In June 2007, the power cuts in Pakistan lasted no more than 3 or 4 hours a day. Today, in extremely hot weather, Pakistanis have to endure without electricity for 8 to 10 hours a day. Industrial production is suffering, exports are down, jobs are being lost, and the national economy is in a downward spiral. By all indications, the power crisis in Pakistan is getting worse than ever.
Extended Load-shedding:
Extended electricity load shedding in Karachi's five major industrial estates is causing losses in billions of rupees as the production activity has fallen by about 50 per cent. KESC, Karachi's power supply utility, is dealing with with a shortfall of around 700MW against a total demand of 2200MW. Almost all forms of power generation from fossil fuel-fired thermal to hydroelectric to nuclear are down from a year ago. As a result of the daily rolling blackouts, the economy, major exports and overall employment are also down and the daily wage earners are suffering. The KESC and PEPCO owe more than Rs. 10b to the independent power producers (IPPs) and paying them will help bring them into full operation and ease the crisis at least partially.
Electricity Demand:
As discussed in an earlier post, Pakistan's current installed capacity is around 19,845 MW, of which around 20% is hydroelectric. Much of the rest is thermal, fueled primarily by gas and oil. Pakistan Electric Power Company PEPCO blames independent power producers (IPPs) for the electricity crisis, as they have been able to give PEPCO only 3,800 MW on average out of 5,800 MW of confirmed capacity. Most of the IPPs are running fuel stocks below the required minimum of 21 days. IPPs complain that they are not being paid on time by PEPCO.
Per capita energy consumption of the country is estimated at 14 million Btu, which is about the same as India's but only a fraction of other industrializing economies in the region such as Thailand and Malaysia, according to the US Dept of Energy 2006 report. To put it in perspective, the world average per capita energy use is about 65 million BTUs and the average American consumes 352 million BTUs. With 40% of the Pakistani households that have yet to receive electricity, and only 18% of the households that have access to pipeline gas, the energy sector is expected to play a critical role in economic and social development. With this growth comes higher energy consumption and stronger pressures on the country’s energy resources. At present, natural gas and oil supply the bulk (80 percent) of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the supply. For instance, Pakistan currently produces only 18.3 percent of the oil it consumes, fostering a dependency on expensive, imported oil that places considerable strain on the country’s financial position, creating growing budget deficits. On the other hand, hydro, coal, wind and solar are perhaps underutilized and underdeveloped today, as Pakistan has ample potential to exploit these resources.
The country's creaky and outdated electricity infrastructure loses over 30 percent of generated power in transit, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south.
Gilani Government's Response:
Neelum-Jhelum hydroelectric project, first formally announced by former Minister Omar Ayub on June 10, 2007, is finally starting in earnest under the PPP government of Prime Minister Yousaf Raza Gilani. This hydro project is expected to add 963MW power generating capacity at a cost US $2.2 billion, according to Business Wire. Prior to this project, the new Pakistani Prime Minister signed a deal with a Chinese company, Dong Fong, for setting up 525 MW thermal power plant with an investment of $450 million at Chichoki Mallian (Sheikhupura). Both of these projects are expected help partially close the 3000 MW gap that exists today between supply and demand in Pakistan.
Green Energy Opportunities:
In response to the warnings of energy crisis in Pakistan, President Musharraf's government recognized the need and the potential for renewable alternatives and, in 2006, created Alternative Energy Development Board to pursue renewable energy. In particular, AEDB is focusing on wind and solar as viable alternatives. AEDB is facilitating setting up of small renewable energy projects in line with government’s policy of promoting the use of renewable energy in the country’s power generation mix, says the board’s chief executive officer Mr Arif Alauddin. AEDB has recently issued Makwind Power Private Ltd (MPPL) a Letter of Intent for the setting up of 50MW wind farm at Nooriabad in Sindh, as part of its efforts to facilitate 700 MW wind energy by 2010.
According to data published by Miriam Katz of Environmental Peace Review, Pakistan is fortunate to have something many other countries do not, which are high wind speeds near major centers. Near Islamabad, the wind speed is anywhere from 6.2 to 7.4 meters per second (between 13.8 and 16.5 miles per hour). Near Karachi, the range is between 6.2 and 6.9 (between 13.8 and 15.4 miles per hour). Pakistan is also fortunate that in neighboring India, the company Suzlon manufactures wind turbines, thus decreasing transportation costs. Working with Suzlon, Pakistan can begin to build its own wind-turbine industry and create thousands of new jobs while solving its energy problems. Suzlon turbines start to turn at a speed of 3 meters per second. Vestas, which is one of the world's largest wind turbine manufacturers, has wind turbines that start turning at a speed of 4 meters per second. In addition to Karachi and Islamabad, there are other areas in Pakistan that receive a significant amount of wind.
In only the Balochistan and Sindh provinces, sufficient wind exists to power every coastal village in the country. There also exists a corridor between Gharo and Keti Bandar that alone could produce between 40,000 and 50,000 megawatts of electricity, says Ms. Katz who has studied and written about alternative energy potential in South Asia. Given this surplus potential, Pakistan has much to offer Asia with regards to wind energy. In recent years, the government has completed several projects to demonstrate that wind energy is viable in the country. In Mirpur Sakro, 85 micro turbines have been installed to power 356 homes. In Kund Malir, 40 turbines have been installed, which power 111 homes. The Alternative Energy Development Board (AEDB) has also acquired 18,000 acres for the installation of more wind turbines.
In addition to high wind speeds near major centers as well as the Gharo and Keti Bandar corridor, Pakistan is also very fortunate to have many rivers and lakes. Wind turbines that are situated in or near water enjoy an uninterrupted flow of wind, which virtually guarantees that power will be available all the time. Within towns and cities, wind speeds can often change quickly due to the presence of buildings and other structures, which can damage wind turbines. In addition, many people do not wish for turbines to be sited near cities because of noise, though these problems are often exaggerated. Wind turbines make less noise than an office and people comfortably carry on conversations while standing near them.
