The process from having an energy vision to achieving energy security is a complex and multi-faceted one which requires dedicated efforts and input from specialists. The crucial phase of this is none other than an energy demand modelling exercise undertaken on scientific lines and based on a current and expected rise in energy demand – not only for the medium to long-term but for 20 to 25 years.
Unfortunately, such an exercise has never been attempted in the country. This negligence has contributed significantly to inaccurate policies resulting in the ongoing energy crisis. However, accurate energy modelling itself requires a detailed data gathering phase. Data accuracy leads to an accurate demand model which then leads to accurate plans. This necessitates the implementation of a standardised roadmap so that policymakers can be guided from the initial vision to the preparation and implementation of an action plan; create an accurate energy demand for short to long term planning; harmonise the energy demand at the national and provincial level; and allow for a variety of energy and technology mixes.
Any systematic approach encompassing the above mentioned steps would minimally comprise: i) an energy vision ii) energy demand modelling iii) energy resource mapping iv) energy policy development and v) an energy implementation plan. The energy implementation plan must be followed in letter and spirit thus ensuring that timelines and goals are met.
Vision is the nascent step for any plan. However, the predicament here is not turning the vision into a detailed policy or action plan as has been the norm in the country. The energy vision needs to provide a view of the future in accordance with the overall economic and national plans as well as population estimates. It is crucial that intricate details are not set at this time of the process as the necessary information needed is not available to the resource planners. Many failures of energy plans can be traced back to the setting up of details too early in the planning process.
In the last few decades, energy demand modelling has become a complex process entailing the utilisation of specialists and expert simulation systems. Predicting the demands accurately is crucial to coming up with an energy plan which ensures energy shortages do not occur in future.
As evident in the first decade of the twenty-first century, any energy demand forecasting with regard to Pakistan needs to accommodate the uncertainty factor. This uncertainty factor can either mean unprecedented growth as witnessed in the early 2000s or a slowdown interval in the economy. To accurately predict this factor, the energy demand modelling needs to follow a systematic process from the collection of data on key drivers. These key drivers, among others, include: i) energy infrastructure ii) energy intensity of industrialisation iii) consumption pattern iv) travelling habits and v) consumer demand behaviour. The first step in this process is accurately identifying all the key drivers. Next, a methodological process for data collection needs to be followed to ensure data accuracy.
Based on the data collected, the energy experts are able to model the demand. Simulation software is a cornerstone of this step and its usage has become a common practice in energy modelling.
Energy demand modelling kick-starts the intricate process of energy resource planning. This is a time consuming process as the experts also have to look at the geopolitical situation globally and in the region. This includes many other factors such as the country’s imports and national fuel sources. Here the need is to focus on a number of factors of which energy sources and infrastructure development are the most important. The energy sources needs to comprehensively cover the areas of electricity generation, energy procurement, indigenous sources, technologies available and global trends. Infrastructure-related planning covers the areas of construction of new power plants, pipelines, water accessibility and so forth. Areas such as energy efficiency planning and energy diversification are also integrated at this point. The decision to include the areas of renewable energy in the national energy mix, requirements of human resource, financial constraints and industrial requirements are also mapped in this phase.
Once the energy resource mapping is done, the energy policy can be formulated. It is this energy policy which is based on such extensive groundwork that promises to deliver a successful implementation plan.
However, the work does not end here. The policy developed needs to be an integrated energy policy. Developing different policies for different energy sources, such as: i) fossil fuels, ii) renewable energies, and iii) energy imports not only leads to duplication of efforts at national level but also costs more resources. Additionally, the policy coordination and coherence becomes a major issue. In rare instances the policies might also negate each other.
The ideal integrated energy policy would cover all aspects of energy at national and provincial levels. Once an integrated energy policy has been developed, only then can the policymakers move on to the implementation phase.
Development of the energy action plan marks the start of the implementation phase. Based on the energy policy, an energy action plan is created which outlines the details for the implementation of the plans to achieve the identified energy targets with timelines as well as availability of financial resources and/or investment.
Can this be done in a country known for duplication efforts, multiplicity of institutions, lack of coordination and political considerations taking precedence over rational decision making and optimal resource allocation? To this list, another dimension that needs to be factored in is none else than the corruption, malpractices and the urge to swindle and squander away the scarce financial resources.
The energy policy developed with a roadmap, timelines and optimal energy mix – prepared by experts – has to be agreed upon by the major political parties so that an uninterrupted pursuit is ensured. This would give a positive signal to donors, multilateral institutions and investors about the continuation of the policy. Let us deliver this time.
