Electricity Energy Crisis In Pakistan

Electricity Energy Crisis In Pakistan ABSTRACT Energy Crisis in Pakistan is one of the severe challenges the country is facing today. Electricity, gas, water, fuel is essential part of our daily life and its outage has severely affected the economy and overall living of ours. Thousands have lost their jobs, businesses; our daily life has become miserable. Pakistan is currently facing up to 18 hours of electricity outage a day, is expected to face more if not dealt with in time. The purpose of this study is to analyze the nature of this crisis and to propose some short-term as well as long-term solutions to this problem. This study is exploratory in nature. I have done my best to conclude and sketch up some recommendations in the light of identified hurdles in the way of implementing the appropriate solution to our problem. My study finds some major wholes in our system if they are covered up we can not only overcome the deficiency of electricity in our systems but also we can be able to export it to our neighboring countries. The basic flaws that our study identified are related to circular debt, and the inadequate capacity of our electricity production and distribution systems. Also I emphasized on some prospective alternatives to our electricity production that are cheaper and they provide more cleanly electric energy as compared to fossil fuel run energy plants. INTRODUCTION Background Study: Pakistan has been facing an unprecedented energy crisis since the last few years. The problem becomes more severe during summers. However, this winter was no different. During the peak crisis there was a power outage of 3-4 hours everyday. Those without generators and UPS faced tremendous problems. The prices of both continued to increase due to a sharp increase in their demand. Almost two years ago the then WAPDA chairman who happens to be a caretaker minister admitted that WAPDA cannot meet the current demand for electricity. Its surprising that such a senior and experienced person took so long to find this out. On top of that the government which talked about Pakistans supposedly booming economy failed to understand the gravity of the situation. General Musharraf (R) after becoming Chief Executive used to talk about building dams especially Kalabagh Dam. This was one of the many promises he failed to keep. Even after that very few power plants have been set up to meet the demand for electricity. During the second government of Benazir some independent power plants were set up. Had they not been setup then we would have had a much bigger crisis with life almost coming to a standstill. The policy makers of Pakistan have so far failed to understand one thing. They do talk about making dams and setting up nuclear power plants but why do they not understand the importance and benefits of alternate energy sources such as solar, windmill energy etc. They are cheap and quick methods for producing electricity. Pakistan is a very blessed country because solar energy is available in most cities all year round similarly wind energy is readily available in the coastal areas. These energy sources if tapped can be of great help in reducing the current demand supply gap. Pakistan is facing power shortage, natural crisis and oil crisis. In a report it is claimed that Pakistan has faced 1000 to 2000 MW shortage of power. And it will likely face 3000MW next year. Pakistan is facing 80 millions tons of oil shortage according to its need. And is lacking behind the needs of natural gas at about 27 million ton of energy in current year and this ratio will raise in upcoming years. 1.2 Energy Crisis in Pakistan: An energy crisis is any great shortfall (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources. The crisis often has effects on the rest of the economy, with many recessions being caused by an energy crisis in some form. In particular, the production costs of electricity rise, which raises manufacturing costs. For the consumer, the price of gasoline (petrol) and diesel for cars and other vehicles rises, leading to reduced consumer confidence and spending, higher transportation costs and general price rising. Energy resources have depleted! Whatever resources are available are simply too expensive to buy or already acquired by countries which had planned and acted long time ago. Delayed efforts in the exploration sector have not been able to find sufficient amounts of energy resources. Nations of the world which have their own reserves are not supplying energy resources anymor e; only the old contracts made decades ago are active. Airplanes, trains, cars, motorbikes, buses and trucks, all modes of transportation are coming to a stand still. Many industries have closed due to insufficient power supply. Price of oil has gone above the ceiling. At domestic level, alternate methods like solar, biogas and other methods are being tried for mere survival. The above is a likely scenario of Pakistan and around the globe after 25 years. A pessimistic view, but realistic enough to think about and plan for the future. But are we doing anything about it? Lets have a look at