As is painfully evident in summers, Pakistan is an exceptionally sunny country. If 0.25% of Balochistan was covered with solar panels with an efficiency of 20%, enough electricity would be generated to cover all of Pakistani demand. In all provinces the AEDB has created 100 solar homes in order to exploit solar energy.
Solar energy makes much sense for Pakistan for several reasons: firstly, 70% of the population lives in 50,000 villages that are very far away from the national grid, according to a report by the Solar Energy Research Center (SERC). Connecting these villages to the national grid would be very costly, thus giving each house a solar panel would be cost efficient and would empower people both economically and socially.
Coal Power and Hydroelectricity
In addition to high winds and abundant solar potential, Pakistan has the fifth largest coal deposits in the world. The negative environmental effects of coal burning can be be mitigated by making use of the latest clean coal technologies that limit noxious gas exhaust into the atmosphere. 
Pakistan also has some deposits of natural gas in the Potwar Plateau region and near the border between Balochistan and Sindh, but these are likely to disappear within 20 years.
Because of the presence of many rivers and lakes, it makes sense for Pakistan to build dams to support water management and electricity generation projects. However, it must be done with care to avoid damage to the environment or loss of farmland.
Financial and Policy Incentives
Despite the fact that Pakistan is so well endowed with wind and solar potential, only a few projects such as those mentioned above have been completed. One of the reasons why this has occurred is that Pakistan does not have major financial incentives available for those who want to install wind turbines or solar panels. Let us look at the case of India, Pakistan's neighbor. Despite having less potential for wind, India now has the world's fourth largest number of wind turbines installed at 7,093 MW, according to India: Renewable Energy Market report. Ahead of India are Germany at 21,283 MW, Spain at 13,400 MW and the US at 12,934 MW. In Germany, Spain and India, those who install wind turbines and solar panels are guaranteed a certain rate per kilowatt hour. In India, this varies according to the technology and the area. The Ministry of New and Renewable Energy, India reports that in most areas, between 2500 and 4800 rupees are guaranteed for solar panels, and for wind turbines, between 250,000 and 300,000 rupees are awarded.
Because of the above incentives, the cost of wind in India is between 2 and 2.5 cents per kilowatt hour while in Pakistan, the cost is 7 cents. In December 2006, President Musharraf announced a national renewable energy policy. This policy means that small projects do not need approval and that any person can put up their own project. However, there are no financial incentives for doing so. At the moment, all renewable energy equipment has no sales or income tax and is free of custom duty, but these incentives are not enough to stimulate major growth in the renewable energy market where ROIs and other financial ratios have a long gestation or breakeven period. In certain situations, such as the textiles and other Karachi industrial units losing production and export opportunities due to power cuts, it may make sense for the owners to join hands and build power generation capacity they can rely on.
Conclusion
In addition to coal and hydro electricity generation, Miriam Katz argues that it is clear that Pakistan is a suitable country for the installation of wind and solar: due to high winds near cities; the presence of rivers and lakes as well as the availability of wind turbines from nearby India. There are also other reasons for installing renewable energy. It is quite normal for extended power outages to happen on a daily basis in the country, but this cannot continue if the Pakistani economy is to grow. In March 2007, President Musharraf stated that renewable energy should be part of the push to increase energy supplies by 10 to 12 percent every year. The government also set a target of 10 percent of energy to come from renewables by 2015. If the new PPP-led government follows through with aggressive renewable energy push, Pakistan could be an Asian leader in renewable energy given its natural resources of wind and solar as its strategic endowments.
Related Links:
Renewable Energy Businesses in Pakistan
Pakistan Council of Renewable Energy Technology
Renewable Energy for Pakistan
Pakistan Policy on Renewable Technology
Sugarcane Ethanol Project in Pakistan
Community Based Renewable Energy Project in Pakistan
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25 comments:
Great article Riaz. Pakistan should be bullish on alternative energy. NOW IS THE TIME!
Keep it up!
A good outline of ongoing efforts in the area of renewable energy.
When consumers would have the benefit ,any info on time line?
There is a ton of money and effort going into renewable, alternative energy sources backed by US government and private sector. I think the wind and solar are almost ready for prime time, as shown by German experience. Now it's a matter of Pakistani government's financial incentives and private sector's willingness that will determine how quickly wind and solar take off to make up a significant percentage of electricity generation in Pakistan. If done right, this sector can boost the economy by creating lots of jobs and electricity for consumers and industry.
Here's a comment received via email on Pakistan's power crisis:
My Dear Riaz Haq Sahib..............
A Salamu Alaikum
I hope you are fine…….
I am sorry to disturb you as I wish to consume your some important time……
I am Raja Naveed Sarwar, from Pakistan….. I am writer and a researcher………I used to propose advices to the Government of time, on different issues………whether one acts or rejects, but as a citizen, I think it is my duty to play a role in every national issue that creates hindrance in my country’s progress…….
Sir, regarding the current electricity crisis in Pakistan, I wish to place some advices, and I hope you will also present your opinion in this regard…….
“The electricity crisis is the biggest crisis nowadays in Pakistan….. Government must pay the arrears of the electricity producing companies or IPPs…….. Government should negotiate with these companies and give them surety to pay their arrears as soon as possible… at the instance; Government should pay their arrears in the installments…
For the Thar Coal Project, I think we neither have finance nor the infrastructure to utilize this treasure…… So, it is better to invite the world’s largest companies to Pakistan and introduce our Coal reserves….. Any company can explore, invest and generate power, and plus utilize this coal for the production of Cement……Government of Pakistan can negotiate with these companies, and by the mutual partnership at the sharing basis, an agreement specifying the terms and conditions can be accomplished…….
