OVERCOMING ENERGY CRISIS
TARIQ AHMED SAEEDI
Dec 26, 2011 - Jan 1, 2012
The words seem to lose their substance upon reaching the corridor of power since notwithstanding umpteenth number of attempts made to bring into notice genuine issues facing the country in the media, the government remains disappointingly indifferent to the public pleadings.
The energy crisis is one such pressing issue battering the economy so hardly that growth outlook wears a murky impression with industrial production at many companies coming to standstill due to it.
When it is summer, electricity load shedding disturbs the domestic and industrial lives and come the winter the spectre of gas outages revisit to exacerbate the situation. The vicious circle has been active since last three years or so.
Defending its position, the government says the crisis was there since it assumed the charge of the corridor of power. But, perhaps never in the history of Pakistan complaints against energy problems as well as law and order were so loud, intense, and clear. The defending position may be interpreted as the unspoken plea of the incumbent government that there are obstacles in its smooth functioning or propaganda machines in operation to malign its good deeds.
However, there are undersupplies of gas and electricity and failure of state functionaries to ensure security to public lives and properties is evident.
According to the annual report by the state bank of Pakistan (SBP), prolonged power outages, gas undersupplies, flood implications caused negative growth of 0.1 per cent in the industrial sector during financial 2010-11.
Textile sector that is prime foreign exchange spinner is suffering from multipronged pesky problems. Gas and electricity shortages are forcing the textile processing and value added sector to go for massive attritions in cost, production as well as in workforce.
Textile manufacturers have been demanding of the government to address their problems.
Textile exports are on the downward trajectory and five months of the current fiscal year have already shown the slides. July-Nov textile exports have dropped to $5.02 billion from $5.08 in the corresponding period last year. If present slide continues, the likelihood of attaining $25 billion exports target is uncertain.
A knee-jerk response to arising problem is a phenomenon in this part of the world.
Ban on CNG kits and cylinders to save natural gas for manufacturing industries and power sector, is appreciated by all who want to see gas supplies primarily to the sectors more important to the economy. Unquestionably, at the time of crisis or in the midst of scarce resources, prime needs should be prioritized. However, does it make any sense to wean an infant from milk without providing him/her a nutritious substitute? In this case, both consumers and CNG investors are at infancy stage.
CNG sector having huge investments and serving approximately three million vehicles is a kid that has been forsaken out of the blue clearly because of gas resource mismanagement on the part of the government and perhaps desultory introduction of CNG at the very first step.
Analysts said this would help the government in overcoming shortage of gas supplies to the power plants as well as industrial sector on the verge of collapse on energy scarcity.
Different estimates pop up about the share of CNG sector in gas consumption. Proponent of ban quotes high figure whereas opponents keep it at low. An apparently authentic estimate puts it at 11 per cent.
At present, there is a shortfall of 300 million meter cubic feet per day (mmcfd) in the system with the demand standing at 1400 mmcfd and supply 1100 mmcfd. Power plants run on gas are obviously unable to produce required electricity as they are receiving insufficient gas volumes.
The government must ask the sole integrated power company in the city what it has done so far to improve its production capacity and reduce line losses. KESC's production has dropped to 7,826kwh from 9,129kwh in 2005 while its offtake from Wapda scaled up to 5,423kwh from 3,836kwh earlier, according to the Karachi chamber of commerce and industry (KCCI). The utility remains dependent on Wapda and independent power producers (IPPs) instead of its own production capacity, said the association representing 50,000 business units in the city.
The government should reduce an eerie gap in between ex-refinery and government prescribed rates in the course of discouraging CNG uses in private and public transports. A rude ban will serve nobody in the end and be going to reinforce investor's perception about inconsistent policies in the country.
As far as the power sector is concerned, private sector's involvement is very important with government's role be relegated to regulation only. Private investors are eager to explore alternative sources of energy as they are doing independently to meet the energy needs at factory level.
Advisably, such initiation should be encouraged to cope up with the electricity load shedding that is rendering sobering losses to industrial production and leading to unemployment.
At individual level, manufacturing concerns are generating power, and in some cases renewable and steam energy. The cost gets high in independent generation, which can be brought down as they join forces with each other. Government should support trade associations to come up with their own energy solution. In past, trade bodies in Karachi had expressed their willingness to start generation for particular trade zones.
Separate business entities should be designated for power generation and distribution. Power generation and distribution should be allowed as commercial business. Attractive incentives on generation through alternative sources may attract entrepreneurs and well-heeled investors.
Media reports said the government is planning to go with Iran-Pakistan gas pipeline project. Although all energy sources what to say IP project should be explored, the government should make rational instead of emotional decision with regards to choosing IP or TAPI first.