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Energy Crisis in Pakistan

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ENERGY CRISIS IN PAKISTAN

EDITOR

DR NOOR UL HAQ

ASSISTANT EDITOR

KHALID HUSSAIN

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IPRI Factfile

CONTENTS

Preface

v

1. Pakistan: Power Crisis Feared by 2007

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2. Major Energy Crisis Feared

3

3. Pakistan’s Quest for Energy Security

4

4. Waste to Energy is Needed in Pakistan

7

5. Type of Energy

10

6. Thermal Energy

10

7. Hydel Energy

12

8. Wind Energy

13

9. Rising Oil Prices

15

10. Pakistan Coal Reserves be Explored

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11. Pakistan Iran Agree on Gas Pipeline Project

17

12. ECNEC Approves Energy Projects

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13. Energy Crisis in Pakistan-I

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14. Energy Crisis in Pakistan-II

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15. Pakistan's Energy Crisis to Worsen in Next Two Year

22

16. Wind Power: Solution to Energy Crisis

23

17. Energy Crisis may go from Bad to Worse

26

18. Asian Development Bank Considering Loan for Small Hydro Projects

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19. US Advise Pakistan to Purchase Electricity from Central Asia

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20. Energy Strategy

28

21. Pakistan Urged to Import 4,000MW from CARs

30

22. Fuel Shortage may Worsen Power Situation

32

23. Energy Crisis: Serious and Worsening

33

24. Energy Crisis in Pakistan is Growing Rapidly

35

25. Efficient Household Appliances to Mitigate Energy Crisis

38

26. Coping with the Energy Crisis

40

27. Iranian, Pakistani Presidents Resolve Pipeline Issues

43

28. Ties with Iran

44

29. Power Crisis & Alternate Energy Technology

45

30. Government Calls IPPs Meeting to Tackle Power Crisis

47

31. Competing Firms Complete Feasibility Reports

48

Energy Crisis in Pakistan

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33.

Entangled in Energy Web

51

34.

Meeting Held to Discuss Pakistan's Energy Crisis

54

35.

Government Taking Steps to Overcome Energy Crisis

55

36.

Energy Conservation Plan to Combat Shortage

56

37.

Demand-Supply Gap Increases Dramatically

57

38.

Pakistan Facing Acute Power Shortage

58

39.

Renewable Resources Must to Counter Energy Crisis

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40.

Load Shedding: Part of Conspiracy

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41.

Coal Power Plants to Help Overcome Energy Crisis

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Government to Ensure Indiscriminate Load Shedding: PM

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43.

Pakistan Puts Clocks Forward, Hopes to Save Electricity

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44.

The Option for Solar Power

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45.

Advancing of Clocks Creates Confusion

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46.

Iran can Help Pakistan in Energy Sector

70

47.

SAARC Members Asked to Sign Energy Treaty

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48.

Subsidy on Use of Up to 200 Power Units Stays

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49.

Load Shedding becomes a Nightmare for Karachiites

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50.

Severe Fuel Crisis Hits Frontier

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51.

Shortage of Fuel at Petrol Pumps Causing Concern

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52.

Shortage of Petrol Products Tormenting Consumers

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53.

No End to Electricity Meter Shortage

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54.

Peshawar Transporters Threaten to Besiege Oil Depots

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55.

Diesel Shortage Affecting Operation of Tube-wells, Tractors

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56.

Load Shedding Increases as KANUPP Trips Again

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57.

Fuel Stations Run Short of Diesel

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58.

Frequent Power Shutdowns Bringing Grades Down

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59.

New Energy Order

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60.

Power Plants Top Gas Supply Priority List

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61.

Resolving Power Crisis a Priority

86

62.

Authority Set Up for Thar Coal Mining

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IPRI Factfile

PREFACE

Pakistan is presently facing a serious energy crisis. Despite strong economic growth during the past decade and consequent rising demand for energy, no worthwhile steps have been taken to install new capacity for generation of the required energy sources. Now, the demand exceeds supply and hence “load- shedding” is a common phenomenon through frequent power shutdowns. Pakistan needs about 14000-15000MW electricity per day, and the demand is likely to rise to approximately 20,000 MW per day by 2010. Presently, it can produce about 11, 500 MW per day and thus there is a shortfall of about 3000- 4000MW per day. This shortage is badly affecting industry, commerce and daily life of people.

All possible measures need to be adopted, i.e., to conserve energy at all levels, and use all available sources to enhance production of energy. It seems that the government is considering importing energy from Iran and Central Asian Republics and using indigenous sources, such as, hydel, coal, waste, wind, and solar power, as well as other alternate and renewable energy sources, besides nuclear power plants for production of energy. Needless to say that if the country wishes to continue its economic development and improve the quality of life of its people, it has to make serious efforts towards framing a coherent energy policy.

The Factfile includes selected articles and news items on the subject appearing in the media from 2nd July 2004 till 10th July 2008.

July 10, 2008.

Noor ul Haq

Energy Crisis in Pakistan

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PAKISTAN: POWER CRISIS FEARED BY 2007

The country may plunge into energy crisis by the year 2007 due to rising electricity demand which enters into double digit figure following increasing sale of electrical and electronic appliances on lease finance, it is reliably learnt Thursday. “The country may face energy crisis by the year 2007 following healthy growth of 13 per cent in electricity demand during the last quarter, which will erode surplus production in absence of commissioning of any new power generation project during this financial year,” informed sources told The Nation. As per Pakistan Economic Survey 2003-04, electricity consumption has increased by 8.6 per cent during first three-quarter of last fiscal year. However, a top level WAPDA official maintained that electricity demand surged up to 13 per cent during last quarter. The survey said household sector has been the largest consumer of electricity accounting for 44.2 per cent of total electricity consumption followed by industries 31.1 per cent, agriculture 14.3 per cent, other government sector 7.4 per cent, commercial 5.5 per cent and street light 0.7 per cent. Keeping in view the past trend and the future development, WAPDA has also revised its load forecast to eight per cent per annum as against previous estimates of five per cent on average. Even the revised load forecast has also failed all assessments due to which Authority has left no other option but to start load management this year, which may convert into scheduled load shedding over a period of two year, sources maintained. The country needs a quantum jump in electricity generation in medium-term scenario to revert the possibilities of load shedding in future due to shrinking gap between demand and supply of electricity at peak hours. According to an official report, the gap between firm supply and peak hours demand has already been shrunk to three digit (440 MW) during this fiscal and will slip into negative columns next year (-441 MW) and further intensify to (-1,457 MW) during the financial year 2006-07. The report maintained that the difference between firm supply and peak demand is estimated at 5,529 MW by the year 2009-10 when firm electricity supply will stand at 15,055 MW against peak demand of 20,584 MW.

Chairman WAPDA Tariq Hamid at a Press conference early this year warned about the possible energy crisis and stressed the need for ‘quantum jump’ in power generation. The experts say it could only be possible through a mega project of hydropower generation; otherwise the gap between firm supply and peak demand will remain on the rise.

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They said the power generation projects, which are due to commission in coming years are of low capacity and will not be able to exceed the surging demand of the electricity. They say no power generation project will commission during this fiscal year and the total installed capacity of electricity generation will remain 19,478 MW to meet 15,082 MW firm supply and 14,642 MW peak demand. Giving details of projects, the sources said Malakand-lll (81MW), Pehur (18MW) and combined cycle power plant at Faisalabad (450MW) are planned to be commissioned during the year 2007. Mangla Dam raising project would also add 150 MW capacity to the national grid by June 2007. Besides this, Khan Khwar (72MW), Allai Khwar (121MW), Duber Khwar (130MW) and Kayal Khwar (130MW) are expected to be completed in 2008 along with Golan Gol (106MW) and Jinnah (96MW). Moreover, Matiltan (84MW), New Bong Escape (79MW) and Rajdhani (132MW) are expected by 2009 while Taunsa (120MW) is likely to be completed by 2010. Sources say WAPDA has also planned to install a high efficiency combined cycle power plant at Baloki (450MW), which is expected to be completed by 2010. In addition of these, power plant 1 & 2 of 300 MW each at Thar Coal with the assistance of China are also planned for commissioning in 2009, sources said. Moreover, efforts are also under way with China National Nuclear Corporation for the construction of a third nuclear power plant with a gross capacity of 325 MW at Chashma, they added. When contacted, a WAPDA official said there is no power shortage in the country at present as the Authority still has over 1,000 MW surplus electricity. However, he admitted that the shortage may occur in the year 2007 and onward and said the Authority will utilise all options including running of IPPs plant at full capacity to avert any possible crisis. About the system augmentation to bring down line losses, the official said the Authority would spend Rs 3.5 billion on augmentation of distribution lines this fiscal while another Rs 5 billion will be consumed on transmission lines. “We have been negotiating Rs 9 billion loan with a consortium of local banks to upgrade and augment the power transmission system,” he disclosed. The official further said that five new transmission lines of 220-KV would be installed by the end of 2004, that would ensure smooth supply to the consumers. He expressed full trust on present transmission and distribution system and said it could easily sustain the load of total installed power generation in the country.

July 2, 2004

http://www.energybulletin.net/883.htm

Energy Crisis in Pakistan

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MAJOR ENERGY CRISIS FEARED

Pakistan is most likely to face a major energy crisis in natural gas, power and oil in the next three to four years that could choke the economic growth for many years to come, official estimates and energy experts suggest. Pakistan’s total energy requirement would increase by about 48 per cent to 80 million tons of oil equivalent (MTOE) in 2010 from about 54 MTOE currently, but major initiatives of meeting this gap are far from turning into reality, said a former petroleum minister on condition of anonymity for the simple reason that he had also served the present government. Major shortfall is expected in the natural gas supplies, he said. According to official energy demand forecast, he added, the demand for natural gas, having about 50 per cent share in the country’s energy consumption, would increase by 44 per cent to 39 MTOE from 27 MTOE currently. Partly contributed by gas shortfalls, the power shortage is expected to be little over 5,250MW by 2010, he said, adding that the oil demand would also increase by over 23 per cent to about 21 million tons in 2010 from the current demand of 16.8 million tons. This would leave a total deficit of about nine million tons of diesel and furnace oil imports, he said. Since the gas shortfalls were expected to be much higher, the country would need to enhance its dependence on imported oil, thus increasing pressure on foreign exchange situation, he added. Last year’s oil import bill amounted to about $6.5 billion compared with about $3.5 billion in 2004-05, mainly because of higher international oil prices - a burden expected to be even higher in future as a result of growing Middle East crisis. Current year’s oil import bill has again been projected by the government at about $6.5 billion on last year’s average prices, which have started to rise in the recent days. According to the former minister, the government had planned five major initiatives to meet these energy requirements. They included three gas import pipelines, Gwadar port as energy hub and LNG import. However, four of these measures, including the three import pipeline projects, show no signs of progress for various reasons while concentration on energy facilities in Gwadar would chiefly depend on security situation, besides oil and gas import pipelines. Planning Commission sources said the government had planned to add an overall power generation capacity of about 7,880MW by 2010. Of this, about 4,860MW is to be based on natural gas, accounting for 61 per cent of capacity expansion.

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IPRI Factfile

However, the gas-based power expansion of about 4,860MW would remain in doubt since these estimates were based on gas import options for completion in 2010, 2015 and 2020, said the sources. The fifth initiative of LNG import was on schedule and would start delivering about 0.3 billion cubic feet of gas (BCFD) by 2009 and another 0.5 BCFD by 2015, said the sources. Petroleum ministry officials are not ready to speak on record about gas import options and resultant overall energy shortfalls because of recent political developments on Iran-Pakistan-India pipeline project and security situation in Afghanistan and non-certification of gas reserves in Turkmenistan. According to World Bank estimates, a demand gap (supply shortage) of about four per cent of the total demand, is expected in 2010. Even though this gap would be met by LNG imports, it would again increase to 20 per cent of the total demand. The bank said the indigenous gas supply would fall from 32.6 MTOE in 2010 to 20.7 MTOE in 2025 while the ‘gas supply-demand gap’ would rapidly increase as demand is expected to grow continuously, quadrupling in 2025. As per the World Bank estimates, the gas imports will represent almost 67 per cent of natural gas supply in 2025. One can, therefore, gauge the quantum of shortage in case import pipelines are not materialised. Pakistan’s gas reserves are 32.8 TCF at present, with reserve- production ratio in the order of 27 years, considering that domestic production does not grow substantially. Power sector demand represents 41 per cent of total gas consumption, general industries 24 per cent, fertiliser 7.8 per cent and domestic-commercial 22.8 per cent, cement 1.5 per cent and CNG 2.8 per cent.

Demand growth has been up to 8.5 per cent in recent years and is expected to be seven per cent with power industries and domestic consumption accounting for 82 per cent. Gas demand already displays seasonal pattern with national demand growing in winter beyond transmission capacity. Therefore, supplies to large users mainly industries and power plants are curtailed during winter months to ensure supplies to domestic, commercial and small industries. Annual production at present is about 1.16 TCF.

