Harnessing Energy Resources Of Pakistan

Published Date: 02 Nov 2017

Introduction

Due to a fast growing demand, high system losses, fuel supply limitations, seasonal reduction in the availability of hydropower, under utilization of mineral resources, false and short-term policies and the gap between the demand and supply of electricity is resulting in routine load shedding.

The continuing energy crisis and hiking prices of electricity are the main factors hampering national economy. The acute power shortages (ranging from 4 to 18 hours of load-shedding) is forcing the industrial sector to work at under-production level and threatens badly the export performance besides creating social as well as law and order problems in the country. One of the factors behind the difficult situation is the rising circular debt, which affects energy producers; the total volume of power sector circular debt has risen to Rs 650 billion [1] . According to the Planning Commission of Pakistan, the peak power sector demand during fiscal year 2011-12 is expected to increase at 21,000 MW. Therefore, supply will fall short and the gap is expected to be between 4,500-6,000 MW.Few positive initiatives have been taken in the past.However, many opportunities have been lost resulting into present squeeze.

Pakistan’s energy sector is in crisis, problem seems insurmountable. There is a need to solve the issue by tapping our vast mineral resources and proffer a way forward to break the status quo to embark upon the journey to self-sufficiency in energy sec by using the same.

Aim. To identify the potentials of untapped energy resources of Pakistan, while highlighting various impediments in tapping them to optimum, with a view to recommend viable measures to utilize these resources to overcome the crises.

Scope. The scope of this research shell encompass: -

Part - 1. Energy Production in Pakistan – An Overview.

Part - 2. Potentials of Energy Sector in Pakistan.

Part - 3.Potentials vis-à-vis Impediments - Analysis.

Part - 4.Recommendations.

Conclusion.

PART – I

ENERGY PRODUCTION IN PAKISTAN – AN OVERVIEW

Independence; August 1947 - 1959 [2] . Pakistan inherited 60MW of power generation capacity for a population of 31.5 million. In 1952, Government of Pakistan acquired majority shares of Karachi Electric Supply Company (KESC); and thereafter, engaged in generation, transmission and distribution of electric energy to the industrial, commercial, agricultural and residential consumers of the metropolitan city of Karachi and its suburbs. In 1959 the electricity generation capacity raised to 119 MW.

Creation of Water and Power Development Authority (WAPDA). In 1958, WAPDA was created as a semi autonomous body for the purpose of coordinating and giving a unified direction for the development of water and power sectors, which was previously being dealt with by the respective electricity and irrigation department of the provinces.

First Three Decades of WAPDA (1960 – Early 90s) [3] . By 1964, the electricity generation capacity rose to 636 MW.Rapid progress witnessed a new life to the social, technical and economic structures of the country. Mechanized agriculture started, industrialization picked up and general living standards improved.The task of accelerating the pace of power development picked up speed and by the year 1970, the generating capacity rose to 1331 MW with installation of a number of thermal and hydel power units.In the year 1980 the system capacity touched 3,000 MW, which rapidly rose to over 7,000 MW in 1990. However, due to increasing urbanization, industrialization and rural electrification, the supply of electricity was unable to keep pace with demand that was growing consistently at 9-10% per annum.

The Revamp - Mid 90s - 2000. In 1993 - 94, the peak demand exceeded supply capacity by about 15-25%, necessitating load shedding of about 1,500 - 2,000 MW. In order to eliminate power shortage in minimum possible time, the Government constituted an Energy Task Force in 1993 to devise a comprehensive policy for revamping the energy sector. In March 1994 [4] , on the recommendations of the Energy Task Force, Government announced a "Policy Framework and Package of Incentives for Private Sector Power Generation Projects". The said policy / incentives attracted foreign investment in the power sector, and Pakistan witnessed Independent Power Production (IPP), details of IPPs operating in Pakistan attached at Annexure A. The Power Policy 1994 helped overcoming load shedding, rather, it resulted in surplus power as the actual load growth was much less than that projected and the projects were contracted beyond requirement. Moreover the Policy attracted only thermal projects resulting in reversal of the hydel/thermal generation mix.