the current energy situation of Pakistan and the world. Pakistans economy is performing at a very high note with GDP growing at an exceptional rate, touching 8.35% in 2004-05.In its history of 58 years, there has been only a few golden years where the economy grew above 7%. This year official expectations are that GDP growth rate will be around 6.5 7.0%. For the coming years, the government is targeting GDP growth rate above 6%. With economy growing at such a pace, the energy requirements are likely to increase with a similar rate. For 2004-05, Pakistans energy consumption touched 55.5 MTOE (Million Tons of Oil Equivalent). The energy consumption is expected to grow at double digit if the overall economy sustains the targeted GDP growth rate of 6% by the government. Pakistans energy requirements are expected to double in the next few years, and our energy requirements by 2015 is likely to cross 120MTOE. By 2030, the nations requirement will be 7 times the current requirement reaching 361MTOE. Pakistans energy requirements are fulfilled with more than 80% of energy resources through imports. On the other hand, international oil prices have not only broken all records but are touching new highs, with every news directly or indirectly affecting the black gold industry. Moreover, speculators all around the world expect oil prices to touch $100 per barrel in medium term. With concerns over Irans nuclear program, terrorist issues in Nigeria and high economic growth in China India and their ever rising energy requirements, oil prices dont see any another way but to shoot upwards. What is the government doing to ensure a sustainable supply of energy resources for economic growth? What strategic steps are being taken to acquire energy resources in future? Is private sector willing to invest in Pakistans oil industry? What are the incentives being offered to the foreign players to continue working in the exploration sector? What hurdles are stopping other big players around the world to enter Pakistan? What is the role of gas distribution companies so far? Are the citizens of Pakistan being robbed by energy giants with ever rising utility bills? What should be the real price of petroleum, kerosene and other oil products in Pakistan? When will the nation have load shedding free electric supply? Have we been able to make long term contracts with the countries to provide uninterrupted supply of energy resources? Will the government be able to provide enough sources to the citizens for a sustainable economic growth? Have we lost the race for acquiring maximum energy resources for future surviv al? One of the major problems facing the new government, the energy crisis, is intense, costly and multi-dimensional. The infuriating electricity and gas disruptions and soaring fuel prices in turn pushing the cost of living have made life difficult for people. The even before it took office the new government was greeted with two jumps in fuel prices, accounting for a 15% rise in two weeks. Meanwhile, crude oil prices have been registering all-time-highs, shooting 40% in the past year. The undeniable reality is that that this global spike will somehow have to be accommodated in energy prices in Pakistan. There is no quick solution to electricity shortage and the trend of surging prices is irreversible. There is very little the new government can do on this in the immediate term. At best, the problem can be prevented from aggravating until a sustainable solution is struck. Tough decisions will have to be made, and executed with commitment. The starting point of any remedial efforts should be an acknowledgement of the fact that the crisis is a self-inflicted one. It cannot be denied that something has been wrong down the line that caused this crisis. The country has nearly gone energy bankrupt while a total disaster appears to be round the corner unless pragmatism is shown. It is also important that lessons be learnt from the past mistakes on part of relevant circles. The crisis is still addressable as long as there is due vision and devotion. The golden age for energy in Pakistan has been 1960s and most of the 1970s, that is when Tarbela and Mangla dams were put into operation and other dams, including Kalabagh, were actively pursued. In subsequent years, action in the field of energy has been utterly recklessness. The prevalent crisis is a consequence of imprudent energy policies over the last three decades. One of the major limitations that have hindered energy prosperity in the country is short-sightedness. There has not been a meaningful and coherent energy policy in place over this period. The approach has been project-oriented, rather than goal-oriented. Almost every regime has dealt with energy on an ad hoc basis. Long-term and sustainable planning of energy have been an alien concept. The reason is fairly simple; energy projects usually require huge investments and commitment, making them undesirable to any regime. The attitude of delaying new projects, as far as possible, has been the common practice and is in fact the recipe of the present crises. In doing so, when things start getting out of