The writer is a Ph.D. candidate.
The visiting delegation of Asian Development Bank (ADB) extends broader support for water and power projects in Pakistan though there is no mention of financing major projects of national importance like Diamer Basha Dam and Neelum Jhelum Hydropower Project.
A seven-member high profile delegation of Asian Development Bank (ADB) Board of Directors, headed by Executive Director Maurin Sitorus, called on the Pakistan Water and Power Development Authority (Wapda) chairman at Wapda House here on Sunday to discuss matters relating to the projects being implemented by Wapda in water and hydropower sectors. ADB Country Director Werner E Liepach and Wapda Member (Power) Muhammad Qasim Khan were also present.
The ADB delegation said that the bank had been supportive of the projects in water and power sectors in Pakistan, adding that they would continue their cooperation to the government of Pakistan and Wapda for the future projects as well. It is pertinent to mention here that federal government in general and Wapda management in particular have been failed in garnering support for key water sector projects in recent years.
There have been several announcements made for reaching a consensus with various international financial institutions in this regard but eventually to no avail. Speaking at the meeting, the chairman said that Wapda, in view of increasing needs of electricity and water in the country, was working on over 20 large and medium-sized projects with cumulative power generation capacity of more than 20,000 MW and water storage capacity of about 12 million acre feet (MAF).
Wapda plans to add 6,000 MW low-cost hydel electricity within next five years and another 14,000 MW by the year 2020, he said. He said that in addition to utilising local financial resources, the investment and the assistance by various international financial institutions was also of immense importance in implementation of these projects.
World Wildlife Fund (WWF) and Sui Northern Gas Pipelines Limited (SNGPL) have signed an agreement for an extensive student outreach programme to educate the youth about the importance of energy conservation, according to a statement on Saturday.
The significance of vigilant and wise usage of the natural gas in order to mitigate gas wastage during winters is also going to be taught, it said.
The joint venture between WWF and SNGPL will reach out to 45,000 students in Punjab and Khyber-Pakhtunkhwa. SNGPL has committed to engage 10,000 students from underprivileged public schools during this campaign, so that they can get learning experience along with enjoying the interesting stories on the ways and means of saving energy, it said. Specially designed and written Spellathon story books will be distributed among the children, which will add to their knowledge of issues concerning the energy consumption in Pakistan, conservation of natural resources, especially gas, and dealing with the appliances that utilise gas for their safety and conservation, according to the statement.
Karachi Electric Supply Company (KESC) signed a multifaceted memorandum of understanding (MoU) with Engro Corporation to cooperate on projects of mutual interest, according to a statement on Friday.
The memorandum of understanding would cover four key initiatives; fertiliser off-take agreement from KESC’s bio-gas waste-to-energy power project for generation of 22MW; a 300-600MW coal project at Thar; import of liquefied natural gas (LNG) as alternative fuel for KESC’s generation plants, and supply of up to 65MW to Engro’s Polymer and Chemicals unit at Bin Qasim, it said.
The memorandum was signed by Tabish Gauhar, chief executive officer of KESC and Ali Ansari, president of Engro Corp, to mark the cooperation between the two private sector companies, according to the statement.
Gauhar said, “This multidimensional MoU is strategic in nature as both the private sector companies are keen to work closely to address various issues being confronted by the energy sector.”
“We are confident that together we would realise these key projects that are of significant importance for the national economy.” Ansari said, “This memorandum will help deploy greater synergies across the two businesses and aid the growth process by leveraging competencies of both Engro and KESC in their respective domains.”
“Together we hope to alleviate the grave issues in the energy sector that continue to affect the performance of companies and help create stronger value propositions for the industry and the economy.”
KESC is in the process of setting up a waste-to-energy power project that will produce approximately 22MW. This bio-gas power plant will also have the potential to produce 100,000 tons of organic fertiliser every year.
Under the terms of the MoU, Engro Fertilizer Ltd will explore the option of setting up an integrated fertiliser plant or entering into an off-take agreement for the organic fertiliser from this bio-gas plant, said the statement.
Sindh Engro Coal Mining Company (SECMC) is in consultations with the Indian companies for technology transfer to conduct open cast mining of Thar coal, said Shamsuddin Ahmed Shaikh, chief executive officer of SECMC on Friday.
India is digging out 550 million tons of coal every year from the coalfields in Rajasthan and others, which were quite similar to Thar, he said.
“It is better to acquire technology and expertise from the neighbouring country instead of opting for European companies,” said Shaikh.
