(This essay owes its skeleton and information, almost 90%, to this essay by Mr. T. S. Awan. Please share information, critique and more articles on it.)
Energy Crisis in Pakistan
“What does ‘LOL’ stand for in Pakistan?
‘Lots-of-Loadshedding’.”
“Why isn’t anyone intervening in
Africa (as in Middle East)? It’s the layer of oil on Middle East … otherwise it’d
have been no different than Africa.”
- Former NATO chief, Gen. Wesley Clark,
2007
[Introduction]
General
(rtd.) Wesley Clark, one time Supreme Allied Commander of NATO, admits that US and Europe's intervention in Middle East – initiative of multiple regime changes in around
seven countries through direct and indirect wars – is primarily to gain control over oil resources by Western powers. Control over energy has
become a cause of wars among nations, only indicating how critically important
this resource; although power of collaboration is being underestimated. One
cannot imagine a tomorrow devoid of energy in modern world. Energy is its
cornerstone. It is critical to be self-sufficient in its generation to preserve
independence of a nation. Developed world differentiates itself from the rest
because it has been able to harmonize its supply and demand, managing both at
the same time. Self-sufficiency and control over energy gives the North its
edge over the South.
Pakistan
is energy-deficient. How can one imagine an active and prosperous human being
short on blood? Life is hard without sufficient blood running up and down the
veins, pumped by the heart round the clock. Pakistan has failed to contain its
energy crisis; failing to increase supply proportionately and conserving demand.
In 1980s, it met 86% of its demand; come 2000s, situation is getting worse.
Explosion in the supply of natural gas gave the nation a breather, sharing
burden of electricity and oil, only to make future insecure as gas reserves
deplete at fast rate. Fire-fighting on the part of government becomes national
strategy, instead of proactive, long-term planning. This has contributed to
circular debt problem because of short-sightedness political government.
Let
alone increase the supply of energy, situation has worsened due to poor management,
operational inefficiencies, power theft, and line losses. This largely sums up
the problems country faces in its battle to restore sanity in energy sector,
which is now nudging the economy towards disaster, warns latest report of Asian
Development Bank.
[Energy sector in Pakistan]
Energy
sector of Pakistan is considered to be under-developed, thanks to poor
management and planning, with untapped potential for humungous growth. The root
problem is energy generation which never took place proportionately with the
rising demand and positive economic growth, with rapid boost taking place in
Musharaf’s era. Nobody could tell him about the shortfall in the supply that
would engender an energy crisis for coming government(s). The songs of ‘all is
well’ were sung by the planners, and now we are in a quagmire where no
short-term solution can work. Apart from this energy generation failure,
government did little to contain the demand which seems to have exploded out of
proportion in past two decades; operational inefficiencies and line losses are
costing government billions; power theft; and on the top of that, the cheapest
source of electricity, namely, hydropower, suffers from seasonal oscillations
between 2,414 and 6,761 megawatts, depending on river flow. To offset the gap
between supply and demand, populace suffers from load management or
load-shedding. This crisis has pervasive and far-reaching consequences on
economy, society and overall functioning of the country.
[Energy
sector & consumption]
Pakistan’s
energy sector consists of following consumers: household, industry, services,
transport, government, etc. The largest
consumer is industry, accounting for around 58% of total consumption; it is
followed by transport sector at 22% usage; and 15% is consumed by household,
and rest with other sectors. This shows that the power crisis is affecting the
industrial setup most, and cause for pain for ordinary citizens. The
consumption is met by the mix of petroleum oil, gas, electricity, coal and
liquefied petroleum gas (LPG) sources. Gas contributes most with share of
43.7%, followed by oil at 29% and so on.
[Energy
supply]
In
2010, energy supply per capita decreased by 3.09%. The country is in need of
15,000 to 20,000 megawatts (MW) per day. Its current supply is, however, around
11,500 MW per day. Hence, it faces a shortfall of around 3,500 to 8,500 MW.
This is the root of cause of all troubles for the struggling economy and
industry.
[Sources of energy]
[Non-renewable:
fossil fuels: unsustainable / the main sources]
Non-renewable
resource is the main energy source of Pakistan, which basically is fossil fuel,
formed by the remains or decomposition of animals and plants deposited in
earth’s crust and with a long process are converted into oil and gas. There is
no replenishment for these sources. There are four main types of fossil fuels:
oil, natural gas, coal and liquefied petroleum gas (LPG).