Khaleeq Kiani, Dawn, July 28, 2006

http://www.dawn.com/2006/07/29/top16.htm

PAKISTANS QUEST FOR ENERGY SECURITY

Energy has become an important prerequisite for the economic development of a country. On one hand it is used for the industrial and agricultural purposes and on the other hand it is required for domestic use of the citizens. Natural gas is the fastest growing primary energy source. Globally

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consumption of natural gas is projected to increase by nearly 70 percent between 2002 and 2025, with the most vigorous growth in demand expected among the emerging economies. Consumption of natural gas worldwide increases in the forecast by an average of 2.3 percent annually from 2002 to 2025, compared with projected annual growth rates of 1.9 percent for oil consumption and 2.0 percent for coal consumption. The electric power sector accounts for almost one-half of the total incremental growth in worldwide natural gas demand over the forecast period. South Asia is important to world energy markets because it contains 1.3 billion people and is experiencing rapid energy demand growth. After India, Pakistan and Bangladesh are the next largest South Asian countries in these categories. Economic and population growth in South Asia have resulted in rapid increases in energy consumption in recent years. The major energy issues facing South Asian nations today are keeping up with rapidly rising energy demand. Agency for energy consumption has projected that by the year 2010 South Asian countries shall be consuming more than double the current levels of primary commercial energy. Pakistan’s largest energy source is natural gas, with demand and imports growing rapidly. Currently, natural gas supplies 49 percent of Pakistan’s energy needs. According to the Oil and Gas Journal (OGJ), as of January 1, 2005, Pakistan had 26.83 trillion cubic feet (Tcf) of proven natural gas reserves. Pakistan is looking to increase its gas production to support increasing consumption through Pipelines from Iran and Turkmenistan. Currently, Pakistan ranks third in the world for use of natural gas as a motor fuel, behind Brazil and Argentina. In addition, Pakistan hopes to make gas the fuel of choice for future electric power generation projects. Pakistan ambitiously seeks to increase oil production through new alliances with foreign companies. Pakistan’s net oil imports are projected to rise substantially in coming years as demand growth outpaces increases in production. Pakistan will see power shortages by 2007 unless actions are taken to increase generation and reduce transmission losses. Pakistan has 18 gigawatts (GW) of electric generating capacity. Thermal plants using oil, natural gas, and coal account for about 70 percent of this capacity, with hydroelectricity (hydro) making up 28 percent and nuclear 2.5 percent. Pakistan's total power generating capacity has increased rapidly in recent years, largely due to foreign investment, ultimately leading to a partial alleviation of the power shortages. Pakistan often faces load shedding in peak seasons. Transmission losses are about 30 percent, due to poor quality infrastructure and a significant amount of power theft. Periodic droughts affect the availability of hydropower. The Government is understandably engaged in a vigorous effort to expand the nation’s power generation capacity through building of dams and inviting foreign investors for establishing thermal units in the country. The things are,

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however, seemingly getting out of its hand due to the yawning gap between supply and demand of electricity. Coal currently plays a minor role in Pakistan’s energy mix. However, Pakistan contains an estimated 3,362 million tons, sixth largest in the world. President Musharraf has stated that coal should make up more than the current 1 percent of electric power generation in Pakistan. The Pakistani Ministry of Industries and Production has granted a Chinese company to build two coal-fired power-generation plants to supply 600 MW of electricity. Aside from power plants generated by coal, Pakistan is also working to expand the use of wind turbines. For instance, the Pakistan Alternative Energy Development Board (AEDB) recently approved New Park Energy Phase I, a 400-MW wind project near Port Qasim. Energy cooperation is the key to regional development. Pakistan’s government is working on plans to build an Iran-Pakistan-India (IPI) pipeline that spans from Iran’s massive reserves to Indian markets across Pakistani territory. Russia’s biggest gas producer, Gazprom, has recently shown interest in the $7.4 billion pipeline project and has indicated its desire to invest in it. While Iran and Pakistan have made agreements to move forward, India still remains reluctant due to its recent nuclear deal with USA. Iran has offered to cover 60 percent of the construction costs of the pipeline and Pakistani officials have stressed their ability to safeguard the pipeline. Iran will lay the pipeline from Pars to Pakistani border. Islamabad will build the pipeline from the Iranian border to its Central Pakistani city of Bhong in District Rahaim Yar Khan. Both countries have discussed the gas pricing formula, project structure, its feasibility, gas off-take volumes and the gas sales and purchase agreement. In spite of US pressure for not building IPI pipeline, Pakistan remains determined for the pipeline. In fact, in the face of the US pressure against IPI, now two pipelines from Iran are under "active consideration" — one for Pakistan and the other for India, through Pakistan. If India participates in IPI project, Pakistan will be entitled to transit fee. But, if Pakistan builds the pipeline from the Iranian to the Indian border, then it will also be entitled to transportation charges. This is the great vision of President Pervez Musharraf and Prime Minister Shaukat Aziz according to which Pakistan is going to become an energy corridor for China. Islamabad’s negotiation for a second transnational gas pipeline from Turkmenistan to Pakistan via Afghanistan (TAP) also entered a final stage because experts are of the view that Pakistan's fast growing energy demand requires laying two gas pipelines. Washington supports the TAP project and has assured the pipeline’s security through Afghanistan. It also holds good prospects for other South Asian users, depending on the size of supplies that Turkmenistan can arrange. The plans to build a third transnational gas pipeline from Qatar to Pakistan and India—- Gulf-South Asia Pipeline (GUSA)-—seem to have slowed down because of

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the gas availability issues. "The plan to import gas from Qatar is not, however, shelved," maintained by Jahangir Khan, spokesman for Ministry of Petroleum & Natural Resources. With the development of Gawadar Port, Pakistan can provide the trade and energy corridor for the whole region especially to China. In this perspective president has rightly remarked so, “When Karakoram Highway was built, the world called it the eighth wonder, and we can create the ninth and tenth wonders by establishing energy pipelines and railway linkages between the two fast growing economies.” China and Pakistan agreed to widen KKH for larger vehicles with heavier freight. The rebuilding of KKH will enable China to ship its energy supplies from the Middle East from Gwader Port in Balochistan through the land route of KKH to western China, which is its development hub. This alternative energy supply route will reduce Beijing’s dependence on the Malacca Straits. Pakistan also wants to set up a “crude transit route” through Gwader Port for Beijing’s energy shipments from Iran and Africa. For this reason, Pakistan is building oil refineries, natural gas terminals, oil and gas equipment, and transit facilities in Balochistan. China has agreed to help Pakistan with its plans for the development of its oil and gas industry. With this planned elaborate energy infrastructure, KKH has assumed an added significance as an alternative land link between China and its energy sources, of which Iran is at the top. The recent Pak-China energy forum in Islamabad was a major step in formulating future strategy to ensure energy security of both countries.

Muhammad Munir, Pakistan Observer, 20 May 2006

WASTE TO ENERGY IS NEEDED IN PAKISTAN

Growing urbanisation and changes in the pattern of life, give rise to generation of increasing quantities of wastes and it’s now becoming another threat to our already degraded environment. However, in recent years, waste-to-energy technologies have been developed to produce clean energy through the combustion of municipal solid waste in specially designed power plants equipped with the most modern pollution control equipment to clean emissions. Yet, solid waste management practices differ for developed and developing nations. In developing countries like Pakistan, institutions charged with the responsibility to make decisions on solid waste management, operate in the enormous information, policy and strategy vacuum and lack therefore the ability to address this looming environmental disaster. The perfect ‘case study’ of information gap in selection of appropriate methodology to dispose municipal waste exhibited by the apex civic authority of Pakistan is when the capital development authority has finally decided to solve the ever-increasing volume of municipal waste by landfill in groundwater

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IPRI Factfile

recharge area. While in developed countries, landfills are now bracketed as ‘obsolete’ and ‘mines of the future’ after observing several problems like pollution and contamination of groundwater by leachate and residual soil contamination after landfill closure and simple nuisance problems. This is the very reason why in the United States sanitary landfill techniques have steadily decreased from 8,000 in 1988 to 1,767 in 2002. Extensively focusing on turning waste to energy, municipal authorities in USA have realised the contribution of waste to an increasing electricity shortage. Today in America, 2500 MW are solely generated by the waste-to- energy plants. Many other countries in the world, Sweden, Japan included, have applied this technology since the last 20 years. In the sub continent, India installed three projects to produce electricity from waste with a total capacity of 17.6 MW. Although these ‘made in India’ power plants are generating electricity by direct incineration, causing pollution and must be upgraded by sophisticated monitoring systems to check pollution. These examples are enough to establish that CDA’s ignorance of modern technologies is surely not simply a lack of ‘access to information’, but questions the professional capabilities of the planners within its corridors. The site selected for the landfill project is at Kuri, an ancient city of Potwar and its aerial distance is hardly five kilometres from sector G-5, known as the nucleus of Islamabad. Though, in July 2003, the same site was considered for a landfill project but UNDP out rightly rejected and warned that environmental cost would be considerable, besides air pollution, contamination of groundwater if Kuri was selected as a landfill project. JICA in 1988 also compiled a detail investigation report, which established that the area is the recharge zone of the aquifer catering for more than 50 per cent of the twin cities’ drinking demand. Based on these serious environmental constraints, as its location is up a slope and within the flood plain of Gumrah River, the recharge-basin of the twin cities aquifer, the site was rejected. Recent floods substantiated the finding of all the reports, as the site is definitely within the flood plains of the Gumrah River and would need to be protected on a priority basis, especially as water shortages is now a permanent problem of the twin cities. Whoever selected and approved the site for the ‘disaster of the future’, showed ignorance of the above reports and absolute ignorance of the adverse environmental impacts this project would create. Is this ignorance simply unawareness of the planners or is it complete apathy towards anything old, which rejects that Kuri is recorded as an ancient city of the Potowar Region. As CDA is constantly focusing on developing tourist attractions, why not preserve this historical area? Aware of the unprofessional management at CDA’s varied directorates one anticipates leachates from the landfills, polluting the amazingly still clean groundwater table, while the wind will carry

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waves of leaking gases towards the G-5 Sector, farther adding to the prevalent health hazards of the capital. ‘Access to clean water’ has been given the ‘top priority’ flag by the president. Selecting a site along the Gumrah River, known to recharge the groundwater along its winding course through Chak Shehzad and Kanna shows the warped priorities of the planning commission that approves projects, the ministry of interior responsible for CDA affairs and the CDA itself. Had CDA only followed the minutest details provided in the Federal Capital Commission Reports of 1960 by the earlier planners of the capital city, Islamabad today would have been a model for the rest of Pakistan. The CDA ignored the most recent seismic zoning report of the region too. According to EPA US regulations, duly adopted by Pakistan’s EPA, there should be no significant seismic risk within identified landfill sites. Kuri is within a highly sensitive earthquake zone, according to new seismic zoning maps prepared after the earthquake 2005. An earthquake having a magnitude of 4.2 was recorded on July 7, 1989 and its epicentre was at a distance of 10 kilometres from Kuri. Had the spread of this infectious disease the ‘vacuum of information’ been contained in time, CDA would surely have been able to diagnose that the estimated cost of two billion rupees for the landfill site, would have sufficed for setting up an ‘energy-to-waste’ plant in the city. With load-shedding a permanent crisis in Pakistan, adding some extra megawatts through waste-to- energy could have solved many ills in the rapidly growing energy needs. A vacuum of information has not allowed the CDA to communicate either with the alternate energy development board, established by the federal government in 2003. This board was given the mandate to solve the energy crisis that is facing this country through renewable technologies. Although advertisements in the printed media asked for feasibility studies of ‘waste-to- energy’ units for ten cities of the country, the twin cities were ignored. Had mutual interactions been part of the government systems, the funds available to the CDA for the ill-fated sanitary landfill, and the technical know-how of alternate energy development board (AEDB), Islamabad could have prided itself of being the first ever waste-to-energy unit in the country today. The decision to construct a landfill project at extremely sensitive areas need not only to be reviewed but also need to empower the AEDB to generate electricity from waste to cope with the energy demand in the lines of international environmental commitments avoiding violation of the Kyoto Protocol and Stockholm Convention. Now decision-makers have to choose whether to allow the CDA to go ahead with the landfill project, to dump waste for adding more pollution and contamination of groundwater or to allow production of environment friendly energy.

Arshad H Abbasi, November 9, 2006 http://www.alternative-energy-news.info/waste-to-energy-pakistan

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IPRI Factfile

TYPES OF ENERGY

Energy can be differentiated as

1. Kinetic energy

2. Potential energy

Kinetic Energy

1. Sound

2. Wind

3. Mechanical for example moving piston in a cylinder

4. Electrical energy. Electricity, lightning

5. Thermal Energy, Heat, hot water, steam

6. Light , microwaves, x-rays , solar, ultra violet rays

Potential energy

1. Gravitational energy. Hydro power, ball above ground

2. Spring . stretched rubber band

3. Magnetic planetary poles

4. Nuclear , fission, fusion, heavy water uranium

5. Chemical , gasoline, batteries, oil natural gas, gun powder, coal, wood

2007

http://www.energy.com.pk/energytypes.htm

THERMAL ENERGY

Thermal Energy is the oldest type of energy. With all known history available, Wood was always used for heating and cooking. In 2nd world war fossil fuels entered in the form of coal to get the energy, until liquid fuels were discovered and because of their convenience of transportation they took over as major contributors of the energy source. Once the steam engines were invented then the coal or liquid fuel was burnt in the boilers and the heat produces steam which is used to drive electrical generators, or any other mechanical device. Rudolph diesels invention of diesel engine revolutionaries the energy concept and today we see sine the majority of machines moving on diesel engines.

Diesel engines can be 2 stroke or 4 stroke type. They can be in line or arranged in V or even W shape. They can be single acting or double acting. Another method of converting thermal energy to mechanical energy is by the gas turbines. Turbines are also used to run by steam or hot gases which are produced by igniting fuel.

Energy Crisis in Pakistan

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For converting thermal energy to electrical energy alternators are used to drive on constant RPM. The choice of gensets strictly depends on the requirement of the client, before ordering a power plant following points to be considered

1. Expected demand of the power.

2. Type of fuel required

3. Space available for the power plant

4. Avilability of genset

5. Avilability of local service back up and stock of parts

6. Price is paramount importance and hidden expenses should be looked carefully The major manufacturers and suppliers of Gensets based on internal

combustion engines are given below

1. MAN

2. Wartsila

3. Caterpillar

4. Jen Bacher

5. Waukesha

6. Mitsubishi

7. Detroit Diesel

8. Rolls Royce

Internal combustion engine can obtain 30-50% thermal efficiency. It means that around 50% energy is wasted in the form of exhaust gases , cooling systems and radiation. Therefore for larger plants heat recovery systems are

utilized.

In Pakistan due to attractive gas prices this is a general trend that gas operated power plants are preferred if gas connections are available. The gas gensets are available from less than 1 MW sizes to 6 MW configuration. Normally they are V type and 12,16 18 and 20 cylinder configuration. In addition some models are available on duel fuel technology which can be operated simultaneously on gas and furnace oil. The price of a 3 MW gas genset can be expected around 1 Million $. However low RPM engines will be more costly Unit cost of fuel on gas genset can be evaluated as follows

Fuel Cost

Rs 2.7 (depends upon the genset )

Maintenance

Rs 0.20

Lubricating Oil

Rs.0.10

Chemical

R

Rs. 0.02

General stores

Rs. 0.01

Labor

Rs.0.10

Overhead +Insurance

Rs.0.07

Financing

0.20

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Total

The engines which are running the fuel cost is only variable and can be calculated by multiplying fuel cost by a factor of 225. (225 grams / KWHR is an average net fuel consumption expected.)

2007

http://www.energy.com.pk/THERMAL_%20ENERGY.htm

Rs. 3.40

HYDEL ENERGY

Water flowing in the rivers has kinetic energy. Once they are used to drive the turbine and produce electricity the power generated as Hydel Energy. Power produced by the turbines depends on quantity of water flowing/minute and the head of water available.

Mostly river flows by melting glaciers on high mountains. Once the water start flowing in the valleys it changes its head very rapidly. This energy can be converted into electrical energy. Two method are normally used:-

1. Dams

2. Run of River projects.

In case of Dams the water flow is restricted by making a huge storage device and the head of water is increased, the water then is allowed to flow by means of gates and pass through the turbines, the head of reservoir level is maintained to provide uniform power, and the water stored in peak season additionally is used for irrigation purposes in dry seasons. In run of river projects the water is diverted through the tunnels and once it gains the head allowed to fall and pass through the turbines and back to river. the water in these projects is continuously flowing and not being

stored.

paramount importance in choosing a

suitable site for the hydro project and it evolves a very serious time and money consuming study.

Once a site is located further detailed feasibility study is required before proceeding any serious effort to start the work. The feasibility study should include following field work.

