… and there will be light

China has come for­ward in a big way to help Pak­istan tide over its en­ergy cri­sis.

Southasia - - CONTENTS - By S.G. Ji­la­nee

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.

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