By Aurangzeb Soharwardi(The nation newspaper magazine money plus 23 nov 2009)
Economy has become the most vital concerns of Pakistan, owing to various important factors like growing population, depleting energy reserves, deteriorating law and order and intensifying regional conflicts, particularly the phenomenon of global war on terror . The electricity supply has to play the pivotal role in this regards Pakistan is facing a critical energy situation. Its energy needs are likely to be doubled in the next decade and at least 20,000 MW electricity demand has been forecasted, with a fast upward trend. Energy consumption percentage in Pakistan is , ,Domestic 44%, Industry 31%, Agriculture 14.3%, Government sector 7.4%, Commercial 5.5%, Street lights 0.7%, approximately. Power sector is consuming 33.1% of the total produced crude oil and 37.2% of gas, coming from 173 gas fields operative in the country .The peak electricity demand had touched the figure of 18000 MW last year with Per capita energy consumption in Pakistan as 342 kwh. Electricity is being generated through hydel and thermal mainly. 16 IPPs , with capacity of 6000 MW, including the largest KAPCO(1600 MW) ,Hubco(1300), Muzaffar garh, Guddu and Jamshoro are functional . Rental power plants are also on the way. Installed hydel generation is 6500 MW with Tarbela dam(3,478 MW), Ghazi Barotha ( 1450 MW), Mangla ( 1000 MW ), Warsak (243 MW) and Chashma ( 184 MW ). Wind energy potential is approximately 15000 MW. 11.3 billion Bhasha dam project , largest ever project under taken in Pakistan is likely to resume soon. Pakistan prepared an energy security plan (2005-2030), which forecasts a seven fold increase in total primary consumption and an over eight fold increase in the requirement of power over the next twenty five years. PEPCO under the umbrella of ministry of Water and power is contemplating numerous options for attracting foreign investments which will position Pakistan as a key trade and investment hub linking the Middle East, South Asia and Central Asia, with the Gwadar post creating a new economic corridor. Presently, One of the most pragmatic approach adopted by the government is to persuade foreign governments and entrepreneurs to invest in energy sector of Pakistan, particularly for electricity generation . Pakistan has requested $4 billion in International Monetary Fund aid as part of an effort to strengthen its economy amid a war with militants. The $4 billion would come in addition to a $7.6 billion credit line that Pakistan secured from the IMF .The government is working to establish Energy Development Fund of $1-2 billion with the help of International Financial Institutions that include the World bank and Asian Development bank. The first step has been to clear the gigantic menace of circular debt worth rupees 85 billion. As per the out come of negotiations between the world bank, Asian development bank and the government, The electricity consumers would be able to avail RS/67 billion subsidy during the current fiscal year . Iran has indicated its willingness to finance three projects related to development of energy infrastructure in Pakistan by utilizing $ 330 m total pledges made at Tokyo Donor conference. This commitment consists of $ 10 million as grant, $ 120 m as project finance and $ 200 m as trade finance. PEPCO is striving to make all possible arrangements for smooth and speedy process of electricity import from Iran. Contract agreement between NTDC and an Iranian firm for the initial phase supply of 100 MW electricity, costing 74.86 million/RS, through construction of transmission line and 220 kv grid station at Gawadar was signed in feb 2009. The negiciated loan agreement and the project documents have been sent to ministry of finance for issuance of GOP guarantee and legal opinion of ministry of law. The project is expected to be completed in june 2012. Iran may assist Pakistan in supplying 1000 MW additional electricity to GAWADAR port and surrounding towns of sindh and Balochistan in order to further ease the growing power crises. Contract agreement to carry out feasibility study was signed with joint venture of consultants and will take about five years. Final report is expected to be completed by apr 2010 and the project planning is way ahead of schedule. The delegation of PEPCO/NTDC during its visit to Iran also negotiated the terms and conditions of extension in contract for import of 39 MW power from Iran to Pakistan, for border towns of Balochistan with reference to tariff determination ,which is also on final stages. The electricity was offered at a price of 5 cents by Iran, which was raise to 11.50 cents. Now PEPCO is trying to bring the price down to7 or 8 cents. PEPCO is also in coordination with Ambassadors of Pakistan and Iran for ensuring speedy progress. Iran has also expressed interest to finance construction of SEHRA hydro power project in AJ&K by an Iranian company costing $ 350 m, with a power generation capacity of 65 MW. Chinese companies have shown tremendous interest in investing in Pakistan’s energy sector. Recently it has signed 747 MW combined cycle project with Harbin power engineering CHINA, located at Guddu power company under GENCO II. The project will replace the existing underrated units and increase the generation capacity of the power plant. China has also formally indicated to provide two nuclear power plants with a generation capacity of 300 MW each, Chashma-3 & , along with two power plants of 320 MW each in Karachi. China has also included 969 MW Neelum –Jhelum Hydro electric power project with a cost of RS/ 128.4 Billion in its 2009-2010 FYDP. The most significant of which is 200 MW RPP Shiekh Manda near Quetta . China has allocated $700 million for the construction of small dams in all four provinces of