control, haphazard and quick-fix measures are sought. A typical example is the Independent Power Producers (IPPs) saga of the 1990s. In an attempt to avert an approaching energy crisis, as a result of negligible capacity addition during the 1980s and the early 1990s, the regime in 1993-94 d ecided to go for thermal generation through the IPPs. Undoubtedly, the IPPs provided a very healthy contribution at the supply end, enhancing power generation capacity by more than 5000MW. Nevertheless, this power addition cost the country a fortune apart from the controversial tariff structure, the move was against the spirit of energy sustainability and security for the country. The fact that the IPPs were set up at the terms of the investors suggest that it was a move made in panic. The last few years provide a perfect example of failure to make a timely response to the growing energy needs. A threefold increase in energy demand over the last two decades has been responded to with an ill-proportioned increment at the supply end. Consequently, with the advent of 2008 the gap between demand and supply grew to 4,500MW indicating a 40% deficit of electricity. The prevalent energy crisis has not appeared overnight the omens were evident for a number of years but the authorities failed to react in time. Senior WAPDA officials claim that in 2002 the government was officially warned about the approaching electricity crisis and was asked to take immediate measures to enhance generation capacity. The timely warning failed to receive any appreciation. The attitude of the relevant authorities has thus indirectly contributed to the growth of the dire crisis. Another example worth quoting here is that of the 969MW Neelam-Jehlum hydroelectric project. It was to be constructed in 2003 at a cost of $1.5 billion. It got abandoned until the present power crises intensified towards the end of 2007. The revised estimate is around $2.25 billion. The delay is costing the country a fortune an extra $750 million in terms of project cost, apart from enormous monetary dents inflicted by the five-year delay. It is also noteworthy that WAPDA has traditionally pursued the major projects of national interest but failed to get the due positive response from the policy- and decision- makers. Interestingly, WAPDA plays the role of a scapegoat, because the common man blames WAPDA for his sufferings. It is also important to plant relevant and qualified people at the key policy and decision making positions. Quite often, these positions are offered to utterly irrelevant, ill-qualified and incompetent people. The track record suggests that energy offices are amongst the most coveted ones in any regime, simply because they are considered to be the most lucrative ones. There are examples when undergraduate and utterly irrelevant people have been appointed to run energy offices. There are also cases when the crucial positions have been used as incentives during political bargaining. The unhealthy attitude towards sensitive energy positions is enough to explain how the field of energy has been traditionally toyed with. Another aspect of the bankrupt policies is politicisation of projects of national interest. The paramount example is that of Kalabagh Dam. It has been politicised to such an extent that its orchestration now appears to be next to impossible. Evidences suggest that the issue has been used to serve the vested interest of regimes and certain political and ethnical forces. With the emerging post-lection sense of national reconciliation on the political arena, it is expected that such projects would be looked into with cool heads. It is time to move on. The technical issues, if there be any, have to be addressed on the drawing board, rather in processions. It has to be realized that the delay in project has not only made the country suffer but also people that come from all provinces. In order to tackle the existing crisis and ensure a prosperous energy future, the backbone of the future energy policies would have to be reliance on domestic resources (hydropower, coal and solar and wind energy) and energy conservation. Decisions on energy projects should revolve around national interest rather than naÃÆ'Â ¯ve political and personal gains. Energy offices should be run by qualified, committed and deserving people equipped with due mandate. Relevant ministries and departments should also be overhauled. INFLATION AND ENERGY CRISIS IN PAKISTAN Pakistan is facing a number of constraints in the path of social economic and political development. One of them is the ever-increasing inflationary pressure on the general public. This inflationary pressure created a social instability and misconception among the messes towards the Government. General public considers the government responsible for this inflation. Government gave the blunt gift of inflation, unemployment, terrorism and energy crisis to the public. The government offended the masses. Some economists argue that such type of increase in prices was never seen before the regime of Musharaf. The prices of essential domestic commodities have touched the psychological boundaries. The