Geographical

situation

is

1. Detailed Mapping of the area

2. Topographic study of the area

3. Seismic refraction study

4. River flow data

5. Weather data containing, Temperatures, pressures, rain humidity

6. Water sampling and testing

7. Environmental study

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9. Wild life and fish study

10. Identification of stake holders of the area

11. Coring and getting samples of the soil at 50-200 meters depth

12. Laboratory testing of the cores samples

13. Tectonic study to evaluate earth quake dangers

2007

http://www.energy.com.pk/hydel.htm

WIND ENERGY

Pakistan is facing acute shortage of energy. with 7% increase of its economy this short fall soon to slow down its economic growth and will shatter its dream to become one day a developed country. Most of its energy demand is being met with either Hydro power or thermal units. Pakistan is spending a very large amount of foreign exchange to purchase the furnace. The gas reserves already start depleting and oil markets are sky rocketing. To overcome this shortage Government take a initiative to investigate Alternate energy resources in Pakistan developed Alternate Energy Board AEDB. The Board is headed by Retd Air Marshal Shahid Hamid. identified 50,000 MW energy potential from wind resource Pakistan is blessed with a large resource of wind corridor. Although Pakistan meteorological Department was gathering wind data for quite long time But recently United States provided wind energy map for Pakistan which confirms a strong wind corridor in Sind coastal area. AEDB issued about 80 LOI to the investors List of LOI holders )to develop 50 MW wind farms. Out of which 15 are already issued the land and feasibility reports and financial closings are in progress. The following is a brief road map for developing a wind form

1. submission of proposal by sponsor

2. Review of proposal by AEDB

3. Posting of Bank Guarantee

4. issuance of letter of intent ( LOI )

5. Feasibility study

6. Generation License

7. Tariff Determination

8. Submission of Performance Guarantee

9. Tariff determination by NEPRA

10. Submission of performance guarantee

11. Issuance of Letter of support

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IPRI Factfile

The first requirement of conducting feasibility study is to install a

wind mast. The three major manufacturers of wind data are listed below. This document explains the method for installing weather station.

1. www.wilmers.com

2. www.ammonit.de

3. www.environdata.com.au

Geological, seismic, tectonic and environmental studies will be required along with Digital mapping and topography of the site for preparing a bankable feasibility study. A confirm EPC cost will also be needed for calculation of tariffs. Some large manufacturers of wind turbines are given below

1.

Denmark (27.9%)

2.

GE Wind, US (17.7%)

3.

Enercon,Germany (13.2%)

4.

Gamesa, Spain (12.9%)

5.

Suzlon, India (6.1%)

6.

Siemens, Denmark (5.5%)

7.

Repower, Germany (3.1%)

8.

Nordex, Germany (2.6%)

9.

Ecotecnia, Spain (2.1%)

1

Mitsubishi, Japan (2.0%)

WIND ENERGY BASICS Power developed by a wind turbine can be mathematically shown in following formulae 1/2xdensity of air x effective area of rotor blade x cube of speed of wind

Energy Crisis in Pakistan

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Energy Crisis in Pakistan 15 The lay out and designing of the wind form can be

The lay out and designing of the wind form can be done by wind energy planning and project software available in market in a reasonable price . One such software is Wind Pro which is a very convenient tool for project management. Environmental Protection agency require a detailed environmental impact study of the project. The following issues should be discussed detail

1. Birds collision or alteration of their migration routes

2. Noise impact

3. flickering

2007

http://www.energy.com.pk/Wind%20Energy.htm

RISING OIL PRICES

All predictions now failing and the oil prices are rising and now about to reach 100 $ level. who knows that in market trading if even the customers are buying the oil on +100 $. the reason being given for this enormous rise is the US oil reserves are depleting and therefore customers are ready to purchase the oil at any price available. The future prospects also not very encouraging. All trading is being made on +90 $. OPEC promised to raise its out put but with out any

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IPRI Factfile

significant effect. for the time being the prices were dipped but risen again on much higher values. The winter is just arriving and nobody knows that these prices will settle at what level. Rising tension between US and Iran is one reason. Some sources are predicting the attack on Iran is imminent. If the condition continues like this who is going to be benefited. Emerging economies and developing will suffer most. Their economy is dependent on energy resources. how can survive and how can they meet their production commitments. In recent months oil surged from 70$ to 92$ and still rising. Those industries which consumes more energy will suffer with maximum. It will lead to rise of inflation shutting down in efficient industries and rising un employment in third world countries. When come to individual the poor will suffer most .High income group will survive and it will not effect on their livings. But the strains coming on poor in third world countries will transform to social unrest and hence will cause instability in the region. Pakistan economy is already under intense pressure. On one hand it has the competitors like China and India giving cut throat fight. Another end it has continuous problem on its western borders draining its resources and causing political chaos. The election is just three months away and the results expected are the change of government to Pakistan Peoples Party. Pakistan exports and its all economic activities are dependent of uninterrupted energy supplies for its energy requirement maximum share still of furnace which is imported from Middle East countries. Rising prices will bring a wave of inflation. Already many textile mills closed down due to higher production costs which make it un economical. further increase in oil prices will definitely bring more strain on existing working units. In election environments it will be definitely a difficult decision for Prime Minister Shaukat Aziz to authorize the fuel prices in Pakistan. But he has no other option. How far the Government continues to absorb the fuel bills eventually it has to increase the prices. And again who will suffer simply the poor Today only there are news that Pakistan is going ahead 2000 MW power plant based on furnace oil. Now we have to look for the future and sustainable economic activity. Development of Renewable energy resources are not moving ahead beyond symposiums and conferences or in other crude words lip services. Pakistan's future as economic leader in the region is at stake if sustainable cheap energy resources are not developed on priority.

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So the solution is not so simple. Renewable yes. The hurdles should be identified and removed on priority. One area which we want to emphasize is the conservation of energy. We have to persuade all concerned that all possible measures to be taken to save energy so it can be used for future. Energy efficient plants and machines are the recipe for our survival.

2007

http://www.energy.com.pk/risingoilprices.htm

PAKISTAN COAL RESERVES SHOULD BE EXPLORED

The energy shortage is increasing day by day and the resources of Pakistan are limited and this year we are witnessing increasing of imported fuel bill. This is time that Pakistan should explore all its available resources. We see a limited progress in alternate energy sector. But so far little efforts are being made to explore and use the coal reserves in Sind. This is claimed that coal quality is inferior and having low BTU. This is a challenging task. Today technology and boilers are available that can burn any kind of coal. Therefore all possible measures should be adopted to utilize existing resources. The smaller size power plants near the coal mines which can get direct feed and connect to National Grid will be an ideal configuration.

2007

http://www.energy.com.pk/news%20and%20views.htm

PAKISTAN IRAN AGREE ON GAS PIPE LINE PROJECT

This week very good news coming in energy sector that Iran and Pakistan finally agreed to go ahead with the project. The gas project which was initiated by Iran India and Pakistan was having many constraints and was continuously under pressure from US. India was asking more time to make the decision and therefore the project was delayed.

Finally Iran and Pakistan decided to continue with the project and when ever India decides it can be accommodated in the project extension. The major issue which is now resolved is the gas price which is now related to petroleum prices as per the international practice. For all practical purposes the gas purchased will be based on BTU values as agreed by both partners. For Pakistan it means that the gas will be on higher price than the domestic supply which is subsidized for common house hold users.

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IPRI Factfile

The gas is prime energy source for domestic usage as well as fertilizers and power generation companies. This is expected that the average price when fixed for local consumers will take care for common users as well as industrial users

Iran wants quick decision for Gas Pipe

Iran asking India to make the decision of joining Gas Pipe Line project soonest, otherwise the project will be started with Pakistan. Reluctance of India to make a firm decision is understandable due to Geo- Political Scenario. However this project is vitally important and profitable for Indian sustainable economic growth. Therefore a positive outcome is expected soon.

2007

http://www.energy.com.pk/pakiran.htm

ECNEC APPROVES ENERGY PROJECTS

The Executive Committee of the National Economic Council ECNEC approved 23 projects worth 116.5 Billion Rs. The meeting was the last on the chairman ship of Prime Minister Mr. Shaukat Aziz whose term is expiring in three weeks. Energy sector was given prime consideration and the development of nuclear power projects approved. Pakistan facing acute shortage of energy and this is a wise decision to focus on nuclear energy which is renewable, cheap and environment free. with furnace reaching 100$ Large Hydel projects having social concerns ,wind turbines not available in market, and gas reserves depleting nuclear becomes most attractive option.

2007

http://www.energy.com.pk/ecnec.htm

ENERGY CRISIS IN PAKISTAN - I

We have written many blogs on this subject. But we never thought that the situation will reach to such disastrous condition so soon. Last week we saw a series of disasters in energy sector. Pakistan electrical energy production sustain shortfall of 3000 MW. Actual figure is slightly controversial as we have seen various statements emerging from various sectors. Production units were shut. There was severe load shedding through- out the country. APTMA was forced to accept volunteer load shedding of 5 hours each day on all units. And the residential areas were with out power

Energy Crisis in Pakistan

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maximum time of the day. The situation was worsened because Sui Gas Company already stopped the supply of industrial units and was going through a system of load shedding it self. Therefore captive units were shut off due to non avilability of the gas. The IPP who were operating on furnace could not get the regular supply of furnace and they did not bother to keep enough stock for contingency therefore stop shutting. And then naturally the blame game started, starting from the water shortage in Dams to furnace oil transportation problem, violence in Sind and maintenance activity in some independent power producers. Now it is officially declared that in last 10 years not a singles MW was added. We have seen hundreds of seminars, conferences and events on energy issues in Pakistan. The money wasted there if utilized then at least we can add few hundred MW of Power. The fact is that Pakistan is sustaining an acute shortage of Power. Its demand is increasing and production is declining due to aging of the plants. And no solution is in sight. The projects which are in pipe line will not come in line before 2009. And even the magnitude is such that it will not be able to fulfill the demand of today. WAPDA is in favor of large dams and thinks that the delay of construction of large dams was the basic reason for the shortage of power. The issue is very controversial subject and it is not expected to resolve soon. Moreover the construction of the dam will take at least 10 years and if the situation persist our economy will then come to a stage where it will need any power any more. The situation demand an urgent decision. A decision which is vital for the safety, stability and survival of Pakistan. Energy is a key factor for the stability and prosperity of Pakistan. If our production units keep on shutting then un employment will rise and hence street violence will rise. This is the time to restructure our energy policy. In our opinion instead of many agencies one central ministry should look after the energy issues in Pakistan. This is utmost important that an environment should be created where the investments are made in energy sector. Recently Government is advocating a policy of promoting the investment in Private Sector. Although the response is favorable but the out come is very slow. Now Government has to make a huge investment in energy sector. And the investment has to be in direct purchase of power plants, manufacturing main and auxiliary units, The objective should be utilization of diversified energy resources. It is imperative that renewable energy resources should be explored but still conventional thermal and coal fired power plants should be established.

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IPRI Factfile

The strategy should be to explore indigenous local resources. For example furnace oil plants are best suited in Karachi where the port and refinery facilities are available. Gas plants to be installed in Baluchistan, Sind and N.W.F.P near to existing gas fields. N.W.F.P should explore medium, small and micro size hydro projects. Sind must use its Coal reserves. Wind turbines to be installed in coastal belt, and Punjab must explore bio-gas and city waste plants. From US and Europe we should borrow and purchase the technology to manufacture various power plants in Pakistan. For example if we start building 1-3 KW micro hydro, wind or solar power plants in Pakistan sufficient to provide energy to one home we can sell to individual families direct at low installments. The cost will be recovered in utility bills compensation. For the furnace IPP and captive power plants should be allowed to import furnace oil duty free. Then existing laid up power plants will again become operational. All efforts to be made that Iran Pakistan gas pipeline project is implemented soonest. Moreover one additional pipe line for crude oil to be installed to reduce our dependence on sea route. Pakistan is in need of energy very badly and urgently. Pakistan should look for nuclear energy possibilities. Pakistan is one of seven countries in the world who has an indigenous capability to operate the nuclear power plant for last forty years. Pakistan should look all alternatives to increase its electrical energy production by 10,000 MW in two years. This is a very challenging and difficult task. But if it fails its target then all other indicators will go negative leaving behind a disastrous situation. A dedicated campaign of energy conservation is needed to spread the awareness of energy conservation programs. This is also believed that in general major energy consumers have little or no awareness of energy saving procedures. The machinery when purchased a very little emphasis is given on electrical or mechanical efficiency of the plant. The result is that our production units are consuming much more energy than their competitors resulting their product cost high and it is not competitive in international market.

Energy conservation is indeed energy production. So if an investment is made in this sector then it will pay back in 3-5 years. This is the responsibility of Government to start various energy conservation programs suited for various industries.

2007

http://www.energy.com.pk/energy%20disastor.htm

Energy Crisis in Pakistan

21

ENERGY CRISIS IN PAKISTAN - II

A very common question asked in Pakistan is about the most burning issue in

Pakistan? The answer you will get may be a list of hundreds of issues which

start from Kashmir and will end on terrorism or militancy etc etc.

Recently Mr. Mansha in an interview in CNN replied same question by giving a simple answer that water and energy are two most valid problems

in Pakistan.

Energy is a most problematic issue in the world. Whereas oil prices are steadily rising and no stability is seen in near future. Demands of energy from the emerging markets like China and India are growing day by day. Pakistan with official figurers of growth rate of 8% will have a definite rise in

demand of energy for minimum 3% In USA the Gulf of Mexico is famous for oil producing and refining facilities. The prosperity of Houston is only due to oil industry being flourished. However the weather is not so kind on this area and hurricanes and tornadoes commonly hit the southern part of USA and Caribbean. Such is the volatility of fuel market now that just news of one hurricane developing in Caribbean shoots the oil prices in the world. A few years before oil was being traded on 20$ and no body ever thought that the weather conditions in the gulf can effect the oil market. Politically the Iran situation is deteriorating day by day where as Iraq condition is not stabilizing. Oil today is being traded around 65 $/, and the most vital question now is what will happen if the prices rises to 75 $ or even one hundred $/barrel. Pakistan with small manufacturing market, surrounded by major emerging economies like China, India, Malaysia, Indonesia, Philippines and Bangladesh will be worst effected with the rise of energy prices. As a rule of thumb modern day manufacturing industries utilize at least 33% production cost in terms of energy prices. An increase of energy cost will effect their production cost and will force the manufacturers that either to reduce the labor cost or to remain competitive in market by improving the quality standards. Major giants China and India will benefit with this condition and smaller economies will suffer badly. Are our policy makers in Islamabad thinking for the gravity of problem which is now just standing on our door step? On famous oil embargo days a lot of research in Europe was carried out to find the alternate source of energy. The findings are available even in college books. However with the drop of oil prices such alternatives were uneconomical and therefore shelved.