First,
petroleum contributes 29% to the total supply of energy, as of 2009-10. The
majority of crude oil is imported from Gulf States. It is also used in the
production of electricity, generating 64 percent (34 from hydropower). Highest
consumers of this source are power, transport and industry sectors followed by
agriculture and households. Currently, 24 million crude oil is being extracted annually,
which will be exhausted in 12-13 years at current rate if new wells are not
discovered and utilized, as total estimated reserves are around 303 million
barrels.
Second,
natural gas became the fast growing energy source in various sectors of the
economy. In 2010, average production exceeded slightly 4,000 million cubic feet
per day. In industry is used to make consumer products; its derivative,
compressed natural gas (CNG), is used in transport sector; and households use
it for various purposes, including cooking, heating, and using it to run
generators. Pakistan is currently largest CNG consumer in the world, thanks to
price differential between CNG and petrol that is driving its consumption
crazily. We might suffer from the fate of New Zealand, who had converted almost
everything to CNG only to reverse it back to other forms of energy as they ran
out of their gas reservoirs, unless we can miraculously complete pipeline
project with Iran.
Third,
coal reservoirs are deemed to be the last hope of energy-deficient Pakistan,
although controversially. With over 180 billion tonnes of coal reserves
identified at Thar coal field, it is a prospect worth pursuing. The coal
currently being extracted is of not good quality, used primarily in brick kiln
and cement industries.
Another
major energy source consists of renewable resources. These resources are
naturally replenished and can be utilized again and again to produce energy,
coming from sources such as water, sunlight, wind, tide and geothermal heat. It
is sustainable and clean.
Hydropower
is produced using electricity generators to extract energy from moving water.
Pakistan is a goldmine of hydel power, which is under-utilized contributing
only 34% to total electricity generation. The potential generation ranges
between 41,000 to 45,000 MW, whereas only 6555 MW is being tapped. Currently,
there are five hydropower stations, fully functional, namely, Tarbela Dam,
Ghazi Brotha, Chashma, Warsak and Mangla Dam, with combined production of 6555
MW. There are five potential hydropower stations waiting to come to life
including, Diamer-Bhasha, Munda, Kalabagh, Bunji and Dasu Dam with combined capacity
of around 17,000 MW, which can meet the shortfall of supply by more than 90%.
There
are alternative sources of energy, apart from the two categories – namely,
renewable and non-renewable resource – which are promising and future of
sustainable energy production. However, these are contested and yet not as
feasible and economical as current sources of energy. The potential of all
these alternative sources are huge, beyond our wildest imagination. Future is
here.
Wind
potential of Pakistan is 10,000 MW to 50,000 MW. It works on the principle on using
wind’s power to drive the blades of wind turbines, ending up in generating
power. A Turkish company is going to install a 50 MW turbine in Jhampir. More
plants are to be installed in Jhampir, Bin Qasim Karachi, Keti Bandar, etc.
Similarly,
solar power also has huge potential of generating 100,000 MW, although it seems
like a distant dream, but with revolutionary innovation, its tipping point may
not be that far. The key to this treasure is developing solar cells that
convert sunlight into electricity. In Gilgit-Baltistan, government is building
20,000 solar water heaters. Mobile companies have been asked to shift fuel of
their transmission towers from petroleum oil to solar cells.
Ranging
from utter incompetency to foreign pressures and lack of political will, the
Pandora box of Pakistan’s current energy crisis traces its roots to
multifaceted and distinct causes.
Firstly,
over the decades, the demand for energy has grown due to following main
reasons: increasing population; electrification of rural areas, in 1990s more
than 60,000 areas had connections, whereas in 2000s it has passed the mark of
one lakh; industrial and agricultural growth; and increasing transportation
needs.
Secondly,
with increasing demand that outpaced the supply, there has been a lack of
integrated and proactive planning for growth of energy generation. Although the
country did not lack natural resources and sites for the exploitation of
non-renewable and renewable energy, it failed to tap its potential. Few plants
have been installed by the government to meet future needs. It did invite
Independent Power Producers (IPPs) to share its burden; the IPPs have become an
object of controversy, and clearly have not been able to meet the shortfall.
Against the demand of 20,000 MW, we’re producing only 11,500 MW.
