EXPLOITING HYDROPOWER POTENTIAL

IT WILL HELP IN BRINGING DOWN COST OF POWER GENERATION AND ENSURING YEAR-ROUND SUPPLY OF IRRIGATION WATER.

SHABBIR H. KAZMI
(feedback@pgeconomist.com)

June 11 - 17, 20
12

Energy sector experts are of the consensus that for bringing down average cost of electricity generation, Pakistan will have to add minimum 20,000MW hydropower generation capacity. They say this is not a castle in the sky but a realistic approach because mighty River Indus has the capacity to produce 40,000MW. However, groups having vested interest have been opposing construction of dams in the country on various grounds from ecological threats to hatred among the provinces and from lack of funds to huge transmission losses.

The growing consensus is that international financial institutions (IFI) have been patronizing these groups. One of the evidences is that in late eighties IFIs decided not to lend more money to Pakistan for the construction of hydel units. Instead, they made specific funds available for the construction of thermal power plants by the private sector. All this is being endorsed by the government of Pakistan (GoP) though successive power policies, which have put the cart before the horse.

This could be best understood by examining the existing system. It comprises of three subsectors: 1) generation, 2) transmission, and 3) distribution. Under the new policy, private sector has been encouraged to establish power plants, which make nearly half of the total installed electricity generation capacity. Transmission and distribution still rests with public sector.

While the country has been adding thermal power plants, no major dams have been constructed; Tarbella has commenced operation in mid seventies and since then Ghazi-Brothra (a run of the river facility) has been established. The GoP has successfully privatized Kapco and KESC but no distribution company has been privatized in more than 20 years.

Experts say thermal power plants operating in Pakistan may not be as efficient as those operating in developed countries, but distribution companies are 'mother of all evils'. According to a power sector, analyst performance of these companies is highly deplorable. They receive payment for 30 per cent of the units dispatched only because 40 per cent of total units dispatched are pilfered and another 30 per cent add to account receivables, as a result circular debt is created. Electricity tariffs are increased with regular intervals in the name of recovery of full cost.

Pakistan has wasted more than four decades and billions of dollars to create a justification for the construction of Kalabagh Dam, which has become a contentious issue and a source of hatred among the provinces. Experts say instead of wasting time and money, another location should have been identified. Even if that was not possible smaller dams should have been constructed.

Now, the country is facing two chronic problems 1) flood water cannot be stored and 2) thermal generation has become a luxury. Now hydel generation contributes 30 per cent to total as opposed to 70 per cent in the past.

One of the points used to oppose hydel generation is 'it is seasonal' as opposed to thermal, which does not depend on season. This may be true but the colossal difference between cost of hydel and thermal generation makes former viable means of energy.

Experts say thermal power plants are like standby facilities that can be used in extreme emergency, maybe, like lowering water level. They added thermal power plants are mostly located close to the points of consumption and therefore higher cost of generation is partly compensated by relatively low cost of transmission.

Pakistan can follow China and India as role models in hydel power generation. Both of them have constructed an umpteen numbers of mega as well as smaller dams. As opposed to this, Pakistan has two and a half dams, namely Terbella, Mangla and Warsak. While India is often accused of having constructed many dams in violation of Indus Water Treaty, it is not explained what stops Pakistan from building dams. Some cynics say that opponents of Pakistan do not want the country to achieve food security. In the absence of water storage facilities, the country faces drought like situation.

It is often said that Pakistan cannot mobilize funds because IFIs are not willing to extend any support. With the recent success of sovereign Ijara Sukuk, another window has been opened. Now, Pakistan can float rupee as well as dollar denominated Sukuk at highly competitive rates. Just to remove any ambiguity, it must be known to all that over the last three years, Pakistan has mobilized nearly Rs300 billion Ijara Sukuk. To accomplish the mission in shortest possible time, Pakistan will have to focus on smaller dams and run of the river type hydropower plants and at the same time initiate work on couple of mega projects, because a mega project is completed in five to ten years.

Some experts say that since little water is available in the country, there is no need to construct water storage facilities. However, they have been proved wrong after devastating floods of 2010 and 2011. Experts say that the floods of that magnitude will hit Pakistan almost every year. Therefore, the work on construction of water storage facilities must commence immediately and be completed on war footings.

Pakistan must accept Chinese offer to finance and construct dams. The Asia's largest economy has created on earth the world's 8th wonder 'Three Gorges Dam'. Many of the western experts had termed it worst catastrophe, but had eggs on their faces when the mega construction withstood some of the worst floods. Pakistan has one of the world's largest man-made irrigation systems, but it has become fruitless because of lack of adequate water storage facilities.