The senior management of SECMC would visit India soon to discuss technical collaboration, equipment procurement and coal export to India, said Shaikh, adding that Tata Power and BHIL had expressed keen interest in forming collaborations with them.
SECMC plans to setup a 1,200MW coal-powered power plant in Thar and open cast mining of coal, envisaging an investment of $3 billion.
Shaikh said that the circular debt among several other issues is creating problems in securing the financing but once the funds were arranged, it would take four years for the commercial power production.
The Sindh Engro Coal Mining Company Limited is a joint venture between the Sindh government and Engro Powergen, to mine coal from Thar Block II.
Although the project is in its early stages of technical and economic feasibility assessments, the company aims at utilising ample reserves of Thar coal for power generation.
The government has decided that only Thar coal would be used for coal-based power generation in the future and all conversions of existing and construction of new power projects would be designed on Thar coal specifications, he said.
The landmark policy decision was taken by Prime Minister Raja Pervez Ashraf, while chairing a meeting of the Thar Coal and Energy Board at the Prime Minister’s Secretariat on October 3. The Sindh government has requested the federal government that the conversion of the existing 800MW and new 600MW power plants at Jamshoro be designed on Thar coal specifications. The policy decision will ensure energy security that has been eluding the country for such a long time.
The Thar coal field is estimated to have reserves of 175 billion tons, 68 times higher than Pakistan’s total gas reserves.
Calling upon the Asian Development Bank (ADB) to be a lead financier to Diamer-Basha Dam, President Asif Ali Zardari said that early completion of the project was crucial in view of the country’s electricity requirement and much-needed water for ensuring continued agricultural productivity. He stated this while talking to the ADB Board of Directors at Aiwan-e-Sadr on Friday.
President said that energy shortage and water scarcity were among the major issues being faced by the country that hindered smooth economic growth and government’s efforts for poverty alleviation. He emphasised that being a water-stressed country, it was important for Pakistan to urgently enhance its water storage capacity to ensure food security and continued agricultural productivity which was backbone of the country’s economy.
He said that the project was also crucial as it would generate 4500MW environmental-friendly energy to meet the growing demand of the developing economy. He said that the construction of Diamer-Bhasha Dam was an integral part of Pakistan’s strategy to control natural disasters like the devastating floods, diversify its energy mix by harnessing the renewable sources of clean, affordable and environmental friendly energy, generate short and long term employment opportunities, particularly for the locals, and to focus on building massive infrastructure for overall socio-economic uplift of the area and standard of living of the people.
He said that the government had demonstrated its political will and was tapping all avenues for generation of the resources for this project of vital importance. He said that the government was also cognizant of the safeguard policies and concerns and therefore was adhering to ADB’s principles for resettlement of the displaced persons and environmental protection.
President also appreciated the engagement of the Bank in TAPI natural gas pipeline project that would transport Caspian Sea natural gas from Turkmenistan through Afghanistan into Pakistan and then to India.
The delegation assured ADB’s continued engagement with the country. The delegation of ADB comprised Maurin Sitorus, Ashok Lahiri, Kazuhiko Koguchi, Jerome Destombes, Richard Edwards, Ms Khin Khin Lwin, Siraj Shamsuddin and Werner E Liepach.
President was assisted in the meeting by Finance Minister Dr Hafeez Shaikh, BISP Chairperson Farzana Raja, Secretary General M Salman Faruqui, Petroleum Adviser Dr Asim Hussain, Senator Farhatullah Babar, Senator Syeda Sughra Imam, Deputy Chairman Planning Commission Dr Nadeem-ul-Haq, and other senior officials of the ministries concerned.
Earlier, while talking to the ADB delegation, Prime Minister Raja Pervaiz Ashraf said that Diamer-Basha Dam was a project of great national importance which had a national consensus as all the stakeholders had endorsed it.
He said that ADB had been a very reliable partner of Pakistan. “It has extended technical and financial assistance to Pakistan in many development projects and Pakistan greatly values the cooperation extended by ADB”, he said and added, “It is my earnest desire that we should concentrate on a few strategic projects so that they can be completed in time and yield results.”
Laraib Energy, the Hub Power Company Limited’s (Hubco) hydel project, is expected to come online by the end of this year or early 2013, slightly earlier than scheduled i.e. middle of 2013, Hubco’s management told an analysts briefing on Thursday.
Laraib is the first independent hydropower producer (IPP) in Pakistan/AJ&K with an installed plant capacity of 84 MW situated near the New Bong Escape, some 7.5 km downstream of the Mangla Dam and 120 km from Islamabad.
