POWER CRISIS

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)

May 2 - 15, 2011

Pakistan's electricity demand and supply gap had widened beyond 5,000 megawatts until last week. The shortfall results in the worst kind of power crisis in the country hampering industrial production on one hand and public lives on the other. Asian Development Bank (ADB) says energy shortfall in Pakistan is shredding real economic growth two percentage points every year. The present government, the hardcore practitioner of stopgap measures, runs out of such measures either this time round to tackle perilous power crisis. Daylight saving and two off weekdays are nothing but ham-fisted moves by this government when it fails to make the revenue system transparent that the foreign donor is also emphasizing.

Electricity prices are being increased every now and then to the chagrin of public. A substantial monthly income of an average household is spent on an electricity bill. The federal government pushed up electricity tariffs 30 per cent alone in July-June 2009-10 (FY10) and the trend persists in this year as well.

Energy crisis hard presses industrial resource developments and without energy security industries cannot move forward. Electricity load shedding is affecting the performance of industries. Textile industry that is a major export revenue spinner has come under the direct attacks of blackouts. Production operations slow down, shrink to one or two shifts from three i.e. round the clock, or come to grinding halt in many factories. The country receives handsome foreign inflows because of the textile exports. Upward trend in textile exports this year were taken as good omen. It is feared that energy crisis would crimp the exports since textile sector is losing production capacity day by day. The government has to crank out permanent solutions if it wants to keep the crisis from getting bad to worst.

Illogically, when the country boasts of one of the world's largest coal reserves and when the coal is a perfect substitute of thermal and other sources to produce electricity then why there has not appeared coal-to-energy solution to overcome the worsening energy crisis, which is adversely affecting the economy. Critics say either the hymn of coal reserves is a self-deceit to assuage pain or there is something seriously wrong with the administration charged with the task of exploiting coal reserves to generate electricity. They say either the coal has no practical energy solution, or the bureaucrats cling to their deep-rooted bureaucratic sluggishness in making local coal-to-energy a reality.

Latter supposition draws its logic from the ineptness of the officials in other affairs of governance. Price hike is mainly because of lack of control over and management of supply chain. Contrastingly, the blame is put on the price increases in the international market. Through foreign impact unravels a chain reaction on price structure as happens in case of petroleum prices, yet removal of supply chain problems can lessen the exogenous and endogenous impacts to a great extent.

Bad governance has become a buzzword nowadays to define the performance of the government's departments.

Discovery of coal reserves has been made public a decade or two ago. The country's biggest coal reserves are said to occur in the desert area of Sindh, known as Thar. Based on the findings of geological surveys, the resources-rich areas were categorised in to various blocks so that coals could be harnessed according to the priority zones. Total coal reserves in the country are confirmed to be around 185 billion tons. Of that, 175 billion tons lie in Thar and the neighbourhoods of interior Sindh. Coals are extracted for the production process of construction industry. However, share of coal in energy mix is negligible.

On and off the government officials come to the media to update public of progress on coal gasification project, which is aimed at to generate electricity, but they could not manage to put weights in the public information by divulging the real constraints in the way of energy to coal generation. Fund scarcity is one of the important obstacles in the tardiness of coal gasification project.

Public private partnership can be proved a best model to start any capital-intensive project let alone energy initiatives. Since energy emergency has put the survival of many industries at stakes, private sector is serious to thrash out proposals with the government to cope up with the power crisis. The growing interest is importantly not driven by commercial motives but need-based understandably. Hit by menacing load shedding, private companies resort to self-help measures like electricity generation from the small power plants. But, as such measures have effects on small scale and are adopted at individual level, cost of electricity production turns out high. Electricity production at factory level is therefore nonviable. Conversely, if private sector is allowed to set up power plant to meet the electricity needs of, say, a cluster of companies, this may become a practical solution.

Karachi has five main industrial areas in its radius and all these zones rely on electricity supply from Karachi electricity supply company (KESC), a sole distributor of power to the country's first and largest modern metropolis.

KESC's distribution losses run in to 40 per cent of total electricity in its system. Power pilferage and technical losses cause shortage of electricity. The consequence of shortfall due to mixed reasons of shortage of supply from upcountry Wapda, KESC's own dilapidated power plants, and its decrepit distribution lines, prove disastrous for the domestic, commercial and industrial consumers.

Businesspersons have pointed out importance of privately run power plants in the industrial zones to overcome energy crisis. The idea is confused with the independent power production that has been unsuccessful. Factually, the idea is pursuing investments firstly in production of electricity by business associations in different major zones and secondly in transmission and distribution system.