Prime Minister Raja Pervez Ashraf Thursday announced full support of the federal government for the ambitious Thar Coal project, aimed at helping the country meet its energy shortages. Addressing a gathering here after visiting the Thar coal project, the Prime Minister also announced an amount of Rs 200 million for development projects, including provision of electricity in the area. He also announced setting up of an IT centre, to impart basic computer education to the children, in every town. The Prime Minister who was earlier given a detailed briefing by Dr Samar Mubarakmand about the gasification project to generate electricity from coal, also announced a month salary as bonus for all those working on the project.
A Korean Concentrix (CX) Solar company has expressed interest in putting up a solar energy project in Quetta. It is already in negotiation with the Baluchistan government and would be signing a Memorandum of Agreement (MOA) for the construction of a 300 MW Power Plant Project. A three member Korean delegation, led by Dr. Choi Moon-sok, the CEO of Concentrix (CX) Solar, Korea, met with the Chairman Board of Investment Saleem H. Mandviwalla for solar energy projects in Pakistan, here, on Tuesday. The delegation informed the Chairman that their technology is the latest and the best suited to Pakistani conditions. The Baluchistan government has already offered them a piece of land of 1,500 acres approximately near the airport. As a first step, they would install 50MW, and then they would gradually complete the 300MW in the form of six complexes/ sub units. Mandviwalla welcomed them and encouraged them to start the project and to come up with various other proposals to invest in the energy sector of Pakistan. The company also intends to sign an MOU with the Board of Investment, which is under process.
Later, Mandviwalla, along with the delegation, called on the Prime Minister, where the company representatives apprised the PM about their planned power plant project in Quetta. They also suggested various proposals, like the conversion of the diesel generated pumps to solar energy for irrigation purposes. The PM appreciated their investment plans and ensured the full support and cooperation of the government in these projects.
A Korean company has expressed its interests in investing in solar energy projects in Pakistan, including installation of a 300-MW solar energy project in Quetta.
In this connection, a three-member delegation of the company, Concentrix (CX) Solar, called on the Prime Minister, Raja Pervez Ashraf, here on Tuesday and apprised him of their planned power plant project in Quetta. The delegation was led by Dr Choi Moon-sok, the CEO of Concentrix (CX) Solar. The Chairman of Board of Investment (BOI), Saleem H. Mandviwalla, was also present.
The Korean delegation also discussed various other proposals, like the conversion of the diesel-generated pumps to solar energy for irrigation purposes. They said that the Korean technology was best suited to Pakistani conditions.
The delegation told the chairman of the BOI that they had been having negotiations with the Balochistan government and would be signing an agreement for the construction of the 300-MW power plant in Quetta.They said the Balochistan government had already offered them a piece of land of 1,500 acres for that purpose.
192,000 workers not paying their electricity bills
ISLAMABAD: Wapda employees consume free of cost electricity worth approximately Rs3 billion — roughly 360.6 million units of electricity — annually, it was learnt Tuesday.
The latest revelation came to light during Tuesday’s meeting of the Senate Committee on Water and Power presided by Senator Zahid Khan. According to details, the committee recommended putting an immediate end to the supply of free electricity to Wapda employees.
Every year 1,92,000 Wapda employees do not pay for electricity. Out of this number, 54,000 have already retired.
The committee was also told that 28 employees had been sacked on the charge of electricity theft.
Committee Chairman Zahid Khan said that the provision of free electricity to Wapda employees meant an increased burden on consumers due to the inefficiency of the power sector.
He advised the concerned authorities to increase the salaries of Wapda employees so that they could afford to pay for the electricity they consumed.
Speaking on the occasion, Energy Management Cell (EMC) chief Basharat Cheema said that the bleeding power sector had braved an estimated Rs104 billion loss just because of inefficiency in the recovery of bills and electricity theft.
Secretary of Water and Power Zafar Mehmood opined, “The government has disconnected the electricity supply of many consumers who owe dues worth Rs30 billion. Consumers from Khyber-Pukhtunkhwa alone owe Rs23 billion of this amount.”
Meanwhile, the Pakistan Electric Supply Company (Pesco)’s CEO revealed that its consumers were experiencing an additional six hours of power failures due to substandard grids system and transformers.
“The system is not strong enough to bear the load of electricity.
“Even if the supply side is improved power failures in KP cannot be done away with until the system is upgraded,” he observed.
The Council of Common Interests on Wednesday decided to constitute a committee to address the complaints of the provinces regarding uneven loadshedding in the country and given the task to complete its recommendations within a week.A CCI meeting, held here at Prime Minister Secretariat under the chairmanship of Prime Minister Raja Pervez Ashraf, decided that the committee headed by Minister for Water and Power will include Chief Secretary and a technical member from each province.The terms of the reference of the committee include recommendation of a mechanism to ensure equitable distribution of available electricity and measures for recovery of power dues.The Prime Minister directed the committee to put up its recommendations within one week.Earlier, in his opening remarks, the Prime Minister recalled that the present energy crisis was due to the failure of previous government, which did not add a single MW of generation capacity to the system.
