October 30, 2006	Monday	Shawwal 6, 1427

Pakistan recently experienced the fourth major power breakdown to hit the national grid since 1999 and the longest in its history. It cost the nation over Rs200 million.

This is mainly as a result of shortage of power and poor transmission and distribution infrastructure. When demand outstrips the capacity, causing a ripple effect and resulting in the collapse of the entire system.

We will continue to live with this phenomenon unless we take drastic action, on war footings, to improve the power sector of the country; without it the tall claim of eight per cent increase in GNP in future will only be a dream.

Our power generation capacity was considerably enhanced in the nineties, but since 2000 no major project has been constructed.

From 1987 to 1992, in Wapda, we doubled the power generation capacity. Major transmission lines from Tarbela to Jamsharo via Faisalabad and Multan were added to reduce the line losses which were brought down from 28 per cent to 19 per cent. It has now jumped to 30 per cent.

During People Party’s tenure in power considerable power generation capacity was added in private sector. There was a lot of criticism at that time on the power tariff of 6.5 cents given to these developers, but at that time this was the only solution to meet the rising demands.

Since then no significant addition has been done to our power generation capacity resulting in the present crisis.

Instead of taking long time measures to over come energy crisis we are grappling at quick fixes which will only bring further deterioration in this sector. It is incomprehensible why KESC was hurriedly privatised without the government having negotiated capacity building programme on improvement of distribution system with the buyer.

The price the people and Karachi based industry and commercial sector are paying as a consequence of frequent power failure is all too evident. These and other failures of political and economic aspects of the government are least likely to restore the investor’s confidence in the country.

It is disturbing that instead of undertaking mega projects in public sector, government has opted for a further pulling out of the power sector. The revised power policy is aimed at inviting independent power producers to fill the gap between supply and demand.

If pursued in disregard of the consequences, it will only make the power crisis go further up in the years ahead. Such policies are the result of the highest tariff in the region today. This is having a catastrophic effect on our exports.

We are trying to deceive the nation by performing opening ceremonies of projects like Bhasha Dam, which should have least priority. During late 1980s we tried to complete the feasibility of this project with foreign assistance but the investors refused to finance the feasibility because according to them the area was disputed. One wonders how we can finance this mega project now.

Without detailed feasibility it is surprising how we have laid the foundation stone of Bhasha Dam. A similar façade was enacted in the past when a developer from Honk Kong was hailed in the press for the development of billion dollars thermal coal project which did not see the light of the day.

The preliminary study of Bhasha Dam has indicated that this is a questionable project and difficult to construct even for a developed country mainly because of the technical problems.

If constructed it will be the highest concrete Dam in seismic prone region. It will be prohibitively expensive to construct because of the difficult design and mountainous terrain.

The transmission line will have to be constructed over the most rugged and unstable mountain region of the world. Even a small slide will cause havoc to the transmission line which may take months to restore. Bhasha is therefore a non-starter to meet our immediate energy needs.

During the last fiscal year, Pakistan spent $6 billion on energy imports when oil was at $40 a barrel. If oil prices reverts back to between $60 to $70 per barrel and with about 10 per cent annual increase in the energy consumption, we would need over $9 billion this year for energy import, about $3 billion go out for debt servicing resulting in the expenditure of 2/3 of our meagre export earnings of $17 billion.

A recent report of UNDP indicates that we have no elasticity to raise our exports earnings. Even our principal industrial sector of textiles has been loosing market share in textile and clothing in competition with the regional countries including Bangladesh which does not even grow cotton.

Last year’s trade deficit of $12 billion, the highest in the country’s history has already been overtaken in the last three quarters. So, where is the hard currency going to come to pay for our essential needs, such as medicine, machinery, defence and reserves to keep the rupee from sliding.

Our country’s use of privatisation proceeds and home remittances to finance the current consumption is self defeating. The feel good factor thus created would start to evaporate as the few remaining state owned enterprises are sold out.

This should give sleepless nights to our policy makers. As if that was not worrying enough, we still want to add to our external venerability by opting for second hand expensive and inefficient imported thermal power plants on rental bases at a tariff of three cents per KWH excluding fuel cost and buying F-16 air crafts for billions of dollars. One wonders why we need these expensive toys when we have nuclear deterrent.

I recall when we achieved our nuclear capability in 1983, we used to argue with General Zia, to go nuclear instead of keeping the bomb in the basement, reduce the army to half (because nobody would dare to violate the borders of any nuclear state) and use the money thus saved, for the development of the country: but he also did not want to displease the Americans.

Our total installed capacity of power is 19500 M W. Considering the spinning reserves and the line losses, the firm capacity is reduced to about 10000MW resulting in massive load shedding of two to three thousand MW.

With eight to 10 per cent annual increase in power demand Pakistan will require about 25 thousand MW of firm capacity by 2015. It is, therefore, imperative that we increase our installed capacity with all available resources at the earliest, otherwise our exports will completely collapse and the country will plunge into darkness for 30 per cent of the time.

