By Engrs Hussain Ahmad Siddiqui & Engr Jawaid Iqbal Mufti
THE government at all levels has committed to providing the two basic essentials— potable water and electricity— to the entire population by the year 2007.
Indeed, energy is one of the vital components for achieving economic development and its consumption an indicator of the progress of a nation; ours being amongst the lowest.
Growing industrialization coupled with rapid urbanization puts a premium on demand for electricity. In this perspective, the government’s commitment to providing electricity to all is re-assuring.
Understandably, a comprehensive strategy is being adopted for the enhancement of power generation capacity at national level, with focus on utilizing indigenous resources. Implementation of the strategy is thus aimed at ensuring continued power availability, strengthening power generation, transmission and distribution system, and thus making power sub-sector viable.
The government, in recent weeks, has unfolded the strategy, in parts. To achieve the objectives, a 7-member Cabinet Committee on Energy has been constituted, headed by the prime minister, which will be responsible for economic and technical regulation and expansion of the energy sector, besides undertaking other related functions.
The government has taken a number of steps aiming to remove impediments hampering implementation of various independent power producer (IPP) projects, in particular. For example, natural gas supplies for power plants were restricted till now. Earlier indications of 9-to-10-months-a-year availability of natural gas for thermal power plants, committed only up to 2010-11, had negative impact on the progress of gas-based projects.
In fact, gas supply position is not that bad since discovery of seven new gas reserves was made during last three years that would help meet the gas demands for next 25 years. Again, development of additional wells in existing gas fields has increased gas production by additional over one billion cubic feet per day since the year 2002-03. Approval has therefore, been accorded to a new gas allocation and management policy ensuring gas supplies to the IPPs, amongst others.
Gas Management Policy 2005 has already been announced, which has exempted the IPPs from levy of gas commitment charges made applicable recently on other industrial projects. The dual-fuel (gas/oil fired) power plants, employing high efficiency combined cycle technology or co-generation technology, of capacity up to 50 MW will be given top priority for gas allocation.
Processing time for the new projects has been curtailed and tax exemption—hitherto allowed only to gas-based plants—has been granted to dual-fuel projects as well, to be established on or after September 01, 2005. Likewise, the prime minister has issued instructions to resolve genuine problems of the IPPs on priority.
Also, amendments have been made in Power Policy 2002, allowing concession period up to 50 years for investment in hydropower projects by the private sector. It has extended providing sovereign guarantees for power projects below 50 MW too, which are to be facilitated by the provinces and Azad Jammu & Kashmir as per policy.
In a latest move, the government is considering restoration of tariff that was announced under the Hydro Policy 1995, for projects having signed power purchase agreements at lower tariff in the past. Ostensibly, these projects were not coming up.
The nation currently experiences electricity shortfall of 500 MW, and is expected to face increasing power shortage in coming years, on the basis of demand-supply projections. Apparently, there will be no major additional power generation capacity created by then, according to the schedules available for projects in the pipeline so far. Study of various scenarios worked out indicates that there would be significant power shortage throughout the period, but critically in next three years.
The demand-supply analysis carried out on the basis of medium term development framework (GDP projections) load forecast shows that the Wapda system would have power shortage of 5,138 MW in the next five years. By the end of fiscal year 2005-06, the net shortfall will be 400 MW, which will increase to 1,000 MW by June 2007 and 1,200 MW by December 2007.
Let us look at the power generation scenario. As on June 30, Pakistan had installed power generation capacity to the level of 19,657 MW (mega watt), and produced approximately 83,000 GWh (giga watt-hour) electricity for its some 15 million consumers nationwide.
Consumers are growing at the average rate of about nine per cent annually, and so is the load demand. Obviously, power generation entities in public sector, even after resorting to purchasing power from the IPPs, find it hard to keep pace with the growing consumer requirements.
A number of power plants have already been retired—of cumulative capacity of 412 MW in last few years—-and others are due to retire in near future. At present the de-rated capability of installed power plants is thus hardly 90 per cent. During past few years there has been nominal addition in capacity, though it jumped drastically— over eight per cent —in the year 2003-04 when 1,548 MW were added to the national capacity (TABLE-1).
During this period 1,450 MW capacity Ghazi Barotha hydropower project was commissioned. Since 1996, Wapda could not establish, as it was not allowed to, any new thermal power plant and its activities were restricted to the development of water-power projects. Instead, private sector was encouraged to play a proactive role in setting up thermal power plants under power policies adopted from time to time.
In response to Power Policy 2002 proposals for setting up as many as 17 power projects, both thermal and hydro, with a cumulative capacity of around 4,000 MW are in advanced stages of processing. Out of these, construction of nine projects of cumulative capacity of 1,329 MW is scheduled to commence during this year (2005-06).
National Electric Power Regulatory Authority (NEPRA) has recently finalized tariff for two gas-based thermal projects, namely Orient Power (200 MW capacity) and Star Power (123 MW), for which financial close could be achieved shortly. These projects are likely to be developed on a fast-track basis, under directive from the government, in case respective tariffs are settled. Currently, sponsors of another three thermal power plants are negotiating tariff with the KESC/ Wapda.
The 150-MW capacity Western Electric Power is also expected to achieve speedy progress to put it on stream earliest. Two hydropower projects in private sector, processed under Hydro Policy 1995, are also expected to be achieving financial close soon.
Recently, the private power and infrastructure board (PPIB) has approved another 16 thermal and hydro power projects with a cumulative capacity of 3,700 MW. Another three projects, based on gas and oil-gas dual-fuel, of total 1,400 MW capacity, are scheduled for international competitive bidding shortly.