Prime Minister Raja Pervez Ashraf will leave on a two-day visit to Sindh on Thursday, where he will visit Thar Coal Field and Pakistan Steel Mills in Karachi.During his stay in Karachi, he will hold meetings with political leaders and people from different walks of life.The Prime Minister will be briefed about the Thar Coal development project by Secretary to Government of Sindh, Coal and Energy Development.A presentation will also be made to the Prime Minister by Naveed Ismail, Managing Director, National Transmission and Dispatch Company on laying of transmission line from Thar Coal Field.The Prime Minister will also be briefed by Shahrukh Khan, CEO Sino-Sindh on latest status of Block-VI project as well as on Block-I project.Shams Uddin Shaikh, CEO, Sindh Engro Coal Mining Company will brief the Prime Minister on the latest position of joint venture between the Government of Sindh and Engro on Block-II of Thar Coal Field.
A three-member Korean delegation led by Dr. Choi Moon-Sok, Chief Executive Officer of Concentrix Solar, Korea called on Prime Minister Raja Pervez Ashraf here at the Prime Minister House on Tuesday evening.Dr. Choi Moon-Sok informed the Prime Minister that his company which is a subsidiary of German company is interested to make investment in the energy sector and has plans to construct a 300 MW solar energy plant near Quetta, Balochistan.The Prime Minister said that Pakistan assigns high importance to the development of renewable energy sources in the face of acute energy shortage in the country.The Prime Minister welcomed investment in energy sector and said the government would encourage generation of electricity by exploiting the solar energy, as it has great potential in the country where sun light is available in abundance.He said if electricity can be produced through solar energy at affordable rates, it can be utilized to meet domestic demand as well as our agriculture needs.
The government launched plans to attract foreign investment in wind and solar energy potentials, which have the capacity to generate about 143,000MW electricity in the country. About US$1.2 to 2.7 billion investment is expected in both forms of energy.
Work on wind power plants is underway in Jhimpir, Gharo, Keti Bandar and Bin Qasim in Sindh province. Some of these will come into operation next year. Wind speed in the Sindh corridor is stronger and stands in a category between 7.5 and 7.7 m/s.
A USAID report says Pakistan has the potential to produce 150,000MW wind energy, of which only the Sindh corridor can produce 40,000MW. The government plans to achieve up to 2500MW by end of year 2015 from wind energy.
Work on the country’s first-ever Zorlu Energy Wind Power Project with 50MW generation capacity is underway in Jhimpir and start trial production soon. Pakistan Alternative Energy Development Board AEDB recently approved New Park Energy Phase I, 400MW wind project near Port Qasim.
With help of China-3 Gorges Corporation, a 50MW wind energy plan at Jhimpir will be completed next year. An MoU was signed at Pak-China Joint Energy Group JEWG meeting to set up wind energy projects of 550MW accumulative capacity initially. A fund was also established by the government to mainstream, implement alternative energy technologies.
Iran has threatened to cut electricity supply to Pakistan by August 11, if dues worth $41 million are not paid, documents available with The News reveal.
Iran has been exporting electricity through 132 kv transmission line from Jakigur to Mand. In 2006, Pakistan imported 39 MW and then 36 MW more were added from the Iranian side. Non-payments have landed the energy deficit country into more trouble, as the switching off by Iran will multiply power outages in Balochistan, reveals an official document available with The News.
Iranian energy company – TAVANIR – in its communication to Pakistan’s Foreign Office has said in plain words that it is going to cut the electricity supply of 74 MW by August 11 if its dues ($41 million) are not paid. Pakistan is currently importing 74 MW of electricity from Iran for the bordering areas of Balochistan and has not paid for the electricity imported since June 2011.
Iranian electricity is currently being imported at the rate of 8-9 cents per unit. A senior official on condition of anonymity said the government of Pakistan is willing to pay $41 million but in the wake of US and EU economic sanctions, it is difficult to carry out a banking transaction with Iran. However, the government has forwarded a proposal of State Bank of Pakistan to Iran suggesting a payment mode. He expressed his inability to disclose the proposal.
Meanwhile, the NTDC has placed the request with Iran not to cut the electricity supply hoping the issue will be resolved and the Iran will be compensated. It is pertinent to mention that Pakistan has already inked a deal with Iran for importing 1000 MW at 10 cents per unit.
“The tariff will be revised after every three years after the commissioning of the project.” The project to import 1000 MW electricity will materialise in four years. Under the proposed project, he said, Iran will build a powerhouse specifically for Pakistan in Zahidan and a 700kilometre transmission line will be laid from Pak-Iran border to Quetta.
Dr Ashfaque H Khan
Pakistan is currently facing the worst power crisis in its history. The resulting power cuts in the form of loadshedding, often lasting 8-18 hours, have served to constrain economic growth and development and also adversely affected the lives of the people, poor or even middle-class.
