Energy Crises In PakistanGroup Members:

Shoaib ButtAshfaq Ahmad

Malik SafdarArif Naseer

What Is Energy Crises?

An energy crisis is any great shortfall (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources.

Introduction

Electricity Crisis in Pakistan is one of the severe challenges the country is facing today. Electricity is essential part of our daily life and its shortage has severely affected the economy and overall living of ours. Pakistan is currently facing up to 18 hours of electricity outage a day, is expected to face more if not dealt with in time.

Current Energy CrisesCurrent Energy Annual Shortfall goes even up to 5,000 MW

Annual Increase in Energy Demand: 8-12% Peak Demand: 13,000 – 18,000 MWToday’s Energy Shortfall: 3,059 MW

Conventional options for power generation

Hydropower Coal Oil (conventional/diesel) & Gas

(indigenous/import) Nuclear These options are relevant, but face major

development hurdles!

Hydropower Energy

Present demand of electricity in country in actual is above 17,000 MW and will be 30,000 MW by year 2017

Energy deficit was 3,000 to 5,000 MW .Hydropower Potential - 100,000 MW70 % of hydro potential lies in KPK

Hydropower Energy

Under-Construction Hydropower (1,943 MW): ▫ Punjab - 98.5 MW ▫ KPK - 611 MW ▫ AK - 1,202.5 MW ▫ GB - 30.8 MW

Feasibilities under preparation (13,023 MW): ▫ Punjab - 3,814.4 MW ▫ KPK - 324.4 MW ▫ AK - 65.50 MW ▫ GB - 8,754 MW

Nuclear Energy Pakistan has around 30 thousand metric tons

of uranium (308). Pakistan has two nuclear reactors of 425 MW

power. It is only 2.4 % of the electricity production.

Coal EnergyPakistan produces only 0.2 % of its power

through coal.The current coal production in Pakistan is

only 3.5 million tons per year.In Pakistan, there are plans to build only two

300 MW coal-fired plants at Thar.

Causes of energy crisesCrises in hydropower energyCrises in coalCrises in oil & gasCrises in nuclearPoor governanceCircular debtCorruptionElectricity theft

HydropowerEnvironmental impact Provincial disputes Geological Long development and construction phase Financing Silting in reservoirs Snow melt unpredictability (climate

change?)

CoalMining challenges (deep mining technology

and lack of expertise) Quality of coal Water requirement Long development and construction phase Financing Environmental impact

Oil & GasIndigenous resources depleting (oil & gas

reserves) Imported oil based energy expensive and

price volatile Iran pipeline - International politics Burden of energy “insecurity”

NuclearObstacles due to international concerns Financing Long lead time Project execution delays and cost overruns Cost of waste management Cost of decommissioning

Poor policy making:The months of January to May have very low

hydropower available since reservoirs are empty and snow melt will not, start till June. The Tarbela reservoir receives about 95 percent of its water through snow melt. The natural gas is in short supply and is available only to produce 29 percent MW of electricity. As over 50 percent of current generation is dependent on furnace oil, it is not viable for the government to purchase and provide oil at such high price. Therefore, many plants are either shut or producing much below their capacity.

POOR PLICY MAIKNG:

In any case, renewable resources of energy like solar energy and wind energy should be explored.

Neighboring China is rapidly moving towards alternative energy.

Lack of transparency is the biggest hurdle in development of alternative energy.

In one report, Nepra did not allow setting up of wind mills in Sind as the power companies demanded 8 cents per unit and Nepra was adamant to pay Rs 7.5. This was back in 2007. Now in 2011, Nepra is willing to pay 16 cents per unit, to the same companies, how ironical?

