Pakistan's Electricity Crisis

[Riaz Haq]

Pakistan’s economy has recently been growing at 7-8% per year, doubling its GDP over the last 7 years. The industrial growth rate has been closer to 12.5% per year during this period, contributing 38% of the total economic output of Pakistan. Per capita energy consumption of the country is estimated at 14 million Btu, which is about the same as India's but only a fraction of other industrializing economies in the region such as Thailand and Malaysia, according to the US Dept of Energy 2006 report. With 40% of the households that have yet to receive electricity, and only 18% of the households that have access to pipeline gas, the energy sector is expected to play a critical role in economic and social development. With this growth comes higher energy consumption and stronger pressures on the country’s energy resources. At present, natural gas and oil supply the bulk (80 percent) of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the supply. For instance, Pakistan currently produces only 18.3 percent of the oil it consumes, fostering a dependency on imports that places considerable strain on the country’s financial position. On the other hand, hydro and coal are perhaps underutilized today, as Pakistan has ample potential supplies of both.

Pakistan’s rising energy demand, according to the U.S. Department of State’s Paul Simons, creates opportunities for regional cooperation. To this end, the U.S. Trade and Development Agency convened a meeting a couple of years ago in Istanbul that produced an agreement on examining options for exporting Central Asian electricity to Pakistan. It should be noted here that US does not favorably look upon any Iran-Pakistan cooperation in the energy sector. At an Asia Program event organized by Wilson Center in 2006, Vladislav Vucetic of the World Bank provided a troubling assessment of the state of Pakistan’s electricity sector—demand is approaching maximum production capacity, while institutional capacity for policy development and implementation remains low. Worse, failing to resolve these problems may cause investment delays and hamper Pakistan’s economic growth. Sanjeev Minocha of the IFC, a major source of private sector financing, noted the paucity of domestic private sector initiatives in Pakistan. The IFC has sought to raise investor confidence through its funding of private Pakistani energy companies, including the new firm Dewan Petroleum. Ultimately, stated Minocha, it is crucial that investment projects take into account the interests of local communities.

In early 2008, Pakistan's industrial consumers are facing an electric power deficit of up to 3,600 megawatts (MW)due to low water levels at hydroelectric dams and damage to two main power lines attacked during the three days of violence following Bhutto's assassination. More than anything, this represents the failure of long term energy planning to go with the economic growth forecasts.

Among the temporary issues exacerbating the larger power crisis, the two main power transmission lines were blown up in January 2008 in Sind, creating a shortfall of 1,000 MW. The business community complain that lopsided and unplanned shutdowns have resulted in closures in almost all industries. Subsequent production losses will be reflected in further pressure on exports and lead to increased imports.

Water levels have fallen by 32% compared with last year, according to the Pakistan Electric Power Company (PEPCO). Pakistan's current installed capacity is around 19,845 MW, of which around 20% is hydroelectric. Much of the rest is thermal, fueled primarily by gas and oil. PEPCO also blames independent power producers (IPPs) for the electricity crisis, as they have been able to give PEPCO only 3,800 MW on average out of 5,800 MW of confirmed capacity. Most of the IPPs are running fuel stocks below the required minimum of 21 days.

While there are many economic successes of the Musharraf-Aziz administration in terms of reviving the Pakistani economy and putting it on a growth path again, the energy sector represents its biggest failure. This failure has the potential to threaten Pakistan's economic future, unless immediate steps are taken to bring this crisis under control over the next few years.

[Riaz Haq]

Here's another microhydro success story in rural Pakistan:

BAHRAIN, Pakistan, March 14 (UPI Next) -- Installation of a micro-hydropower station on a stream in Serai has brought electricity to the people of the remote village in the highlands of the Upper Swat Valley in northwestern Pakistan for the first time.

Residents of Serai, in Khyber Pakhtunkhwa province's Malakand Division, about 60 miles north of the Swat district capital of Mingora, say the introduction of electricity has provided them with benefits most people take for granted, such as allowing them to walk at night without fear of tumbling off steep paths to their death.

Similar power plants are in the works for the area, a move that could pave the way to solving Pakistan's increasing energy shortage.

Micro-hydropower stations require less water than do conventional hydropower stations, so a single family can install one producing 5 to 10 kilowatts for personal use.

The power station was built by the European Union and the Sarhad Rural Support Program, a development organization working in Khyber Pakhtunkhwa province and the Federally Administered Tribal Areas.

"A total of 240 micro-hydropower plants are to be installed with a production capacity of 21.7 megawatts in the parts of Malakand Division that have no access to electricity from the country's national grid," Zahid Khan, a Sarhad program project manager overseeing the installation of the plants, told UPI Next.

Most micro-hydropower plants in Pakistan can produce 5 to 100 kilowatts. The next size up, mini-hydropower plants, produce between 100 kilowatts and 1 megawatt. Small hydropower plants produce between 1 megawatt and 10 megawatts, while large plants can produce much more.

Energy experts in Malakand Division are urging government and non-government organizations to use micro-hydropower projects to tackle the country's increasing energy crisis.

Serai's 80-kilowatt power plant is among the first to be successfully installed, providing electricity to more than 700 households.

