… and there will be light
China has come forward in a big way to help Pakistan tide over its energy crisis.
Pakistan bristles with crises of varying dimensions. Some of them, like terrorism or minor insurgencies, are easily managed by military operations. Others, like literacy and health are so insignificant that they do not merit the attention of the policymakers. But it is the energy crunch that has emerged as the mother of all crises.
“Pakistan is in the midst of one of the worst energy crises in its history,” says economic analyst Shabbir Kazmi. But the crisis did not happen suddenly like any natural calamity. It had been building up over the years while the elite controlling the country’s destiny were playing games, sometimes with the political system, alternating between dictatorship and democracy, and sometimes to conquer Kashmir either by sending raiders or waging full-scale wars. They turned the advantage of Pakistan’s geostrategic location from a blessing into a curse, selling it to an eager America. But the
deluge of dollars it brought in were used for war-making and turning the country into a warrior state, or other activities that ensured a good life for the chosen few, while development and infrastructure building were neglected.
For example, after the signing of the Indus Water Treaty with India, Pakistan was required to complete construction of one mega hydroelectricity plant every 10 years “to ensure year-round availability of low cost electricity and irrigation water.” But, the last mega dam, the Tarbela, was completed in the mid-nineteen-seventies. Since then no major dam has been built, while Kalabagh remains mired in politics.
According to the latest available figures, Pakistan has an installed electricity generation capacity of 22,797MW (excluding Karachi Electric) but actual power generation is around 15,000MW The average demand is 17,000MW and the shortfall is between 4,000 and 5,000MW. The principal fuel sources are: furnace oil (35.2 per cent), hydel (29.9 per cent), gas ( 29 per cent), and nuclear and imported (5.8 per cent)
The low level of generation is due partly to outdated and inefficient power plants and partly to a cash crunch to buy the required quantity of furnace oil so the plants could operate at their optimum capacity. For example, power plants operating in the public sector have an installed capacity of over 4,800MW but actual generation hovers around 1,200MW.
At present, the bulk of electricity supply comes from hydroelectric plants (6,500MW) and IPPs (6,500MW). The output of the hydro plants is dependent on water availability in the dams, and can fall to as low as 2,500MW when water levels drop drastically. And IPP output is limited by money problems.
Pakistan does not have many industries. Its heavy industries are even fewer. But the available supply is inadequate even for this modest demand. Capacity utilization in some key industries has, therefore, fallen to nearly 50 percent. .
The energy shortfall is both slowing the pace of economic activity and causing public unrest, which sometimes erupts into violence, due to prolonged outages of electricity and gas.
Since coming to power in 2013, Nawaz Sharif has been focusing his attention on the energy sector. The government paid Rs260 billion in cash to independent power plants (IPPs) to clear outstanding debt. It also issued bonds to pay off liabilities pertaining to state-owned companies such as exploration and production firms and oil and gas marketing entities. After clearing the debt of the IPPs, it was expected that they would be able to generate 1,700MW in additional electricity, reducing the shortfall that currently exceeds 6,000MW. But it seems the benefits will take time to percolate.
It is the failure to explore hydroelectric power that has compounded Pakistan’s energy crisis, making it dependent on other means such as thermal power plants which use furnace oil.
Of Pakistan’s 6,500MW hydro capacity, the bulk is contributed by three projects: Mangla, Tarbela and Ghazi Barotha. There are nearly two dozen IPPs, of which Hub Power Company, Kot Addu Power Company and Uch Power Plant are the major ones. Pakistan also has three nuclear power plants, two in Punjab and one in Karachi, with an aggregate capacity of over 800MW.
WAPDA supplies electricity to the rest of the country while Karachi gets its electricity from Karachi Electric (KE), which handles generation, transmission and distribution. The bulk of its generation comes from the Bin Qasim Power Plant, which has an installed capacity of 1,260MW. Another 500MW comes from smaller units. Since privatization, KE (previously KESC) has added another 500WM capacity at Bin Qasim but output has remained erratic because of the inconsistent supply of gas.
Pakistan has the potential to produce 40,000MW by constructing small and midsize dams. It also has the potential to get electricity from sugar plants located across the country, especially in rural areas. Sugar mills could deliver up to 3,000MW to the national grid, experts say. .
The International Energy Agency has forecast that the total electricity demand of the country will be 49078MW in 2025. This poses a great challenge because it would require increasing the installed capacity to 50,000MW.
The unit price of solar electricity is even higher than oil-fired power generation. Therefore, solar is not a feasible option under the circumstances. As to wind energy, its unit price is higher than hydel and coal power.
Alternatives, like Thar and Lakhra coal, are still at a discussion stage. The Iran-Pakistan gas pipeline is blocked by the US, while the TAPI ( Turkmenistan-Afghanistan- PakistanIndia) gas pipeline also remains at best a dream if not a pipedream.
Amidst such a bleak situation, China’s assistance comes like a windfall. In November 2014, the Chinese government announced that it would finance Chinese companies to build $45.6 billion worth of energy and infrastructure projects in Pakistan as part of the China-Pakistan Economic Corridor (CPEC). Speaking at a seminar on “21st Century Maritime Silk Road and China-Pakistan Economic Corridor ( CPEC)” in Islamabad, Chinese Ambassador Sun Weidong said that the country was ready to support its neighbour overcome the energy crisis and after their completion the energy projects would inject 10,000MW electricity in Pakistan’s power sector and help build a number of hydropower dams.
Documents from Reuters show that China has promised to invest around $33.8 billion in various energy projects and $11.8 billion in infrastructure projects which will be completed latest by 2017. The deal includes $622 million for Gwadar Port. According to the same source, under the CPEC agreement, $15.5 billion worth of coal, wind, solar and hydro energy projects will add 10,400 megawatts of energy to Pakistan’s national grid.
Because 2017 is not far away and the Chinese appear to be quite serious about vigorously pursuing the project, it kindles hope that it is not going to be long before the country is able to tide over this mega crisis; the darkness will lift and there will light.
The writer is a senior political analyst and former editor of Southasia.
Pakistan does not have many industries. Its heavy industries are even fewer.