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IPRI Factfile

This is the time that Pakistan now asses very carefully that in case of oil prices rising to 75 $ what actions it should take to conserve energy and to find the alternate source of energy. A volunteer option for all energy users is to conserve energy. To make the plants more efficient and to see that each drop of petrol is saved .If we make serious study on this subject then we may achieve up to 20% saving in energy ,hence saving in our production cost and making our products more attractive in international market. Of course the energy conservation programs cost money. However the investment will be rewarding and will be beneficial in long terms. Pakistan’s thermal units are day by day become aging, reducing their output power. With the rise of demand very soon we will see an acute shortage of energy and hence load shedding and shutting of the industrial units. This will seriously affect our competitiveness in the international market. A liberal and progressive policy with less bureaucratic approach towards energy producing units will help and bring attractive investment in Power sector. This is the responsibility of government to look for the alternate options for finding the energy resources. This investment can only be made by the federal government. This is the time of survival. Only the countries which are prepared for the worst will have a prosperous future.

2007

http://www.energy.com.pk/energycrisis.htm

PAKISTAN'S ENERGY CRISIS TO WORSEN IN NEXT TWO

YEARS

The Pakistani government is anticipating the energy crisis to worsen in the coming two years due to a 50% increase in the demand and a rather slow improvement in the supply, the leading Pakistani newspaper DAWN reported Monday. The power shortage, estimated to be 1000 to 2000 MW during the current year, is likely to hit 3000 MW next year and to increase to about 5300 MW by 2010, said the report. The overall energy requirement of Pakistan is expected to be about 80 million tons of oil equivalents (MTOE) in 2010, up by about 50% from the 54 MTOE of the current year, it said. A government official told DAWN that the energy shortage was severe and widespread in almost all areas, and natural gas, power, and oil shortages were all posing risks to the economic growth in medium to long term period.

Energy Crisis in Pakistan

23

Another official, quoted by the report, said that the development of water resources would resolve the problem in the long run but in the short term, there was a limit to constructing costly thermal power projects given their high economic costs. A major shortfall is expected in natural gas supplies, as an official energy demand forecast indicates that the demand for natural gas, which makes up about 50% of Pakistan's energy consumption, would increase by 44% to 39 MTOE from 27 MTOE currently, DAWN reported. The government had planned five major initiatives, including three gas import pipelines, the Gwadar port as energy hub and the LNG import to meet these energy requirements. But four of these measures, namely the three import pipeline projects, are uncertain at present, while concentration on energy facilities in Gwadar would chiefly depend on security situation, besides oil and gas import pipelines, said the report.

Xinhua English Newswire, January 9, 2007 http://tdworld.com/news/pakistan-energy-crisis

WIND POWER: A SOLUTION TO ENERGY CRISIS

W I N D P OWER : A S OLUTION TO E NERGY C RISIS TO

TO encourage private investment in power sector, the government formulated power generation policy (2002). However, progress in commissioning of new power plants has been slow. In the four years since the revised policy was implemented, only one 225 MW gas-fired power plant has achieved financial close. The extended time lag is not entirely unusual as power projects based on natural gas and furnace-oil involve prolonged negotiations to secure contracts guaranteeing uninterrupted supply of fuel over the life of the project. Up till now, these contracts were entered into with state-owned energy companies such as PSO and OGDC. As these corporations are to be privatised, the government-guaranteed fuel-supply contracts might not be available for new projects. This will make project financing more difficult since a private enterprise is more likely to default on its fuel-supply obligation over the 25- year life of a power project than a state-owned corporation. This could potentially result in further delays in implementing thermal power projects.

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IPRI Factfile

As Pakistan’s energy needs are immediate , thermal and large hydro- electric plants may not be the solution because such projects may take between 4-12 years to become operational. In order to meet the energy requirements, the best option is exploiting wind energy because wind power projects can start generating electricity within two years. This is why wind energy is the fastest-growing source of power in the world and its globally-installed capacity has risen from 20,000MW in 2001 to 70,000MW in 2006. USA alone is installing 4,500MW per annum and China plans to install 20,000MW by the year 2020. India offers a good example of a country that has embraced wind energy and has added substantial electricity generation capacity within a short period of time! It’s cumulative wind power generation capacity is 6,018MW, of which 4,500MW was installed in last five years! If Pakistan can realise half the growth that India has achieved, it can add 2,250MW to its electricity supply in the next five years, much more than possible by pursuing thermal power projects. In fact, wind energy can go a long way in meeting our acute energy shortage. It has also the following additional benefits. First, thermal electricity production ignores certain “negative externalities”. Externalities are implied costs which are not reflected in the price of a service. For example, a power plant running on natural gas will divert its limited supply from domestic consumption as well as vital industrial use. The total supply of natural gas is fixed and so its usage for power generation could result in a shortfall in other sectors of the economy. An example being the recent shut-down of 11 cement and two fertilizer plants due to gas-supply shortage. The economic loss resulting from deficiency of natural gas due to excessive reliance on gas-fired power generation is a negative externality. Similarly, in event of war or terrorism, supply routes of oil-tankers/ gas-pipelines will require extensive military protection. This extra cost of security is also a negative externality of thermal power plants. The exclusion of negative externalities understates the true cost of thermal power generation and makes it appear cheaper than it is. Compared to thermal power generation, wind power provides a secure and independent source of externality-free energy. Second, Pakistan’s current account deficit for FY2006 was recorded at $5.7 billion. The deficit is likely to worsen next year when it is expected to exceed $8 billion. The large increase in the current account deficit is mainly due to a 66.6 per cent surge in oil-imports, a large portion of it is due to increased demand from oil-fired power plants. Any strategy to cut current account deficit has to deal with cutting oil imports and this can be achieved by reducing reliance on power-generation from furnace oil. Here again, wind energy offers an effective alternative to oil- fired power plants which will help reduce the current account deficit.

Energy Crisis in Pakistan

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Third,, thermal power tariff is vulnerable to spikes in oil prices similar to the one in early 2006 when the crude-oil prices jumped to $78. As the tariff regime compensates the IPPs for the cost of fuel, any sustained increase in oil prices will feed into the tariff calculation and result in higher cost of electricity. Exploiting wind energy makes economic sense since wind is free and it will make cost of electricity generation less vulnerable to temporary or permanent increases in oil prices. Lastly, wind power plants will be able to claim carbon-credits (certified emission reductions or CERs) for producing clean energy. CERs are already trading on European commodities exchanges and a global trading mechanism is being developed. Recently, an investment bank (Morgan Stanley) invested more than $3 billion in CERs. Therefore, CER prices are expected to rise as they continue to attract interest. Under the renewable energy policy, the CERs will be shared between the IPP and the government. This will have the effect of reducing the net-cost of wind power since revenues generated from sale of government-owned CERs will off-set a portion of the tariff paid to the IPP. Exploiting wind power offers the best route for attaining sufficiency in electricity production and reducing reliance on gas and imported furnace oil. Though wind power requires greater investment per mega-watt produced, however, unlike thermal power generation wind power avoids negative externalities such as additional cost of protecting fuel supply routes. Wind energy will help reduce the country’s oil-import bill and the cost of power generation less vulnerable to fluctuations in oil prices. In addition to all these benefits, windfall from sale of carbon credits will make wind power an economically attractive proposition for meeting our electricity demand at an accelerated pace. Pakistan has a huge potential to develop wind power. The “wind corridor” in the coastal area of Sindh alone has the capacity to generate 50,000MW and AEDB has put in place a `renewable energy policy that is one of the most comprehensive and investor-friendly in the world. However, progress towards first wind power plant has been handicapped by a severe shortage in supply of wind turbines. The experience of other countries is that once the first project is executed, subsequent additions to capacity take place at an accelerated pace. This should be the case with Pakistan as well. It is important that the government continues to provide incentives to private investors in the form of an attractive tariff. This support is essential for the development phase of wind power sector and to realise its potential. Exploiting wind resources is not only in our economic interest, but serves our security interest as well!

Malik Ahmad Jalal, Dawn, January 29, 2007

http://www.dawn.com/2007/01/29/ebr13.htm

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ENERGY CRISIS MAY GO FROM BAD TO WORSE

The country may witness an aggravated energy crisis in the years to come as the proposed thermal power house at Chichuki Maliyan with a capacity to generate 500 megawatt electricity is in the doldrums, as the project has been withdrawn from Wapda in a strange development, The News has learnt. Right now power consumers are facing a massive power shortfall of about 2,000 megawatt and this crisis will persist in the years to come as the Chichuki Maliyan power project will get delayed. Earlier the government had decided that the Chichuki Maliyan power project would be initiated in the public sector and Wapda had been assigned the task.

Wapda conducted the international competitive bidding (ICB) and received the lowest bid from the Japan-based Marubeni Company. Under the agreement, the Marubeni Company was also to invest in the project and to this effect it had arranged a loan from the Japan Bank for International Cooperation (JBIC). Wapda was to complete the thermal plant at Chichuki Maliyan with 340 megawatt production in August 2008 and another 160 megawatt by Dec 2008, and it was strong perception that this project would give a massive relief to the common man and wriggle the country out of load-shedding and power crisis.

Confirming the shocking development, a senior Wapda official from Lahore said that the top decision makers in the country have taken a U-turn and decided that the private sector would complete this project of paramount importance. “But under the new decision, the project would be inordinately delayed,” he feared. The price of the project has also increased by Rs 100 million because of the delay, and this a very shocking decision. “The earlier cost of the project was Rs 2.6 billion.” In the wake of the decision, Wapda had to stop all the spadework to initiate the project. “The government has taken the new decision as the Qatar Investment Authority (QIA) will initiate this project,” the official said. The Board of Investment (BoI) has managed to bring the Qatar Investment Authority in the country and persuaded it to invest in this project. However, sources in the BoI confided to The News that Saifur Rehman, a close aide to former Prime Minister Nawaz Sharif, was a partner of the QIA and had 25 per cent equity in it. The official said that in the last two months the BoI has held about two meetings with QIA officials and Pakistan has inked an MoU with Qatar to this effect. “Under the MoU, the Qatar Investment Authority has to come up with financial close within three months,” the official said.

Energy Crisis in Pakistan

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Asked about the status of the project after the government decided to withdraw it from Wapda, he said that Wapda was about to start the project and the Japanese company had been short-listed and its terms and conditions were also evaluated. But after the new decision, all the activities have been stopped.

Replying to a question, he said that in case the QIA failed to come up with financial close within the stipulated time, the project would be further delayed, escalating the project cost further, and worsening the power crisis.

Khalid Mustafa, The News, June 13, 2007

http://www.thenews.com.pk/top_story_detail.asp?Id=8465

ASIAN DEVELOPMENT BANK CONSIDERING 250 MILLION $ LOAN FOR SMALL HYDRO PROJECTS IN PAKISTAN

Indeed a very positive development if the terms of this loan finalizes soon. Pakistan is heading for acute shortage of energy and therefore all measures which can enhance the country's ability to produce clean energy will be welcomed by all quarters. The important question which should be looked is that how this loan will be distributed. We suggest that small packaged turbines of 10-50 KW to be assembled or manufactured in Pakistan and these turbines distributed to Local residents on easy loans. Since the turbines will be providing electricity for small group of houses therefore transmission expanses will be cut. This addition of power will not affect the existing shortage of electricity. Because beneficiaries will be mostly those people who does not have an electrical connection. But a lager saving will be in the form of forest wood which is now used for heating and cooking.

September 9, 2007

http://www.energy.com.pk/news%20and%20views.htm

US ADVISE PAKISTAN TO PURCHASE ELECTRICITY FROM

CENTRAL ASIA

The recent story in Daily Dawn reconfirms US advice to Pakistan to purchase electricity from central Asia. We are of view that US should be persuaded to provide technical and financial assistance to manufacture Wind Turbine technology in Pakistan as well as boilers and turbines manufacturing facility which can burn low quality coal available from Sind Province. Self reliance in Energy requirements is a key element for sustainable economic growth of Pakistan.

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Pakistan should have a fair treatment to explore all possible energy resources including nuclear energy for its growing energy demand.

September 9, 2007

http://www.energy.com.pk/news%20and%20views.htm

ENERGY STRATEGY

Updated 9th November 2007

Few weeks before when oil started rising we predicted that no need for panic and the oil will maintain a position between 70-76$/barrel. We were proved to be wrong. But not us. Just last months there was not much anxiety all around the world. But now, what it looks, the world is again heading towards an energy crisis similar to 1970. So far the surge in markets always pointed to OPEC which was blamed for throttling the production valves to regulate the market. Short term crisis were related to speculations of war and political disturbances in shipping lanes transporting the fuel. Now the situation is different. OPEC is helpful more than ever to pump maximum oil it can deliver but the demand is growing steadily. One reason is the change in life style which came with the increase of net income in Asian countries due to economic growth tempting them to spend on luxury transportation and electronic goods. But, the major source is the rising economic growth of China and India as well as other emerging markets which need more fossil fuels to keep their industries running. The future outlook, therefore, is the worst than expected. There is panic all over the world to explore renewable energy resources but due to high demand of machinery the delivery time is quite long. Pakistan is caught up between a crisis. On one hand it wants to catch the growth rate at par with the region and on other hand it has already been facing the acute shortage of energy. There are many reasons for slow growth in energy sector. But one simple reason is that many departments are responsible for energy management in Government. There is Water and Power Ministry, Oil and Gas Ministry, OGRA, AEDB, NEPRA, PPIB, WAPDA, NTDC, SHYDO and many more. To streamline the system, this is suggested that one unified energy Ministry has to be made responsible for all energy issues and different desks are made in one roof for developers and end users. For developers, paper work has to be made simple. The investors should be offered up front tariff and can only appeal if their real cost is enhanced by some reason. Presently, before the construction starts, investors

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have to go for lengthy processes. The government should invest substantial amount for wind and solar energy and once the projects are matured then can privatise.

Updated on 3rd November 2007

ECC on Wednesday approved 5.89 cents as an upfront tariff for Hydel projects. This is a revolutionary step taken by Pakistan Government to promote and encourage the investors in Hydel sector. In fact, this is the most logical and wise step adopted by the government for energy sector. This will encourage investors to come forward in Hydel sector. Pakistan is blessed with high mountains covered by glaciers and the rivers flowing across the country. PPIB, so far, processed 19 Hydel power projects to produce 4900 MW energy. Now we request honorable Minister to further persuade all government agencies to facilitate that these projects can be commissioned earlier than scheduled time. For this purpose, all red tapes are to be removed as far as possible. We learnt from reliable sources that Asrit-Kedam 209 MW power project is moving with record speed and the sponsors, Yunus Brothers, are highly committed to complete the project by 2011 instead of scheduled time 2014. RSWI, the consultants, are confident that the project is very promising and can be completed ahead of schedule. October was a month to be remembered when world oil prices shot up at record level and at the end of the month it was staying at 94$ level. It was almost certain that OGRA will allow the price hike for petrol and diesel from 1st November. However a cabinet meeting in the chairmanship of Prime Minister Shaukat Aziz overruled this decision and kept the prices same. However, furnace prices were raised all time high by Rs 4210 /ton for domestic market. The price now stands on 34000 Rs./ton. This price hike can be justified in the light of rising crude oil prices but for domestic market the fuel tariffs now are not so realistic. The diesel and furnace prices are now standing at almost same level. A little intelligent power house manager can start using diesel instead of furnace which is cleaner and easier to burn or even can mix the diesel with furnace lowering its viscosity and make it more comfortable to burn. Those diesel generators, which were running as standby generators and were less efficient, will be more attractive for end users and the furnace power plants will be shut down. For those IPPs which run their plants on furnace, this increase will be shifted to utility company which is purchasing the power and hence to WAPDA, which is already deep in trouble.

