OVERCOMING Pakistan`s energy crisis has been proclaimed as the highest priority by Prime Minister Nawaz Sharif`s government. The recommendations issued by the Pakistan asionary Forum`s energy experts at their Lahore meeting on June 30 constitute an excellent agenda for action.
The government has already acted on the first recommendation: to eliminate the so-called circular debt by paying Rs306 billion and promising to pay the rest of the Rs503bn that is owed by later this month.
The other proposals made by the experts for short-term action acceleration of recoveries, including from government institutions; stopping electricity theft; rationalising tariffs and medium-term steps to enhance energy efficiency could `save` up to 40pc of thecountry`s current power production.
This would be sufficient to meet the current demand.
The critical policy decisions, however, concern the selection of future energy options, their priority,magnitude and sequencing. These decisions will need to take account of technological, economic and political factors.
Wind and solar power can contribute to Pakistan`s generating capacity. But both still require significant subsidies to be economically viable, even if the tariffs are rationalised. The tariff offered by the previous government 17 cents per kilowatt hour was almost double the cost of producing energy from fossil fuels.
Pakistan should not sacrifice economic growth by resorting to the most expensive options first, while ignoring the more readily available and cheaper alternatives such as coal and hydropower. Wind and solar installations should be limited to regions such as Balochistan, interior Sindh and the Federally Administered Tribal Areas where electricity grids are unavailable and uneconomical.
Nuclear power will be essential in the long term to assure Pakistan`s energy independence. However, the capital cost of installing nuclear plants is high and the most advanced reactors from France, Japan and South Korea are unlikely to be sold to Pakistan. Once China develops the most advanced reactors, and Pakistan`s financial position is stronger, the expansion of nuclear power willbecome a realistic option for Pakistan.
The use of gas for power and home consumption is attractive for Pakistan, for three reasons.
First, Pakistan already has in place the extensive Sui gas distribution system.
Second, gas prices are likely to come down due to expanded supplies from shale gas exploitation by the US today and later by China and others. Third, gas is a relatively cleaner, low-carbon-emitting fuel as compared to other fossil fuels.
Until Pakistan discovers other gas fields to replace the depleted Sui reserves, it should look to gas imports at competitive prices to meet its near-term needs.
The Iranian pipeline is a rational option; but its realisation may continue to encounter objections from the US and others. It may therefore be wise for Pakistan to make the installation of a liguefied natural gas terminal for gas imports a high priority.
For the longer term, Pakistan`s bestoptions for power generation are hydro and coal.
Pakistan`s river systems provide the potential for almost inexhaustible power generation. The advantages of hydropower are self-evident: clean and cheap energy as well as flood prevention and improved irrigation. Most of the sites for the larger dams have been identified and considerable preparatory work completed.
Yet, due to misguided parochialism and pusillanimous leadership, Pakistan has tapped only a small fraction of this vast natural resource.
Some contracts, recently awarded to Chinese companies, appear to be stalled.
A crash programme should be launched for hydropower installation. Chinese companies appear ready to execute such projects and to provide a considerable part of the financing.
The failure to exploit Pakistan`s enormous coal deposits is equally monumental. Technical incompetence has played a major role in this failure. Some Western powers, while still utilising old and `dirty` coal plants, now oppose financing from international institutions for coal power in developing countries.
New technologies coal gasification and liquefaction can be utilise d for theextensive and efficient use of Pakistan`s several coal fields, including the giant coal deposits in Tharparkar. Yet, not a single ton of Thar coal has been mined.
Proposals from national and international companies are collecting dust in the Sindh Coal Authority`s filing cabinets.
Open proposals should be invited from interested companies and entrepreneurs for the exploitation of Pakistan`s coal fields and decisions made rapidly under the glare of public scrutiny. Meanwhile, the installation of coal-fired power plants should be accelerated. Until Pakistan`s indigenous coal becomes available, these plants can use imported coal since it is cheaper than oil or gas.
Pakistan`s energy policy will need to overcome certain political, institutional and financial obstacles. Resistance from vested interests will have to be countered boldly, and relief provided to the poor.
Competent and honest professionals should be recruited to execute specific elements of Pakistan`s energy policy.The responsibility for monitoring implementation would best be assigned to a high level independent commission rather than the line ministry.
At the operationallevel, it would be advisable to decentralise functions. A corporation controlling the state electricity grid is necessary but generation plants and local electricity distribution can be managed more efficiently by separate public and, preferentially, private players.
Financing for the energy plan will have to be generated from efficiency, tariff rationalisation and several other means, such as project financing from companies awarded the construction contracts (on the Chinese model); privatisation of state generating plants and distribution companies, such as the Karachi Electric Supply Company sell-off; and, most significantly, fiscal reforms to mobilise investments in energy infrastructure and power generation.