Thirdly,
the cost of production of electricity is so high that it can termed as the main
reason of current load-shedding. The main cause of high cost is faulty fuel
mix. Furnace oil is being used as the main fuel to produce thermal electricity.
It is government’s responsibility to provide power generating companies with
furnace oil. The cost producing with latter is Rs16 per kwh, which costs the
end-consumer Rs22-25/kwh. Government is unable to pay fuel cost to generating
companies, forcing plants to be either shut down or run on low capacity.
Generating companies in turn are unable to pay to oil companies resulting in a
high circular debt of around Rs400 billion. Without clearing this burden of
debt, load-shedding situation cannot improve an iota.
[Consequences / effects on various parts of
the economy]
Energy
crisis is pervasive in all major sectors of economy and affect quality and
standard of life of population at large.
Economic
sector is being hit hard because energy is pivotal for the smooth functioning
of its various parts. Economic losses are incurred due to low productivity and
cessation of activity in agriculture, industrial and transport sector. Modern
economy of a country is integrated, and if one element is displaced or gets
weakened it troubles other elements. Lower gross domestic profit (GDP) and high
inflation can be attributed to this on-going crisis.
Agriculture
sector is also affected, largely because productivity heavily depends on the
functioning of tube wells in many areas. Not only that, production of support
agricultural inputs like pesticides and fertilizers is also hampered. Therefore,
higher energy generation will boost agricultural productivity.
Industrial
sector represents as one of the most grievous victims of the crisis. It is
bloody picture of units being shut down or run at low capacity, layoffs taking
place, and overall loss of competitiveness of the country, all of which is also
hurting the economy and comparative advantage. Another consequence for this
sector is flight of capital; not only foreign but local investors are
investing, for instance, in Bangladesh, moving textile units there. If this
crisis is not solved immediately, the industrial growth may be reversed
completely, allowing foreigners to decimate local industry and innovation
forever.
Unemployment
is a natural consequence of the preceding consequences of energy crisis.
Shutting down of units and layoffs create unemployment. Interesting inflation
is also going up along with layoffs. Moreover, new employment opportunities are
not being created due to decreasing investment in new ventures, partially due
to weak economy, corruption and terrible law and order situation.
Social
and psychological problems are also emanating from this crisis. Load shedding
has led poor junta to take their frustration to road, unleashing it on public
and private property, creating some of the most horrendous scenes of
incivility. Since domestic supply of energy is erratic and as rare as gold, it
stresses people out decreasing their productivity as workers and citizens.
Above
all, energy crisis is creating the worse outcome for many: poverty. Instead of
decreasing poverty figures after six decades, the country is on the path of
adding misery to more and more people. However, economic growth is the messiah, as demonstrated by the
experiment of Harvard Advisory Group in Pakistan in 1960s.
In
short, energy crisis is a plague that is poisoning many a sectors’ productivity
and growth, increasing circular debt on government, and creating unrest in the
populace. The problem is two-fold: supply shortage and demand explosion. It is
not just the government that is to be blamed, but the people as well.
Nonetheless, its options have not been exhausted. Instead, there is wide range
of policy options available, although time taking, which can end this crisis
for many generations, if not for eternity.
[Recommendations]
Solutions
to energy crisis are not going to be ordinary, because the crisis is not. Recommendations
and especially its implementation can be very painful for the people and for
the government. These are hard times; hard decisions need to be made, or else
this generation will end up compromising its own, and of future, generation. The
reforms vary, firstly, due to the time factor involved in the completion of
projects; secondly, according to the nature of energy resource; and, finally,
depends on supply and demand sides of the problem.
Reducing
unnecessary consumption – or, reducing demand – can benefit populace and
industry a lot. While American nation learnt the art of preservation thanks to
twin oil shocks, we refused to do so despite widespread knowledge and omens of
eternal low supply of energy. Government needs more robust educational campaign
that covers as many ears and eyes as possible. Household consumers waste lot of
electrons with their electrical devices, including TV, computers and lightings.
In transportation, many reforms can be made: increasing usage of public
transport, strengthening of railways, etc. in industry, energy efficient
machinery and tools must replace tools of antiquity. Billions can be saved by
reducing line losses. This will shrink government’s pockets but the future
payoffs are worth it. Moreover, reliance on rental power projects should be
decreased to drive down prices, which will boost production, although increase
consumption which can be harmonization with education in conservation.
