CALL FOR A DIVERSIFIED PROGRAM TO OVERCOME POWER SHORTAGE
July 25 - 31, 2011
Pakistan's overall power demand will reach 36,000 MW by 2015 and a staggering 114,000 MW by 2030, which merits concerted efforts on the part of policymakers to attract investment for meeting the future challenges.
The government needs to pursue a diversified programme focusing on domestic energy resources (mainly hydro and coal), efficiency improvement, conservation as well as electricity import to meet the growing energy demand.
Total power generation during 2005-09 increased at a compound annual growth rate of 1.73-percent and hydel generation by 2-percent only, revealed in a study on power sector carried out by the IGI Securities hired by the Planning Commission of Pakistan for giving an overview of power sector.
The study pointed out that compared to FY06 the overall hydel generation slipped by 3.44 percent. Hydel generation has been cyclical in nature with peak generation during July-September (6,580MW) and lowest during January-February (3,930MW). The Water and Power Development Authority (Wapda) and Karachi Electric Supply Corporation (KESC) are both generating below their 2005 capacity, depicting a decline of 3.15 percent and 2.93 percent, respectively.
Similarly, electricity generation from nuclear sources has decreased by 12.78 percent in the last 5 years. As a consequence, overall supply of the country remained stagnant at a time when demand surged in excess of 6 percent.
The current generation capacity remains skewed towards thermal with 65.8 percent share, followed by hydel 31.9 percent. Nuclear energy is capable of producing only 2.3 percent of total electricity generation mix. The ratio of oil/gas in the generation mix which stood at 24:74 back in FY05 rose to 47:52 in 2009 and higher share of oil in the overall generation has invariably resulted in higher costs per kWh production.
The government response to power crisis has been focused i.e. on the addition to capacity mainly through oil-based rental power plants (RPPs), expediting processing of independent power projects (IPPs) in the pipeline and developing a portfolio of new IPPs through competitive bidding.
Experts told PAGE that national electric power regulatory authority (NEPRA) must ensure that the development of the power projects should not be compromised at the costs of fake demands of anyone, rather a balance needs to be maintained while addressing the developmental issues which inevitably arise while setting up a power project. They also said the governmental agencies should take lead in absorbing all such risk, which any private entity would not be in a position to assume owing to lack of its control on such issues.
They further said the legal framework enabling the public-private entities to team up for development of the power projects need to be strengthened more providing the requisite comforts by the financing institutions in particular. The governmental institutions need to take a long-term approach while facilitating the development of power projects through public-private partnerships.
In addition, the overall tariff increases is required to be made not only to bring the prices up at par with the market place, but to also generate enough cash flow in WAPDA and KESC to enable the organizations to qualify for additional debt.
All the governmental entities working as facilitators of the power projects need to work in a harmonized manner, whereby owing to the widespread developmental implications of any power project, it is imperative that all efforts towards the development of such power projects are made in a coordinated manner without compromising their respective limitations and or the broader objectives. All the stakeholders involved in the development of the power projects need to be open to the new ideas and show willingness to adopt the best practices being followed worldwide for the development of power projects, they added.
The country is suffering heavy load shedding which is estimated to be of the order of over 30 per cent of the system demand. These outages have aggravated the sociopolitical situation, and are costly to the national economy.
In contrast, according to an estimate Pakistan's hydel potential alone is 100,000 MW with identified sites of 55,000 MW. An annual average US$3.2 billion is required to finance the power infrastructural initiative and private sector investment is expected to be 45 per cent or US $15 billion.