energy crisis in pakistan

Energy Crisis in Pakistan 1

E NERGY C RISIS IN P AKISTAN

E DITOR
D R N OOR UL H AQ

A SSISTANT E DITOR
K HALID H USSAIN

2 IPRI Factfile

C ONTENTS

Preface v
1. Pakistan: Power Crisis Feared by 2007 1
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 17
11. Pakistan Iran Agree on Gas Pipeline Project 17
12. ECNEC Approves Energy Projects 18
13. Energy Crisis in Pakistan-I 18
14. Energy Crisis in Pakistan-II 21
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 27
19. US Advise Pakistan to Purchase Electricity from Central Asia 27
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
32. Government to Invite Businessmen to Discuss Power Crisis 50


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 59
40. Load Shedding: Part of Conspiracy 60
41. Coal Power Plants to Help Overcome Energy Crisis 62
42 Government to Ensure Indiscriminate Load Shedding: PM 63
43. Pakistan Puts Clocks Forward, Hopes to Save Electricity 64
44. The Option for Solar Power 65
45. Advancing of Clocks Creates Confusion 68
46. Iran can Help Pakistan in Energy Sector 70
47. SAARC Members Asked to Sign Energy Treaty 70
48. Subsidy on Use of Up to 200 Power Units Stays 72
49. Load Shedding becomes a Nightmare for Karachiites 72
50. Severe Fuel Crisis Hits Frontier 74
51. Shortage of Fuel at Petrol Pumps Causing Concern 75
52. Shortage of Petrol Products Tormenting Consumers 75
53. No End to Electricity Meter Shortage 76
54. Peshawar Transporters Threaten to Besiege Oil Depots 77
55. Diesel Shortage Affecting Operation of Tube-wells, Tractors 78
56. Load Shedding Increases as KANUPP Trips Again 79
57. Fuel Stations Run Short of Diesel 80
58. Frequent Power Shutdowns Bringing Grades Down 81
59. New Energy Order 83
60. Power Plants Top Gas Supply Priority List 85
61. Resolving Power Crisis a Priority 86
62. Authority Set Up for Thar Coal Mining 86

4 IPRI Factfile

P REFACE

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


P AKISTAN : P OWER C RISIS F EARED 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.

2 IPRI Factfile

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


M AJOR E NERGY C RISIS F EARED
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.

4 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

P AKISTAN ’ S Q UEST FOR E NERGY S ECURITY
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


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,

6 IPRI Factfile

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


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

W ASTE TO E NERGY IS N EEDED IN P AKISTAN
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

8 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


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

10 IPRI Factfile

T YPES OF E NERGY

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

T HERMAL E NERGY
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.


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

12 IPRI Factfile

Total Rs. 3.40
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

H YDEL E NERGY

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.
Geographical situation is 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.
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
8. Social impact


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

W IND E NERGY

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

14 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


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

R ISING O IL P RICES

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

16 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.


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

P AKISTAN C OAL R ESERVES S HOULD BE E XPLORED
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

P AKISTAN I RAN A GREE ON G AS P IPE L INE P ROJECT
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.

18 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 A PPROVES E NERGY P ROJECTS
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

E NERGY C RISIS IN P AKISTAN - 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


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.

20 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


E NERGY C RISIS IN P AKISTAN - 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.

22 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

P AKISTAN ' S E NERGY C RISIS TO W ORSEN IN N EXT T WO
Y EARS
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.


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

W IND P OWER : A S OLUTION TO E NERGY C RISIS

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.

24 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.


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

26 IPRI Factfile

E NERGY C RISIS M AY G O FROM B AD TO W ORSE
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.


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

A SIAN D EVELOPMENT B ANK C ONSIDERING 250 M ILLION $
L OAN FOR S MALL H YDRO P ROJECTS IN P AKISTAN
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

US A DVISE P AKISTAN T O P URCHASE E LECTRICITY F ROM
C ENTRAL A SIA
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.

28 IPRI Factfile

Pakistan should have a fair treatment to explore all possible energy
resources including nuclear energy for its growing energy demand.
September 9, 2007

E NERGY S TRATEGY

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


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.

30 IPRI Factfile

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

P AKISTAN U RGED TO I MPORT 4,000MW FROM CAR S
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.


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.

32 IPRI Factfile

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

F UEL S HORTAGE M AY W ORSEN P OWER S ITUATION
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


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

E NERGY C RISIS : S ERIOUS AND W ORSENING
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

34 IPRI Factfile

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

energy crisis in pakistan

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (18)

Andere mochten auch

Andere mochten auch (18)

Ähnlich wie energy crisis in pakistan

Ähnlich wie energy crisis in pakistan (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

energy crisis in pakistan