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Meantime power shortage in whole country remained forcing the utility companies for load shedding. Mr. Liaqut Jatoi, Minister for water and power, called a press conference and expressed his views. He acknowledged the shortage of 1500 MW which will continue in next summer also. He told reporters that 13 memorandum of understandings have been signed to overcome the shortfall of 1500 MW power with foreign investors and an investment of 200 billion $ will be made in power sector. He also told that government is allocated 140 billion Rupees for the development of power sector including Bhasha Dam. He also told that 100 MW electricity will be imported from Iran. Presently we have three different critical problems in energy sectors which all need immediate attention:-

1. Current shortfall in production and availability of no standby power to meet any emergency.

2. Long term increase of shortfall with increased energy demands.

3. Rising fuel prices making the production cost high.

The projects in pipeline will start commissioning from 2014. All planning of Hydro and alternate energy is for next five years. So the biggest question now is what to do for the current situation.

This is itself promising news that in spite of political uncertainty honorable Minister finds an opportunity to address the energy sector. In our opinion, situation now is so critical that it needs a diversified approach. We have to look for all options of existing as well as alternate energy resources. As earlier been written our existing machines are less efficient. The end users should be persuaded to replace with more efficient machines. We have to discourage use of larger cars and should develop mass transit systems in mega cities to avoid use of one car/person.

November 9, 2007 http://www.energy.com.pk/strategy.htm

PAKISTAN URGED TO IMPORT 4,000MW FROM CARS

The World Bank has advised Pakistan to start working on import of 4,000MW of cheap electricity from Central Asian states, besides working on domestic sources to overcome electricity shortage owing to a 43 per cent expected increase in demand to 20,000MW by 2010. The World Bank estimates that Pakistan’s peak demand now exceeds 14,000MW and the present installed capacity of 19,500MW has become inadequate on account of the wide variations in the water availability, which greatly reduces the firm capacity available. “Electricity demand at the generation level is forecast to grow at 7-8 per cent per year to about 20,000MW by fiscal year 2010 and 44,700MW by 2020,” a government official told Dawn quoting fresh World Bank estimates.

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The country that had a comfortable supply position during the last several years has already started experiencing shortages during peak periods and “it is anticipated that if no new capacity is added, firm power shortage would amount to 5,500MW by fiscal year 2010.” The World Bank understanding that besides improving supply efficiency, demand management, addition of new hydro and thermal power stations, Pakistan should expedite importing 1,000MW from Tajikistan and Kyrgyz Republic in the first phase and then increase such imports to 4,000MW in the second phase. These imports, the World Bank believes, have two major advantages. First, the cost of supply from Sangtuda, Rogun, Talimardjan and Kambarata power stations in the CARs would range between 2.26 cents to 3.75 cents per unit compared with existing average generation cost in Pakistan at 5.6 cents per unit.

Pakistan is now entering into contracts with independent power producers (IPPs) for thermal power generation at a tariff as high as 14 cents per unit.

Second, the attractive feature of the imports form CARs is that Pakistan’s peak demand occurs in summer, when the Central Asian power systems have large surpluses from their hydroelectric generation stations. The WB says that international financial institutions like Asian Development Bank, Islamic Development Bank and USAID and private sector companies like AES Corporation of USA and RAO UES of Russia have already indicated to be part of the project once feasibility studies currently underway are completed. According to the government of Pakistan estimates, the country is most likely to face a major energy crisis in natural gas, power and oil in the next three to four years that could choke the economic growth for many years to come. Pakistan’s total energy requirement would increase by about 48 per cent to 80 million tons of oil equivalent (MTOE) in 2010 from about 54 MTOE currently, but major initiatives of meeting this gap are far from turning into reality. Major shortfall is expected in the natural gas supplies, the sources said.

According to official energy demand forecast the demand for natural gas, having about 50 per cent share in the country’s energy consumption, would increase by 44 per cent to 39 MTOE from 27 MTOE currently. Partly contributed by gas shortfalls, the power shortage is expected to be little over 5,250MW by 2010, a little lower than World Bank’s estimates of 5,500MW. Simultaneously, oil demand would also increase by over 23 per cent to about 21 million tons in 2010 from the current demand of 16.8 million tons. This would leave a total deficit of about nine million tons of diesel and furnace oil imports, sources said.

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Since the gas shortfalls were expected to be much higher, the country would need to enhance its dependence on imported oil, thus increasing pressure on foreign exchange situation, more so as international market continues to go up. Planning Commission sources said the government had planned to add an overall power generation capacity of about 7,880MW by 2010. Of this, about 4,860MW is to be based on natural gas, accounting for 61 per cent of capacity expansion. However, the gas-based power expansion of about 4,860MW would remain in doubt since these estimates were based on gas import options for completion in 2010, 2015 and 2020. None of these projects could achieve these deadlines. According to World Bank estimates, the indigenous gas supply would fall from 32.6 MTOE in 2010 to 20.7 MTOE in 2025 while the gas supply- demand gap would rapidly increase as demand is expected to grow continuously, quadrupling in 2025.

Khaleeq Kiani, Dawn, November 17, 2007

http://www.dawn.com/2007/11/17/ebr4.htm

FUEL SHORTAGE MAY WORSEN POWER SITUATION

The electricity shortage that currently fluctuates between 1,000 and 3,000 megawatts is likely to worsen in a few days because of problems of transporting furnace oil and diesel through the railway system and other means.

Petroleum Ministry sources told Dawn that Pakistan State Oil (PSO) has sought federal government’s permission to invoke force majeure clauses of its fuel supply agreements (FSAs) with independent power producers (IPPs) because of its inability to meet fuel requirements because damage caused to railway tracks and fuel-carrying bogies was much more than originally believed. Force majeure clauses in FSAs and power purchase agreements allow suppliers to announce in advance that they would not meet contractual obligations because of natural calamities or conditions beyond their control. “Availability is not a problem, all products are now in abundance but storage and movement (of oil products) is a serious dilemma,” said a senior official.

PSO sources also confirmed that force majeure notices had been communicated to all independent power producers as a protective measure because a default in supply contract attracts large financial penalties that could also be a problem for the government which guaranteed these agreements. These notices would enable IPPs to serve similar notices to power companies, but hopefully the situation would improve a crisis situation averted. The

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sources said that the PSO supplied more than 40,000 tons of fuel to power companies every fortnight through train but problems were also being faced in the pipeline system. The problem was compounded by non-availability of tanker lorries, the PSO sources said, adding the force majeure notices would avoid imposition of financial penalties. The sources said that the PSO had written to the government that the railway authorities had informed them that they would not be in a position to repair the damaged infrastructure in less than 20 days, hence it would not be possible for the PSO to meet its contractual obligations. The sources, however, said the secretary petroleum was working in coordination with the ministry of defence to make alternate arrangements, including engaging the National Logistics Cell and even the private sector because of the limited capacity of NLC. The sources said prolonged disruption in the movement of fuel oil could also lead to shortage of other products because of 20-25 per cent reduction in capacity utilisation of refineries. Since the uplift of fuel oil and diesel stocks and their transportation emerged as the real problem, the storage capacity of refineries was filled to the brim. As a result, they had reduced their refining capacity that could eventually lead to shortages of products in the market. Munawar A. Baseer, managing director of Pakistan Electric Power Company (Pepco) which looks after corporate generation and distribution companies formerly run by the Wapda, told Dawn that fuel shortage was a concern but not a crisis. He said that public sector generation companies had enough fuel for about 20 days.

Khaleeq Kiani, Dawn, January 01, 2008

http://www.dawn.com/2008/01/01/top11.htm

ENERGY CRISIS: SERIOUS AND WORSENING

Serious energy shortage, massive load-shedding and lowest ever strategic oil reserves are emerging as major risk to the economy. The situation, it appears, will not be any better in the days ahead given the political uncertainty and policy planning failure over the last few years. Combined with multi-layered risks including current account deficit, the critical shortage of energy — an ingredient that fuels the economic growth — has the potential to choke economic growth. The shortfall in electricity generation did not emerge suddenly but was developing over the years as the development of cheap and indigenous energy sources was discouraged for lack of any vision. Sponsors of hydropower producers who were offered a tariff of 4.7 cents per unit under the 1997 policy

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were practically blocked from developing their plants at this tariff rate and offered a much lower rate of 3.3 cents per unit in 1999. Same happened with development of coal resources. A Chinese firm that had agreed to set up a 600MW project at Thar for 5.79 cents per unit was forced to quit when the authorities refused to offer a tariff of more than 5.39 cents per unit. As a result, no power project could be set up in the last eight

years. The regime never tired of criticising political governments for signing costly energy contracts (at the average rate of 5.7 cents per unit). But it allowed signing of contracts for thermal power project at a much higher tariff of up to 15 cents per unit, although none of these projects would be available to the economy in the next 6-12 months. Likewise, the recent revelation of the country’s strategic oil reserves at

a precarious level clearly exposed the government’s lack of vigilance and failure of energy companies to meet their contractual obligations. The strategic oil reserves for defence had also been consumed to meet shortage and thus the country’s security has been exposed to great risks. Under the fuel supply and power purchase agreements, the oil marketing firms and power generation companies - whether in the public or in the private sector – are required to maintain a minimum of 21 days of their fuel requirements. Non-compliance of such contractual obligations is subject to heavy penalties under the law. The government, too, is required under the standard operating procedures defined in the official Blue Book to ensure that

it has oil stocks for at least 21 days of consumption to meet any eventuality,

either a natural calamity or war or any such event. The imperative of maintaining stocks for 21 days was highlighted by the blocking of communication routes during the violent protests following the tragic killing of former Prime Minister Benazir Bhutto. The entire episode led to disruption of fuel supply chain that included railway, pipeline and road transport. In varying degrees, it came to light that neither the independent power producers, nor the oil marketing companies including those in the public sector had maintained sufficient stocks as required under the law. The result would be more load shedding in the days ahead. The export growth that is already stagnating would be hit if enough energy – gas and electricity – is not ensured to the industrial sector. The power shortage that had officially been estimated to remain in the range of 1000-2000MW during the current year has already touched 3600 MW. The economy is being run at almost 30 per cent energy shortage, which could worsen if oil supplies continue to remain short or the current disruption of oil transportation prolongs. Wapda estimates that the country could face a power shortage of about 5,500MW by 2010. Overall, Pakistan’s total energy need is expected to be around 80 million tons of oil equivalents (MTOE) in 2010, up by about 50 per cent from the current year’s 54 MTOE. And since at least four out of five

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major initiatives, originally planned for meeting this demand, are uncertain at present or significantly behind schedule, the shortage estimate could be anybody’s guess. Even the closure of business after sunset and reduction in street lightening did not get the desired results, leading to a massive load shedding of almost daily four hours across the country. Most of the industrial and commercial sector has also been deprived of the natural gas since the advent of winter. Energy shortage is severe and widespread in almost all areas, while different sectors contribute to each other’s problems. “Natural gas, power, and oil shortages were all posing risks to the economic growth in medium to long- term period,” a government official said.

A major shortfall is expected in natural gas supplies. According to an

official energy demand forecast, the demand for natural gas, having about 50 per cent share in the country’s energy consumption, would increase by 44 per

cent to 39MTOE from 27MTOE currently. The government had planned to add an overall power generation capacity of about 7,880MW by 2010. Of this, about 4,860MW was to be based on natural gas, accounting for 61 per cent of the capacity expansion. However, the gas-based power expansion of about 4,860MW would remain in doubt since these estimates are based on three gas import options for completion in 2010, 2015 and 2020.

A major part of about 4,860 gas-based plants may not be available and

the difference may be met through other costly options. Even if the physical work is started today, it will take at least seven years to complete a pipeline project and it was not clear if construction of Iran to Pakistan pipeline project

could be taken in hand in the near future. Partly contributed by gas shortfalls, the power shortage is expected to be little over 5,500MW by 2010, said a Planning Commission official, adding that the oil demand would also increase by over 23 per cent to about 21 million tons in 2010 from the current 16.8 million tons. This would leave a total deficit of about nine million tons of diesel and furnace oil imports. Since gas shortfalls are expected to be much higher, the country would need to enhance its dependence on imported oil, increasing pressure on foreign exchange balances.

Khaleeq Kiani, Dawn, January 07, 2008

http://www.dawn.com/2008/01/07/ebr2.htm

ENERGY CRISIS IN PAKISTAN ARE GROWING RAPIDLY

President recently claimed that construction would soon begin in Karachi on one of the tallest buildings in the world. The project, according to the president, would show the world that Pakistan is a “progressive and dynamic

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country and we are second to none”. But unless Pakistan can light that building, President claims will look silly. Robust economic growth-rates over the past several years have encouraged Pakistan to ignore fundamental weaknesses in the economy. Yes, Pakistan’s economy is growing; that’s the good news. The bad news is that with this growth comes higher energy consumption and greater pressure on the country’s energy resources. Unless Pakistanis — the government, but individual citizens as well — act now, the country’s future will indeed be dark, in more ways than one. At present, demand for energy exceeds supply. Power outages and planned power cuts (euphemistically termed “load-shedding”) are, for many, an everyday occurrence. In addition to their economic costs, energy shortages foster political instability. Last summer angry public protests in Karachi and riots in Liaquatabad demonstrated how close many Pakistanis are to reaching the limits of their patience. A widespread power outage affecting much of the country last September triggered panicky rumours of a coup. Earlier this year, the opposition and the ruling parties staged nearly simultaneous protest walkouts from the Senate following a disagreement over high domestic oil prices. This unrest may be only a foretaste of things to come. Absent drastic action, Pakistan’s energy situation is expected to get far worse in the years ahead. According to the government’s own figures, by 2015, eight short years from now, energy demand in Pakistan will be nearly 22 percent greater than projected supply. By 2030, this energy shortfall will be 64 percent. What do these figures mean for Pakistanis? Higher prices, fewer jobs in a slowed economy, reduced opportunities, less comfort, heightened political turmoil. A Pakistan with serious energy shortages will not be a pleasant Pakistan. Today, oil and natural gas supply nearly 80 percent of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the indigenous supply. For instance, Pakistan currently produces less than 20 percent of the oil it consumes. This fosters a dependency on imported oil that places considerable strain on the country’s finances. While the present situation with respect to natural gas production is not nearly as critical, Pakistan’s projected natural gas needs are expected almost to double (from 2004 levels) by 2010. On the other hand, hydropower and coal are perhaps under-utilised today, as Pakistan has ample potential supplies of both, at a time when these resources provide for relatively little of Pakistan’s energy needs. Pakistan’s proven coal reserves are the world’s sixth largest, and the government intends to increase the share of coal in the overall energy

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mix from 7 to 18 percent by 2018 — a course that may make sense from an

energy standpoint, but which carries troubling environmental implications.

