IT was a freezing winter night in 2010 and I had just checked into the government rest house at the Lal Sohanra national park when the lights had gone out. The caretaker at the premises had lit a bonfire in the sprawling backyard which extended on one side to the edge of a lake.

“This is Nawaz Sharif’s favourite spot sahib, right where you are sitting. Been here several times, and we would chat late into the night sometimes” he told me as we warmed our hands in the bonfire heat. “The younger one is more reserved ... he’s a grouch. But the elder one’s very relaxed. Oh, and he loves to listen to the flute” he went on to disclose.

Recently, Prime Minister Nawaz Sharif returned here to inaugurate the Quaid-i-Azam solar park. Situated on the edge of the Cholistan desert near Bahawalpur, the region which is famous for its peacock, gazelle and black buck is now set to become the world’s largest solar park. Investment commitments totalling nearly 1,000 megawatts have already been received from local and Chinese business groups.

Energy requirement and economic growth are strongly correlated. Pakistan’s per capita energy demand is one fifth of the world average. Electric power is a factor of production presently in short supply. And it is holding back economic growth.

The present peak electricity demand is estimated at 25,000MW while studies indicate that to cater to the projected electricity demand, an additional 100,000MW of capacity would need to be installed over the medium term.

One limitation of renewable energy is its fluctuating availability. Solar power is only available during daytime, wind power when there is breeze and hydropower is dependent on the ebb and flow of the water. This keeps renewable energy from becoming the mainstay in the overall energy mix. For this reason the base load in most grid systems is carried by thermal (and nuclear) power stations which can provide a steady supply all day and all year.

One would imagine urban solid waste to be a steadier source of fuel. But scavenging at various stages of the waste management process and inelegant waste disposal and handling mechanisms make it hard to work with. The end result is high cost-per-ton of fuel.

Similarly biomass generated in the agriculture and livestock sector fulfils about a third of Pakistan’s total primary energy requirement. This, like so much else in this country, takes place in the non-commercial sector and remains undocumented. Nevertheless, projects can be conceived and commercialised where crop residues and animal dung is purchased from the farmers for conversion to higher forms of energy while simultaneously creating markets for this energy.

A successful commercial model will be one that can extract more energy from the same quantity of fuel, creating enough value to recompense farmers for the forgone fuel; with which they can buy their energy requirements from the market and still have money left over.

Such a model will bring parts of the rural subsistence economy into the commercial, documented economy. This way, much of the future growth can be based on indigenous fuel.

Contrary to what many believe, all renewable energy is not cheap. The present wind and solar power tariffs are close to what is being paid to oil-based Independent Power Producers and twice as high as the 8.5 US cents that was offered to private hydropower producer, Laraib Energy, a couple of years ago.

Dams at Bunji, Diamer-Bhasha, Dasu and Kalabagh (if consensus can be built) can potentially contribute 20pc of the projected requirement of 100,000MW. Other smaller dams, biomass, wind and solar potential should be tapped to the maximum extent possible. The base load will, however, need to be carried by thermal (including coal) and nuclear.

Assuming a benchmark price of $1.3 million per installed megawatt, the country would need an investment of $130 billion in the next 15 to 20 years. To put this figure in perspective, the total foreign direct investment, or FDI, in Pakistan in the last 50 years in all business sectors is in the region of $20bn.

However, lately, perhaps because of our failure to carry through reforms in the power sector, sensing a lack of seriousness to fix the structural issues, players like Xenel, National Power and AES have left Pakistan after selling off their stakes.

The key to overcoming the energy challenge, then, lies in the governance of the energy sector.

The writer has served the Punjab Board of Investment & Trade as its director general and is assisting the Planning Commission and its working groups in developing Pakistan Vision 2025 and the 11th Five-Year Plan.

moazzamhusain@gmail.com

Published in Dawn, May 18th, 2014