The Downfall 2001 – 2012. In the year 2000, the vertical disintegration of WAPDA started as part of the country’s new electricity market restructuring and liberalization program. Since then WAPDA has been broken down into fourteen separate units.Four thermal power-generating companies, nine distribution companies and a transmission and distribution company. By 30 June 2010, the total generation capacity from WAPDA (hydel and thermal), KESC, IPPs and generation from two nuclear power plants stood at 20,922 MW.

Electricity Production Sector In Pakistan

Electricity Generation Sources [5] . The electricity generation sector in Pakistan is a mixed industry of hydro, thermal and nuclear power plants as following:-

Hydel. 31 percent power is generated through hydel systems. The total capacity of existing fourteen hydel stations is 6,481 MW.

Thermal. 66.8 percent power is generated through thermal system. Thermal resources mainly used as fuels are furnace oil (37.4%) and natural gas (29.4%). The total installed capacity of thermal power plants in the country is 13,978 MW.

Nuclear. 2.2 percent is generated through nuclear power generation systems. Only two nuclear power plants are established in Pakistan with a total generation capacity of 462 MW.

Coal. Despite the fact that Pakistan has over 185 billion tons of coal reserves [6] , the coal based power generation is 0.1% (almost nonexistent).

Import. 0.26%.Pakistan is importing electricity from Iran at three points to Baluchistan;Mand interconnection 132 KV, Tuftan and Mashkhel through 20 KV.

Electricity ProductionSector. The main electric power producers in Pakistan are WAPDA, KESC, Pakistan Atomic Energy Commission (PAEC) and IPPs.

Water and Power Development Authority (WAPDA). WAPDA is generating 11,381 MW (using hydel and thermal). WAPDA is bifurcated into two entities i.e. WAPDA and Pakistan Electric Power Company (PEPCO). WAPDA is responsible for water and hydropower development. Whereas PEPCO is responsible for the management of all the affairs of WAPDA’s fourteen public limited companies in the areas of thermal power generation, transmission, distribution and billing.

Karachi Electric Supply Company (KESC) .The Company owns 1,955 MW of generation capacity (using oil and gas only). KESCwas incorporated on 13thSeptember 1913 under the Indian Companies Act, 1882 as amended vide Companies Ordinance 1984. The company has been privatized in November 2005. KESC is principally engaged in generation, transmission and distribution of electricity to Karachi and its suburbs. KESC is not able to generate electricity as per installed capacity due to short supply of gas. The approximate demand for power in the city is at least 2300 MW. To meet the supply-demand gap, KESC purchases power from WAPDA and IPPs

Pakistan Atomic Energy Commission (PAEC). PAECis operating two nuclear power plants in Pakistan. Efforts are in hand for the construction of another two plants at Chashma i.e. CHASNUPP-2 and 3, likely to be commercially operative by 2016 and 2017 [7] respectively. Currently, installed capacity is 462 MW

Karachi Nuclear Power Plant (KANUPP). The first nuclear power plant of the country commissioned in 1971 with the help of Canadian General Electric Company. Installed capacity is 137 MW.

Chashma Nuclear Power Plant-1 (CHASNUPP-I). It was commissioned in the year 2000 with the help of China National Nuclear Corporation. Installed capacity is 325 MW

Independent Power Producers (IPPs). At present IPPs mentioned at Annexure A, are operating in Pakistan while a number of projects are under construction. The gross power generation capacity of the IPPs is 7,123 MW.

Summary of installed generation capacity is as shown in graphical format as under: -

PART – II

POTENTIALS OF ENERGY SECTOR– MINERAL RESOURCES

Mineral and Power Resources

14. Pakistan is poor in metallic minerals and power resources but has rich deposits of a few non - metallic minerals. Many of the mineral deposits are located in inaccessible parts. The infrastructure required for their exploitation does not exist. Therefore, mining is a minor sector of Pakistan’s economy. It accounts for about .5% of the GNP and the minerals provide a weak base for the industrial development.

15. Pakistan’s resource potentials are as follows:-

a. Non - Metallic Minerals. This constitutes the major chunk of our natural resources. Rock salt and lime-stone are found in a large quantity [8] .

(1) Rock Salt. It is used for cooking and for preservative purposes and for the manufacture of soda ash, bicarbonates of soda, textiles and tanning. Total reserve of rock salt has been estimated at over 100 million tons.