fixed income employees and creditors are affected by this inflation. During five years the prices of red chilli increased by 62.7%, flour 66.2% vegetable oil 120% sugar 30.9% rice 69.9% and other essential domestic commodities like vegetables, chicken etc also showed increasing trend of prices. According to official reports the inflation rate is 7.2% and according to non-official reports like UN 8.6% World Bank 8.9% and Asian Development Bank 9.1%. This inflationary pressure has psychologically affected the employees and employers. Some renounced economists argue that the reason of this increasing inflation rate is the standard year 2001 according to which inflation rate is measured. In 2001 the foreign aid was given to Pakistan therefore low standards were made to measure the inflation rate. Although the increasing trend in the prices of fuel and other things in the international market is another factor but the standard year is also a factor. Not only these factors caused hyperinflation but also energy crisis played a vital role in this hyper change in the prices of daily use domestic and capital commodities. There are three main resources used to fulfill the energy requirements Electricity, Fuel and Gas. Despite having the treasure of natural energy resources, Pakistans energy production plants are not fulfilling the countrys requirements effectively. The present energy crisis is affecting the economy entirely. Industrial and daily life has paralyzed by this energy crisis. WAPDA is just fulfilling the countrys energy need near to 46% the remaining is fulfilled by the alternative expensive resources. The energy crisis created cost pull inflation in the country, as electricity is the key material for any production plant. There is a general observation of 5-10 hours of load shedding, but some times it hits the level of 18 hours. Even the industrial capital of Pakistan (Karachi) is suffering from the same situation. Why in the era of energy reservation Pakistan is not utilizing its energy resources? Pakistan is just relaying on the electricity production by Dams. But Pakistan has not enough dams or water to generate electricity. Although WAPDA is enjoying the monopoly but government has to pay 2 rupee/unit as incentive. Our neighbouring country India has built a number of Dams to overcome the energy crisis but Pakistan government has paid no heed on this issue. Many projects are delayed due to provincialism the glaring example is of Kala Bagh Dam. The costly machinery amounted US $9 million is now functionless due to (rust) delay in the construction of Kala Bagh Dam, Some scientists predicted that in next 10year world has to face the water shortage also. If the government fails to construct dams for the generation of electricity due to Provincialism government should have to adopt alternative options to accomplish the energy needs of the country. As Iran has large treasure of natural energy reso urces like natural gas and fuel, despite this Iran is engaged in the attainment of nuclear power generation plant. Pakistan, despite being an atomic power does not think about the nuclear electric generation plant. International community is imposing sanctions on Iran due to uranium enrichment but Iran pays no heed to them. Then why is the Pakistani government reluctant to use its nuclear plants to tackle energy crisis? Secondly, Pakistans western area especially Thar is enriched by natural coal, which is the fifth largest treasure of the world. Pakistan has signed a contract with China to generate 300 Mega watts by coal deposits in 2003, but due to some reasons it has not been completed till now. Industrialists due to high prices of electricity use alternative resources (petrol) in electric generators to fulfill their energy needs but, the fuel (petrol) prices in international market cross the psychological limits of US $110/beryl recently. The high prices of fuel and electricity created a long-term cost pull inflation (increase in the prices of raw material of one commodity cause high prices of other commodities).There are a lot of expectations with the new government as Nawaz Sharif pledged that if he came in rule he will fix the prices of domestic commodities like vegetables oil, floor, sugar and rice for two years. Now the new government should take basic steps to eradicate inflation. I think energy crisis is the real cause of this inflationary pressure. We are hopeful that new government will take some positive steps to fulfil its promises and public expectations. HYDEL ENERGY Water flowing in the rivers has kinetic energy. One they are used to drive the turbine and produce electricity the power generated as hydel energy. Power produced by the turbine depends on quantity of water flowing/minute and the head of water available. Mostly river flows by melting glaciers on High Mountain. One the water starts flowing in the valley its changes its head very rapidly. This energy can be converted into electrical energy. 