Coming to grips with the power crisis
By Sultan Ahmed
WITH the domestic oil production static at 50,000 barrels a day for the last 50 years, Pakistan has to meet 80 percent of its oil needs through very expensive imports. Determined efforts by successive governments to cut down oil import have not been successful. As a result the import of oil has risen from 160,000 barrels a day in 1986 to over 350,000 barrels in 2006.
And the total oil import this year is likely to be $7.5 billion due to larger imports and higher prices instead of $6.5 billion. That has aggravated the balance of trade deficit and the balance of payments.
Almost every time the oil exploring companies look for oil they are more likely to come across gas but the gas they find is not large enough to meet the varied and rising needs of Pakistan. So the shortage of gas has forced many factories in Punjab to close down and a few in Sindh as well.
Meanwhile, the government has announced a comprehensive alternate energy development policy which promises large incentives to the companies developing alternate energy. The government has promised active assistance to such companies. Such decisions should have been taken a long time ago, but various factors, including the hope that the world price of oil will come down have stood in the way as it is a virgin field in Pakistan.
The government is also exploring various energy conservation measures after talking too much about it and doing too little. In fact, the practice of lavish illuminations was permitted particularly on weddings eves along with illegal use of electricity for street cricket at night.
The energy crisis has become acute at a time when the government needs far more power and gas to supply to the people before the general elections next year. President Musharraf and Prime Minister Shaukat Aziz have promised water and power to all by the year 2007 but without mentioning before the elections and they are trying to act on their promises as much as they can in spite of overwhelming odds.
The shortage of power has become acute because of the crisis in Balochistan and the greater power consumption there, gas connection to many villages keeping with the pre-election promises and the fall in the output of hydel power because of reduced withdrawal of water from the dams by the provinces following heavy rains. The election season also demands that the POL prices are not high and that the people are allowed to enjoy relief as the world oil prices come down. But the prime minister refuses to do so. He says as the world price of oil drops, the money saved has to be used to reduce the budget deficit or meet the shortfall in the petroleum surcharge earnings. Although the World bank and the IMF pressure too is in that direction, he would soon see political wisdom in reducing the POL prices before the elections which the ruling coalition led by general Musharraf is determined to win.
Meanwhile, the prime minister has asked the ministries of water and power and petroleum to come up with short, medium and long term energy conservation policies. And they are working on such policies. The Wapda has moved the government for Rs 50 to 60 billion in foreign exchange for importing furnace oil to produce enough power. And the government is reported to have told Wapda to rely less on furnace oil, but it says it has no other option except resorting to load-shedding which is abhorrent in an election year.
One of the energy conservation proposals mooted was to have an extra weekly holiday on Saturday, but that option has been rejected by the prime minister. Earlier moves to have an extra weekly holiday showed that not much power could be saved through that means. In a country where too much of power is vested in the government and crime is on the rise, it cannot afford another weekly holiday while there are even otherwise too many weekly holidays. It will retard economic growth as well.
That option is hence not there. Reducing the shopping hours has not been successful either and not much of an energy saver and anyway the government is not ready to hand over Rs50 billion to Wapda to buy furnace oil.
But in a pre-election period the government can also not afford extensive and frequent load-shedding. What happened in Karachi this summer cannot be repeated all over the country without horrid consequences? Anyhow, chairman of Wapda Tariq Hameed has said that his organisation will face a shortfall of 2,000 MW by January and it may have to resort to half an hour of load-shedding daily in the big cities.
The situation may not have become so acute if the government had taken decisions on major dams earlier instead of delaying it for seven years. It could have started work on the non-controversial dams earlier instead of waiting for political clearance for the contentious Kalabagh dam. The World Bank has been urging the government to take firm decisions on the dams, get aid and start work on the project early, but the government delayed the decision for too long.
It has now decided to go ahead with five dams which may cost $20-25 billion. Preparatory work on the Kalabagh, Diamer, Bhasha and Akori dams is to start quickly and all the dams will be completed by 2016, says the prime minister.
The international aid agencies are coming to the help of Pakistan in every sector of energy development. They are dissatisfied with the performance of the government in the energy sector, particularly the tardy energy reforms. While they admire many of the energy reforms of the government, they find the reforms in the energy sector feeble and inadequate. And they are dissatisfied with the performance of the official institutions in the energy sector and want radical improvements there.
And they want early privatisation of PSO, Pakistan Petroleum and OGDC instead of delaying that on one pretext or another. The government is to move decisively in that direction soon.
Meanwhile, the Karachi City Council has called for a 25 percent reduction in POL prices to pass on the benefit of the falling world oil prices to the people. More local government councils may follow suit and issue such calls.
Meanwhile, a ray of hope in this sector is the possible arrival of gas from Iran through the Iran-Pakistan-India gas pipeline. There has been some delay in finalizing the agreement and starting work on the project because of the disagreement on pricing which is sought to be solved with the help of an expert from London. Meanwhile president Musharraf has reaffirmed that the IPI gas line would be built at all costs heedless of the UN resolutions on Iran’s power quest. But the Iranian gas may take four to five years to arrive in Pakistan and that is a very long wait.
Foreign minister Khurshid Kasuri who has returned after meeting the Iranian president has also said the UN policies will not affect Pakistan-Iran relations.
A major reason for the sharp increase in the consumption of POL products is a rise in the number of cars, thanks to the liberal bank loans. The affluent persons are replacing small cars with large ones and supplementing their fleet. The traffic jam in Karachi is increasing and now each kilometre travelled consumes more petrol or gas. The quest for parking space results in further loss of energy. If more convenient and comfortable public transport was available, there would be less demand for private cars. But the public transport system is inadequate and inefficient and buses are over-crowded. Bus fares are also rising frequently.
Meanwhile, a planning commission official has said that Pakistan will face a gas, oil and power shortage in the medium and the long term. The fact is that Pakistan cannot depend on import of oil to the extent of 80 per cent of its needs and which will go on rising. And if oil consumption within a year can go up by 80 per cent as it is reported to be the case this year, that is too difficult to cope with.
It is easy to ask the ministries of water and power and petroleum to come up with comprehensive energy consumption for the short, medium and long term, but it is difficult to act on that as past experience has shown. Waste and theft of power is more common in Pakistan than energy consumption for which there is very small public support.
With such lasting and acute power shortage it is difficult to attract sufficient foreign investment. It is not every investor who has the money to invest in power production units as well and he may not be willing to borrow money for that purpose from the bank at a high interest rate.
The law and order situation in the country demands that more homes keep their lights on rather than off in the night.
Anyway with the price of oil being what it is and fluctuating along with the shortage of gas in the face of rising demand we have to make determined efforts to make energy conservation a success and prevent the vast power theft.


