For sustainable economic
growth, there is a need to focus on renewable energy sources, which do not
burden the national exchequer. Around two-thirds of the power sector in the
country is dependent on fossil fuels which are non-renewable. This high dependency
drains the national exchequer, whereas a mounting import bill continues to
exert pressure on the trade deficit and our foreign exchange reserves.
The system has the
capacity to generate almost 17,500 MW of electricity, but it is not working at
its full capacity because many of the producers of power cannot afford the
rising cost of electricity generation. This has been exacerbated by an acute
shortage of gas and skyrocketing cost of imported furnace oil. The situation
now is that if power plants run on oil, that only ends up further expanding an
already massive circular debt and, otherwise, large-scale loadshedding is the
only alternative. Clearly, Pakistan
needs to explore low-cost power generation options.
Cheap,
environment-friendly hydroelectricity should be among the top of such options.
It is also best suited to the country, but the problem is that we have failed
to expand our hydropower potential. Excluding hydropower, the contribution of
renewable energy to the country’s energy mix is negligible.
As for government
initiatives, it did set up an institution in 2002 called the Alternative Energy
Development Board (AEDB), especially for this purpose. The Pakistan
Meteorological Department, with assistance from USAID, carried out a
wind-resource study of Pakistan
and developed a precise and accurate detailed map, showing the potential
available in the country for harnessing wind energy. According to it, the
country has a total potential of 35,000 MW, which it can produce from wind
power. The study found that from one place alone, the Gharo-Keti Bandar wind
corridor in coastal Sindh, several thousand megawatts can be produced.
On this issue, Pakistan has
also been extended help by other donors. For example, the latter helped in the
formulation of an investor-friendly renewable energy policy in 2006. It offered
various incentives for independent power producers, including guarantees to
purchase electricity, and concessions such as a zero sales tax and no import
duty. As a result, 73 letters of intent (LoI) were issued for a total of 4,650
MW of energy to be produced. In view of this large-scale interest, the Planning
Commission of Pakistan fixed a target for the AEDB to complete wind projects of
900 MW capacity till 2010.
Fourteen of the 73
wind-generated projects completed feasibility studies. By 2007, the National
Electric Power Regulatory Authority (Nepra) had issued power generation
licences to five companies and they were to start operation by early 2010.
Regrettably, all of this
came to nothing. All the investors abandoned their projects, leaving behind
their security with the AEDB and Nepra. Media reports at that time suggested
that the investors were unhappy about some of the demands made by the
government bureaucracy, particularly Nepra.
Compare this failure with
India where the renewable
energy sector has managed to produce about 14,800 MW, which is a quarter of the
entire wind potential of India.
Moreover, in the last five years, up to March 2010, India has added 8,213 MW by
electricity generation from its wind resources. In Pakistan
the AEDB claimed its first success story, when a project with the capacity of
40 MW was inaugurated at Kalar Kahar hills in Punjab
in April 2009. However, the very next month, the blades of the turbine could
not sustain the wind pressure, and flew away — literally! Now, only two
blade-less wind towers stand as a monument to the AEDB’s so-called ‘success
story’.
Recently, the first-ever
financial closure of a wind power project was achieved, but the tariff at which
the power would be bought was an abnormally high Rs16.95 per unit. This is what
it would cost consumers, after counting line losses, wheeling charges and the
operational expense of distribution. One question that needs to be asked is
whether the cost of obtaining an energy performance certificate was
rationalised and compared with wind power tariffs in other countries. Besides,
the tariff is much higher than for electricity provided through hydropower
generation, which usually has a lower plant factor. In India, the tariff
for power produced by wind energy projects is between two and four rupees per
unit. And the reason it is low is because of genuine market competition, strict
regulations and the honest leadership of the minister looking after renewable
energy. One of the reasons for delay in installing wind power turbines, as
officially stated by AEDB, is the rise in their cost. This, however, is
contrary to facts, since the capital cost of producing wind turbines has fallen
steadily over the past 20 years. And this has happened because wind turbines
are now mass-produced and the costs have come down because of economies of
scale. For example, the cost of a turbine decreased from $1.22 million/MW in
2008 to $1.05 million/MW by 2010. If the AEDB was actually serious about
facilitating the wind power projects it could have helped the investors obtain
lower-priced wind turbines from India
which has more than a dozen companies manufacturing the product. Furthermore,
cooperation in wind energy between the two countries can open new avenues of
regional friendship.
Of course, no one is
saying that the renewable energy sector will be developed overnight, but, at
the very least, an effort should have been made by now to lay down the
foundations of this sector. That, regrettably, has yet to be done and hence
there seems to be no promise in sight on this front. As always, the policies
regarding energy generation are good and more than adequate. However, the
problem lies in the failure to implement these policies. And, unfortunately,
the impact of this failure is felt solely by the people of Pakistan who
have to suffer acute power shortages and several hours of loadshedding daily.
To reiterate, this dismal situation is not the consequence of an absence of or
even lack of energy sources but a direct result of institutional failure,
mal-governance and lack of political will to harness indigenous sources of
alternative energy.
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