Meanwhile, provincial rivalries and widespread public opposition have significantly slowed the government’s plans to build dams capable of generating electricity. Many Pakistanis argue that large hydroelectric projects should be a last resort, after low-cost energy

conservation measures have been fully utilised. Nuclear power at this point accounts for barely one percent of Pakistan’s energy consumption. The government has announced plans to develop a generating capability of 8,800 megawatts (MW) of nuclear energy by 2020, compared to the country’s current output of less than 450 MW. But this

goal is unlikely to be reached unless Islamabad is able to persuade the United

States and other western countries to help it develop civilian nuclear technology, an idea certain to meet with resistance in the West. Pakistan’s renewable energy potential — hydro, wind, and solar — is substantial, although presently this potential remains largely untapped. Escalating petroleum prices in recent years have given Pakistan an additional incentive to invest in renewable energy technologies. In 2003, the government ambitiously declared that by 2015, 10 percent of the country’s total energy supply would come from renewable energy sources, and established the Alternative Energy Development Board to coordinate renewable energy promotion. Modest steps in the direction of greater reliance on renewable energy have already been taken. Nonetheless, renewable energy labours under severe handicaps in competing with conventional energy — hidden subsidies that allow for lower conventional energy generation costs, for example, and policies that permit conventional energy to disregard the costs of the pollution it creates when pricing power. Unless renewable energy is given a level playing field, a major expansion of renewable energy generation is unlikely, and the government’s goal of 10 percent by 2015 will not be met. Rural areas across India, Bangladesh, Sri Lanka, and Nepal have all implemented successful clean and renewable energy initiatives. Bangladesh, for instance, has experienced considerable success with solar home systems financed through micro-financing. Pakistan’s neighbours have something to teach Pakistan, if only it will listen. Pakistan’s minister for petroleum and natural resources has identified energy as the most important input for the country’s economic development. The uninterrupted supply of energy to fuel the nation’s economy, he has declared, should be the highest priority for the country’s economic managers. Yet the record of past governments does not induce confidence. It's said by one of Pakistan’s most distinguished economic analysts, has written of “a colossal failure of public policy” over six decades, which has left the country with “weak institutions, inappropriate pricing

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policies and insufficient public-sector investment that [has] contributed to what appears to be an inexorable march towards another crisis”. Pakistan cannot afford a repetition of this sorry history. The good news is that Pakistanis are not being asked to find a cure for cancer, or to discover entirely new methods or technologies in order to meet their energy needs down the road. There already exists widespread agreement on at least the broad outlines of an energy strategy for Pakistan. Pakistan’s energy managers know what needs to be done. But solemn promises and soaring rhetoric will not do the job. Preparing for Pakistan’s energy needs over the next quarter century will require long-term vision, a national commitment widely shared among the country’s political and business leaders, inspired leadership sustained from one government to the next, and most of all, political will to make and carry out difficult choices. Pakistan — the country, not just the government of the day — needs to decide that muddling through is not enough. Pakistan, as a country, has to get serious about creating an energy strategy, and then — and this is the hard part — about implementing it. Pakistan will not find itself alone in this task. Islamabad’s friends around the world believe that it is in their own national interests for Pakistan to succeed — which means, among other things, that Pakistan succeed in its quest for energy security. At the end of the day, Pakistanis themselves must solve the problem of energy insecurity, but the outside world — both the private and the public sectors — can and will help. Energy matters for Pakistan. If Pakistan is to succeed in its ambitious plans for economic development, if it is to raise the grossly inadequate living standards of its people, if it is to achieve the economic growth necessary to ensure political stability, if it is to begin to address the many environmental problems that up to now have been largely ignored, and which have a hugely adverse impact on the daily lives of Pakistani citizens, if it is to live in peace with its neighbours, several of whom are directly impacted by Pakistani decision-making in the energy sector, if Pakistan is to move towards all these goals, Pakistanis must get serious about energy.

Emma-Gill, January 24, 2008

http://www.articlealley.com/article_460564_22.html

EFFICIENT HOUSEHOLD APPLIANCES TO MITIGATE ENERGY

CRISIS

The federal government has entrusted Engineering Development Board (EDB) the task of adopting strategies in collaboration with relevant private

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sector industries to enhance the efficiencies of different energy consuming household products being produced in the country. As per the government’s initiatives to overcome the energy crisis in the country, the EDB held separate meetings on Saturday with leading local manufacturers of fans and pumps and finalised a strategy which would help enhance the efficiency of these domestic products. The increased efficiency will result not only in reducing consumption of energy and help conserve energy.

The discussions focused on different aspects of the products including general design, quality of input material and the relevant benchmarks. EDB General Manager Zahid Yaqub, who chaired the meeting, informed the private sector representatives about the initiatives being taken by the government to overcome the energy crisis. One of the strategies adopted is to enhance the efficiency of different energy consuming household products. The meeting was informed that the electricity consumption during 2005-06 was 67,603GWh, out of which 45.4 per cent was consumed by the domestic sector. It was estimated that every household in Pakistan has a minimum of two to three fans and based on this figure, the total strength of fans was over 30 million. The President of Fan Manufacturers Association (FMA) called for reducing the rate of sales tax on various components of fans. Currently, the country has four leading manufacturers of fans as compared to nearly 200 small units manufacturing fans in different parts of the country. The FMA president alleged that the small units were using substandard components in order to keep the price low and ignoring energy conservation. According to the FMA statistics, the industry was manufacturing five million fans every year, out of which one million fans were exported fetching $30 million. The FMA also called for banning export of copper, the main component used in fan manufacturing. The meeting on pumps was told that the enhancement of efficiency of motors used in domestic industrial and agricultural sectors can save 3 to 5 per cent of the total electricity consumption. It was felt that quality of copper wire and silicon steel being used and manufacturing of motors and pumps should be increased by reviewing the standards developed by the PSQCA. The federal government has also decided to introduce standards for the manufacturing of gas geysers in order to enhance their efficiency and save energy.

The Pakistan Standards and Quality Control Authority (PSQCA) has drafted the required standards for the production of gas geysers. The standards were being sent to all chambers of commerce and industry and manufacturers for their views before finalisation.

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The decision to this effect was taken at a meeting chaired by EDB General Manager Zahid J. Yaqub and attended by leading manufacturers of geysers, representatives of government agencies and senior officials of SNGPL. The meeting was informed that the energy efficiency of local geysers was much lower than the world standards. Therefore, research and development (R&D) was necessary to achieve global standard. The industry emphasised the need of duty-free import of various components of instant water heaters in order to introduce quality products in the market. Some manufacturers showed their willingness to produce high quality products, if investment on R&D was made by the government. ENERCON Managing Director Fareed Ullah Khan informed the meeting that the government was ready to accept any practical proposal from private sector for energy conservation. Addressing the meeting, the EDB general manager said that the government was undertaking initiative to minimise the magnitude of the energy crisis. One of the strategies adopted is to enhance the efficiencies of the different energy consuming household products. He added that the crisis should be converted into an opportunity to introduce high quality product in the market. Another area, which needs to be looked into, is the phasing out of inefficient incandescent bulbs in favour of more energy-efficient compact fluorescent lamps (CFLs) that reduce greenhouse gas emissions and cut household energy costs. While CFLs are more expensive to buy than incandescent bulbs, they pay for themselves in lower power bills within a year. The switch to CFLs will result in household lighting costs falling by as much as 80 per cent, and the country’s annual greenhouse gas (GHG) emissions falling 2 million metric tons starting in 2010. Additionally, national electricity demand is expected to fall by 2,000 megawatts, or the equivalent of electricity generated by six power plants.

Amin Ahmed, Dawn, February 10, 2008

http://www.dawn.com/2008/02/10/ebr11.htm

COPING WITH THE ENERGY CRISIS

One of the major problems facing the new government, the energy crisis, is intense, costly and multi-dimensional. The infuriating electricity and gas disruptions and soaring fuel prices in turn pushing the cost of living have made life difficult for people. The even before it took office the new government was greeted with two jumps in fuel prices, accounting for a 15% rise in two weeks. Meanwhile, crude oil prices have been registering

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all-time-highs, shooting 40% in the past year. The undeniable reality is that that this global spike will somehow have to be accommodated in energy prices in Pakistan. There is no quick solution to electricity shortage and the trend of surging prices is irreversible. There is very little the new government can do on this in the immediate term. At best, the problem can be prevented from aggravating until a sustainable solution is struck. Tough decisions will have to be made, and executed with commitment. The starting point of any remedial efforts should be an acknowledgement of the fact that the crisis is a self-inflicted one. It cannot be denied that something has been wrong down the line that caused this crisis. The country has nearly gone energy bankrupt while a total disaster appears to be round the corner unless pragmatism is shown. It is also important that lessons be learnt from the past mistakes on part of relevant circles. The crisis is still addressable as long as there is due vision and devotion. The golden age for energy in Pakistan has been 1960s and most of the 1970s, that is when Tarbela and Mangla dams were put into operation and other dams, including Kalabagh, were actively pursued. In subsequent years, action in the field of energy has been utterly recklessness. The prevalent crisis is a consequence of imprudent energy policies over the last three decades. One of the major limitations that have hindered energy prosperity in the country is short-sightedness. There has not been a meaningful and coherent energy policy in place over this period. The approach has been "project-oriented," rather than "goal-oriented." Almost every regime has dealt with energy on an ad hoc basis. Long-term and sustainable planning of energy have been an alien concept. The reason is fairly simple; energy projects usually require huge investments and commitment, making them undesirable to any regime. The attitude of delaying new projects, as far as possible, has been the common practice and is in fact the recipe of the present crises. In doing so, when things start getting out of control, haphazard and quick-fix measures are sought. A typical example is the Independent Power Producers (IPPs) saga of the 1990s. In an attempt to avert an approaching energy crisis, as a result of negligible capacity addition during the 1980s and the early 1990s, the regime in 1993-94 decided to go for thermal generation through the IPPs. Undoubtedly, the IPPs provided a very healthy contribution at the supply end, enhancing power generation capacity by more than 5000MW. Nevertheless, this power addition cost the country a fortune – apart from the controversial tariff structure, the move was against the spirit of energy sustainability and security for the country. The fact that the IPPs were set up at the terms of the investors suggest that it was a move made in panic.

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The last few years provide a perfect example of failure to make a timely response to the growing energy needs. A threefold increase in energy demand over the last two decades has been responded to with an ill-proportioned increment at the supply end. Consequently, with the advent of 2008 the gap between demand and supply grew to 4,500MW indicating a 40% deficit of electricity. The prevalent energy crisis has not appeared overnight -- the omens were evident for a number of years but the authorities failed to react in time. Senior WAPDA officials claim that in 2002 the government was officially warned about the approaching electricity crisis and was asked to take immediate measures to enhance generation capacity. The timely warning failed to receive any appreciation. The attitude of the relevant authorities has thus indirectly contributed to the growth of the dire crisis. Another example worth quoting here is that of the 969MW Neelam-Jehlum hydroelectric project. It was to be constructed in 2003 at a cost of $1.5 billion. It got abandoned until the present power crises intensified towards the end of 2007. The revised estimate is around $2.25 billion. The delay is costing the country a fortune – an extra $750 million in terms of project cost, apart from enormous monetary dents inflicted by the five-year delay. It is also noteworthy that WAPDA has traditionally pursued the major projects of national interest but failed to get the due positive response from the policy- and decision- makers. Interestingly, WAPDA plays the role of a scapegoat, because the common man blames WAPDA for his sufferings. It is also important to plant relevant and qualified people at the key policy and decision making positions. Quite often, these positions are offered to utterly irrelevant, ill-qualified and incompetent people. The track record suggests that energy offices are amongst the most coveted ones in any regime, simply because they are considered to be the most lucrative ones. There are examples when undergraduate and utterly irrelevant people have been appointed to run energy offices. There are also cases when the crucial positions have been used as incentives during political bargaining. The unhealthy attitude towards sensitive energy positions is enough to explain how the field of energy has been traditionally toyed with. Another aspect of the bankrupt policies is politicisation of projects of national interest. The paramount example is that of Kalabagh Dam. It has been politicised to such an extent that its orchestration now appears to be next to impossible. Evidences suggest that the issue has been used to serve the vested interest of regimes and certain political and ethnical forces. With the emerging post-lection sense of national reconciliation on the political arena, it is expected that such projects would be looked into with cool heads. It is time to move on. The technical issues, if there be any, have to be addressed on the drawing

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board, rather in processions. It has to be realised that the delay in project has not only made the country suffer but also people that come from all provinces. In order to tackle the existing crisis and ensure a prosperous energy future, the backbone of the future energy policies would have to be reliance on domestic resources (hydropower, coal and solar and wind energy) and energy conservation. Decisions on energy projects should revolve around national interest rather than naïve political and personal gains. Energy offices should be run by qualified, committed and deserving people equipped with due mandate. Relevant ministries and departments should also be overhauled.

The News, April 17, 2008

http://www.thenews.com.pk/daily_detail.asp?id=107244

IRANIAN, PAKISTANI PRESIDENTS RESOLVE PIPLINE ISSUES

Iranian President Mahmoud Ahmadinejad and his Pakistani counterpart Pervez Musharraf on Monday cleared all hurdles over a gas pipeline to India and agreed to sign a deal soon, state media said. Ahmadinejad discussed the 7.5-billion-dollar project to transport Iranian gas across the subcontinent while making a short stopover in Islamabad on the first leg of a whirlwind tour of South Asia. “The two leaders expressed satisfaction over the resolution of all issues that had delayed a final agreement,” Foreign Minister Shah Mahmood Qureshi was quoted as saying by the official Associated Press of Pakistan. Qureshi added that the Iranian and Pakistani presidents had tasked their foreign ministers to agree on a “mutually convenient date for signing the agreement” after their hour-long talks in Islamabad. Iran also agreed to provide 1100 MW of electricity to Pakistan to help it overcome a recent power shortage, particularly in areas adjoining Iran, the news agency said. Musharraf and Ahmadinejad also discussed the situation in neighbouring Afghanistan, which is battling a Taliban insurgency, and “stressed that peace and stability was vital for the region”, APP reported. Ahmadinejad later held talks with new prime minister Yousaf Raza Gilani, his first meeting with an official from a new government that took power last month after defeating Musharraf's allies in elections. The Iranian president arrived on Monday morning at Chaklala Airbase in Rawalpindi, a garrison city adjoining Islamabad, and was greeted by an air force honour guard and received bouquets from a young boy and girl. He is on his way to Sri Lanka later Monday and will also visit India in coming days.