Thus, there are a number of power projects in pipeline, to be constructed in public sector as well as in the private sector. TABLE-2 shows the projects that are scheduled for commissioning during the period 2007 - 2010. According to the schedules, only 99 MW power generation is likely to be added to national grid by 2007. Based on past experience, it is apprehended that even these projects could be delayed, due to a number of internal and external factors and force majeure. Implementation of Wapda’s Vision 2025 has already run into snags.
The hydro power projects of Wapda awarded to foreign contractors in 2002, namely Khan Khwar, Duber Khwar and Allai Khwar hydropower projects have suffered technical and legal constraints and infrastructure limitations. Consequently, all the three projects have witnessed the most inordinate delays. However, WAPDA has recently speeded up progress for early completion of these on-going projects, by removing bottlenecks.
In view of the grim power situation, the IPPs are being asked to enhance optimally the generation capacity of their existing plants within shortest possible time. On similar lines, the government has asked Wapda to implement capacity improvement plan primarily through rehabilitation and recovery of old thermal power stations, which would add 187 MW to the system by December 2007.
Also, Wapda has been allowed to set up two new thermal power projects that have lesser gestation period and thus can be commissioned in a shorter period compared to hydropower projects. These gas-based, dual-fuel power units with a cumulative capacity of 850 MW are to be located at Nandipur (450 MW) and Chichoki Malian, near Lahore (about 400 MW). Implementation of these projects, for which detailed feasibility studies are in hand, will be undertaken, on emergency footings, by November this year.
The two projects, to cost about Rs37 billion, are scheduled to go on stream by December 2007. The other project to come up in public sector is the old plant of 512 MW total capacity gas turbines that has been gifted by the UAE government in August 2004, and is to be relocated, on bifurcation, as 432 MW power station in Karachi and 80 MW unit in Faisalabad.
Major IPP projects that would come up speedily as a result of government decisions include New Bong Escape project of 97 MW capacity, Kohala project of 600 MW, Abbasian project of 245 MW, Taunsa Barrage project of 120 MW and Matiltan project of 84 MW capacity. Raised Mangla Dam project, on completion sometime in 2007-08, will add about 150 MW to the national grid. There are also plans to install a 100-MW wind-farm power plant in Karachi. The financial outlay for all these projects would be enormous, however.
As Wapda serves 88 per cent of the total electricity consumers countrywide, it possesses, along a principal power generation capacity, an integrated transmission and supply system as well. It constitutes 500-kV, 220-kV, 130-kV and 66-kV transmission lines, totalling over 46,000 circuit-kilometres, and 681 grid stations of cumulative capacity of 41,000 MVA. The transmission and transformation infrastructure has become inadequate and, at the same time, its major part is outdated. In fact, electricity distribution network in almost all the larger cities is in a dilapidated condition.
Realizing the needs for improvement and expansion of the whole system, many projects are currently being executed by Wapda, whereas others are planned. Major on-going projects are 500-kV Muzaffargarh-Gatti, 500-kV systems for power dispersal from Ghazi Barotha hydropower station and the proposed Thar coal-based project, 500/220-kV NTDC-KESC interconnection and 220-kV Uch-Sibbi double circuit transmission lines. All these projects are due for completion in the year 2007-08.
Likewise, 500 kV Sahiwal substation and two new 220 kV grid stations in and around Lahore city are under construction, to be completed by 2007-08. Another two 220/132 kV grid stations are planned, one each at DG Khan and Kharian. Special incentives are therefore to be offered to the respective contractors to complete the work ahead the respective project schedules, in order to achieve the targets of providing electricity to the population.
Undoubtedly, rural electrification has imparted a new momentum to the agricultural sector resulting in economic uplift of the areas. At present 68 per cent of the total population of about 162 million, lives in rural areas. Wapda is responsible for implementing village electrification program in all the provinces, excluding northern areas and Azad Jammu & Kashmir, but including territories of the Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA).
Out of a total of 127,586 villages, 90,467 were electrified by 30th June 2005, progressively, over a period of 45 years. Thus, there are another 37,119 villages that need to be energized by Wapda. The remaining villages are targeted to be electrified by December 2007, to be financed under the prime minister’s Roshan Pakistan Programme. Electrification of villages through solar and wind energy will be nominal, which has not been taken into consideration in this study.
Historically, the growth of electrification of the villages by Wapda remained at about two per cent annually, that is adding in the range of yearly average 1,500 villages, from 1997-98 to 2002-03, though much less in previous years. It was only in the subsequent two years that the growth rate increased to 10-12 per cent. In all, electricity was provided by Wapda to 7,193 and 9,467 villages during the whole fiscal years 2003-04 and 2004-05, respectively (TABLE-3). The high speed is being maintained, as work is in progress in another 6,838 villages, to be completed by December 2005.
At the presently achieved higher pace, target electrification of over 37,000 villages will require more than three years. The government is finalizing a strategy in this regard and, as a first step, has already directed Wapda to set up a special cell to speed up electrification work. Indeed, if financial and physical resources are made available to Wapda to overcome infrastructure and other capacity limitations, it will result in accelerating the progress to the desired levels.
In conclusion, a two-year timetable for providing electricity to all—whether in urban or rural areas—is too ambitious, but not unrealistic, in case the recent measures adopted are implemented by the government in letter and spirit and effectively monitored.
In any case, these measures will help reducing the larger electricity supply deficit in the short-term period. Seeking energy security in the medium-term and long-term perspectives, nonetheless, is a step in the right direction. Again, availability of electricity is not enough, it must also be economical and affordable.
