Pakistan’s
energy sector crisis is posing challenges to the country’s national security
now. Around six to eight hours of daily loadshedding in the urban areas and a
twelve to eighteen hours in rural areas, coupled with unemployment also caused
by energy shortage in the industrial sector, has led to significant
vulnerabilities that are now rapidly leading toward political instability. At a
time when the country is fighting a war against terrorism, violent riots
triggered by chronic power cuts have created the perfect environment to nourish
violence resulting in widespread civil disturbance.
Pakistan having a surplus of electricity in the year 2002 is now short of more
than 5500MW at a time when its peak demand is 18100MW. One of the causes of
this energy crisis is the failure to anticipate the growing demand of
electricity annually that was 3% in the year 2003 and rose up to 10% in the
year 2008 due to higher economic growth and unplanned continuous rural
electrification on political pressure.
The fundamental cause of the energy crisis is its dependency on fossil fuels.
The system has the capacity to generate almost 17,500MW of electricity but it’s
not working on its full capacity due to non-affordability of the rising cost of
electricity generation, severe shortage of gas and the skyrocketing cost of
imported furnace oil.
Pakistan’s daily gas requirement is 6.5 billion cubic feet (BCF) against its
current supply of 4.0 BCF, which means that Pakistan at present faces a
shortage of 2.5 BCF. The major consumer of gas is the power sector, which
consumes nearly 40% of the total production of gas, has not only declined the
hydroelectricity share from 52% to 30% but also caused the depletion of our
limited gas reserve. To overcome the impact of the shortage of gas supply, the
thermal power plants have had to switch from gas to furnace oil.
Consequently the cost of generation has tripled as compared to the amount of
the cost of gas. Not only this, the already crippling economy of country is
over burdened with a loan of $3.7 billion for the import of furnace oil.
Due to the former mentioned reasons, the cost of providing electricity to
consumers could not be fully recovered, while the tariff for consumers remained
unchanged from 2002 to 2007. For the first time in early 2007 the government
increased the electricity tariff but still could not pass the whole cost of
production on the consumers. The gap in cost of electricity generation and
government-notified tariff had swelled to Rs3.39 per unit in 2010. Gas crisis
and shifting toward oil coupled with the inability of the power distributions
companies to pass on the cost of electricity to consumers, had turned power
sector hostage to circular debt. Thus, dependency on fossil oil pushed
country’s power sector between devil and deep blue sea, if power plants run on
oil it created circular debt, if not then large-scale loadshedding is the only
option.
When Zardari Government started ruling the roost in March 2008, the crisis was
piling up. The sycophant adviser of Ministry of Water and Power (MOWP), had
briefed Zardari and his prime minister that Rental Power Plants (RPPs) is the
panacea of energy crisis. Inline with the party decision, the federal cabinet
approved installation of 14 rental power plants to generate of 2,700MW. The
RRPs, initiative rental power plants was turned into a mega corruption swindle
and the country’s energy crisis only deepened. In this most extroverted deal,
country has to pay high captive cost, but due to gas shortage, the cost of
electricity generations very high, that why the RPPs are only are contributing
68 megawatts in the national grid.
This was the Himalayan blunder committed by Zardari’s government. Otherwise,
hydroelectricity that is one and so far the cheapest and environment friendly
source of energy was neither considered nor given due priority. Keeping a
generation mix dominated by cheap hydroelectricity generation the government
could have achieved the objective to keep consumer-end tariffs at affordable
levels while also passing on the true cost of electricity.
However, whenever the question about hydroelectricity is raised, the MOWP has
always given a stereotypical answer-hydropower project takes a long time and
needs a huge capital investment-but this is a rather weak argument in light of
modern hydropower project management.
In our neighbourhood, Indian policymakers are working towards adding 50,000MW
of clean and renewable hydropower to their energy mix and have resultantly set
some significant records in this regard. Many public sector hydropower
projects, for instance, 520MW Omkareshwar project on the Narmada River has been
completed in four years. Small hydropower projects are taking just 20 to 22
months for completion. However, at the top of the list of excellent hydropower
project management is the 86MW Malana hydroelectric power project in Himachal
Pradesh. It is unique because it was constructed within 30 months against its
five-year schedule, and at almost 50 per cent less cost than the approved
budget — and that too at a high altitude amidst difficult mountainous terrain.
While in Pakistan, the MOWP deliberated with stakeholders for two and a half
years and finally brought out a power generation policy in 2002, nineteen
run-of-rivers hydropower projects were planned and accordingly funds and the
schedules were chalked out to add 4325MW of electricity. Regrettably, only two
projects were completed in nine years. All these projects were delayed causing
a serious energy crisis in the country. Had they been implemented according to
the plan, Pakistan would have had 4325MW of cheap hydroelectricity to keep the
wheel of economic growth turning.
Deliberate and abnormal delay in hydropower projects and wastage of heavy
foreign exchange in RPPs is not the only crime of MOWP. In 2008, when the
government was finding it difficult to lure foreign investment to overcome the
increasing energy shortfalls, an entrepreneur requested MOWP for permission to
start 600-MW Mahl hydropower, which was advertised by the Board of Investment (BOI)
for private sector investment. The private entrepreneur arranged 800 million
dollars to generate and then sell electricity just Rs4 per unit. Unfortunately,
all his efforts aimed at benefiting the nation and public at large through
development of cheap and environment-friendly hydroelectricity were made
unsuccessful by adviser to MOWP. As a last resort, the investor published an
appeal to the prime minister and the president of Pakistan for intervention to
develop the Mahl hydropower project, on 27 of March 2010 on the front page in
this most popular daily paper to avail their attention in this regard.
Nevertheless, he has never had any reply from both the offices. However, in
April 2011, adviser to MOWP sent another demand to Friends of Pakistan (FOP)
seeking funds of $37 billion for hydropower projects, including Mahl.
Development of hydropower is the only solution to the Pakistani energy crisis.
Failing to address energy crisis shows that some authorities in the government
have arcane plans. Destabilising Pakistan, using energy as an instrument, would
prove dangerous for global peace. To make Pakistan prosper, global community
should not help Pakistan financially only but more importantly, the country
needs honest, dedicated and sincere advisers who can help to create an enabling
competitive environment so that the private sector can also participate in
investment without any fear.
This is only possible if the global community extends its help and intervenes.
Without their help, the current regime neither capacity nor has will in
providing reliable, consistent and cheap electricity. I plead to the 175
million Pakistanis and media out there to help form their own government and
fight for this situation of political turmoil and energy crisis.
(The writer can be contacted at ahabasi@gmail.com)
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