(2) Gypsum. Gypsum is an industrial mineral used as a raw material for fertilizer, as a retarder in cement, as filler in paper, paints, rubber etc. Total reserve is estimated 350 millions.

(3) Barite. It is used in oil-well drilling and also in the manufacture of paints, glass insecticides and barium compounds. Total reserve of barite in Pakistan is estimated at 5 million tons.

(4) Sulphur. There are two major sulphur deposits in Pakistan: Kohi -I- Sultan and Sanni. It is the main raw material for sulphuric acid. It is also used in the manufacture of explosives, Paints, dyes, rayons, pulp, fertilizers etc. and in refining petroleum and non - ferrous metals.

(5) Lime stone. It is the chief raw material for cement and is also used in the manufacturing of lime, bleaching powder, glass, soap, paper, paints etc. Large deposits exist in Balochistan, Margalla Hills, Murli Hills and Manghopir.

b. Metallic Minerals. In Pakistan they exist in the Axial Belt and in the Eruptive Zone. Iron ore, Celestite, Copper, Maganese, Chromite and antimony are known to exist.

(1) Chromite. It is used to import hardness and electrical resistance to steel. Bridges and railways are built from steel containing chromite. Main chromite reserves are located around Muslimbagh.

(2) Iron Ore. Iron Ore has been located at a number of places in Pakistan but its commercial exploitation has not started. Total reserves are estimated above 430 million tons.

(3) Celestite. It is used in signal rockets and flares, tracer bullets, transportation warning fuses and warheads. In Pakistan there are two well known deposits. The estimated reserves are over 300,000 tons.

c. Power Minerals

(1) Coal. In addition to famous / vast Thar Coal reserves (exclusively covered in subsequent paragraphs); coal has been mined continuously in Baluchistan and Punjab, since before independence. Good quality Sub-bituminous coal is available in various coalfields of Baluchistan / Punjab. Some small coal reserves are also located in NWFP and AJK.Pakistan posse’s lignite coal reserves in Lakhra, Sonda, Indus East and other coalfields of Sindh. Lakhra coalfield is thoroughly investigated and developed. A 150 MW plant is currently being operated by WAPDA on Lakhra coal. The Sonda and other coalfields of Sindh are yet to be investigated and developed.

(2) Thar Coal Reserves [9] . Thar Coalfield lies in South Eastern part of Sindh province. The approach to the Thar area is by metal road via Hyderabad, Mirpurkhas and Naukot. It is about 380 km from Karachi by road.

Discovery. The first indication of the presence of coal beneath the sands of the Thar Desert was reported; while drilling water wells by the British Overseas Development Agency (ODA), in 1992. Geological Survey of Pakistan (GSP), confirmed huge deposits of coal the same year during a research program assisted by United States Geological Survey (USGS). Coalfield is spread over an area of more than 9100 square kilometres with estimated reserves of 175.506 billion tones.

Geology. Thar coal, which is Lignite (less calorific value [10] and higher stripping ratios [11] ) in nature. Coal with similar characteristics has been exploited profitably in Germany, Poland, India, and other countries.

Potential. Thar Coal presents an electricity generation potential of 100,000 MW [12] , at estimated consumption of 536 million tonnes/year

Present Status. In order to establish the coal resources in the selected six blocks, a total of 239 holes have been drilled.Underground Coal Gasification Project for generation of 100 MW of electricity at Block V in Tharparkar had commenced last year. To date $9.22 million have been released for the project [13] .

Thar Coal & Energy Board (TCEB). In order to exploit Thar Coal resources on a fast track basis for power generation, in Jun 2011 the Federal Government and Provincial Government of Sindh have decided to work together; for this purpose, TCEB has been established [14] . Main purpose of TCEB is to function as one-stop organization and decision-making body to facilitate investment and development of Coal based power projects.

(3) Nuclear. Growing energy needs and inadequate indigenous energy resources dictate large-scale use of nuclear power in Pakistan.

Use of Nuclear Energy in Pakistan – Genesis [15] . Pakistan is a pioneer developing country in using nuclear technology for producing electricity. Pakistan was 15th country in the world, to have commissioned the nuclear power plant. PAEC was established in 1955. In 1960s, number of scientists / engineers was sent abroad for education and training. In 1971, Pakistan’s first nuclear power plant became operational.

