September 03, 2007	Monday	Sha'aban 20, 1428

The American assistance for Pakistan’s energy security is expected to feature prominently in the `strategic dialogue’ to be held between the United States and Pakistan this month.

The US Deputy Secretary of State, John Negroponte is expected to arrive in Islamabad on September 11 for the dialogue which is being held after a considerable delay. ‘From the US side, there will be an increased emphasis on helping Pakistan meet its rising energy needs’, a diplomatic source said. The US side may ask Pakistan to explore sources other than nuclear energy and meet its urgent needs by importing gas and electricity from central Asian states, according to the source.

Pakistan will "insist" on being treated at par with India by the United States, he said, but it was not likely to happen, "at least in the near future". This was due to the alleged involvement of some senior scientists in nuclear proliferation, he maintained.

Some of the spadework, he said, has been done during the visit of Assistance of Secretary for South Asian and Central Asian Affairs Richard Boucher last month A separate funding was expected to be made available by the Bush administration to help import energy particularly from Tajikistan for which the Asian Development Bank (ADB) is likely to offer $150 million assistance.

The USAID’s South Asia Regional Initiative for Energy (SARI/Energy) is an eight-country programme for energy security. The countries are Pakistan, India, Nepal, Bhutan, Bangladesh, Sri Lanka and Maldives.

Currently, the diplomatic source said, more attention was paid to help complete its wind and solar maps so as to develop a strategic and business operating plan. Upon request from Pakistan, a national policy framework for LNG has been prepared for addressing the regulatory, management, revenue and tariff related issues.

The US government believes that SARI/Energy will help the ministry of power in identifying American universities and other national institutions where Pakistani officials working in the energy sector could be trained.

When alternate energy resources are discussed, there is always more emphasis on coal based power generation. But many government officials concede that incentives offered for coal-based power generation have failed to attract foreign investment. The absence of response to the lucrative fiscal incentives offered for setting up integrated coal mining and power generation projects make the power crisis look gloomier.

Even exemptions of sales tax and customs duty on the import of machinery and equipment for coal-fired power projects, besides fiscal incentives available under the power policy did not help lure international companies.

Inadequate institutional arrangements, harsh climatic conditions, challenging mining environment, large capital requirements, location disadvantages, non-availability of industrial support services and the absence of an authentic data on hydrological budget were believed to have been identified as some of the "major problems" that thwarted government's efforts to attract international companies.

Sources said that the absence of professional expertise in developing large open cast mine and commissioning power projects, non- availability of developed human resources and absence of clean coal technologies have further hindered the investment process. It is also said that the looming power shortfall which is to touch 2500MW in 2007-08 will affect the targeted growth rate.

"The idea of restricting the unfavourable impact of high cost of imported energy to the national economy by improving the energy supply and by develop coal as strategic national asset in line with the Energy Security Plan has so far failed to achieve its objectives", a source said.

The country has witnessed an accelerating development in various fields but power growth, sources said, was not commensurate with the development of other sectors for which the government needed to develop indigenous resources for ensuring energy security.

The government on its part had decided to enhance the share of coal in overall energy mix from present seven to 20 per cent to generate 20,000MW of electricity by 2030. Coal production was about five million tones annually up to 2005-06 but there was a need for 120 million tones of coal to be mined to generate 20,000MW power.

Also, Pakistan Atomic Energy Commission (PAEC) plans to establish an Engineering Design Organisation (EDO) to develop indigenous capability for manufacturing nuclear power plants (NPPs).China has offered 4-6 NPPs but Pakistan needs many more.

Achieving self-reliance in nuclear technology was said to be the way out. The EDO will be a commercial entity.

The EDO will be responsible for the indigenisation in design, engineering and construction of NPPs, development of standardised NPPs, life time support to nuclear power plant operations etc.

At present, fuel mix in power generation is dominated by fossil fuel (50 per cent gas and 20 per cent oil). The fossil fuel is depleting fast besides its price in international market is very volatile. "Therefore, in order to secure energy it is imperative to diversify the fuel mix in power generation", writes the PAEC to the higher authorities.

Accordingly, it said the Energy Security Action Plan (ESAP) has envisaged to increase the share of nuclear power from 0.8 to 4.2 per cent. For this purpose, the ESAP is meant for the installation of 88,000 MW nuclear power by 2030.

For additional power generation requirement, emphasis is being laid on the development of indigenous resources which includes hydro, coal, natural gas and nuclear.

It also said that eight small and medium hydro projects are under different stages of implementation with a total capacity of about 755 MW and are expected to be completed by 2010. The feasibility study of Diamer/Basha, Dadu, Bunji and Kohala hydro power projects are in hand. In addition, 989 MW Neelum-Jhelum hydro project has also been approved for implementation in the public sector.

A 440-500 MW combined cycle power plant at Chichoki Millian near Sheikhupura (Punjab) is ready for implementation in the public sector. A 325 MW Chashma Nuclear Power Plant (CHASNUPP-2) is under construction which will be completed by 2010-2011.Besides, Karachi Nuclear Power Plant (KANUPP-II) and KANUPP-III)are in the feasibility stages of their preparation.

Conceding the growing power crisis across the country, a senior official of the ministry of finance claimed to bring new power projects on stream shortly, including KESC's $150 million project to supply additional 750MW of electricity to Karachi where power cuts had caused riots.

"Power crisis is a matter of concern for which we need to have more power projects particularly hydro projects. But since there is no consensus on building the Kalabagh Dam, it cannot be started", he said.