For this, Government can also publish the open tender in the International newspapers……..
Government can even invite the present Independent Power Producers (IPPs) to use this coal reserves for the generation of Power, and in return they will less their present arrears, in the indemnity of this they should be directed to expand their present generation capacity…..so that the electricity problem can be lightened …….
We should allow the IPPs to use the coil reserves for the generation of the power at the mutual partnership with the Government (according to terms and conditions)…….
I think Government should call a national conference of electric companies, IPPs and renowned technical experts………then formulate a committee of high profile technical experts, who will draw the Power Policy in continuation with the Power Policy of 1994 and consider the current Supply/ Demand mechanism and the available options……
I know all this havoc is happening due to the weak economy……… In my last letter to Government, I advised:
“Pakistan also requires the “Economic Bail-Out Package”……… for this, Pakistani community around the World, Pakistani companies & organizations, Pakistani banks can play a positive role….. Through the “Round Table Conference of Economists” Pakistani Government can appeal to the stated parties…..
Government can launch a transparent “International Fund” that will also be connected with all the Pakistani Embassies and Consulates around the World…..”
President Zardari should address the nation as soon as possible and not only appeal to the Pakistani community around the World for financial support, but also enhance the confidence and morale of the depressed nation, that is going to the way of an insurgency….
I remember the time, when Mr. Nawaz Sharif addressed the nation as the PM, and appealed to the Pakistani community for “Qarz Utaro, Mulk Sawaro”, it was a successful step ……
I do admit, now people are clever and they can not come into these kinds of schemes easily, but, at least Government should try, in the different form……..”
Dear Sir, I am waiting for your reply……..
Regards,
Raja Naveed Sarwar
Pakistan………..
I have read the Articles on Energy Crises in Pakistan. As an Consulatnt in Power Sector, I agree and suugest that Solar is the Best Solution to meet these Energy Crises.
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Here's a piece of news that caught my attention:
"Pakistan, Turkey sign wind energy pact"
Islamabad, Jan 17 (Xinhua) Pakistan Saturday signed a wind energy pact with a Turkish firm.
Pakistan’s water and power minister Raja Pervez Ashraf and chief executive of the Turkish company signed the agreement in Islamabad, the News Network
International news agency reported."
Here's a rather skeptical assessment I received from a person involved in the energy sector in Pakistan:
I reached the conclusion that based on economics,wind energy was best option and even Government Of Pakistan issued 80 letters of intent in this respect .I was trying to sell GE wind Turbines from Germany.But it took so long that when it comes to the stage of final negotiations,we found that all factories in the world are booked for two years and delivery not possible before 3 years.Most American companies found partners in India who capitalized on the situation and started manufacturing under license from foreign companies.We could not even get from India and chapter was closed.Then there was political mess in Pakistan ,not yet get cleared. Only this week Water And Power Ministry announced that it has made an agreement with a Turkish Company to build first Power Plant in Sindh using Wind Turbines.May God save this Turkish Company.
Oct 24, 2008: Pakistan will produce 1,000 megawatts of electricity through wind energy within the next few years, according to Irfan Afzal Mirza, Technical Director of the country’s Alternative Energy Development Board. He told the Voice of Germany that approval has already been given to over twenty-three projects producing 50 megawatts each.
http://www.windenergynews.com/content/view/1436/45/
President of Zorlu Enerji (Pvt) Ltd., Murat Sungar Bursa, who just signed a wind energy agreement with HESCO in Pakistan, said that the estimated cost of 50 MW project was 120 million dollars. He added the company was also considering to further expand the project upto 250MW.
He said incentives offered by Pakistan’s renewable energy policy was a major factor in the company’s decision to invest here. He said that capacity of the wind farm will be enhanced upon successful completion of 50 MW phase.
Zorlu Enerji was the first company to establish wind farm for power generation in Pakistan after signing Energy Purchase Agreement with Hyderabad Electric Supply Corporation for purchase of six MW electricity generated at the company’s facility in Jhimpir.
NEPRA has awarded tariff of US cents 12.1057 Per KWH, which is cheaper than the electricity generated from thermal sources. The power generated from the first phase would be routed to the Jhimpir gird station by HESCO and would be sufficient to electrify 6,900 homes in Hyderabad region.
Harnessing the strong winds coming from South West, the wind farm is first commercial wind power project of the country, comprising five towers in the first phase with an installed capacity of 1.2MW wind turbine generator per tower.
http://www.pakistanhousing.pk/News/index.php/govt-of-pakistan-plans-additional-4000-mw-power-by-year-end/
It seems green energy projects are suffering along with the rest of the economy due to credit crunch. The wind turbine orders are declining and companies manufacturing wind power equipment are reducing workers.
Here's a NY Times report on this :
Factories building parts for these industries have announced a wave of layoffs in recent weeks, and trade groups are projecting 30 to 50 percent declines this year in installation of new equipment, barring more help from the government.
Prices for turbines and solar panels, which soared when the boom began a few years ago, are falling. Communities that were patting themselves on the back just last year for attracting a wind or solar plant are now coping with cutbacks.
“I thought if there was any industry that was bulletproof, it was that industry,” said Rich Mattern, the mayor of West Fargo, N.D., where DMI Industries of Fargo operates a plant that makes towers for wind turbines. Though the flat Dakotas are among the best places in the world for wind farms, DMI recently announced a cut of about 20 percent of its work force because of falling sales.
Much of the problem stems from the credit crisis that has left Wall Street banks reeling. Once, as many as 18 big banks and financial institutions were willing to help finance installation of wind turbines and solar arrays, taking advantage of generous federal tax incentives. But with the banks in so much trouble, that number has dropped to four, according to Keith Martin, a tax and project finance specialist with the law firm Chadbourne & Parke.
Wind and solar developers have been left starved for capital. “It’s absolutely frozen,” said Craig Mataczynski, president of Renewable Energy Systems Americas, a wind developer. He projected his company would build just under half as much this year as it did last year.
The two industries are hopeful that President Obama’s economic stimulus package will help. But it will take time, and in the interim they are making plans for a dry spell.
Solar energy companies like OptiSolar, Ausra, Heliovolt and SunPower, once darlings of investors, have all had to lay off workers. So have a handful of companies that make wind turbine blades or towers in the Midwest, including Clipper Windpower, LM Glasfiber and DMI.
Some big wind developers, like NextEra Energy Resources and even the Texas billionaire T. Boone Pickens, a promoter of wind power, have cut back or delayed their wind farm plans.
Here is an excerpt from Pakistaniat website about the use of solar energy:
A practical example of the use of solar energy could be seen in some villages of Pakistan where each house has been provided with a solar panel that’s sufficient to run an electric fan and two energy saving bulbs. Prior to this arrangement, the whole village used to be plunged in pitch dark during night. One such example is the village with the name of Narian Khorian, some 50 kilometers away from Islamabad, where 100 solar panels have been installed by a local firm, free of cost, to promote the use of solar energy among the masses. Through these panels, the residents of 100 households are enjoying light and fan facilities. Had these panels not been installed, the people living in this area wouldn’t have even dreamt of getting this facility for decades as the provision of electricity from the national grid was a far cry due to the difficult terrain and high expenses involved.
To give you an example of the use of solar energy, you must have noticed solar panels installed on poles along with the telephone booths on your left hand side while commuting on the Motorway. Each of these telephones is being powered by this panel. A battery is installed beneath each solar panel to store energy for keeping the telephone in operation during night when there’s no sun light. It’s a stand-alone system, entirely powered by solar energy. During emergency, the commuters make use of these telephones and call for help.
To give you another example, if you happen to drive from Rawalpindi (Faizabad) towards Murree on the newly constructed Murree Road, you would see on your right hand side blinking red hazard lights installed at the top of each WAPDA pole. Each of these lights is being powered by a stand-alone solar system i.e. a solar panel and a battery. Just imagine, how much expensive and full of hassle it would have been if solar panels weren’t used for this purpose and these lights were provided normal electric connections!
To read more, please visit here.
Wind energy has been regarded as one of the most promising forms of renewable energy to be utilized for electric power generated for current and future needs. Historically wind energy has been harnessed for a vast number of human needs for approximately 5500 years. As a ‘futuristic green source of energy’, wind energy is now being harnessed at a growing rate globally, as we face a dramatic change in our environment.
In view of the above, The United Nations Development Program - UNDP has initiated the project "Sustainable Development of Commercial Scale Wind Power Generation Project” referred simply to as the Wind Energy Project (WEP). This project has been undertaken as an effort to curb the current global environmental crisis being faced in light of heavy emissions of green house gases to fuel a growing population. The project is focused on both developed and developing countries, and is in Phase I of its implementation in Pakistan. The project is being undertaken in association with the Global Environmental Facility (GEF) and the Alternative Energy Development Board
(AEDB).
Please visit our website www.wep.org.pk for a detailed analysis into the implementation of wind energy in Pakistan based the UNDP directive, including specific and thorough investigations into wind energy, wind resource assessment, key financial instruments for tariff refinement, detailed EIA and EA guidelines with reference to potential windy sites in Pakistan, and a list of informative websites on wind energy. Also, please sign our guestbook http://wep-guestbook.org/guestbook/ and leave your comments.
PM inaugurates Pakistan’s first wind power project (Daily Times April 20, 2009)
* Gilani says 24 similar projects underway
* Hopes mid-term renewable energy policy document will get cabinet’s approval
JHIMPIR: Prime Minister Yousuf Raza Gilani on Sunday inaugurated Pakistan’s first-ever wind energy scheme – the 50-megawatt ‘Zorlu Energy Wind Power Project’ – and said the government has created a fund to mainstream and implement alternative energy technologies in the country.
“The fund will be used partially to finance economically viable projects … and for the much-needed capacity building of the renewable energy sector,” said Gilani at the inauguration – which was attended by Sindh Governor Dr Ishratul Ibad, Chief Minister Qaim Ali Shah, Federal Minister for Water and Power Raja Pervaiz Ashraf and the water and power secretary.
The prime minister said that the Alternative Energy Development Board (AEDB) – in collaboration with public and private stakeholders – had prepared a mid-term renewable energy policy document. He said the policy focussed on creating a feasible environment for power generation through renewable energy means in the country. “I hope the policy will be submitted to the cabinet and approved soon,” he said.
“The launch of the Zorlu wind farm is, indeed, a major milestone towards exploiting the wind potential of renowned Gharo-Keti Bandar Wind Corridor. This 60 kilometre long and 170 kilometre deep corridor alone has the potential to generate over 50,000 megawatts of electricity,” he said.
The prime minister said the launch of the project had heralded the beginning of a new era in Pakistan.
“We are keen … to reduce dependence on imported fossil fuel, control environmental pollution and achieve sustainable energy security,” he added.
“I am proud to narrate that apart from the Zorlu wind farm, 24 other wind projects, with a cumulative capacity of 1,200 megawatts, are under way.”
He also praised the Zorlu Energy Group for its plan to expand the project to 250 megawatts. “This will also send a very strong signal … that Pakistan offers great opportunities to do business and investment.” app
Why hasn't anyone thought of alternative power before? Seriously, just solar power alone can power the whole of Pakistan as it's such a warm country! I suggest next time overseas Pakistani's go to Pakistan, instead of taking gifts for their relatives, they buy some solar convertors which are pretty cheap in England
Power sector has been holding Pakistan back in recent years. Here's BMI assessment of energy sector prospects:
The new Pakistan Power Report forecasts Pakistan will account for 1.37% of Asia Pacific regional powergeneration by 2013, with a stable theoretical generation surplus before the country’s substantialtransmission losses are taken into account. BMI’s Asia Pacific power generation assumption for 2008 is7,093 terawatt hours (TWh), representing an increase of 3.2% over the previous year. We are forecastingan increase in regional generation to 9,099TWh by 2013, representing a rise of 28.3%.
Asia Pacific thermal power generation in 2008 totalled an estimated 5,570TWh, accounting for 78.5% ofthe total electricity supplied in the region. Our forecast for 2013 is 6,999TWh, implying 25.7% growththat reduces the market share of thermal generation to 76.9% - thanks largely to environmental concernspromoting renewables, hydro-electricity and nuclear generation. Pakistan’s thermal generation in 2008was an estimated 62.8TWh, or 1.13% of the regional total. By 2013, the country is expected to stillaccount for 1.13% of thermal generation.
For Pakistan, gas is the dominant fuel, accounting for 47.5% of primary energy demand (PED) in 2007,followed by oil at 30.7%, hydro-electric energy at 12.9% and coal with a 7.9% share. Regional energydemand is forecast to reach 4,859mn tonnes of oil equivalent (toe) by 2013, representing 24.9% growthfrom the estimated 2008 level. Pakistan’s estimated 2008 market share of 1.52% is set to ease to 1.45%by 2013. The country’s estimated 2.5TWh of nuclear demand in 2008 is forecast to reach 5.0TWh by2013, with its share of the Asia Pacific nuclear market rising from 0.49% to 0.75% over the period.
Pakistan is ranked third behind India in BMI’s Power Business Environment Rating, thanks to itsrelatively high level of renewables (mostly hydro) generation and healthy power consumption/energydemand growth prospects. Several country risk factors offset some of the industry strength, but thecountry is in a good position to keep clear of Malaysia below.
BMI forecasts Pakistan real GDP growth averaging 3.98% a year between 2009 and 2013, with the 2009estimate at 2.50%. The population is expected to expand from 161mn to 177mn, with per capita GDP andelectricity consumption increasing by 20% and 11% respectively. Power consumption is expected toincrease from an estimated 81TWh in 2008 to 99TWh by the end of the forecast period, which provides arelatively stable theoretical generation surplus (before transmission losses, etc.), assuming 4.3% annualgrowth in electricity generation.
Between 2008 and 2018, we are forecasting an increase in Pakistani electricity generation of 59.2%,which is mid-range for the Asia Pacific region. This equates to 27.2% in the 2013-2018 period, up from25.1% in 2008-2013. PED growth is set to increase from 19.1% in 2008-2013 to 25.8%, representing49.9% for the entire forecast period. An increase of 49% in hydro-power use during 2008-2018 is a keyelement of generation growth. Thermal power generation is forecast to rise by 52% between 2008 and2018, with nuclear usage up 380% from a low base. More details of the long-term BMI power forecastscan be found at the end of this report.
Here's a recent Daily Times report about Bhasha Dam in Pakistan:
ISLAMABAD: Deputy Chairman Planning Commission, Sardar Asef Ahmad Ali on Thursday said some changes had been made in Bhasha Dam project, particularly in its power component. In an exclusive interview with Daily Times he said the power component of Bhasha Dam would be run on Public Private Partnership basis so that burden on the government kitty might be reduced. In this regard he said that a ‘Company’ would be established, which would be converted into an international consortium. The consortium would be able to get equity as well as funds from the International Financial Institutions (IFI), Kuwait Funds and others.
Once the Company is established, he said that there would be no problems for funding, as it would be able to borrow from the market and repay the loan. “The government has assigned me to structure the Company,” the Deputy Chairman said and added that he would invite all power distribution companies including KESC to purchase its shares. The government and WAPDA might also purchase its share and later, expatriates would also be offered shares in it. In this manner, it would enjoy the status of an International Company. Its marketing plan would be carried out at world-class top companies and arrangements would be made to conduct internationals show for it. In this way, all requirements for making it an ‘Equity’ would be fulfilled, he added. All these measures have been carried out for the first time in Pakistan.
About PSDP (Public Sector Development Programme) he said that as a routine, the government releases 19 to 20 percent developmental funds in first quarter of the current fiscal year (July-September 2009). Reason for low allocation was the slow process of revenue generation through new measures adopted in the annual budget. PSDP releases for second quarter (Oct to Dec 2009) was already in progress. If the funds are released in time, he expressed hope that the government would be able to achieve its targets. At present, he said there was no indication by the ministry of finance regarding cut in PSDP 2009-10.
Currently the country’s revenue generation remained stagnant at 8.5 percent of the GDP, which he termed as lowest in the world. The government wanted to increase it to the level of 11 percent of the GDP. “Finance Minister Shaukat Tareen informed me that the government identified 2 million new taxpayers in the existing system and if it remains successful, then the PSDP will be remain as it is”, he maintained.
Dear Mr. Riaz
Thank you for having such a productive pro-Pakistan blog. Usually, overseas Pakistanis are busy complaining about Pakistan and how bad everything is. You on the other hand are concerned and trying to help. I appreciate your efforts and pray that others should also do the same. No country no matter how nice can be your home like Pakistan. My advice to others is no matter what passport they carry you will always be known as Pakistani. Be proud of it.
