S.KAMAL HAYDER KAZMI,
Research Analyst, PAGE
Aug 16 - 22, 2010
Energy crisis continued to severely hamper Pakistan's economic growth in 2009-10. Sharp increase in the international price of oil throughout the year 2009 put enormous upward pressure on the cost structure in the power generation sector due to which large domestic supply shortages of electricity and gas occurred. Lower accumulation of water reserves in dams compounded the severity.
Despite hefty increases in end-user electricity tariffs over the past two years, a significant gap still exists between generation cost and recovery due in large part to the adverse developments.
In the country, the circular debt problem plaguing the power sector stems from a disparity between cost and tariffs of energy. The inability to increase the consumers' energy tariff prior to fiscal year 2007-08-though generation cost kept increasing-gave rise to substantial cost-tariff differential. As the subsidy element grew, large amounts of circular debt were created whereby power producing companies were unable to receive payments from distribution companies. As a result, the power producers could not make payments to the fuel suppliers. In addition, the net position of overall circular debt was declined from Rs190,953 million in July 2010 to Rs103,939 million in the month of April 2010.
CIRCULAR DEBT RESOLUTION
On 01-06-2009 Rs214 billion On 30-06-2009 Rs216 billion On 18-05-2010 Rs120 billion
During July-March 2009-10, altogether 50 wells have been drilled including 16 wells in the public sector and 34 in the private sector as against 60 in the same period last year (SPLY) registering a decrease of 16.67 per cent. Total investment of 888.80 million dollars has so far been made in the current financial year in the upstream petroleum sector.
Electricity generation from the hydro and thermal source has witnessed an increase of 5.6 per cent growth during the current fiscal year (July-March 2009-10) as compared to five per cent decline in July-March 2008-09. Moreover, after growing negatively since 2007-08, the electricity generation has started to grow positively during current fiscal year 2009-10. The composition of electricity generation suggests the stagnation in shares of hydro and thermal sources in the electricity generation with share of thermal remained larger than of the hydro source.
The village electrification program is an integral part of the total power sector development program. As a result, the village electrification growth rate during July-March 2009-10 was increased by 10.0 per cent over the 5.7 per cent rise during SPLY. Furthermore, the number of electrified villages has increased from 137,765 by 30th June 2009 to 147,038 by the end of March 2010.
Transmission and distribution (T&D) losses as per cent of net system energy have remained more or less stagnant from 21 per cent to 25 per cent during 2000-01 to 2008-09. Furthermore, during July-March 2009-10, T&D losses have witnessed an increase of one per cent year on year. Keeping in view of these losses, the NTDC and Discos have invoked various technical and administrative measures to improve operational and managerial efficiency to reduce power losses. Other measures such as renovation, rehabilitation, capacitor installation and strengthening the distribution system network are a continuous process for controlling wastage of power.
Recently, the consumption share of industrial and domestic groups witnessed a decline of 5.1 per cent and 0.1 per cent during July-March 2009-10 year on year. The significant increase in the consumption shares has been witnessed in the groups of public lighting, supply to KESC and agriculture during the period under review.
During July-March 2009?10, the installed capacity of KESC's various generating stations remained at 1,955 MW against the peak demand of 2,459 MW. During July-March 2009-10, KESCís own generation stood at 5,504 million units (kWh) against 5,837 million units (kWh) during SPLY thereby showing a decline of 5.7 per cent during the period. Total units available to the KESCís system exhibit an increase of 5.6 per cent during July-March 2009-10 year on year.
ELECTRICITY CONSUMPTION BY ECONOMIC GROUPS (% SHARE) ( JULY-MARCH)
YEAR DOMESTIC COMMER-CIAL INDUSTRIAL AGRICULTURE PUBLIC LIGHTING BULK SUPPLY TRACTION SUPPLY TO KESC 2008-09 42.20 6.40 25.20 13.30 0.50 4.90 0.01 7.50 2009-10 42.15 6.45 23.92 14.03 0.57 4.92 0.01 7.94
Moreover, the T&D losses of KESC posted an increase of 5.9 per cent during the first nine months of the last fiscal year. Power purchase by the KESC was increased by 17.8 per cent during the period. The share of domestic consumer in the KESC's units' sale to Karachi consumers remained at 41.90 per cent during the July-March 2009-10 followed by industrial (34.70 per cent) and commercial (10.80 per cent).
Electricity consumption has increased over the years, but successive governments failed to plan for the future. As a result, Pakistan now needs a huge supply of electricity, and has very few power generation plants that can cope up with the demand. The current government has announced plans to set up power plants and build dams to help generate power, but building power plants afresh takes a lot of time and a lot of money, which this cash-strapped government will not be able to pay for on its own. The government must implement not just the power-saving proposals but also look towards building power plants and harnessing alternative energy resources.