3.1 Methods for Generating Hydel Energy Two methods are normally used: Dams In case of Dams the water flow is restricted by the making a huge storage device and the head of water is increased, the water then is allows to flow by means of gates and pass through the turbine, the head of reservoir level is maintained to provide uniform power and the water stored in the season additionally is used for irrigation purpose in the dry season. Run of the river projects In the run of river project the water is diverted through the tunnel and once it gain the head allowed to fall and pass through the turbine and back too river. The water in these projects is continuously flowing and not being stored. Geographical situation is paramount importance in choosing the suitable site for the hydel project and it evolves a very serious time and money consuming study. 3.2 Feasibility Study Once a site is located further detailed feasibility study is required before preceding 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 contain Temperature, Pressures, and Rain Humidity. 6: Water sampling and testing. 7: Environmental study. 8: Social impact. 9: Identification of stake holders of the area. 3.3 Pakistan Major Dams Warsak Dam The gigantic multi-purpose Warsak Dam is situated 30 kms north-west of Peshawar in the heart of tribal territory. It has a total generating capacity of 240,000 kW and will eventually serve to irrigate 110,000 acres of land. Mangla Dam Worlds third largest earth-filled dam is only 115 km south-east of Rawalpindi. One has to turn left from Dina Town and the dam on river Jhelum is about 14 km to the east. The dam is 3,353 meters long and 116 meters high above the river bed. It is designed to store 5.88 MAF water and also used for power generation. In the centre of the dam there is a Gakkhar Fort from where one can have a panoramic view of the lake. For permit to visit the dam, please contact PRO, WAPDA, and Mangla. A NOC from the Ministry of Interior is required for foreigners only. Tarbela Dam The worlds largest earth-filled dam on one of the worlds most important rivers the Indus is 103 km from Rawalpindi. The dam was completed in 1976 at a cost of Rs.18.5 billion. Over 15,000 Pakistani and 800 foreign workers and engineers worked during its construction. It is the biggest hydel power station in Pakistan having a capacity of generating 3,478 MW of electricity. Its reservoir is 97 km long with a depth of 137 meters while total area of the lake is 260 sq.km. Permits are required for visiting the Dam. Please contact Public Relations Officer (PRO), Water and Power Development Authority (WAPDA), Tarbela (Tel: 051-568941-2). A No-Objection Certificate (NOC) from the Ministry of Interior (Shaheed-e-Millat Sectt.), Islamabad is also required for foreign visitors. 3.4 Hydel Energy and its Crisis in Pakistan The energy crisis starts from 1990 and still Pakistan is in the crisis of these all as before. The latest and perhaps the most troublesome crisis faced by the Pakistani nation these days is the shortage in supply of electricity. The country is facing a huge electric power crisis these days. Though it has been more than a year since when the country is facing this crisis, but till now no proper solution has been made to this problem neither any proper planning has come into existence since the symptoms and begging of this short supply of electricity. While rolling blackouts or load shedding as it is locally known has always been a staple of daily life in Pakistan, the problem has become acute in the last couple of years. This crisis appears insurmountable in the near or even long-term future, unless proper understanding and correct implementation is undertaken on priority basis. At present total power production capacity in the country is about 19,500 MW, out of which Hydel Power is only 6,500 MW, balance of 13,000 MW is thermal either using Natural Gas or Furnace Oil. Small capacity of 450 MW is Nuclear and only 150 MW is through coal. It is very important to understand the consequence of the prevailing situation. Current price of furnace oil is about Rs.49000 per ton, which amounts up to Rs.49/- per kg. On an average one kg of furnace oil produces 3.8 kWh of electricity. Thus, the cost of furnace oil for generating one unit of electricity is about Rs.13. On top of this the fixed cost of a thermal plant works out to be about Rs.3 per unit. Therefore, one unit (kWh) of the electricity produced by all thermal plants using furnace oil is Rs.16 per unit. According to WAPDA/IPP (Independent Power Produce rs) agreement, the private power producers will charge WAPDA the actual fuel cost for which they have a direct contract with PSO. As we all know that WAPDA tariff charged from the consumers is about Rs.5 per unit (kWh). The production cost of furnace oil electricity is Rs.16 per unit, add to it the transmission, distribution cost (including loses), the total cost of such electricity works out to approximately Rs.22 per kWh. The difference between WAPDA tariff and the furnace oil electricity is Rs.17 per kWh. It is estimated that the country consumes at least 25 billion units of electricity produced annually through furnace oil, which amounts to the total deficit of Rs.425 Billion. If WAPDA has to balance its books it would require a subsidy of Rs.425 