In the final analysis, success or failure will depend on the determination with which the government pursues the implementation of a clear energy plan, rewarding performance and penalising corruption and incompetence. Political indecision or technical confusion at this time could consign Pakistanis to live in even greater darkness. •
By Munir Akram: A former Pakistan ambassador to the UN. http://epaper.dawn.com/~epaper/DetailImage.php?StoryImage=21_07_2013_009_006
The government has already acted on the first recommendation: to eliminate the so-called circular debt by paying Rs306 billion and promising to pay the rest of the Rs503bn that is owed by later this month.
The other proposals made by the experts for short-term action acceleration of recoveries, including from government institutions; stopping electricity theft; rationalising tariffs and medium-term steps to enhance energy efficiency could `save` up to 40pc of thecountry`s current power production.
This would be sufficient to meet the current demand.
The critical policy decisions, however, concern the selection of future energy options, their priority,magnitude and sequencing. These decisions will need to take account of technological, economic and political factors.
Wind and solar power can contribute to Pakistan`s generating capacity. But both still require significant subsidies to be economically viable, even if the tariffs are rationalised. The tariff offered by the previous government 17 cents per kilowatt hour was almost double the cost of producing energy from fossil fuels.
Pakistan should not sacrifice economic growth by resorting to the most expensive options first, while ignoring the more readily available and cheaper alternatives such as coal and hydropower. Wind and solar installations should be limited to regions such as Balochistan, interior Sindh and the Federally Administered Tribal Areas where electricity grids are unavailable and uneconomical.
Nuclear power will be essential in the long term to assure Pakistan`s energy independence. However, the capital cost of installing nuclear plants is high and the most advanced reactors from France, Japan and South Korea are unlikely to be sold to Pakistan. Once China develops the most advanced reactors, and Pakistan`s financial position is stronger, the expansion of nuclear power willbecome a realistic option for Pakistan.
The use of gas for power and home consumption is attractive for Pakistan, for three reasons.
First, Pakistan already has in place the extensive Sui gas distribution system.
Second, gas prices are likely to come down due to expanded supplies from shale gas exploitation by the US today and later by China and others. Third, gas is a relatively cleaner, low-carbon-emitting fuel as compared to other fossil fuels.
Until Pakistan discovers other gas fields to replace the depleted Sui reserves, it should look to gas imports at competitive prices to meet its near-term needs.
The Iranian pipeline is a rational option; but its realisation may continue to encounter objections from the US and others. It may therefore be wise for Pakistan to make the installation of a liguefied natural gas terminal for gas imports a high priority.
For the longer term, Pakistan`s bestoptions for power generation are hydro and coal.
Pakistan`s river systems provide the potential for almost inexhaustible power generation. The advantages of hydropower are self-evident: clean and cheap energy as well as flood prevention and improved irrigation. Most of the sites for the larger dams have been identified and considerable preparatory work completed.
Yet, due to misguided parochialism and pusillanimous leadership, Pakistan has tapped only a small fraction of this vast natural resource.
Some contracts, recently awarded to Chinese companies, appear to be stalled.
A crash programme should be launched for hydropower installation. Chinese companies appear ready to execute such projects and to provide a considerable part of the financing.
The failure to exploit Pakistan`s enormous coal deposits is equally monumental. Technical incompetence has played a major role in this failure. Some Western powers, while still utilising old and `dirty` coal plants, now oppose financing from international institutions for coal power in developing countries.
New technologies coal gasification and liquefaction can be utilise d for theextensive and efficient use of Pakistan`s several coal fields, including the giant coal deposits in Tharparkar. Yet, not a single ton of Thar coal has been mined.
Proposals from national and international companies are collecting dust in the Sindh Coal Authority`s filing cabinets.
Open proposals should be invited from interested companies and entrepreneurs for the exploitation of Pakistan`s coal fields and decisions made rapidly under the glare of public scrutiny. Meanwhile, the installation of coal-fired power plants should be accelerated. Until Pakistan`s indigenous coal becomes available, these plants can use imported coal since it is cheaper than oil or gas.
Pakistan`s energy policy will need to overcome certain political, institutional and financial obstacles. Resistance from vested interests will have to be countered boldly, and relief provided to the poor.
Competent and honest professionals should be recruited to execute specific elements of Pakistan`s energy policy.The responsibility for monitoring implementation would best be assigned to a high level independent commission rather than the line ministry.
At the operationallevel, it would be advisable to decentralise functions. A corporation controlling the state electricity grid is necessary but generation plants and local electricity distribution can be managed more efficiently by separate public and, preferentially, private players.
Financing for the energy plan will have to be generated from efficiency, tariff rationalisation and several other means, such as project financing from companies awarded the construction contracts (on the Chinese model); privatisation of state generating plants and distribution companies, such as the Karachi Electric Supply Company sell-off; and, most significantly, fiscal reforms to mobilise investments in energy infrastructure and power generation.
In the final analysis, success or failure will depend on the determination with which the government pursues the implementation of a clear energy plan, rewarding performance and penalising corruption and incompetence. Political indecision or technical confusion at this time could consign Pakistanis to live in even greater darkness. •
By Munir Akram: A former Pakistan ambassador to the UN. http://epaper.dawn.com/~epaper/DetailImage.php?StoryImage=21_07_2013_009_006
Related: