HUGE POTENTIAL BUT SLOW-PACED DEVELOPMENTS

SHAMSUL GHANI
(feedback@pgeconomist.com)
Nov 29 - Dec 5, 20
10

According to Pakistan Economic Survey, power generation projects were expected to add to our generating capacity 4,039 MW during FY10, another 3,370 MW during FY11 and another 1,739 MW during FY12. With the estimated annual increase of 12 per cent in power demand, 2010 should have been an energy-surplus year, but with the unnecessary delay in the commercial production of certain completed projects, for unknown reasons, it has turned out to be one of the most difficult energy years.

Again, 2012 should also be a far better year given the timely commissioning of capacity enhancement projects. AEDB and PAEC too have plans to add 9,700 MW and 8,800 MW, respectively, by 2030.

While alternate energy development programs (wind, bio, solar, small hydro etc.) and Pakistan Atomic Energy Commission program for nuclear energy augur well for the developing economy like ours, their role is limited since we cannot depend on them for mega generation of power for which oil, gas and water are being relied upon since long.

Coal is the latest addition to the mega generation fuel club, thanks to the huge Thar coal reserves. However, owing to our lethargic approach to the all important economic problems and the traditional politicising of natural resource utilisation issues, coal still remains a doubtful starter.

Vision-2030 energy program developed by the Planning Commission envisages a meager contribution of 12.25 percent coming from coal by 2030 in total disregard of the massiveness of coal reserves and the recent world trend according to which coal is the fuel of the future. China and India have taken lead by giving coal the top position in their energy mix baskets.

We continue to import coal for power generation and industrial purposes. Sindh Cabinet's approval of a Thar coal power project under public-private partnership (between Sindh government and Engro-Pak) is a welcome sign no doubt, but since the project will take a number of years before it is commissioned, one should stay fingers-crossed to see the actual materialisation of this and three other such projects two of which are underground coal gasification (UCG) power projects.

On nuclear side, the KANUPP plant has already over-lived its life of 30 years. Chashma nuclear power projects owe their existence to the Chinese aid and technical assistance. Any further addition to the nuclear energy basket will depend not only on other nations' assistance but also on the US nod. Given the international concerns about our ability to manage our nuclear assets, the safety standards required to operate nuclear energy plants will give other nations and the US sufficient ground, justified or unjustified, to block our move to enhance our nuclear energy generation capacity. On alternative energy side, therefore, we are left with two major options solar and wind. Vision-2030 energy development program projects a small contribution of around 6 percent coming from renewable energy.

According to our wind map and a US study carried out in Pakistan, we can produce up to 50,000 MW of power from wind. The met department of Pakistan assesses the Keti Bandar-Gharo corridor of wind to have potential to produce 43,000 MW of power. Since larger wind power projects require huge capital outlay, the Alternative Energy Development Board (AEDB) has so far been able to grant approval to a few wind projects with a cumulative capacity of 152.4 MW. Another wind project with the capacity range of 200-500 MW is in the pipeline.

Another potential source of alternative renewable energy is solar power. Our weather conditions resulting in greater number of clear days afford sufficient room for solar power generation. We see these days imported solar heaters vying to compete with the traditional gas geysers. AEDB is pursuing a program to build confidence of the consumers who are usually slow to switch over to new and unproved technology. Beside electrification of far-flung areas and villages, solar power can also be used to light streets, parks and other public places to lessen supply pressures from our national grid system. Again, the optimal use of solar and wind energy cannot be ensured unless projects with mega capacity are put to operation. If the options of wind and solar energy are to be utilised to something near capacity, genuine incentives to private sector shall have to be given. The idea of private-public partnership can also work in this case. Genuine incentives will essentially include free flow of cheap credit. This is where the State Bank will have to shrug off its inertia and come out of the so-called tight monetary policy mode. With the current monetary policy, the development of solar and wind power projects hardly appears feasible. They will only continue to make mini contributions to the national grid with minimum impact on energy scenario.

The quest for alternative energy source, in the given scenario, shifts our focus back to coal. Gas, the linchpin of the Planning Commission vision-2030 program, appears ill prepared to take that role, obviously due to the poor resource position. Unless huge investment on exploration side is made, we may well have a zero gas reserves position by 2030. One may argue that instead of making investment in a dubious project - exploration of new gas reserves - why the intended funds should not be invested in coal development projects? A fairly logical proposition! But then why have we not been able to attract investment to take material advantage of the huge coal reserves position? A fairly logical counterargument! Who will stand up to this argument and provide an answer that satisfies all of the stakeholders: the masses, the foreign investors who made several attempts to create business partnerships with us, the analysts who keep telling us that the use of our natural resources gas, coal and water is the surest way to achieve energy security first and then food security as a byproduct.

Federation might be one of the possible responders. Many years were wasted in reaching price/royalty settlement between Islamabad and the Sindh province. Federation might also reply on how many occasions it succumbed to the outside pressure to put country's coal on the back burner and take short-term lucrative measures like rental power plants. The oil marketing companies could also be the potential responders. They could tell us how many times they tried to grease palm of the authorities to block any moves to develop gas and coal sectors?.