ENERGY DEFICIT HURTS ECONOMIC GROWTH
Oct 24 - 30, 2011
The focus of economic growth having shifted from West to East, those Asian economies that remain bogged down by their energy issues will lag far behind those who have wisely planned and managed their current and future energy requirements. Pakistan's energy crisis ensues from - besides poor management skills and politically divided public opinion - a marginal energy resource base. Pakistan Economic Survey 2010-11 reports: "The energy availability has remained main impediment to economic growth. The growth prospects of the economy in 2010-11 were constrained by the availability of energy. In order to ensure energy supply, government is pursuing policies of increasing domestic energy supplies by attracting foreign investment, diversifying imports to include natural gas, coal and electricity."
While coal and oil imports do not need any additional infrastructure, import of natural gas - new experiment for this country - is certainly going to find a few roadblocks. The enormity of investment needed to construct pipelines and exposure to threats from politically hostile foes (and may be some friends too) make the option of gas import a doubtful starter. The government would do well to focus on workable options alone. And, workable options are plenty, if the government is really serious.
One would certainly question the wisdom of importing a commodity the country is being trumpeted of possessing in huge quantity - coal. The mystery around the Thar coal reserves still remains unsolved. Rejection of this coal by one of the top physicists of the country, and resolve of the other to prove its worth through a UCG pilot project has already confused the nation. The stories of wavering investor interest in these reserves often reported on the back pages of newspapers have become a routine.
The non-reporting of "our coal reserves of 185 billion tons" by all world-renowned reserves reporting bodies further deepens the mystery. In case these coal reserves are a reality, we only need to swiftly develop them on a war footing by committing maximum of resources to them. Ignoring coal as a powerful driver of our energy program in an era of diminishing energy reserves and evaporating investments in the sector will be an unpardonable mistake. In the wake of oil supply crunch, the world attention has turned to coal as an alternative fuel.
In our region, Abu Dhabi, Dubai and Oman are focusing on coal-fired power stations as local natural gas is too expensive in comparison to coal. Our natural gas resources can last, at the current consumption rate and assuming that no new reserves are developed, for another 23 years. We must make best use of the available time and endeavor to put Thar coal supply on tap by the end of 2020.
WORLD ECONOMIES USING COAL AS SOURCE OF ELECTRICITY
(Source: World Coal Association)
An IEA report says that world energy needs fresh investment of $38 trillion by 2035 - $1.5 trillion every year from now on. The International Energy Association, the energy arm of OECD, has up-scaled its previous energy sector investment requirement by 15 percent in the wake of increasing costs of extraction and rising degree of difficulty of extraction operations. Looking at our unreliable energy resource base, we find such investment on our part more compelling. As already mentioned, we have little time at our disposal. We need some desperate but well thought out plans to move forward.
The most alarming aspect of our energy crisis is the lack of a sense of urgency both at government and media levels. With the return of corrupt politicians, the media has become oblivious of its national duties. Keeping its focus on sensationalism, it now and then publishes stories about public protest against load shedding without going further deep into the real issues that are fast eroding our energy resource base.
RANK COUNTRY OIL RESERVES BILLION BARRELS NATURAL GAS RANK COUNTRY COAL RESERVES BILLION CUM* RANK COUNTRY RESERVES BILLION TONS 1.Saudi Arabia 262.000 1.Russia 47.570 1.US 237.296 2.Venezuela 211.200 2.Iran 29.610 2.Russia 157.010 3.Canada 175.200 3.Qatar 25.370 3.China 114.500 4.Iran 137.000 4.Saudi Arabia 7.807 4.Australia 76.400 5.Iraq 115.000 5.US 7.716 5.India 60.600 6.Kuwait 104.000 6.Turkmenistan 7.504 6.Germany 40.699 7.UAE 97.800 7.UAE 6.453 7.Ukraine 33.833 8.Russia 60.000 8.Nigera 5.292 8.Kazakhstan 33.600 9.Libya 46.420 9.Venezuela 5.065 9.South Africa 30.156 10.Nigeria 37.200 10.Algeria 4.502 10.Columbia 6.740 55.Pakistan 0.313 29.Pakistan 0.840 - Pakistan 2.070 CUM* : cubic meter (one cubic meter equals 35.3146667 cubic feet)
With too much corruption and political wrangling in sight, one may wish for another decade of autocratic rule to see that the economic issues and particularly the energy and food security problems get the attention they deserve. With the army being heavily engaged on international and domestic fronts, and with the politicians having succeeded, at least for the time being, in creating a smoke screen to deter army from any sort of adventurism, those interested in the survival of this country should think of depoliticizing the energy sector. This can be achieved by setting up NECP - National Energy Commission of Pakistan to be jointly overseen by the trio of The Chief Justice, The Army Chief and the State Bank Governor. Dr. A. Q Khan may be asked to develop a team of honest, hardworking and competent engineers and scientists. NECP should be a "no go area" for the politicians. The investment funds needed for the reconstruction of energy sector can be raised through the sale of unwanted and burdensome public sector giants like Railway, PIA, Pakistan Steel Mill etc. The NECP agenda should be:
* Fast and profitable utilization of Thar coal reserves with special emphasis on coal-based power generation
* Up-grading and enhancing of hydro power generation capacity
* Attracting local and foreign investment in the field of oil and gas exploration with a view to increasing the existing reserves
* Up-grading and modernizing power distribution systems to minimize production and distribution losses
* Breaking power-theft mafias and ensuring 100 percent recovery from consumers
* Strictly discouraging the creation of energy-related inter corporate debts