Dawn, April 28, 2008

http://www.dawn.com/2008/04/28/welcome.htm

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TIES WITH IRAN

The decision reached in Islamabad on Monday between the visiting Iranian President Mahmoud Ahmadinejad and President Musharraf to sign the accord on Iran-Pakistan-India (IPI) gas pipeline augurs well for all concerned. The longstanding project delayed by reservations expressed by India and disputes over tariff and transit fees can now finally take off the ground. Pakistan’s rising energy needs face a shortage, and in addition to future gas supply, Iran’s offer to wire in 1,100 MW of electricity is godsend. At Pakistan’s initiative, another trilateral deal envisaging the supply of gas to China through this country is also a good omen for regional cooperation that will work to everyone’s benefit. On the political front, the pumping of Iranian gas into Pakistan, India and China at a time when the US opposes such dealings with Iran’s Islamic regime is significant. It is an assertion of independence in international relations on the part of the countries concerned and their refusal to be dictated to by Washington, because it arguably works against their own economic and diplomatic interests. The accord reached with Iran also dispels the impression that Pakistan’s earlier signing of another gas supply deal with Turkmenistan via Afghanistan was an alternative to the IPI deal. All this has profound implications for Pakistan and South Asia. Iran is an important neighbour with which the people of the subcontinent have enjoyed historical relations. It is a major regional player in the bordering Middle East commanding a naval presence in the strategic Strait of Hormuz from where the bulk of the world’s oil passes. On the other side of the fence, even the US, despite all its opposition to Tehran’s Islamic regime and its nuclear programme, cannot deny the importance of engaging Iran if it wants to cool off tensions in Iraq. It is a measure of the failure of American foreign policy that Russia and China should continue to carry out their dealings with Iran, including in the controversial nuclear energy sector as far as Moscow is concerned, and India should snub Washington’s suggestion, as it recently did, to ask Iran to roll back its nuclear programme. Tehran has insisted all along that its programme is for peaceful purposes. President Musharraf’s reiteration of support on the subject to his Iranian counterpart is reassuring. Recent developments taking place in the region whereby American efforts to diplomatically isolate Iran have been snubbed should be seen in the context of growing interdependence of countries upon one another and not as being geared towards furthering the imperatives of a unipolar world — as Washington wishes to see it. All this means that there will be quite a bit of catching up to do for the post-Bush American administration if it wants to take the rest of the world along on many global issues.

Dawn, April 30, 2008

http://www.dawn.com/2008/04/30/ed.htm

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POWER CRISIS & ALTERNATE ENERGY TECHNOLOGY

The Energy Minister’s statement that country will have to face the current energy crisis for next three years shows that he is unable to alleviate the misery of average Pakistani family and expects them to conduct daily routine chores in extreme summer heat without eight to sixteen hours of electricity. It brings us to : 1) Energy Minister has failed to come up with a solution to end energy crisis including nationalization of energy sector and adoption of alternate energy. 2) Which law permits country’s rulers to enjoy uninterrupted supply of electricity while the public who they serve suffers due to load shedding for no fault of their own? Can PM justify uninterrupted supply of electricity in VIP pockets across the country while average Pakistanis face unending power rationing? Similarly, will the rulers clarify for the ordinary people which law allows backup generators for hundreds and thousands of such VIPs nationwide whose number is growing by the hour? Shouldn’t the country’s law lords be taking suo moto notices to end generator culture by unveiling number of generators being used for the VIPs, how much they cost to the national exchequer annually and which law authorizes the procurement, maintenance and fueling. There is no provision in country’s laws that authorize spending and regularization of billions of tax-rupees being wasted on the procurement, running and maintenance of these illegal generators. It is hoped concerned including Public Accounts Committee, citizen watch groups, legal fraternity will help country’s courts and PM to end wastage of tax dollars amidst reports that current 522 billion fiscal deficit will climb to 957 billion by the end of fiscal year 2007/8 and an another impending fuel prices increase before June 30. Thereby rendering immediate borrowing of some three billion US dollar loan to sustain country’s (failing) economy. These figures, energy minister’s statement of requiring three-year gestation period for permanently ending long hours of load shedding and instead calling for adoption of energy conservation measures mandate PMs intervention to end the misery of an average Pakistani who has been forced to face summer heat and humidity for no fault of his own and pay for national policy failure and corruption. PM to show genuine support for people’s plight and as part of austerity drive should ordering following steps to end corruption in electricity and gas departments: 1) Inclusion of all VIP areas across the country including Islamabad into the current load shedding schedule. 2) Across the board removal of generators and air-conditioning/heating systems from govt. offices and residences to end VIP culture and save energy consumption. 3) Withdraw subsidized/free electricity/gas for public servants, office holders and govt. departments because it encourages waste and negates basic spirit of country’s

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law. Otherwise, also lawmakers and govt. employees as public servants cannot have free gas and electricity paid by tax money, which is not extended to the masses. 4) The energy consumption of country’s domestic sector is less than total consumption of free electricity given to govt. sector. Therefore, PM should direct energy minister to save 500 MW by withdrawing free electricity from VIPs instead of forcing load shedding at grassroots. In fact the national leadership to set a personal example should share equal hours of load shedding if not more. Energy Minister in his statement on the floor of the house said that 50/100 MW of electricity will be generated from wind turbines. The amount reflects PPPP’s flawed energy policy stressing on long and midterm plans thereby failing to provide immediate relief to masses. PM should issue immediate directions to incorporate feasible alternate energy technology based on alternate energy mapping for following reasons: 1) it can provide quick and sustainable solution for domestic sector that consumes less than 13% of total generated electricity. 2) In- step with international policy replace 20-25 percent of fossil fuel based current energy generation with alternate energy. 3) Cut fossil fuel imports to reduce foreign currency expenditure. 4) the ‘plug and play’ and main grid compatibility of these alternate energy options can alleviate misery of masses suffering the heat at grassroots due to 8/16 hour protracted load shedding schedules. Therefore, it is need of the hour to permanently shift country’s domestic and agriculture sectors to alternate energy to permanently end load shedding, reduce electricity bills and cut costs on import of ever increasing fuel prices. In this regard, state of the art affordable wind turbines, solar panels, photovoltaic panels can play an important role to help realize the objectives: 1) The ‘plug and play’ and ‘grid ready’ alternate energy technology can bring immediate relief at grassroots and end three year waiting period. 2) These alternate energy solutions are cheaper because: (a) Due to their proximity to consumers it reduces line losses, which in turn reduces energy cost. For example, the alternate energy helps cut line losses internationally accepted standards of 5-7% against Pakistan’s reported line losses exceeding 45 percent of total production, (independent observers put at 65%), which in turn forces per unit electricity prices increase to recover cost of lines losses and thefts.(b) It will allow energy generation at districts, tehsils and individual level, which in turn will help end corruption at all levels and cut over head costs. 3). Cheaper energy will promote small/medium industrial and manufacturing setups with multiple advantages including generation/sustenance of millions of jobs. 4) Cheaper sustainable alternate energy solutions will support and sustain country’s agri-sector offering critical advantages including produce increase and increasing employment opportunities. 5) Reduce energy related disputes between federation and provinces. The fact of the matter is alternate energy as highlighted in my article ‘time for nationalized energy sector’,

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http://pakobserver.net/200804/17/Articles03.asp is a cheaper and with 50,000 MW growth potential is the sustainable way forward to end load shedding, provide relief at grassroots and meet international standards of ‘greener earth’ as part of cleaner global environment. However, it is the mindset than actual challenges in energy field that needs to be addressed as highlighted in my article ‘energy crisis and corruption nexus’ dated 7 Jan. http://www.pakobserver.net/200801/07/Articles04.asp. PM need to help end corruption and stakes blocking adoption of alternate energy to provide relief to masses, uplift agri-sector and facilitate country’s economic progress. In this regard Nawaz Sharif can play an important role by promoting adoption of alternate energy in Punjab. The model in turn can be copied by the rest of the country to provide relief to masses, sustain and generate growth and jobs in country’s agri-sector. In short 4200 MW can be generated by 1600 wind turbines with each generating of 3 MWs. The shift to alternate energy can help Pakistan save 300 billion rupees (4.6 billion dollars) being paid in annual subsidies to energy companies at the rate of 25 billion rupees per month. The purchase of 1600 wind turbines should cost around 0.192 billion dollars (1600 x $1,20,000 per piece) which is not only fraction of 4.6 billion dollars being currently paid under subsidy head but will also cut expenditure on import of costly furnace oil and ease pressure on foreign reserves etc. Logically, the adoption of alternate energy technology should reduce per unit cost with every passing year. All this makes sense in wake of growing oil prices. Finally, it is need of the hour to provide relief at grassroots by incorporating available alternate energy technologies in national energy policy. It will help agri-sector and the industrial sector can be facilitated to adopt alternate energy technology. It will help reduce expenditure on fuel imports and foreign reserve. The nationalization of energy sector and adoption of alternation energy technology can go hand in hand with already approved long and medium term policies and projects based on traditional resources of energy generation.

Rizwan Ghani, Pakistan Observer, May 3, 2008

http://pakobserver.net/200805/03/Articles04.asp

GOVT CALLS IPPS MEETING TO TACKLE POWER CRISIS

The coalition government has called a high level meeting of chief executives of all Independent Power Producers (IPPs) to seek their assistance in tackling the issue of power shortages prevailing in the country. The meeting will be held on Friday (today) at Pakistan Private Power Infrastructure Board (PPIB) and would be chaired by Federal Minister for Water and Power, Raja Pervez Ashraf. Water and Power Development

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Authority (WAPDA) and Pakistan Electric Power Company (PEPCO) officials would also attend the meeting. IPPs are still generating around 4,000MW to 4,500MW per day against 5,728MW power per day as agreed with government. During last year, the power generation by IPPs stood at 5,500MW per day that has dropped during the current season. The country is said to face a power shortfall of over 3000MW per day as the demand of electricity had shot up to 15,000MW per day. The Independent Power Producers (IPPs) are generating 4,500MW power per day and hydel generation stands at 3,500MW per day whereas the total power generation stands at 11,500MW per day. Sources said that with the passage of time, the power generation capacity of the IPPs is declining, the major reason of power shortfall. Sources said that IPPs would be asked to generate power as per agreement with the government and also to extent their operations to overcome the power shortages. Sources said that the IPPs defaults have piled up to Rs 25.3 billion and they have demanded the Federal Government to intervene for paying immediately. Sources said that Independent Power Producers (IPPs) have threatened PEPCO for suspending power generation. Sources said that the meeting would review the payment of dues to IPPs. Due to circular debt among different stakeholders including Pakistan State Oil (PSO), PEPCO, KESC and Federally Administered Tribal Areas (FATA) have become the main reason for low generation of power in the country, sources said. Hub Power Company (HUBCO), the major power generation and supply company has threatened PEPCO to pay its arrears on the account of purchasing power otherwise it would suspend the power supply.

HUBCO is to pay Rs 2 billion dues to PSO for the provision of furnace oil to HUBCO. PSO had resumed the fuel supply to HUBCO after obtaining the letter of comfort from Water and Power Ministry. On the other side, HUBCO claims that it has to receive billion of rupees dues from the PEPCO for provision of power, sources added.

Zafar Bhutta, Daily Time, May 9, 2008

http://www.dailytimes.com.pk/default.asp?page=2008%5C05%5C09%5Cstory_9-5-

2008_pg5_4

COMPETING FIRMS COMPLETE FEASIBILITY REPORTS

The two international firms in fray for constructing a 1,000MW power plant, which will use imported coal as fuel, have completed feasibility studies, an official told The News on Saturday.

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AES Corporation of US and Japanese Mitsui Group were short-listed in December 2006 to prepare two separate feasibility reports for Pakistan’s first such power plant. “Negotiations for power tariff will get underway in a couple of weeks,” said the official, who works for Private Power Infrastructure Board (PPIB). “I cannot specify how much that is going to be, but it will be around NEPRA’s tariff for indigenous coal-fired power plants.” Pakistan is facing an electricity shortfall of 3000MW per day, and spends billions of rupees annually to import fuel oil to run its thermal power plants.

The decision to generate power using imported coal was based on assumptions that not only will it help in meeting demand, the cost of coal will always be lower than oil’s. National Electric Power Regulatory Authority (NEPRA) has given an upfront tariff of US7.8 cents per kilowatt hour (kWh) for Thar coal-fired power plants. However, this tariff differs greatly from what the investors will

want for a power plant based on imported coal. Landed cost of imported coal has surged to $130 per tonne from $60

a year ago. Any tariff based on this coal will reflect the price fluctuation, unlike the upfront tariff offered by NEPRA. NEPRA’s tariff has been calculated on the basis of a report prepared by a German firm RWE in 2004. RWE has recommended a leveled tariff of 7.1 cents per kWh for 40 years. Abdul Basit Mehta, a local representative of RWE, said the tariff was calculated after taking into consideration the costs associated with mining and generation. There is no variable component in the tariff, he added. NEPRA’s tariff seems lucrative from RWE’s point of view, but Hassan Associate, which has proposed the mining of Thar coal and using it for

a 1000MW power plant, sees it unfeasible. “Cost of machinery and equipment has increased manifolds in the last few years,” a company official said. “Anything below 10.5 cents will be unacceptable.” The company had initially demanded 11.1 cents, but had to revise down the tariff after the government’s refusal. It is prudent to recall again, that back in 2005 a Chinese company had agreed to undertake the capital-intensive project at 5.7 cents. That tariff was rejected and the company left. Pakistan is fighting to catch the elusive dream of utilising cheap source of energy since 1992, which was the year when it was discovered that Thar District is sitting over 175 billion tonnes of coal reserves.

The News, May 11, 2008

http://www.thenews.com.pk/print1.asp?id=111829

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GOVT TO INVITE BUSINESSMEN TO DISCUSS POWER CRISIS

Federal Minister for Kashmir Affairs, Northern and Information Technology Qamar uz Zaman Qaira has said the government has decided to convene a special Cabinet meeting to cope with ongoing energy crisis. “All the relevant experts and chambers would also be invited for suggestions over the issue which now has started taking its toll,” he expressed these views while speaking at Lahore Chamber of Commerce and Industry (LCCI) on Saturday. Minister said the present government was taking all possible measures to bridge the gap between demand and supply of electricity. Due to acute shortage of power, not only the industry, the common man was also suffering. He said all the issues had been discussed threadbare in all the four Cabinet meetings held so far. He said to develop IT infrastructure, the government has divided the country into 14 regions and aggressive investments would be made to equip 1400 cities and villages with Information Technology that do not have access to IT.

He said the government has introduced scholarships for the promotion of Information Technology. On the issue of Kashmir, the Federal Minister said that sometimes, informal diplomacy can do the miracles and business community should use its good offices for a breakthrough in this regard. Federal Minister said steps were on way to promote trade between Indian occupied Kashmir and Azad Jammu Kashmir that would definitely help bring the people of two sides further closer. He said special attention was also being given towards vocational training and skill development, as the industry was heavily suffering because of the shortage of skilled labour. Referring to atta prices, he said there was an anomaly in the provision of subsidy. Equal subsidy was being given on atta used by the rich and the poor. Things are being sorted out to ensure benefit to the poor alone. LCCI president, Mohammad Ali Mian stressed the need for early solution of Kashmir issue. He said no Confidence Building Measure (CBM) would work unless the issue of Kashmir is resolved.