Along
with managing demand of energy hungry populace and industry, government should
waste no time investing or arranging investment in new energy sources. There
are two main untapped resources with awesome capacity to meet our energy
demands: Thar Coal and dams.
Thar
Coal has estimated 175 billion tonnes of coal, the energy potential of which
exceeds oil reserves of Saudi Arabia. Government claims to have begun
construction of infrastructure; however little or no significant progress has
been made. There are two scientific approaches that are being pitted against
each other: gasification of coal, led by Dr. Samarkand Mubarak, and open pit
testing and conversion of coal into gas. Former approach is being critiqued for
a lack of open pit testing which is a norm in the world, and that it is a novel
and risky approach. Currently, an audit of the progress done by Dr. Samarkand
is being carried out to decide on further investment in the project. However,
there is no doubt in the minds of experts that Thar Coals resources can be
materialized; it is only a matter of few years.
Somewhere
else in the essay, we identified five potential dams with combined capacity of
17,000 MW. Using renewable resources (water) by constructing new dams and hydro
power plants, much of our energy problems can be solved. However, the projects
such as Kalabagh Dam are politicized beyond one’s wildest imagination, but
according to many experts, including former chairman of WAPDA from Khyber
Pashtunkhawa, we have no other option than to build most of the dams, if not
all.
Instead
of importing furnace oil, government should import of natural gas by IPI (Iran
Pakistan India) and TAPI (Turkmenistan, Afghanistan, Pakistan and India)
pipelines to replace furnace oil and to meet demand of natural gas in industry
and households.
Import
of electricity from Tajikistan - through Pak Afghan Tajikistan transmission -
and Iran (approximately 1000 MW from each of them) pipelines can also serve as
short-term solution.
Utilizing
alternative energy resources should also be part of the energy mix. This
includes wind power, biodiesel or biomass, solar and tidal. These sources may
not be able to meet energy requirements of large cities, but surely will make
small-scale businesses, villages, household and institutions self-sufficient.
Enhancing
civilian nuclear capacity is way to the future. This should be part of
long-term planning, because the costs are heavy and development time long.
[Solution
to circular debt]
An
alternative to furnace oil for production of electricity is coal. It can be
imported. However, even if coal is imported now it will take three years to
fully operate majority of plants on it. Moreover, only those plants will be
feasible to be run on coal, which are near to the coast; transportation of coal
to far off area may not be feasible at all.
Another
short term solution to circular debt is replacement partially furnace oil with
natural gas. We know that natural gas can be extracted by applying heavy
pressure in fields. Availability of gas will take time. Moreover, exploiting
gas from Thar Coal can be a great payoff, although it will take three or more
years. The sooner the change takes place, the better it is in order to restore
industrial and economic growth. Circular debt is expected to come down with
recent increases in tariff. Citizens cannot be burdened any more. The multiple
initiatives to reduce cost of electricity are the last resort to improve the
situation.
[Conclusion]
It
has always been the worse of times. There has been no energy bonanza in
Pakistan. Economic growth did speed up in last decades, so did population
growth rate and demand for energy; only supply of it failed to match the
demand. This ‘feat’ has been accomplished with the help of poor planning,
fire-fighting as a mental attitude of short-sighted governments, lack of
political will, untapped resources, faulty fuel mix for electricity generation,
and whole lot of other causes and its effects. Energy is a key requirement many
sectors of Pakistan’s economy and society, hence its crisis has severe
consequences for all these sectors. The main sources of energy need overhaul,
change of heart, and replacement with new resources such as indigenous coal,
gas, and more reliance on futuristic alternative, sustainable energy resources
which will take at least decade or two before becoming true rivals to fossil
fuels.
The
causes of the crisis are multifaceted and accumulated over time. Reconstructing
the energy sector means dismantling decades of poor planning and
decision-making, which speaks of the complexity of the situation. However, the
severity of the crisis can be a blessing in disguise; it can compel authorities take hard decisions.
Their biggest enemy is their own short-sightedness.
Solutions
have not been exhausted; in fact the opposite is true. Need of the hour is to
launch multiple strategic moves, instead of pinning success in one ‘big push’.
There are at least four kinds of energy sources identified in the essay that
are vast open spaces for development, including building new dams, exploiting
Thar Coal, alternative energy, and importing cheaper energy sources to replace
costly one.