Pakistan.. Pakistan on its part would contribute $ 300 M. The dams would be Wandar dam at Lasbela Balochistan worth RS/ 1.695 B, Naulang dam at Jhal magsi worth RS/10.73B, Guruk storage dam at Kharaan worth RS/1.79 B, Pearl storage dam at Awaran worth RS/1.692 B in Balochistan. .Two small dams in Punjab Ghabir dam at chakwal worth RS/ 2.111 B, Papin dam at Rawalpindi worth RS/ 1.13 B. Similarly two dams in sindh include Nai ganj dam at Dadu worth RS/ 16.924 B, Darawat dam at Thatta worth RS/ 3.175 B. In addition to this Daraban Zam dam at D I Khan worth RS/ 2.75 B, Bara dam in Khyber agency worth RS/14.20 B will also be constructed. Chinese companies would transfer technology to Pakistan to generate solar and wind energy, which would be provided to farmers for irrigation across the country. Funding of the projects to get 2000-3000 MW electricity generated will be done by ZTBL Pakistan. Chinese companies have also accelerated their work on 560 MW Bin Qasim power plant worth RS/35 Billion. KESC and Harbin power have also signed an agreement for dual fired combined cycle plant in Karachi. USA has also extended considerable assistance to Pakistan to over come energy shortage, hampering its economic growth. The recent composite strategic dialogues have developed a consensus that US will help Pakistan in meeting its energy needs.US state department of energy and commerce, National security council,. USAID, US trade and development agency, Federal energy regulatory commissions and Over seas private investment corporation are all striving to collaborate with Pakistan. US government has consented to extend $300 m to $ 500m financial facility to construct private power projects. Proposed projects are: Replacing or repairing 11,000 agricultural irrigation tube well pumps, a major component of electricity transmission, used by a majority of farmers across Pakistan. Rehabilitating, refurbishing, and upgrading targeted components of the Jamshoro, Muzaffargarh and Guddu thermal power stations to recapture significant amounts of their lost capacity.– Improvements at Jamshoro Thermal Power Station, which sits on the banks of the Indus River near the city of Hyperabad in Sindh province, will result in an additional 530 GWh/year of electricity for the national grid., Improvements at the Muzaffargarh Thermal Power Station (TPS), located on the banks of the Indus and Chenab Rivers near Multan, will result in 165 MW and a production of approximately 1,185 GHh/year of electricity for the national grid, saving 17 million dollars in fuel per year. A targeted rehabilitation project to improve the ageing and deteriorating gas turbines at the Guddu Thermal Power Station will restore 33 to 55 MW of the power station’s lost capacity and produce an additional 237 to 372 GWh/year for the national grid. The more efficient units will save approximately 2.3 million dollars per year, Installing higher performance insulation windings and supplying spare parts at the Tarbela Dam Hydroelectric Power Station, located on the Indus River in the NWFP, will increase the station’s capacity to 80 MW – 192 million kilowatt hours – of power. Establishment of rail link from Mir pur khas to Islam kot, Master plan of Thar coal field development, Use of hybrid power system in coastal areas of Sind. Like wise, Germany is also enthusiastic in energy sector investments in Pakistan. The honorary investment counselor of Germany reiterated this while addressing the business community in Karachi chamber of commerce. Particularly, the German companies are showing interest to explore the solar energy potential in Pakistan. Establishment of trade and energy corridors with central Asia is also on the cards, as stated by the President of Pakistan, in the back ground of early implementation of the 1000 km long power transmission line from Tajikistan to Pakistan, known as central Asia-South Asia 1000Other than this , Al-jumaih group of Saudi Arabia, Malakoff of Malaysia and Shenhua of China have been very keen to participate in the joint venture of THAR coal project. Pakistan and Turkey have formed a joint group to examine priority areas of cooperation, particularly the energy sector. This step was initiated in a meeting of Pakistani-Turkish CEOs forum held in Islamabad to promote economic cooperation. Exchange of business delegates have also been agreed upon to get investments. ADB has recently extended $780 million through a multi tranche financing facility for priority energy efficiency projects for reducing country’s reliance on costly, polluting fossil fuels. ADB, carrying out third party audit, has recommended electricity load conservation as well as increase in power generation up to an aggregate 2200, MW. ADB has suggested replacement of 30 million incandescent bulbs in the domestic sector. These efforts to attract foreign investment in energy sector of Pakistan, may lead to a better economic situation and fiscal stability. With the start of new projects ,employment can be generated, raw materials can be mobilized and financial transactions can stabilize the money supply mechanism. It can also have a direct impact on the industrial, agricultural and commercial sectors to strengthen the economy of the country. The foreign investment initiatives taken would not only generate economic activities but also will strengthen the economic fiber of Pakistan on strategic levels. Regarding the foreign investment, PEPCO has signed over 2000 contracts with private sector to overcome energy crises. PEPCO is making untiring efforts to import from or generate electricity in collaboration of any country in the world and the muslim countries are particularly welcomed.PEPCO is all set to make efforts for coordinating, negotiating and implementing energy projects to meet electricity requirements of the country.