The project is being developed under build, operate, transfer (BOT) mechanism and to be transferred free of cost to the government of AJ&K at the end of the 25-year term. The management presentation informed that with the company’s new Narrowal plant, operated under Power Policy 2002, its increased vulnerability to circular debt had concerned many investors.
To recall, certain other IPPs that are operated under the 2002 policy are facing liquidity constraints.
The management’s understanding of the situation suggests that the government would not allow any IPPs operating under the 2002 policy to be converted into the 1994 policy. However, opting for a cooperative strategy with the government as against confrontation is boding well for the company in this regard, added the presentation.
Net receivable in lieu of circular debt that rose to Rs22 billion reported as of June 30, 2012, currently stands around Rs17 billion.
“In case circular debt escalates and adversely affects the company’s cash flows, international arbitration continues to be an option as per their Power Purchase Agreement. However, given the company as well as the sponsor’s ability to resolve through cooperative strategy, they are not likely to take this route,” said Nauman Khan, an analyst at Topline Securities.
On the operational front, Hubco’s old plant is operating at thermal efficiency of 38 percent against tariff specified 37 percent efficiency, while the Narrowal plant is operating at efficiency of 46 percent against 45 percent tariff specified. “The load factors of the two plants are currently above 75 percent. Thermal efficiency, along with higher load factor, continues to bode well for the company in FY13 earnings,” Khan said. Change in dividend policy with new sponsors coming in has also been an area of concern for the investors as at one side, the agreement prohibits them to disburse dividends quarterly. —Javed Mirza
The Ministry of Petroleum and Natural Resources has finally come up with a proposal to restart gas supply to the fertiliser industry as Pakistan is an agro-based economy, according to sources on Wednesday.
This will not only help the ailing economy and the fertiliser sector, but would save hundreds of jobs and precious public money, said sources.
According to a draft proposal, the Ministry of Petroleum has suggested long- and short- term solutions to resolve the issues faced by the fertiliser industry by proposing a detailed summary to the Economic Coordination Committee (ECC) in light of the discussion at the ECC on August 16.
The Ministry of Petroleum’s summary states that the policy to stop gas supply to the fertiliser industry needs reconsideration as Pakistan is an agro-based economy.
The summary, if approved, will benefit the government with huge savings in a constrained fiscal environment, as well as provide immense benefits to the farming community through availability of relatively cheaper urea.
Speaking about the revised draft policy for the fertiliser sector, Petroleum and Natural Resources Secretary Dr Waqar Masood Khan said, “The government is working on both short and long term solutions.
There is a proposal of providing dedicated supplies of natural gas to the fertiliser sector, which might be implemented soon.”
He further added that a comprehensive plan is being devised to ensure natural gas supply – a raw material for fertiliser plants – on a consistent basis. “The ECC would discuss this proposal,” he said.
As per the previous policy, the Sui Northern Gas Pipeline Limited (SNGPL)-based four fertiliser plants located in Sindh and Punjab have received only 45 days of gas in 2012. Resultantly, the urea manufacturing process came to a standstill, causing a loss of over 2.7 million tons in urea production, which otherwise has to be arranged through imports at a landed cost of $1.3 billion per year. On top of $1.3 billion of foreign exchange spending on imports, the government has to bear a subsidy of over Rs61 billion on imported urea to supply it to farmers at domestic market prices.
Owing to significant dependence on imports, despite having indigenous surplus manufacturing capacity, the government has imported 2.2 million tons of urea since January 2011, costing taxpayers dearly.
Official sources confirmed that imported urea on an energy equivalent basis is more expensive than imported fuels. Based on an analysis, it makes sense for the government to import cheaper fuels, such as liquefied natural gas (LNG) and furnace oil, and divert domestic gas supply to the fertiliser sector.
Basic cost comparison of different fuel sources reveals that currently the cost of LNG is as low as $10-12 per mmbtu, furnace oil $16.9 per mmbtu, while imported urea costs $23.1 per mmbtu. According to official sources, non-operating SNGPL-based plants would ultimately lead to permanent closure of the industry, if gas shutdown continues and would cause a major financial default.
The fertiliser plants have to pay back over Rs150 billion to the banking sector but they are unable to service their debt due to non-operating plants. This causes a great deal of stress to the banking sector as the debt becomes non-performing loans owing to closure of plants.
The closure of the fertiliser industry would lead to loss of 15,000 direct jobs and 50,000 indirect jobs and deprive the national exchequer of more than Rs100 billion in annual revenue, states the summary.