There have been widespread complaints in Islamabad, including by Finance Minister Shaukat Tarin, that the government had solutions to improve the power output but was refusing to implement them in order to benefit a handful of power plant operators, such as those supplying rental power at exorbitant rates, while the IPPs are not being paid for supplying power from currently underutilized installed capacity. Requests for information by Transparency International Pakistan regarding rental power contracts have been ignored by the Ministry of Water and Power. There are widespread corruption allegations against Mr. Zardari personally who has influenced the award of the 783 MW rental power contracts to a former governor of Oklahoma and his Pakistani partner.
Here is an excerpt from a recent report from Pakistan Economist about rental power in Pakistan:
Pakistan People's Party led coalition government has opted the option of using Rental Power Plants (RPPs) to overcome persistent electricity crisis that is not only causing great amount of hardships for the fellow citizens but also hitting hard to country's economy. There is much hue and cry from political and other circles over alleged kickbacks in deals of RPPs. Pakistan Muslim League-Nawaz has already announced to issue a White Paper on RPPs while another opposition party-Pakistan Muslim League (Q)- is also at the forefront in highlighting alleged wrongdoings in the execution of RPPs. Sources in PEPCO told PAGE that RPPs would provide electricity at a quick speed compared to IPPs which will reduce power deficit on an emergency basis. These rental projects are for five years and its costing responsibility rests with private sector investors.
The contract life of these projects is between 3-5 years, after which the government has no obligation to purchase power from these units. According to them, it is incorrect to suggest that rental power costs are substantially higher than that of IPPs. Due to different tariff of rental plants, even after taking into account the high fuel costs, the cost difference is almost equal or marginally higher in case of RPPs. Compared with IPPs, RPPs power generation cost ranges between 12-13 cents per KWh, and IPPs' power generation costs approximately 12 cent per KWh. Government circles are of the view that mere blame game is going on just for the sake of leg pulling. There is nothing wrong in RPPs and the only viable option to get rid of load shedding is rental power plants, they believe. They said rental tariffs for the projects depended on number of factors including location of the plants, system maintenance, and consumption of fuels. Others factors are variation in project cost due to difference in technology, age of machinery, and variations in financing. As many as, 14 approved RPPs with total generation capacity of 2250MW will start functioning by December, which would expectedly end the energy crisis.
However, critics of RPPs are of the sanguine view that highly controversial RPPs are proving last resort to overcome the power crisis, which has hit hard the economic growth of the country besides adding salt to public miseries at large. The political government has surrendered to public pressures on construction of Kalabagh Dam, the only way to survive ahead and instead preferred to go after a stopgap arrangement at a higher cost. The independent experts are of the view that RPPs would not only fail to meet rising electricity demand but also burden the national exchequer in general and power consumers in particular. The public is justifiable in questioning that if RPPs are the option, why it is adopted too late. According to Pakistan Electric Power Company (Pepco) Managing Director Tahir Basharat Cheema, an investment of around US $2 billion is expected in power sector through RPPs. Apart from investment in power sector, additional electricity of 1675 MW will be added in the system by December 2009 when nine rental power projects will start generation.
However, overall 2250 MW electricity will be generated through RPPs in current fiscal year (2009-10). Two rental power projects that have already started generation include Atlas Power (213 MW) and Attock Generation (156 MW) while remaining seven will start functioning by December 2009. These RPPs include Nishat (196 MW), Engro (203 MW), Saif Power (213 MW), Fauji Foundation (176 MW), Sapphire Electric Company (213 MW), and Orient Power Company (213 MW). He said all proposals of RPPs were accepted only with bid bonds and performance guarantee by sponsors.
Here's a blog post about "Power Politics" on "Teeth Maestro". It was produced by Center for Research and Security Studies:
Two questions: why have some private power producers completely shut down? Why are private power producers operating way below their full generating potential? Two answers: political score-settling plus the circular debt.
We at the Centre for Research and Security Studies (CRSS) have been trying for months to ascertain the crux of our power politics. Almost all roads lead back to the government. The federal government is the largest power defaulter, then come the four provincial governments, FATA, the KESC and the KW&SB. This is how the circular debt explodes into even bigger circles: the federal government does not pay its electricity bills to Water and Power Development Authority (WAPDA).
WAPDA is then unable to pay for electricity it buys from IPPs. IPPs are then unable to pay for their oil supplies. Refineries, short on cash, are unable to pay their foreign suppliers. Grow, grow, grow and we have a Rs200 billion time bomb.
Welcome to the rental power bonanza; the government’s ingenious – canny, crafty and cunning – all-in-one solution for the crux of our power politics. What we need to do is to re-start the power producers that are shut down. That’s 800 MW at US 11 cents per MW. What we need to do is to resolve our circular debt puzzle. What we need to do is to get our sugar mills connected to the national grid which could generate an additional 2,200 MW at less than US 11 cents per MW.
Here' Reuter's analysis of rental power in Pakistan:
Aides of Finance Minister Shaukat Tarin said he almost resigned after failing to persuade the cabinet against renting, an option he considered expensive and inefficient.
Here are some questions and answers about the plight of the power sector in Pakistan and leasing plants.
WHAT IS THE PROBLEM?
Pakistan has about 20,000 MW of installed power production capacity, but that falls short of demand by roughly 4,000 MW. Lengthy power cuts, dubbed load shedding, have become commonplace.
Past governments failed to anticipate the growth in demand and delayed clearing power project proposals and big dam projects that would have boosted hydro power.
Lack of investment in existing plant, outdated grids and rampant electricity theft mean that some grid companies experience line losses of up to 30-40 percent, analysts say.
Many independent power producers (IPPs) operate well below capacity because they cannot pay their fuel bills regularly as grid companies owe them money.
The crisis has crippled industry, notably textiles, the main export sector and largest employer in the manufacturing sector.
There have also been violent protests that some analysts see as a bad omen both for the government and democracy in a country struggling to contain the growth of Islamist militancy.