At present we are generating 50 per cent of our power by natural gas, 30 per cent hydro, 16 per cent oil, 3.3 per cent nuclear and only 0.2 per cent coal. The country has the capacity of 40000 hydro electric power and abundant coal reserves which are both cheap sources of energy compared with nuclear and gas. Our endeavour should be to base our power plants on indigenous sources.

Hydro power: We are generating only 6000 MW of hydro power against the potential of forty thousand MW. This is the cheapest source of renewable energy and is also environment-friendly.

As explained earlier Bhasha Dam is a non-starter because it is very expensive and difficult to construct, more over it does not fit in the time horizon. Small hydro projects will not make significant difference, moreover these are expensive to construct because of economy of scale.

The only major project which can be completed in the next eight to 10 years is Kalabagh Dam which beside generating 4000 MW of cheap power will have considerable water storage for irrigation purposes, essential to meet the food demands of our growing population.

Kalabagh Dam has no adverse effects on any province. This project has been unnecessary politicised by the vested interests.

When Mr Jam Sadiq was the chief minister Sindh, Mr Jatoi who is the minister of water and power at present, was a minister in Sindh cabinet will recall that the Sindh government almost agreed for the construction of this project at that time. The only opposition was from the Frontier Province.

Here too all the technical experts of the province agreed with WAPDA that Kalabagh had no adverse effects on Frontier Province . Only one political Party was against it. I recall the comments made to me after a detailed presentation regarding Kalabagh by a senior member of that party.” General”, she said ,”what you are saying makes a lot of sense but agreeing to start this project will be our political death”.

With a little bit of more persuasion, all concerns can be brought to a consensus to start this project which is vital for the survival of Pakistan.

Coal-fired units: Pakistan is sitting on 185 billion tons of coal estimated to be second largest reserve in the world. While 1.5 millions MW of coal-based power plants are in the various stages of development around the world we do not even have a single MW plant based on coal. Compare to this 77 per cent of power generation is based on coal in India, 58 per cent in UK and 52 per cent in USA.

Investment in an indigenous integrated coal mining and power generation is a long-term commitment by investor. It is different from investment in the franchise of a fast food chain or from importing ready made power plants. Hence partnership of public and private sector is essential for the successes of such projects.

For the first time, a 150 MW coal-fired plant was installed with the Chinese help at Lakhra in early 90s. It was also planned to develop the coal mines in the area to meet the requirements of this plant.

Against a market value of about $130 million we contracted this plant from China at a cost of $70 million. We asked the Chinese why they are giving us this plant at such a low price, their answer was that though it was a proven technology and such plants are operating all over China, they intended to export similar plants to the entire world . They wanted a corroboratory reference that such a plant is successfully operating outside China.

Lakhra coal plant successfully operated for over two years. Later it was shut down due to poor maintenance. Our future coal fired plants should be based on Lakhra Coal which is of better quality than Thar coal, which has excessive water contents.

Modern technology of pulverized coal, synthetic gas or gaseous fabrication of coal considerably reduce emissions of gases in the atmosphere and make them environment friendly. We should immediately explore the possibility of constructing coal fired plants.

Gas turbines: Power generation based on gas turbines is the quickest means of generating power. These turbines are available off the shelf and have an efficiency of 55 against 36 per cent of oil fired power plants. To overcome the immediate shortage of our power requirements we should set up power plants based on gas. It is imperative that we should endeavour to immediately conclude the agreement for the construction of gas pipe line from Iran for such projects.

Nuclear projects: We have made some headway with the help of China in the nuclear field. Uranium exploration in Pakistan started in the late seventies when we started the Kahuta nuclear project. Geological and exploratory projects carried out since then have resulted in delineation of favourable areas of uranium deposits in Pakistan.

It indicates the resource potential in excess of 30 thousand metric tons of uranium 308. The requirement of yellow cakes for the project needs can be catered to a significant extent from indigenous resources.

Currently there are international embargoes on the transfer of nuclear power technology to Pakistan. People Republic of China is the only supplier of the nuclear power plants to us.

In view of the latest agreements of India and USA in the nuclear field we must also try to get the embargo removed so that we can contract more efficient nuclear power plants from developed countries.

Cost of construction of nuclear power plant is comparable with thermal and hydro plants, but in the long run it is most expensive because its decommissioning cost is more than the commissioning cost. However it is environment friendly and essential to meet our Power requirements.

Infrastructure development: In the last ten years, our line loses in WAPDA system have gone up from 19 per cent to over 30 per cent where as in KESC loses are estimated to be 40 pert cent. It is therefore paramount that more transmission lines should be constructed and distribution system over hauled This can not be done in private sector, it has to be undertaken by public sector.

To overcome the present energy crises it is repeated again that all the national resources should be galvanised, on war footing, to add about ten thousand MW to the existing power generation in the next ten years.

Economical power plants can not be completed over night. Hydro plants require eight to ten years from feasibility to completion, coal based plants four to six years, nuclear three to five years.

Only oil and gas based plants require two to three years but the power generated is very expensive, therefore not feasible in view of prevailing highest tariff in Pakistan compared with the countries in the region which is already making our exports uncompetitive.

What our country needs is a serious straightening of economic and development priorities along with a pinch of selfless patriotism. A tall order indeed.

— The writer is a former chairman, Wapda