High prices of furnace oil:The price of furnace oil was about Rs 2000 per

ton in the nineties. It started increasing in 1999 and went up to Rs 10,000 per ton in 2001. It rose sharply in 2006 to Rs 20,000 per ton, and in 2008 it touched Rs 30,000 per ton. There was a short duration drop in 2009, but then onwards it kept on rising very sharply. In 2010, it went up to Rs 40,000 per ton and at present its price is almost Rs 70,000 per ton. The price of furnace oil has thus risen 30 times since 1990 and seven times since 2005

RENTAL POWER PROJECTS(RPP)

•Rental power plants are set up to meet short-term•RPP are typically commissioned within 4-6 months based on available technology. •Rental periods are normally installed for 5-7 years depending on a country’s requirements.• Rental power plants have been set up in the US, UK, India, Bangladesh, Kuwait, Sri Lanka, Turkey, UAE, Saudi Arabia, Iraq and Palestine,

The concept was introduced in Pakistan in 2007 when two projects were awarded to GE and PPR, both from the US, for 150MW and 136MW each.

CORRUPTION IN RPP:the auditor General’s report has revealed

corruption worth Rs 50 billion in the rental power projects

ADB disapproved of this projects stating that this will result in an increase of 31-45% of electricity charges and will be burdensome to foreign exchange reserves

In the report later ADB pointed towards the negligence of government because the contracts were made on very complex condition and in haste.

COST OF ELECRCITY BY RPPIt is an admitted position that after spending

billions of rupees in the shape of 7% to 14% down payment and exemption from payment of customs duty as well as 6% withholding tax,

against average cost of Rs.24/- per unit kWh [Karkey: Rs.35/- to Rs.50/-; Gulf: Rs.18/- to Rs.19/- Naudero-I: Rs.12/- to Rs.19/-], 120 MW electricity is being generated by the

RPPs and its cost is on a very high side and is not in accordance

Circular debt:The power sector circular debt increased to

Rs396.7 billion by March 15, 2012, which is Rs326 billion or 465.7% higher than the debt in March 2008

Effects of energy crises in Pakistan

1.Effects on industry:That factory has losses from shutting down its equipment and idling its workers. • According to an estimate, there are 10,000 factories in Lahore, among which approximately 30-40 percent factories have been closed because of load shedding. These factories were utilizing electricity and Sui gas in a huge amount.

Unemployment:

According to the labor department sources, approximately 800,000 laborers have been dispelled from their jobs. While, 400,000 to 800,000 laborers were receiving less wage.

Effect on Foreign investment

Agriculture:India stopped Pakistan's water at River Chenab to fill the controversial Baglihar dam.

load shedding is destroying the agriculture sector because there are 200,000 electric tube wells in the country to irrigate the land, which could not be run due to electricity shortage decrease in agriculture production and food shortage in the country

SOLUTIONS

SOLAR ENERGY• Solar power (photovoltaic or thermal) is

another alternative energy source option that is generally considered feasible for tropical and equatorial countries.• Even though the accepted standard is 1,000 W/m² of peak power at sea level, an average solar panel (or photovoltaic — PV — panel), delivers an average of only 19-56W/m².• Solar plants are generally used in cases where smaller amounts of power are required at remote locations. PV is also the most expensive of all options making it less attractive.

BIOGAS• Pakistan is meeting 1.50% of its energy

requirements from biomass, whose consumption is increasing average at the rate of over 5% per annum

.• About 62% of biomass users living in rural areas collect biomass for their use and only 24% buy wood. In urban areas 14% of biomass consumers buy, only 12% of these collect wood for their living and 66% use natural gas.

• At present almost 1,200 plants has been installed and out of the 98% are functional.• In addition, the next five year target is 10,000 number of plants. After that program, 27% of the total potentiality will recover.

Energy Planning• Pakistan needs to aggressively pursue ways to

increase its power-generating capacity. The best options available today are Nuclear and Coal, followed by Wind and Solar. Hydroelectricity can only be pursued after all environmental, ecological and geopolitical issues are settled with a consensus among all four provinces.• Pakistan needs to set up at least a Dozen Nuclear Power Plants, large coal fired plants, wind farms and solar plants in the next 10 years to generate about 20,000 MW of electricity.