WHAT IS BEING DONE TO BOOST SUPPLIES?
The 18-month-old civilian government has vowed to increase supplies but needs huge finances.
It recently reached an agreement with the World Bank and Asian Development Bank to phase in power tariff increases.
The government is working on a multi-pronged strategy to address the problem through building new dams and setting up new permanent power plants. It sees Rental Power Plants (RPPs) as the "only solution", while completing medium and long-term projects.
WHAT IS RENTAL POWER PLANT?
Countries can hire power units from overseas manufacturers that can be shipped in kit form and installed.
It takes four to six months to set up a rental unit, while two to five years may be needed for an Independent Power Producer to build a plant.
Surging emerging economies like China and Turkey have gone the short-term rental route to bridge power supply gaps. And Pakistan, according to official documents, had two rental units commence operation in 2007.
Under the new plan, additional RPPs would be set up to generate 2,250 MW by the end of the year.
HOW WILL RENTAL POWER PLANTS IMPACT FUEL DEMAND?
The rental power plants would increase the Pakistani power sector's furnace oil needs by 29 percent, driving up its import bill and adding to pressure on the rupee and currency reserves.
Pakistan requires 35,000 tonnes a day to feed its thermal power plants and the installation of the RPPs will increase demand to 45,000 tonnes, officials say.
The country imports about 80 percent of its oil. It spent $9.5 billion on the import of 10.6 million tonnes of petroleum products and 7.8 million tonnes of crude oil in the 2008/09 (July-June) financial year.
WHAT ARE THE PROS AND CONS?
Rental plants can provide breathing space for Pakistan to focus on medium- and long-term projects.
Advocates say rental plants are efficient, will help quickly meet growing needs, and end-consumers will pay the same or a bit less for their electricity.
Opponents say the mostly second-hand equipment will be less efficient and that the tariff will rise. They argue that the government would be better off spending money on upgrading and using idle existing capacity.
Some opponents also say the option is being supported by corrupt politicians hoping for kickbacks.
Here is an explanation offered by the News for gas and CNG shortage in Pakistan:
ISLAMABAD: The multi-million dollar mystery shrouding the serious shortage of gas in the country, which has already led to twice a week closure of CNG stations, seems to have finally been resolved, as millions of cubic feet of gas per day is now being supplied to powerful owners of the controversial rental power plants in the country as the Economic Coordination Committee of the Cabinet meeting on Tuesday (tomorrow) has been asked to approve additional supplied for these plants.
The official sources said these expensive rental power plants, which were being installed with tall claims to address the energy crises in the country, were said to have now become one of the major reasons behind a new sorts of energy crises in Pakistan, as their gas requirements are bound to hit other sectors of economy running on gas supplies. The cement sector has already been hit as its gas supply is now being diverted to one such power plant at Naudero.
Under the agreed deal which was subjected to criticism both within and outside the Parliament, these rental power plants will continue to get gas supplies for five years till the completion of their agreements with the Ministry of Water and Power.
The formal approval of this gas supply is being given in the Economic Committee of the Cabinet (ECC) meeting tomorrow (Tuesday). Finance Minister Shaukat Tarin will preside over the meeting as Petroleum Minister Naveed Qamar is out to get the approval for these plants as proposed in the official summary of his ministry.
The sources said the supply of gas would become a huge issue in the coming days for even the domestic consumers after the government would divert more gas to these rental power plants after diverting it from the sectors which were now regularly getting the supplies. Now ECC was asked to give supply of gas only for one plant. Sources said, more demands from other power plants will soon follow and then the country would really experience the burden of these power plants, which were ironically being installed to address the very energy crises of the country.
The official papers to be laid in the ECC meeting revealed that the gas meant for the cement sector in particular was being drastically reduced and diverted to the rental power plants in the country. One source said, certain other sectors which are already getting the gas in the country soon may also face similar kind of cuts in their approved supply to accommodate the privileged and powerful owners of the plants having direct links at the top levels.
The huge gas supply is being supplied as a part of deal struck with these rental power plants by the Ministry of Water and Power in controversial circumstances.
According to the official papers to be tabled in the ECC meeting, the Ministry of Petroleum was now seeking the approval of diversion of gas from cement to power plants and initially a power plant of 51 MW was being provided with 30MMCFD. The papers said earlier the ECC has decided on October 2 to place 12 MMCFD gas from SSGC system at the disposal of PPIB/Ministry of Water and Power for five years for power generation in accordance with the natural gas allocation and management policy of 2005. The official summary said the Ministry of Water and Power have now informed that 12 MMFCD gas been allocated to the power plants project.
The summary said, based on SSGCL commitment, it is proposed that 15 MMCFD additional gas from SSGCL system which includes diversion of 14MMCFD gas being supplied to cement sector may be placed at the disposal of PPPB/ Ministry of Water and Power on the “ as and when available basis for five years” for power generation subject to following conditions.
Here's a Wall Street Journal report about India trying to reduce dependence on China in power sector:
MUNDRA, India—India is trying to rein in its heavy reliance on Chinese equipment and know-how for the ambitious expansion of its power sector. The shift casts a shadow over what has been a healthy partnership in an often tense relationship between the giant neighbors.
India wants to boost electricity output by 60% in the five-year span ending March 2012 to alleviate severe shortages and help fuel a rapidly growing economy. But it doesn't have enough of its own equipment and engineers to meet that goal, so power companies have looked overseas for help. U.S. and European suppliers are too expensive, but low-cost Chinese contractors are a good fit.
Chinese companies are now supplying equipment for about 25% of the new power capacity India is adding to its grid, up from almost nothing a few years ago. They have sent thousands of skilled workers to Indian plant sites, some of which boast Chinese chefs, Chinese television and ping pong.
