Pakistan’s energy crisis could topple government, warns expert

Updated March 05, 2015

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Pakistan has been gripped by severe energy shortages for some years with parts of the country facing electricity cuts for up to 20 hours a day. -Reuters/File
Pakistan has been gripped by severe energy shortages for some years with parts of the country facing electricity cuts for up to 20 hours a day. -Reuters/File

For Prime Minister Nawaz Sharif, this year began on a disquieting note as the country’s entrenched energy crisis continued to escalate.

The Pakistan Muslim League -N party won the 2013 elections with promises to wipe out power outages in Pakistan by 2017, but its failure to stem the growing energy crisis now threatens to bring down the government.

Pakistan has been gripped by severe energy shortages for some years with parts of the country facing electricity cuts for up to 20 hours a day. The country has an installed electricity capacity of 22,797 megawatts (MW), but production stands at a dismal 12,000 MW. In recent years, electricity demand has risen to 19,000 MW.

“Energy may well be the government’s undoing,” Michael Kugelman, senior programme associate for South and Southeast Asia at the Woodrow Wilson Center, told thethirdpole.net.

The Sharif government’s policy space, he said, was fast shrinking in the face of an “emboldened military”.

“If power shortages bring large numbers of people onto the streets, and these protests occur nationwide and are sustained for many days, the military may lean on Sharif to call early elections,” he warned. Pakistan’s politics have been dominated by its powerful military and the generals have a long history of interrupting and meddling with civilian rule.

The situation worsened in January as fuel shortages brought life in major cities in the Punjab province to a halt, including the capital Islamabad. The shortages were caused by the Power and Water Ministry’s failure to pay its Rs 171 billion ($1.7 billion) outstanding debt to the Pakistan State Oil company and came at a time much of the world had begun to enjoy the lowest fuel prices in years.

In the same month the government packed up 6,600 MW of large coal-powered projects in Gadani, Balochistan province. Chinese investors pulled out of the six plants – part of the US$45.6 billion worth of energy and infrastructure deals dubbed the Pakistan-China Economic Corridor – calling the project impracticable due to lack of existing infrastructure in the area, according to media reports.

Eminent economist, Dr Kaiser Bengali, who heads the policy reform unit of Balochistan’s chief minister, argued the Gadani projects were “doomed from the very beginning.” The plants were uneconomical – requiring the construction of jetties to unload and transport expensive imported coal– and would have blown coal dust and pollution straight towards Karachi, he said.

An energy expert working within the government, who requested to remain anonymous, said the Chinese government were never interested in the Gadani projects but wanted to develop the Gwadar port in Balochistan. “They agreed knowingly full well, the project would not be feasible; but acquiesced to Pakistan’s pressure. They knew it would not get past the technical working committee later, and this is what happened,” said the expert.

In early February work on another 6600 MW Chinese-backed coal powered projects in Punjab came to a halt. But Pakistan’s energy woes do not end here

The 963 MW Neelum-Jhelum hydroelectric project in Pakistan-administered Kashmir, expected to be completed in 2016, may now be delayed due to a shortage of Rs 50 billion ($493 million) after Chinese contractors refused to provide equipment to build the underground water diversion tunnel. The dam will divert water from the River Neelum through a tunnel underneath the River Jhelum.

The Jhelum rivers flows from India into Pakistan and the delay, said Bengali, will enable India to finish building hydropower dams on its section of the river first and claim prior user rights over Pakistan, as agreed under the Indus Water Treaty signed by both countries.

Hydropower v. Thermal

Advocates argue hydropower is the cheapest way to solve the country’s energy crisis. “The Rs 50 billion that is needed is not a lot; instead the government is wasting more money [Rs 59 billion or ($581 million)] to produce power from thermal sources,” said energy expert and longtime hydropower advocate Tahir Dhindsa of the Islamabad-based Sustainable Development Policy Institute.

Pakistan has failed to tap its vast hydropower potential because policy makers view energy policy in terms of short term political tenure and put “personal interest over national interest,” said Dhindsa.

Hydropower projects take longer and are more expensive to build in the short term, but provide cheaper energy in the long run. Imported coal powered plants, however, can be set up and start running before a politician’s five-year term ends, Dhindsa explained. The government also saves money by buying old technology Chinese companies have discarded under pressure to clean up smog in their own country. Coal projects also provide more opportunities for kick-backs for the government than hydropower dams.

If Pakistan builds three or four big dams, all its energy woes would be over, argued Dhindsa. “We will be good for the next 50 years, both for storing water and generating energy.”

But there are real questions whether Pakistan will have enough water in the future to produce hydropower. Pakistan’s minister for water and power, Khwaja Asif, recently warned Pakistan will face severe water shortages. “Under the present situation, in the next six to seven years, can be a water-starved country,” the New York Times recently quoted Asif as saying.

And this is where the real problem lies, said Kugelman of the Wilson Centre. “The tragedy about Pakistan’s energy crisis is that so many of the supply-side projects are simply untenable.” he said.

He said the proposed gas pipeline with Iran lacked funding; whenever large dams were proposed there was too much pushback from environmental activists and NGOs; and Pakistan lacks the technological capacity to exploit its untouched coal reserves.

Pakistan needs to review the way it generates and consumes its energy, agreed Dhindsa.

Almost half of the country’s total energy is generated by expensive imported thermal fuel. Reliance on oil and gas has led to high electricity prices for consumers. About 25% of power is lost through inefficient power distribution networks, poor infrastructure, mismanagement and theft of electricity and this needed to be fixed.

Renewable energy holds the key?

The Sharif government is now hoping to expand clean solar and wind energy to generate electricity more cheaply. Pakistan’s government recently cut import taxes on solar panels and approved the use of grid-connected solar energy and rooftop solar installations in a bid to boost solar power across the country.

Last year the government set up the country’s first solar power park, which will soon feed 100 MW of electricity into the national grid and eventually produce 1,000 MW of power.

But renewable energy is unlikely to play a major role in energy production in the near future. “There simply is not enough scale at the moment for solar and wind to take off, and certainly not on levels that would respond to the immense volume of demand for energy in Pakistan,” said Kugelman.

Shafqain Shahid, in charge of the Alternative Energy Development Board’s office in Karachi, is more hopeful. He believes Pakistan can generate about 1,900 MW of energy from wind and solar projects by 2017 – although given that Pakistan has infinite sources of both sun and wind it should be able to generate much more.

Three wind energy projects (of 50 MW each) have already started supplying electricity to the national grid, with another 400 MW of projects in the pipeline, Shahid said.

There are still major regulatory obstacles. While potential investors are interested in windmills or solar parks, the National Power Regulatory Authority (NEPRA) has put a 5% cap on the maximum generational capacity from alternate energy sources, explained sources.

“If NEPRA is able to enhance this up to 10 %, which it may by April 2015, we may be able to generate more and give it to the national grid,” said Shahid.

This article was originally published on The Third Pole