dependable or de-rated capacity is in the range of 15000 to 16000MW due to variety of factor whereas demand for electricity is above 20,000 MW, which is increasing at an average rate of over 8% per year. Presently we are faced with a shortage of 3000 to 4000MW causing the present crises. If left unattended for some more time, it is going to have a multifaceted deleterious impact on the entire economy.

Realizing the gravity of the situation, the incumbent Government has taken some initiatives in this regard. The main purpose of President Zardari visits to Iran and China was to seek their help in Pakistan's efforts to overcome these crises. The government is working on two plans of action-short term to be completed by the end of 2010 to produce additional 4 to 5000MW to meet the likely difference of 4 to 4500MW between supply & demand by 2010-and to develop hydel resources having a potential of over 20,000MW of electricity (comparatively at much cheaper cost) by 2020.

For this purpose President Zardari, during his visit to China last month, signed an agreement under which China will provide technical assistance to Pakistan to develop its hydropower projects. The Government is trying to establish a consortium of all major multilateral and bilateral donors led by the Asian Development Bank (ADB) by next month for arranging $12billion funding for the construction of Diamer Bhasha dam before the next year. The World Bank may also join the consortium.

To meet surging demand, an additional 4,000 MW generating capacity, all based on gas and oil, will be commissioned by December 2010, in both the private and public sector, besides another 325 MW nuclear power plant. In contrast, only 516 MW of hydropower is expected to be added to the system.

Hydropower is globally recognised as a renewable, cheap and reliable resource of energy. It generates electricity with zero emission and produces no waste. There is no requirement of fuel, operating cost is much lower and hydropower plants have longer economic lives than thermal plants. While installed hydropower capacity remains 6,493 MW, enormous potential exists to exploit this huge indigenous resource of energy. According to estimates, it is possible to generate some 34,000 additional MW from hydropower, and 150 sites for projects of cumulative capacity of 20,000 MW have been identified.

In fact, the share of hydroelectric power generation in the overall energy mix is persistently decreasing from 57 in the1980s to 42 in the1990s to current 32 per cent of the total installed capacity. The good news is that the government plans to increase it to the level of 20,000 MW by 2017. Because of recent restructuring, the Pakistan Water and Power Development Authority (WAPDA), re-named as Water Resources and Power Development Authority, is focusing on implementing multipurpose water projects, including medium and mega hydropower projects, either reservoir-based or run-of-the-river.

In addition to expediting various on-going hydropower projects and rehabilitating/modernising the operational power stations, WAPDA has recently embarked upon a series of new hydropower projects. WAPDA Chairman Shakeel Durrani told reporters at a briefing that the Authority is on target to increase hydroelectricity generation three times from current 6,500 megawatts to over 20,000MW by 2017, which would bring hydropower generation at par with thermal electricity. WAPDA Chairman Shakeel said the projects which would be completed during that period included 969MW Neelum-Jhelum project, 4,500MW Diamer-Basha, 4,710MW Bunji and 3,700MW Dasu. Barring Neelum-Jhelum, he added, all these projects would be located on different sites of River Indus. In addition, about 1,000MW would be added to Tarbela by installing new turbines on one of its tunnels.

"It is imperative for Pakistan to exploit its hydropower generation potential as it is the cheapest source of power. WAPDA has speeded up this process which will go a long way in bringing cost of electricity to a reasonable level." He hoped hydroelectric generation, if accompanied with expected exploitation of coal potential, would substantially reduce dependence on gas and furnace oil and that would bring down power generation cost.

"Arranging finances for hydro-electric generation is relatively easy as multilateral agencies give positive signals to hydro-electric projects because they are environment-friendly and commercially viable. Investment in these projects can be recovered in a short period," he said.

Durrani said financial resources required for $2.1bn Neelum-Jhelum hydropower project had been arranged. WAPDA would generate $1 billion from 10 paisa per unit surcharge on consumers, which has been allowed for seven years. Besides that, the Islamic Development Bank, Kuwait, Saudi Arabia and Abu Dhabi funds, and the Organization of Petroleum Exporting Countries (OPEC) have promised $750 million financing. China would arrange the balance of $448 million in the form of supplier credit. He said a residential colony and offices for the contractor and consultants of Neelum-Jhelum project were almost complete, adding work on two tunnels had started. "The Chinese are also imparting on-job training for constructing tunnels to Pakistani engineers."

Durrani said WAPDA would need $11.5 billion for construction of Diamer-Basha dam, including $3.5 billion mark-up, which would accumulate during the construction of the project. The amount, he added, would be payable in installments after the dam became operational. The payments would pose no problem, as the dam would generate its own resources. "Actual amount needed to complete the dam is $8 billion."

The WAPDA chairman said the Asian Development Bank had agreed in principle to be the major financier of the project, adding the Islamic Development Bank and financial institutions in the Middle East had shown interest to provide the balance amount. Pakistan government and WAPDA, he added, would provide funds worth $1 billion for land acquisition, establishment of nine model villages for displaced people, and for construction of new highways as some part of the present highway would come under water. Moreover, $3 billion would be arranged as supplier credit. "The response of financiers of hydro-electric projects is encouraging." WAPDA was undertaking one mega hydroelectric project every year, he said, adding work on Neelum-Jhelum project started last year. Construction work on Basha dam would begin this year while Tarbela extension project would start next year. We all pray for his success.



Despite all financial odds faced by the world economy, the Karachi Stock Exchange remained one of the best performing markets in the region.

Shaukat Tarin, Advisor to Prime Minister on Finance presided over the award distribution ceremony for 25 best performing companies listed at KSE.

The top 25 companies for 2007 are: Unilever Pakistan Foods Limited, Siemens (Pakistan) Engineering, Unilever Pakistan Limited, Rafhan Maize Products, Fauji Fertiliser Company Limited, Pakistan Cables Limited, Arif Habib Limited, Al Ghazi Tractors Limited, International Industries Limited, Dawood Hercules Chemicals Limited, Engro Chemical Pakistan Limited, Clariant Pakistan Limited, Arif Habib Securities Limited, Lakson Tobacco Company Limited, Colgate Palmolive (Pakistan) Limited, Attock Petroleum Limited, Pakistan Petroleum Limited, Ferozsons Laboratories Limited, EFU Life Assurance Limited, Securities Papers Limited, Pakistan Tobacco Company Limited, Oil and Gas Development Company Limited, MCB Bank Limited, Indus Motor Company Limited and Nestle Pakistan Limited.