But now India is reining in cooperation with China as it seeks to build up its own manufacturing base to service power plants. The Central Electricity Authority, India's top planning body for power projects, recently asked government-controlled power companies to use Indian equipment on all upcoming big projects.
The Indian government is also considering a plan to tax Chinese power imports. And Prime Minister Manmohan Singh's aides have told power regulators to make sure India has enough spare parts on hand to fix Chinese equipment when it needs repairs, according to a person familiar with the discussions.
"It's better that we depend on our own capabilities rather than depend on those from the outside," Rakesh Nath, chairman of the Central Electricity Authority, said in an interview.
Pakistan has one of the highest "transmission losses", a euphemism for rampant power theft by consumers. Now Nawaz Sharif, former prime minister and PML(N) chief, is being accused of addressing a supporter's rally lit by "kunda", a hook-like device commonly used to steal electricity.
LAHORE: Pakistan Muslim League-Nawaz found itself entangled in a controversy on Monday that threatened to undermine its claim of occupying the high moral ground, according to a report by DawnNews.
As Nawaz Sharif addressed supporters in the run-up to a Lahore by-election, his large rally was lit up by extensive use of illegal connections using ‘kunda’ (hooks that are attached to live power cables to secure supply without having to pay for it).
Power utility officials told DawnNews that they would estimate the number of units consumed and bill the user based on that, while Punjab Law Minister Rana Sanaullah tried to distance his party and government from this outrage by blaming an unnamed contractor.
PML-N spokesman Siddiqul Farooq told DawnNews that an inquiry would be held to fix responsibility for what was “clearly” a crime.
In a damage-limitation exercise well past midnight, PML-N leader Saad Rafique told a news conference his party was not at fault and that ‘kunda’ connections had been made by the administration to provide security lighting.
Here's more from the BBC about power theft at Nawaz Sarif's Lahore rally and the low-level official being made the fall guy:
A low-ranking Pakistani official has been punished for stealing electricity to provide power for lights used at an opposition night rally.
An inquiry by the Lahore Electric Supply Company (Lesco) blamed the theft on a junior municipal officer.
The unnamed official has been fined 3,000 rupees ($35) for ordering illegal connections for powerful searchlights.
The discovery that power was being stolen came as opposition leader Nawaz Sharif was denouncing corruption.
Lesco says it has also suspended a low-ranking official for failing in his duty to ensure that power supplies to the rally were not illegal.
The BBC's M Ilyas Khan in Islamabad says critics are bound to see the inquiry as a whitewash because the officials involved have been made into scapegoats.
Our correspondent says that electricity theft and other forms of corruption plague Pakistan but it is generally only poorer or less influential people who are arrested for it.
Live wires
Mr Sharif's Pakistan Muslim League-Nawaz (PML-N) party governs Punjab province, whose capital is Lahore, and was widely accused of siphoning off power to provide lighting for the rally.
Television footage showed that metal hooks had been illegally connected to live wires to secure the electricity supply.
The PML-N denied wrongdoing, saying the power supply had been arranged by Lahore administration officials to ensure security at the rally. Mr Sharif denied being personally responsible for the theft.
The allegations were embarrassing for the former prime minister, who indirectly denounced President Asif Zardari in his speech for making illegal money and stashing it away in foreign bank accounts.
Both men have denied persistent accusations of corruption over the years.
General Electric (GE) has signed an MOU with Pak govt to participate in supporting the forecast 54,0000 MW of electricity demand by 2020. Here's the report from Daily Times:
ISLAMABAD: The government has signed a Memorandum of Understanding (MoU) with General Electric (GE) in the Prime Minister House to help promote the modernisation of Pakistan’s infrastructure and economy.
Saleem H. Mandviwala, Chairman Board of Investment and Nani Beccalli-Falco, President and Chief Executive Officer of GE International singed the MOU on behalf of the government of Pakistan and General Electric Company respectively.
The prime minister welcomed the initiatives of General Electric to support Pakistan’s national objective for development. He expressed the democratic government’s commitment of making Pakistan a trade, investment and financial hub.
“This is a landmark day that we have signed the MoU with one of the most renowned conglomerates of the USA, and this will certainly open another productive era of economic ties and people to people contacts,” the Prime Minister said.
The agreement focuses on the development of Pakistan’s energy resources to meet projected demand of 54,000 megawatts by the year 2020. “General Electric is helping build the energy, water, transportation and technology infrastructure of the new century,” says Nani Beccalli-Falco, President and Chief Executive Officer of GE International. “There are huge synergies between the products and services GE businesses provide in energy and infrastructure and the needs and goals of Pakistan to modernize its economy with cleaner, more efficient and better infrastructure technologies.” GE has similar agreements with a number of other governments, including Kazakhstan, Nigeria, Qatar and the province of Ontario, Canada.
The government of Pakistan aimed to meet projected energy demands using diverse sources and tactics. Possible solutions include renewable sources, such as, wind, solar, geothermal, biomass, coal, hydro and conventional thermal through gas and steam turbines, rehabilitation of existing power generation facilities, along with transfer of technology for manufacture and repair of turbines, developing more efficient and environmentally sound rail transport systems, developing water purification and reuse, wastewater treatment, and process system programs.
According to the MOU’s terms, GE would assist Pakistan in achieving its goals by engaging in Pakistan’s energy, transportation and water sectors and would work to identify potential sources of funding and explore potential investment opportunities in those sectors. Pakistan has committed to meeting with GE regularly to facilitate the goals of the MoU and provide support to the establishment and operation of the GE facilities in Pakistan, transparently and consistent with the laws and regulations of Pakistan. Pakistan would also facilitate the issuance of work permits and visas for the GE employees and contractors as needed in order to support the objectives of the signed MOU.
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