The summary proposes a long-term term, wherein the fertiliser plants could be allowed to negotiate directly gas agreements with gas producers and a dedicated line would ensure other sectors get gas on the SNGPL network.
It is important to note that the long-term plan draws entirely on relatively inferior- quality gas fields and new fields without affecting supply to any current consumer. Therefore, immediate benefits would be attained and the government would also be able to save significant foreign exchange and savings from subsidies by manufacturing local urea.
More local supply would also help bring urea prices down substantially. In the summary, there is also a short-term solution that allows gas to Engro by diversion of gas from Guddu. In this scenario, there would
be no loss to Guddu thermal plant in terms of current power generation capacity. This is because the Guddu plant would be able to draw additional gas from Kandkot gas field, which has spare capacity and other Mari plants would keep on operating at 88 percent of their allocation, while Engro’s new plant would run at 75 per cent.
The other three SNGPL plants have also been provided short- term solutions till the long-term solution is implemented, the summary concluded.
Minister for Water and Power Chaudhry Ahmed Mukhtar on Wednesday directed the power distribution companies (Discos) to cut electricity supply to all government and private departments on their failure to deposit the dues.
Speaking in a meeting held here to review the electricity load management and recovery issues, the minister for water and power said that increased recovery rate would help the government generate more power. He also directed the companies to speed up installation of electricity meters throughout the country. He said the government was working on a number of power projects to overcome electricity shortage.
Minister for Information and Broadcasting Qamar Zaman Kaira, who chaired the meeting, said that the government was taking all possible steps to end loadshedding and improve recovery of dues throughout the country. He expressed his satisfaction over the reduction in the loadshedding.
The two ministers interacted with the chief executives of various Discos through video conferencing facility and directed them to speed up the recovery of dues in their respective areas.Most of the chief executives informed the participants of the meeting that there was zero loadshedding in most parts of the country for the last two/three days.
The meeting was told that total demand of electricity in the country was around 13,000MW while total generation stood at around 10,740MW.Kaira said it had been decided to hold meeting on daily basis for reviewing the load management and recovery of the dues. He also directed the Discos to provide further relief to the industrial sector if possible so that the economic activities could be enhanced further.
The meeting was told that loadshedding in industrial sectors was being carried out as per agreement with the industry. All Discos assured the ministers that further relief would be provided to industrial sector.Secretary Water and Power Nargis Sethi was also present in the meeting and issued directives to Discos for improving their performance.
Prime Minister Raja Pervaiz Ashraf, along with his Water and Power Minister, appears to have no alternative except to raise power tariff for controlling the line losses, all set to touch Rs250 billion this year.
“Only solution to overcome this issue is to increase the tariff which has also been recommended by international experts on bridging the gap between purchase and sale price of electricity,” he told the Council of Common Interest (CCI).
Apart from the piling circular debt, load-shedding, inefficiency and mis-governance, the line losses have crossed Rs209 billion figure and is to reach new heights, the last CCI meeting was told by the Ministry of Water and Power.
The minutes of the CCI meeting quote the PM saying: “In case the line losses cross the limit of 7 to 8 percent, it can be attributed to theft which needs to be controlled.” Punjab Chief Minister Shahbaz Sharif was the first to take up this crucial issue before the CCI.
According to the water and power experts, different power distribution companies in Pakistan have different line losses as Hyderabad and Quetta Electricity Supply companies are close to 40 percent.
“In fact, the actual line losses are small and power theft is the major reason behind overall losses, but all is being mentioned in the one account of line losses,” they said.
Seeking provinces’ support, the prime minister emphasized that efforts need to be made to clear the receivables from public and private sectors with the help of provincial governments without considering political differences.
Water and Power Minister Ch Ahmed Mukhtar and his predecessor Syed Naveed Qamar, respectively, were also present, but neither they nor the premier urged for adopting good governance approach or any other option except letting the rates to go up.
The Punjab CM, taking up the specific question, pointed out that the issue of circular debt is a reality and is mainly due to differences of generation cost and the consumer rates and exorbitant line losses and theft.
He highlighted the problem of circular debt close to Rs500 billion which is proving drag on for national economy and is consistently increasing annually.He stressed his point to overcome this issue within a limited time. He mentioned that we need to move for its immediate solution as increase in the circular debt is likely to aggravate the situation of the economy as well as law and order.
In this respect, he (CM) mentioned that action needs to be taken against those industrial units which are stealing electricity and earning profits, according to the CCI minutes.