Existing Potential. Despite international embargoes, nuclear power program in Pakistan is moving forward slowly but steadily. Qualified manpower / professionals now experiencing

Present Status / Potentials. The construction of fourth and fifth nuclear power plants is in progress. More than 47 reactor years of operation experience is to the credit of PAEC. During this period, safety has been the hallmark of the country’s nuclear industry.

The Fact for Cheap Energy. Use of nuclear energy can substitutes imported fuels. A 1000 MW nuclear plant avoids use of 46 billion cubic feet of natural gas annually. A comparison with regards to cost is appended below: -

4.18

4.60

11.37

11.93

12.60

Oil. Pakistan does not have rich oil and gas reserves. The oil reserves in particular are very limited. Probable reserves are estimated at 27 [16] billion barrels of oil. 936 million barrels of oil has been confirmed and 609 million barrels has already been produced. The reserve to production ratio is 1:14, which is critically low considering the high and growing prices of imported oil.

Gas. Probable reserves are estimated to be 282 trillion cubic feet (TCF) of gas [17] . 53 TCF have been confirmed and 23 TCF have been produced, leaving 30 TCF of proven reserves. No significant exploration is underway to explore the estimated figure.

Regional Resources. In the backdrop of massive energy crisis, Pakistan had been exploring options for gas import, three different options have surfaced as following: -.

Iran – Pakistan Gas Pipeline. Originally called as Iran-Pakistan-India (IPI) pipeline. It is now only Iran-Pakistan pipeline, a project of 2100 km.

Inception. A young Pakistani civil engineer Malik Aftab Ahmed Khan conceived the idea in mid 1950s [18] , when an article of his was published by the Military College of Engineering, Risalpur "Persian Pipeline". 

Finalization of the Project- Timeline

Discussions between the Governments of Iran and Pakistan started in 1994.

In February 1999, Iran made a proposal to extend the pipeline from Pakistan into India.

In February 2007, India and Pakistan agreed to pay Iran US$4.93 per million British thermal units (US$4.67/GJ).

In 2009, India withdrew from the project over pricing / security issues; and after signing a civilian nuclear deals with the United States in 2008.

May 2009 [19] , Iran and Pakistan formally signed the accord and finalized the terms and conditions over the pipeline. The pipeline is expected to be operational by December 2014.

Impediments

Financial Constraints of Pakistan. Pakistan is finding it hard to secure a financier for 1.5 Billion dollar pipeline. However, Iran’s President during his February 2012 visit to Pakistan has shown Iran’s willingness to finance the project [20] .

Pressure from United States. In January 2010, the United States asked Pakistan to abandon the pipeline project. If canceling the project, Pakistan would receive assistance from the United States for construction of a liquefied natural gas terminal and importing electricity from Tajikistan through Afghanistan.

Un-Consistent Polices of Both Countries. Regime change, both in Iran or Pakistan may throw the project in back burner due to the wrested political interests, especially on Pakistan side.

Volatile Geo-Political Situation of The Region. Recently, Iran has threatened to block Strait of Hormuz; a serious concern for United States and the West, as 50% of global oil flows from this strait. United States is likely to response in such a scenario.

Economic Sanctions on Iran by United Nations. Although, stance of both countries is: Iran-Pakistan pipeline is not covered under the United Nations sanction list. However, Pakistan may be barred to purchase gas from Iran in near future.

Turkmenistan – Pakistan Gas Pipeline through Afghanistan. The 1,680 kilometer long gas pipeline, backed by the Asian Development Bank, will bring 3.2 billion cubic feet of natural gas per day (bcfd) from Turkmenistan’s gas fields to Multan and end at the North-Western Indian town of Fazilka. Under the agreement, Afghanistan’s share will be 500 million cubic feet per day (mmcfd); Pakistan’s share will be 1,325 mmcfd and India’s 1,325 mmcfd. Project has few hiccups like volatile geo-political situation of Afghanistan and pricing conflicts. In November 2011, Pakistan and Turkmenistan have signed five Memorandum of understanding [21] , and the project is moving steadily.

Qatar – Pakistan Gas Pipeline through Oman and Indian Ocean. A considerable portion has to be under the sea, which is a costly option. Progress on the project is in negotiating stage.