Daily Times, May 11, 2008

http://www.dailytimes.com.pk/default.asp?page=2008%5C05%5C11%5Cstory_11-5-

2008_pg5_16

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ENTANGLED IN ENERGY WEB

Commendable developments have materialized lately on various avenues of energy sector in Asia with countries fostering forward their collaborations for fulfilling their energy requirements. The dream of making Asian gas grid could transform the quest for energy by Asian economies into a cooperative, not conflictive enterprise. Regional actors entangled subjectively in energy web of interdependence, could generate far-reaching effect on the security, stability and development of the region. Hence, locking their positions by working together in a manner of complex correlation. The outcome of this interconnectedness would determine the future course of economics, politics, inter-state relationships, economic cooperation and security status of the region as a whole. With growing oil prices skyrocketing, Asian country's thrust for cheaper imported gas has acquired a greater urgency than ever before. In order to fulfill energy requirements, countries like Pakistan, India, Iran and China have leaned their thrust even to develop civilian nuclear technology to meet the needs of ever expanding economies. Nowadays, we are totally dependent on an abundant and uninterrupted supply of energy for living and working. It is a key ingredient in all sectors of modern economies. It is high time that we must secure our future in the growing state of depleting energy resources. As the new energy world order dawned with momentum in Asia, several key benchmarks have been achieved on aspired projects of IPI (India-Pakistan-Iran) and TAPI (Turkmenistan-Afghanistan-Pakistan- India) gas pipelines. These pipelines can be more appropriately called as "life lines" to the industry and economies of Asian subcontinent and beyond. Countries involved in both either IPI or TAPI had serious reservations involved, which had descended them to remain reluctant in pursuing the projects. We are still in the state of wilderness as yet the projects, which have actually set foot in early 90s or later failed to materialize as yet. Both projects got badly snagged in international and regional politics. But latest signing of "Government Framework Agreement" in Islamabad to initiate TAPI project, readmission of India in IPI, workable agreement between Pakistan and India on transit fee, recent agreement on IPI to draft the final phase of the project and finally signing an accord, depicts active assertion of the stakeholders to remove the impediments on the way. Both projects (IPI) and (TAPI) would provide the gas to the Asian developing countries including Pakistan, India, China and beyond the region. These states have limited oil/liquid reserves to meet their

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demands. With rocketing prices and limited supply of oil, signifies the option of gas which is cheaper, cleaner and plentiful, and in an increasingly environmentally conscious world, developed countries see this as an attractive alternative to oil and mineral fuels. Hence, oil- producing states of Persian Gulf are striving to develop their gas supplies to supplement their dwindling oil reserves. While the landlocked El Dorados of Central Asia offer the energy hungry burgeoning economies to invest and evolve effective methods to transfer the resources. These states have abundance of proven and unproven gas and oil reserves anticipating to be explored. It is quite mandatory for the states to develop the national strategies for robust exploration of not only indigenous resources but require enhancing by trans-national energy options to meet the constraints. TAPI gas pipeline project, would begin from the Dauletabad gas field (Turkmenistan), and runs through Herat, Kandhar (Afghanistan), Quetta, Multan (Pakistan) and the final destination of the pipeline will be the Indian town of Fazilka, near the border between India and Pakistan. The total length of the pipeline would be 1,680 kilometer will be built and operated by a consortium of national oil companies from the four countries, furthermore the cost of the project was just over 3$billion in 2003; today it is $7.6billion. The pipeline is to begin its operations in 2015, if all the contending issues are to be resolved. The pipeline will transport 33 billion standard cubic meter (scm) gas from the Dauletabad gas field. There will be six compressor stations along the entire length of the pipeline and it will have to be guarded by the states they pass through, apart from the pipeline. The largest stretch will fall to the share of Pakistan, between Quetta and Multan and the Indian border. ADB provided the financial assistance of 1.0$ million for the feasibility study of the project. Several major risks were proving as impediments in materializing the TAPI project. Security of the pipeline is the most important in this regard, as it passes through the tumultuous region of Afghanistan, where the security situation is far more satisfactory. Turkmenistan requested UN to adopt a new convention guaranteeing pipeline security. The proposal represents the abandonment of fiercely nationalist policy adopted by Niyazove. Turkmenistan's claims of having reserves of more than 25 trillion cubic feet need to certify through an independent auditor. Issues like that of consortium formation, legal and regulatory framework, and issues of gas sales and purchase agreements need to be resolved at earnest. Political discords among the regional and international powers related to US support to TAPI project due to contentious relations with Iran, Pakistan and India's conflicts and disagreements on various issues and

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Pakistan's constrained relations with Afghanistan are proving as hindrance on the way. The rival IPI (Iran-Pakistan-India) pipeline, conceptualized in 1989, have the potential to link Persian Gulf with roaring economies of Far East. The proposed pipeline would deliver gas from Assalouyeh in southern Iran through Balochistan and Sindh provinces of Pakistan and then to India. This pipeline was smudged and hampered by conflicting issues ranging from security to pricing and finalizing the framework. Length of pipeline runs 1700 miles with 3.2 billion cubic feet per day of Iranian gas to Pakistan and 2.1 billion cubic per day to India by 2011 moreover the cost of the project is nearly 7-8 $billion. To settle the major issues apropos of pricing, Iran demands that clause to revise the gas price every three years to be incorporated into the agreement, which both India and Pakistan disagreed. If substantiate effectively, then IPI pipeline would also assert and depict independent foreign policies adopted by Pakistan and India on issues of high priority related to energy with certainly wanting to break from the pressure to abort the plan. With sever warning to India against joining the project by the US because of Iran, still it demonstrated sign of thrust to move forward for the project. Even US lured India to have the much-aspired civilian nuclear deal to meet its growing energy demands. However later early this year, when India shows reluctance in the IP project, Pakistan declared that China would become part of the project and convert into (IPC). This proclamation sent quaver to India. While depending on the feasibility of the project, China illustrated keen interest in making this a reality with having necessary expertise and resources. With growing demand at domestic markets soaring, and involvement of China led India to participate with revised sense of urgency. For India and Pakistan, it is difficult to show the same level of consent on the IPI because of the divergent foreign policies and priorities involved. Pakistan has deep rooted and closer relations with Iran and support on various issues either nuclear or forming a regional energy grid. Pakistan clearly realized that Iran sees the IPI as both a source of valuable foreign exchange as well as warding off the mounting US and other western powers to isolate Iran on its nuclear enrichment foreign policy. For both states, it would be appropriate to understand the emerging reality that in near future the solution to Afghan problem is far from being a reality and TAPI project is less likely to be practically implemented. Even option was propounded that instead of TAPI, a revised TIPI (Turkmenistan-Iran- Pakistan -India) may be plotted. This is actually more feasible and viable solution, with less troubles for the project. Analysis reveals that on one hand if IPI project carries greater political price for both Pakistan and India than on the other TAPI had

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been put on hold because of security and sensitive areas on the way. But the fact remains that nearly all roads which provides energy security in Asia lead from Tehran. Iran's ability to act as an energy corridor for the sub-continent and salient importance of Iran is indisputable. In the rapidly intensifying international energy competition, Iran holds the master key to the most staggering political and economic roadblock that impedes the economic growth. The problems wont be solved while isolating Iran but close and competitive environment leads to prosperity of the Conclusively, the fact remained which must be kept in mind is that TAPI and IPI would be operational in domains of disorder lying between economically upward regions. Afghanistan as reluctantly been controlled but still has the seeds of insurgency expected to be blossoming this summer as illustrated by the attack on President Hamid Karzai with loud and clear message of " strike any where in the world". On the other hand Pakistan present shaky coalition government has been involved in settling the domestic political instability with paying merge attention to resolve the economic issues. Therefore it can be concluded TAPI and IPI could not become good devices of leverage unless and until Pakistan is to set its house in order and become a normal, democratic and stable state.

Farhat Akram, The Nation, May 12, 2008

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-

online/Business/12-May-2008/Entangled-in-energy-web/1

MEETING HELD TO DISCUSS PAKISTAN'S ENERGY CRISIS

Pakistan's federal cabinet yesterday convened a special meeting here to discuss the worsening energy situation and decided that all commercial markets will be closed at 9 pm while clocks will be set one hour ahead from June 1 till the end of August. The objective of the whole exercise is to save energy in the peak summer season. The move of setting the clock an hour ahead that had failed twice first during the term of prime minister Banazir Bhutto and then in the last government headed by President Pervez Musharraf is now being tried again to get the desired goal of saving energy. This means the sun rise in Islamabad will be at 6:05 am instead of 5:05 am and sun set at 8:05 pm instead 7:05 pm. Presided over by Prime Minister Yousuf Raza Gilani, the cabinet also decided that international bids will be invited to generate 1,200 mega watts (MW) of electricity on fast track basis. The industrial zones across the country will start observing holidays on rotation basis to share the load on electricity while air conditions (ACs) in all government offices will not be turned on from 8 am to 11 am during this period. Half of the street lights will also remain off on alternative basis during

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these three months. The government will also import 10 million energy saving bulbs to promote the culture of energy conservation. This summer (June-August), Pakistan is facing 4000MW of electricity shortages worse than the last year after a 50 per cent (2500MW) drop in hydel generation due to less water in rivers and slower melting down of snows on the mountains, Water Minister Raja Pervez Ashraf said while briefing the newspersons on the cabinet meeting. He said from July international bids will be invited for production of 1200 MW on fast track basis. These bids will be offered at the existing rates (considered cheaper) of the National Electric Power Regulatory Authority (NEPRA) in order to attract investment. However, this offer will be closed as soon as the government achieved the generation target of 1200 MW. The water minister said the power generation tendering and production process took three years or more, but the government has decided to accomplish it within a year-and-a-half.

Khaleej Time, May 16, 2008 http://www.khaleejtimes.com/DisplayArticleNew.asp?section=business&xfile=data/

business/2008/may/business_may560.xml

GOVT TAKING STEPS TO OVERCOME ENERGY CRISIS

The government is taking all necessary steps to overcome the ongoing energy crisis, as it is well aware of the sufferings of masses and the difficulties being faced by the industry, said Raja Riaz, a senior Punjab Minister. At closing ceremony of two-day LCCI SME Fair 2008, he said, a crash energy conservation plan had already been rolled-out by the federal government to bridge demand-supply gap. He squarely blamed the previous government for the energy shortage, “Had a go-ahead been granted to smaller power projects around 600 MW electricity in yester years, the situation would have been far better.” Look at India, it had built scores of dams during all these years, he added. He said LCCI SME Fair and the seminar would help further consolidate businesses in Pakistan. Mohammad Ali Mian urged Minister to evolve all the future business policies after having due consultation with the stakeholders as in the past this practice was hardly seen anywhere. He said a number good policies in the past could not give desired results for want of due attention towards their implementation. On energy crisis, he urged the Minister to tap alternate energy resources because it would help curtail government’s import bill, which was going up with every passing day due to high oil prices in the international market.

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He said Federal government should immediately start construction of big water reservoir including Kalabagh Dam.

Daily Times, May 17, 2008

http://www.dailytimes.com.pk/default.asp?page=2008%5C05%5C17%5Cstory_17-5-

2008_pg5_18

ENERGY CONSERVATION PLAN TO COMBAT SHORTAGE:

MINISTER

Senior Punjab Minister Raja Riaz has said the government is well aware of the sufferings of masses and the difficulties being faced by the industry. In that regard, he said, a crash energy conservation plan had already been announced by the federal government to bridge the demand-supply gap. The minister was speaking at the closing ceremony of a two-day SME Fair-2008, organised by the Lahore Chamber of Commerce and Industry, at the LCCI late on Thursday night. The minister squarely blamed the previous government for the energy shortage, saying in 1994 a plan was chalked out to produce 600 megawatts of electricity by building small power projects on canals but the plan could not get go ahead due to unknown reasons. “Had a go-ahead been granted to these smaller power projects in yesteryears, the situation would have been far better.” Look at India, it had built scores of dams during all these years, he added. Speaking on the small and medium enterprises, the minister praised the Lahore Chamber for supplementing government’s efforts for bringing an economic turnaround. The LCCI SME Fair and the seminar would help further consolidate businesses in Pakistan, he added. In his address, LCCI President Mohammad Ali Mian urged the senior minister to evolve all future business policies after consultation with the stakeholders as in the past that practice was hardly seen anywhere. He said a number of good policies in the past could not give desired results for want of due attention to their implementation. On energy crisis, he urged the minister to tap alternative energy resources because it would help curtail government’s import bill which was going up due to high oil prices in the international market. Due to the shortage of electricity, he said, not only the industry was heavily suffering but it was feared that the unemployment graph could further go up.

Mohammad Ali said infrastructure played an important role in the industrial growth of any country and there was a need for the government to

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expedite up gradation of infrastructure that would not only encourage local investors but would also help attract foreign investment. The LCCI president also suggested to the minister to widen the scope of Businessmen-Police Liaison Committee by including all the industrial areas in it as an improved law and order situation was a prerequisite to investment.

The News, May 17, 2008

http://www.thenews.com.pk/daily_detail.asp?id=113008

DEMAND-SUPPLY GAP INCREASES DRAMATICALLY TO

415MW

The electricity demand-supply gap in the city increased phenomenally to 415 Megawatts (MW) on Tuesday, after Karachi lost electricity from its nuclear power plant at KANUPP, officials concerned told The News. This shortfall is probably the highest recorded here during the current season. The total demand of power in Karachi during the last 24 hours was

2,228MW.

A KANUPP spokesman said that the plant, which supplies 80MW to the Karachi Electric Supply Company (KESC) tripped at around 10:20 a.m. Tuesday due to the loss of KESC transmission lines. Meanwhile, KESC officials said that Unit no. 6 of the Bin Qasim Thermal Power Plant has also been non-functional for the past couple of days, but would be online soon after the requisite repairs and maintenance. The ever-widening demand-supply gap means that almost every residential and commercial part of Karachi has been coming under prolonged and multiple spells of power load-shedding lasting over two-and-a-half hours each. These continue toll late into the night. Moreover, several areas of the city have experienced prolonged and recurring spells of power breakdown since Monday evening because system overload has caused the transmission and distribution mechanisms for electric supply in those areas to go haywire. Probably the worst electric supply situation during the last 24 hours in the city was in Federal B. Area Block-20 near the Edhi Centre. Residents of the area suffered power breakdowns after midnight Monday, and the electricity supply had not been restored until 05:00 p.m. Tuesday. Another complainant from Grey River Flats near the Korangi Creek said that the residential complex had gone without electricity from 01:00 p.m. to 05:00 p.m. on Tuesday. This was after recurring and prolonged power failures from Monday evening till Tuesday morning. Moreover, several parts of Malir, DHA, Lyari, PECHS, Gulistan-e- Jauhar, and Gulishan-e-Iqbal reportedly suffered hours-long power failures till

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Tuesday evening due to serious faults in the systems and installations of power transmission and distribution. In addition to this, several sprawling residential areas of the city, especially in the suburban parts, have been running dry for past couple of days because the prolonged spells of power breakdown and load-shedding have equally affected the water supply installations of the Karachi Water & Sewerage Board (KWSB).

The News, May 21, 2008

http://www.thenews.com.pk/daily_detail.asp?id=113882

PAKISTAN