The power sector crisis is not a recent phenomenon. Such crises have existed in Pakistan since the 1980s with varied intensity but worsening in the last four years. A task force on energy constituted in 1994 found loss to industrial output due to loadshedding to be in the region of Rs12 billion. A survey of 200 industrial enterprises which was conducted by the World Bank in 1995 found that, on average, these industries lost 21 workdays in a year due to electricity shortage.
Then came the 1994 Power Policy of the government which opened electricity generation to the private sector. With the induction of the private sector in power generation, the fuel mix in electricity generation changed in favour of imported furnace oil. Until 2002, this policy worked reasonably well because the oil prices in international market remained low, ranging between $10-25/barrol. With the United States moving into Iraq in 2003, the international price of fuel started rising and so did the cost of electricity generation. The cost of generation, however, increased drastically in 2007-08 with an unprecedented surge in international fuel prices. Sharp depreciation in exchange rate and heavy reliance on petroleum sector for tax revenue after the NFC Award further compounded the difficulties. Today, electricity generated from furnace oil costs Rs16-17/unit.
Why has the power crisis worsened in recent years? Frankly speaking, Pakistan doesn’t face electricity shortages today. It has installed capacity of 22,500MW as of 2011. With power plants generally operating at 70 percent capacity, Pakistan can easily produce 15,750MW of electricity and meet its requirement comfortably. It is interesting to note that with installed capacity of 19,430MW in 2007, Pakistan produced 98,213GWh (Gigawatt Hour) of electricity. But with 22,500MW installed capacity in 2011, Pakistan could produce 94,384GWh of electricity, almost 4000GWh less. Is it not surprising? While installed capacity has increased, electricity generation has declined.
Why has it happened? Several factors have contributed to the decline in electricity generation. These include the T&D (transmission and distribution) losses, rising power theft, growing circular debt, rising inefficiency of power plant, diminishing state authority, and, most importantly, substantial decline in the availability of gas for power generation. In 2005, 504 billion cubic feet (BCF) or 43.5 percent gas was allocated to power generation but the share declined to 337.4 BCF or 27.2 percent in 2011, which is a reduction of 33.1 percent in six years. Gas allocated to transport sector, on the other hand, increased from 24.4 BCF (2.1 percent) to 113.1 BCF (9.1 percent) between 2005-2011 (an increase of 363.5 percent).
What have been the implications for electricity generation? In 2005, electricity generated from furnace oil stood at 13,516GWh, which increased to 33,186GWh in 2011. On the other hand, electricity generated from gas stood at the peak of 43,472GWh in 2005 but declined drastically to 25,879GWh in 2011. In other words, Pakistan moved from relatively low cost of electricity generation (Rs5-6/unit from gas) to high cost generation (Rs16-17/unit from furnace oil) in the last six years.
Higher cost of generation has forced the government to increase the price of electricity by more than 100 percent in the last four years. In a recently defended PhD thesis, Faisal Jamil of Quaid-e-Azam University Islamabad found a strong positive relationship between the rise in the price of electricity and power theft. On one hand, the government continued to increase power tariff and on the other hand power theft continued to rise with little impact on revenue to utility companies. I have been stating time and again that raising power tariff is not a solution and will never be a solution as we move forward. My position has been vindicated through the doctoral dissertation.
What can be done in the short run to address power crisis? Several solutions are in order. Firstly, as we have seen that the diversion of gas from power to transport sector has aggravated the power crisis, it is therefore suggested that through price mechanism the government must discourage the use of gas in transport sector. The price of CNG should be brought at par with motor gasoline in a phased manner so that people will have little incentive to use CNG for transport sector. Secondly, the gas so retrieved from transport sector must be diverted to efficient power plants operating at over 50 percent efficiency level.
Thirdly, there are highly inefficient power plants currently operating at 18-25 percent efficiency level. These plants have outlived their useful life and must be dismantled and the private sector may be invited through competitive bidding to set up new plants in the same area. The gas earmarked for the dismantled plants must be given to the newly setup power plants. With the same amount of gas, the new power plants will generate more electricity. Fourthly, the provision of free electricity to Wapda/Pepco employs must be withdrawn forthwith as this has become a major source of power theft. Fifthly, the government must go for a performance-based appointment for the head of distribution companies. Sixthly, the finance department of Pepco/Wapda be strengthened by inducting professional finance experts.
The power crisis in Pakistan is not because of the shortages of electricity. It is the outcome of misgovernance. The crisis is self created. Wrong policies have been pursued by the government. Development financial institution must also share the blame as they have been advising the government to pursue a one-track policy, that is, to keep increasing the power tariff. This policy has not worked and will never work. The power sector needs urgent and bold action. It needs reform more than a price hike. Is the present government ready to take difficult decisions in this regard?
The writer is principal and dean of NUST Business School, Islamabad. Email: ahkhan@ nbs.edu.pk