Iran – Electricity Import. Iran has offered Pakistan 2200 MW However, Pakistan will have to build appropriate infrastructure for the import.

PART – III

POTENTIALS VIS-À-VIS IMPEDIMENTS - ANALYSIS

Red Tape / Bureaucratic Hurdles’ for Oil Exploration Companies [22] . In 1980’s, many international companies were granted access for oil / gas exploration in Pakistan. Such companies commonly deploy their own capital for exploration, relaying on satisfactory profit sharing over production. Many companies left the country due to combination of factors; including inflexibility of bureaucracy to address anomalies in the tax structure and rising costs over discoveries vis-à-vis post discovery regime; which was un-predictable.

Failure to Exploit Coal Reserves. Pakistan has failed to exploit and develop its huge reserves of coal in Thar largely because; Foreign Direct Investment (FDI) is not available. Petroleum lobby in Pakistan is very strong. They are against any other means of power generation except for the imported oil. This lobby is major beneficiary of the increasing oil bill that is estimated above 15 billion dollar this year.

Delay in Execution of Projects. Un-necessary delays in projects such as 969MW Neelam-Jehlum hydroelectric, indirectly contributed to energy crisis and substantially added to the financial burden. It was to be constructed in 2003 at a cost of $1.5 billion. Delay in its construction until now, not only intensified energy crisis but also impinged heavy on cost (revised estimate was of $2.25 billion)

Slow Progress to Exploit Regional Resources. Pakistan has remained lethargic in order to exploit the regional resources, which are available in ample in the region. IPI is a case in point, the project was conceived in 1990’s, however has yet to be operational.

Politicization of Projects. Another aspect of the bankrupt policies is politicization of projects of national interest. The paramount example is that of Kalabagh Dam. The technical issues, if any, have to be addressed instead of political mockery.

Lack of Foresightedness / Imprudent Policies. Almost every regime has dealt with energy on an ad-hoc basis. Long-term and sustainable planning of energy has never been given a due consideration. No substantial work is being undertaken in the field of energy. The prevalent crisis is a consequence of imprudent energy policies over the last three decades.

Appointment of Non-Professionals to Specialized Appointments. The Government displays a total disregard towards the appointment of professionals on specialized appointments. Onefinds a large number of non-professional ministers / bureaucrats in important ministries who deal in complex energy related matters with no background experience.

Security Situation. Many exploration companies have fled the country, due to the bad security situation. Kidnap for ransom and killing of foreigners are the main cause for their departure.

Weak Participation of Government. The government has mostly looked for private sector investment in energy sector and for itself it has chosen role of facilitator/ arbitrator. Huge investment, after due deliberation is needed to overcome the existing energy crisis.

RECOMMENDATIONS

Future National Energy Policy Objectives. It is recommended that a National Energy Policy be worked out under a constitutional framework to regulate and plan the energy sector in future. The salient of the energy policy shall be: -

Establish targets for development of power sector vis-a-vis projected demand.

Analysis of energy objectives achieved, while planning at least 20 years ahead.

Self-reliance in energy to maximum possible degree.

Import of oil should be reduced to minimum.

Efficient transmission, distribution and use of energy.

Establishment of a mechanism to resolve political issues / controversies related to construction of dams.

Future Choice for Energy. The ultimate choice of the energy mix should be hydel, coal and nuclear. Accordingly, there should be an immediate transition in policy priority i.e. instead of developing gas/oil based thermal power plants any further. Lower capital investment / low running cost hydropower and Nuclear power projects shall be considered.

Investment in Hydropower Projects. Hydropower is the best available option in the recent scenario for meeting challenges of projected energy demands. It is sustainable, reliable, renewable, clean, low cost and indigenous thus can be the principal source of energy. WAPDA is already carrying out feasibility studies and engineering designs for various hydropower projects with accumulative generation capacity of 42,000 MW by the end of the year 2020.It is therefore imperative to put all-out efforts towards development of the untapped hydropower potential without further delay.

Thar Coal Project. Seeking FDI in setting up an integrated coal mining and gasification project at Thar without wasting further time shall plan fast track development. Already, half-hearted and lethargic efforts in development of this valuable resource have put Pakistan far behind other coal producing countries of the world. There are countries in the world whose economies have thrived primarily on coal and its products such as USA, UK, Germany, etc.