"It is something of a miracle. This is the first development project installed here. We are the most neglected and ignored people in Swat," Serai elder Abdul Qadoos told UPI Next.

"People say electricity is the source of every social development."

Another elder, Zareen Gujar, also praised the introduction of electricity.

"Our women, who used to perform household chores by torchlight, will now be able to work longer under brighter light from electric bulbs," he told UPI Next.

"Our women are now learning to use electric irons to iron our clothes too.

"We in Serai have never seen any development activity since this country came into being, as we had no roads, no middle school or high school, not even a dispensary. We have been living a life of deprivation."

Serai is in rough terrain and climbing up to houses can be difficult.

"At last, we are not blind during the darkest nights. Many of our people have died after falling at night," Gul Zada, a local community leader, told UPI Next.

"We have streetlights installed now to walk freely in at night."

Zada said no official or non-government organization had shown villagers the power potential from the water around the village.

The power plant was completed in nine months at a cost of $105,000, of which about $9,000 was raised locally....

Read more: http://www.upi.com/Top_News/Special/2014/03/14/Micro-hydropower-sta...

[Riaz Haq]

In a major development, the Board of Executive Directors of the World Bank (WB) has approved five projects pertaining to Pakistan.

These include International Finance Corporation (IFC)’s Investment in Gul Ahmed Wind Power Limited, Tenaga Generasi Limited (wind power) and Gulpur Hydro Project, Sindh Public Sector Reform Project and Acceleration of Tarbela IV Extension Project.

Officials of the Ministry of Finance and Economic Affairs Division told The News that by far this is the largest number of projects approved by the Board in one month for any country.

They said the major thrust was on the reforms in the energy sector, which was in line with the Country Partnership Strategy for Pakistan approved in 2014. The World Bank Country Partnership Strategy is anchored in the government’s framework of 4Es: Energy, Economy, Extremism and Education, the four strategic pillars of Vision 2025.

Officials of the Economic Affairs Division and Water and Power Ministry said that the World Bank’s Energy portfolio in Pakistan was gradually turning into largest in the world. With CASA-1000 (Central Asia-South Asia transmission line project), Tarbela IV, IFC’s investments in subsidiary company of Three Gorges of China (CSAIL) and Tarbela V in the offing, the portfolio aims to augment the present generation capacity by more than 10,000 megawatts over a period of five to six years. A project to augment and upgrade the transmission system is also in the pipeline.

Last year, the officials said that World Bank disbursed more than US $1.6 billion to Pakistan and a Pakistan Day was observed on May 01, 2014. The Bank is aiming to disburse US $1.25 to 1.3 billion to the government by the end of the current fiscal year from its IDA concessional package.

This generous and expeditious funding by the World Bank is viewed by economic managers of the government as a sign of trust in the official economic reform agenda.However many development planners are of the view that the government will have to undertake a radical reform agenda in order to fully benefit from the World Bank assistance. Major touchstone of success of this reform in energy sector will be privatisation of power distribution and generation companies (DISCOs and GENCOs) and other governance reforms in energy sector including radical handling of intractable circular debt. It is said if the government does not speed up its reform agenda, the World Bank may slow down the assistance.

The recent visit of IFC head Jin-Yong Cai, which is private sector investment arm of World Bank, is also seen by experts as a major development vis-a-vis the World Bank’s interest in private sector development in energy sector.

During his visit, the IFC head met Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar and committed to helping Pakistan tackle some of its most pressing challenges from unemployment to energy shortage by catalysing new investment outside the public sector.

He said private businesses, both large and small, are the backbone of Pakistan’s economy, but they are often held back by power outages, excessive red tape, and a shortage of credit. “By tackling these issues, we can help companies unlock their potential and create the economic opportunities that Pakistanis are eager for.”

The IFC is expected to invest about $500 million annually in Pakistan in the next few years as part of a World Bank Group Country Partnership Strategy.Economists say unless Pakistan improves its business environment and addresses serious issues highlighted by the Ease of Doing Business Report of the World Bank, which has ranked Pakistan quite low due to multiple factors discouraging private business and investment, Pakistan would not be able to benefit from such assistance speedily. Almost all these factors pertain to archaic and unhelpful practices and attitudes of bureaucracy and public sector organisations.

http://www.thenews.com.pk/Todays-News-2-299755-WB-approves-five-pro...

[Riaz Haq]

Finance Minister Ishaq Dar has appreciated the World Bank (WB) executive board’s approval for five energy sector projects in Pakistan.
In a statement issued on Saturday, Dar called the approval “a manifestation of the confidence of international organisations in the continued improvement of Pakistan’s economy owing to the prudent fiscal policies of the PML-N government.”
The five schemes approved by the board of WB’s executive directors are the Gul Ahmad Limited and Tenaga Generasi Limited wind power projects, the Gulpur hydro project, the Sindh Public Sector Reform.
Dar said the approval is in line with the government’s ‘four E’s’ policy, which endeavours to promote education, develop economy, eliminate extremism and end the energy shortage. He assured that projects would be completed before the tenure of PM Nawaz Sharif is over.”
According to the statement, this is the largest ever portfolio approved by WB executive board in one month. The energy projects are expected to add over 10,000 MW to national energy basket.

http://tribune.com.pk/story/834851/sign-of-confidence-dar-hails-wb-...