July 23, 2007	Monday	Rajab 07, 1428

A sharp rise in power demand by 10 to 12 per cent against an average eight per cent decline in electricity generation has resulted in an acute power shortage in the country, particularly in Karachi. Making the situation worse is the frequent breakdowns in supply of power together with abnormal load sheddings.

One making the other worse, and when the power breakdown disrupts the supply of water, the riots occur and the people come out on the streets to destroy the Kesc properties.

The crisis is the outcome of the complacency of the Wapda and the Kesc bosses. They hope that somehow power production will increase or the people will put up with the shortages as before. When they try to tackle the problem, their approach is more dogmatic than pragmatic. Above all, they do not have the large funds needed to invest on new projects.

But now with the oil prices touching nearly $80 a-barrel and Pakistan’s oil import bill exceeding $8.6 billion, there is no place for complacency or a dogmatic approach to the problem. Those who forecast that oil will rise to $100 a-barrel may soon come true. And that would land the non-oil producing Asian countries into a lot of trouble.

But now realism has begun to dawn on officials and there are significant policy changes. The week began with a strong call by the standing committee of the Senate on water and power for adequate measures to increase power and gas supplies.

A new petroleum policy, approved by the Economic Coordination Committee of the Cabinet (ECC) presided over by Prime Minister Shaukat Aziz, provides various incentives to the earnest explorers and producers of oil and gas. Petroleum Secretary Ahmed Waqar has said that it was more realistic and helpful to the gas and oil producers. He said the country now produced 70,000 barrels of oil a-day which was 20 per cent of its requirement and four billion cubic feet of gas.

He said the fruits of the new policy would be visible after five years but in the mean time price of gas would go up in the country.

Five years is a long time, but then oil exploration has been very slow and the OGRA on its part has said the petroleum policy 2000 is unrealistic and wants that it to be scrapped in favour of the 1994 policy.

Development of the Thar coal is to receive attention of higher degree. President Musharraf is presiding over a high-level conference this week. The federal government has set up a new Thar coal company. A private sector company has also been set up by Hasan Associates. More private sector companies are expected to come up following the presidential initiative and the large area over which the Thar coal is spread, making it one of the largest coal mines in the world. If the Thar coal can substitute imported oil for power production it will be of great help to the country.

The government has come up with additional incentives to an alternate energy development company. Other companies in the field are bound to seek the same favour which cannot be denied. In fact alternative energy demands needs stronger support than it has been given.

Pakistan, Iran and India have eventually agreed on a pricing formula for Iranian gas which was a tough exercise. The formal agreement is expected to be signed soon and the work on the project would follow. The Japanese pattern has been adopted for the pricing formula. It has also been made clear that gas will not be available to new private sector power companies.

But what will happen after the Iranian gas becomes available here by 2011 or earlier? That can surely be used for power production instead of imported oil. The situation in respect of the use of Iranian gas for power production should be made clear by the government.

The government has raised the rates for three private sector power producers. There terms were signed when oil prices were very low, but they are now close to $80 a-barrel. Other private producers of power would want an increase in their rates also. Their legitimate demands should be met so that they invest more on power production. If that is not done they may not use their capacity to produce more power.

Exploration licences are being given more liberally than before, but they will now be scrutinised to separate the genuine from the others. Last year, the OGDC was charged to explore 100 wells in a year but they explored under 50. The target and the performance should be close to each other.

More offshore drilling licences are being issued. Some reputed foreign companies are in the field with local explorers. Their endeavours have not been very rewarding so far. If Bombay High can find oil, Karachi cannot be too far for too long. The General Electric Company of Britain has a joint venture with Wapda at Sheikhupura producing 150 MW of power and that is to be expanded now by 100 MW.

The privatisation of PSO has been delayed because of popular opposition to privatising heavily profitable companies.

The World Bank is dissatisfied with the progress of power sector reforms. In particular it deplores the delay in devolution of authority to the 12 distribution units of Wapda. The government had agreed to it, but Wapda is not willing to transfer a share of the authority to its distribution units. The Asian Development Bank agrees with the World Bank.

The ADB is also coming up with a 20-year special fund to finance the country’s development programme. Let us hope the fund will be large enough to accommodate the power sector needs.

While all this is being said about the production and distribution of power, little is said or done about conservation of energy. The waste of energy is as usual on the occasion of weddings with heavy illuminations. There is a great deal of scope in the reduction of consumption, and waste of power. But the leaders and top officials are in the lead in the exhibitionistic waste of power. Now it is feared that more production could mean larger waste of power.