Conversion of Thermal Power Houses to Coal. Existing thermal power plants shall be converted to coal on fast track basis. An estimated $7-8 billion can be saved annually if the existing thermal plants be converted from furnace oil to coal [23] .There is a capacity of 2,976 MW in GENCOs and 2,150 MW in IPP which can be converted to coal with a cost of $1.5 billion to 1.8 billion only.

Nuclear. Nuclear energy for electricity is an environmentally friendly source and the 8,000 to 10,000 MW [24] target by 2030 should be funded along with a complementary educational and skill development program.The China link needs to be kept engaged and strengthened as currently planned [25] . Additional Nuclear Power Plant suppliers should be explored and approached

Exploration of Regional Resources. Import of gas from Iran, Qatar and Turkmenistan should be expedited on fast track basis. This, besides making up shortage of gas, would also bridge the energy gap. Pakistan has planned to import 1,100 MW of electricity from Iran for supply to Gwadar and other coastal areas of Balochistan, which must be expedited.

Credibility. It is imperative that credibility at all levels must be established in order to attract FDI and exploration companies. Credibility can be insured through consistent policies, their systematic and effective implementation, efficient operating practices and most importantly the will to have an impartial approach.

Identification of Sites. All potential sites having potential energy resources should be identified through survey.The Data must be readily available with concerned ministries and then detailed investigations / studies of such sites should be carried out to determine the energy resources.

Development of Small Hydro Plants. Owing to waste hydel resources available, the development of small-scale hydro power plants / machinery indigenously be explored in collaboration with some foreign manufacturers. This will help un-tap the potential at an effective cost with readily available expertise.

Conclusion

Under the present scenario of energy crisis, electricity generation through existing and un-tapped sources of energy must be fast exploitedand shall be on the top priority of the government. Given the challenges and opportunities, the optimum strategy for the country is to seek FDI, technology transfer and go for the indigenous production. Initially at a relatively small scale. The key to success is to start with small scale / simple design and gradually scale them up in terms of size and quality; both in exploration and power-generation sectors. It is a need of time to pay sincere and maximum attention towards un-tapping the existing resources in order to fulfill the future requirements. WAPDA in its Vision 2020 has taken correct decisions to start working with. We shall be ready to face any challenge while exploiting maximum energy potential of Pakistan and obtain optimum utilization from our own resources.

Annexure "A"

List of IPPs

AES Pakistan (Pvt.) Limited

Atlas Power Limited

Attock Gen Limited

Bestway Power Limited

Cavlalier Energy Corporation (Pvt.) Limited (CECPL)

Dawood Power (Pvt.) Ltd. (DPPL)

D.H.A Cogen

Eastern Power Company Ltd (EPCO)

Engro Power gen Qadirpur Ltd. (EPQL)

Foundation Power Company (Daharki) Limited

Gujranwala Energy Ltd (GEL.)

Grange Power Limited (GPL)

Green Electric (Pvt.) Limited (GPL)

Green Power (Pvt.) Ltd.

Halmore Power Generation Company (Pvt.) Limited (HPGCL)

Hub Power Company Ltd. (HUBCO)

JDW Power (Pvt.) Ltd. (JDW)

Japan Power Generation Ltd. (JPGL)

Kohinoor Energy Limited (KEL)

Laraib Energy Limited (LEL)

Liberty Power Tech Ltd. (LPTL

Lumen Energia (Pvt) Ltd. (LEPL)

Milergo Pakistan Ltd. (MPL)

NishatChunian Power Limited (NCPL)

Nishat Power Limited (NPL)

Orient Power Company (Pvt.) Limited (OPCL)

Progas Power Bin Qasim Ltd. (PPBQL)

Radian Energy Power Generation (Pvt.) Ltd. (REPGL)

RUBA Energy Pakistan (Pvt.) Limited (REL)

Sapphire Electric Company Ltd (SECL)

Saif Power Limited (SPL)

SSJD Bioenergy Ltd

Star Power Generation Ltd

Tapal Energy Limited (TEL)

UCH-II Power (Pvt.) Ltd

Yunas Energy Ltd

Warda Power Generation (Pvt) Ltd