Billion. This deficit is somewhat reduced due to cheap power produced through hydel energy and natural gas, but the deficit cannot change substantially, unless bulk of electricity is produced through hydel energy. Obviously, a deficit of Rs.300-350 Billion cannot be sustained, the government does not have resources to pay such a huge subsidy, and it is also not feasible to increase the power tariff very much. Therefore the power crisis is far greater th an what is being perceived. In the absence of extremely heavy subsidy, WAPDA is delaying payments to IPPs and also to the oil companies. The result is that IPPs are now producing much less electricity than their capacity. Thermal energy Thermal energy is the thermal type of energy, with all known history available, wood always used for heating and cooking. In 2nd world war fossils fuels entered in the form of coal to get energy. Until liquid fuels were discovered and because of their convinces of transportation they took over as major of energy source. Once the steam engines were invented then the coal or liquid fuels was burnt in the in boilers and heat producers steam which is used to drive an electrical generators, or any other mechanical devices. Rudolph diesel invention of diesel engine revolution the energy concept and today we see sine the majority of machine 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. The choice of gensets strictly depends on the requirement of client, before ordering a power plant following points to be considered: Expected demand of the power Type of fuel required Space available for the power plant Availability of gun sets Availability of local service back up and stock of parts Price is paramount importance and hidden expenses should be locked carefully. The major manufactures and suppliers of gensets based on internal combustion engines are given below: Man Wartsila Caterpillar Jen bacher Waukesha Mitsubishi Detroit diesel Rolls Royce Internal combustion engines can obtain 30_50% thermal efficiency. It means that around 50%energy is wasted in the form of exhaust gases, cooling system and radiations. Therefore for larger plants heat recovery system are utilized. 4.1 Crisis of Thermal Energy The oil crisis facing the world is not about supply or about the increase in demand. It is about the speculators who are pumping huge amounts of money into forecasting a serious shortage ahead. Not now but in the future. And that the prices will escalate enough for them to make a killing. If one looks at the real picture, there is no shortage of oil, there has been no shutdown of any major producer, nor has there been a sudden jump in the import from any large consumer. The Chinese import for their industrialization is not more than 10 percent annually. This is certainly not enough for the huge jump in the world crude rates. This jump is matched by the phenomenal profits of the oil companies and of course the oil producing countries. The thirst for profits of the oil traders has benefited the oil producers-Iran being a major beneficiary. The US government must be wondering at the irony of this windfall benefiting a prime enemy of American and Israeli interests at the cost of millions of innocent citizens of the US and Europe, engineered by the greasy gnomes of the oil trade. There is no threat of an oil embargo, nor of a war, it is just pure speculation, funded by the huge mountains of American and European cashes at the disposal of the Sources the Oil trade. They stand to make a killing at the expense of hapless citizens of the world. As I had written in an earlier piece as far back as 2005, when an attack on Iran was imminent, that the rise in oil at 100 $ a barrel would impact on the food prices has proved prophetic with the current sky high prices of bread in Europe and America. In the meantime we poor Pakistanis are suffering with 50 percent living below the poverty line, and many more being pushed under thanks to the current oil crisis which has managed to create tsunami that is a threat worldwide, with no remedy in sight. Electricity riots are already a common sight but the frequency of breadlines breaking into riots is increasing daily, not just in Soma lia but in parts of the third world where we thought wheat was never in critical shortage. The riots in Pakistan are for two reasons. Firstly, the price a worldwide phenomenon and second a physical shortage due mainly to incompetence in the many layers of our government. 4.2 Looming Energy Crisis in Pakistan Energy costs, from where they stand now, could rise by more than 50 percent in the next few years. The cost of power on this scale would be difficult to manage by most emerging economies all oil-consuming countries, particularly the third world have suffered due to the consistently rising demand-driven cost of energy. From 2004 onwards, the price of oil started soaring in the international market, and for the first time in October 2004, oil prices crossed the benchmark of US$ 50 per barrel. It continued to fluctuate but kept moving up each year and in 2007 briefly crossed US$ 100 per barrel. For the past few days it has been hovering at US$ 103 plus per