The country to face water shortage as well as energy shortfall by 2010 if a major dam is not built, resulting in serious implications on economic growth, analysts said.
Analysts estimate Pakistan's energy shortfall in 2010 to be around 4000MW if a major dam is not built. This would have a serious impact on economic growth, in terms of presenting significant constraints on large-scale manufacturers and increasing the cost of setting up new businesses.
Given that 64 percent of the workforce is employed in the small-industry informal sector, a severe power crisis would have serious consequences on unemployment.
According to the government Planning Commission's electricity demand estimate by 2010 stands at around 21500MW, and while installed generation capacity should exceed this power requirement, the actual amount available for consumption is reduced by 28 percent due to pilferage and distribution losses. Reducing pilferage and distribution considerably, in a country like Pakistan with a weak administrative machinery is likely to be a horrendous task. Hence other options need to be explored.
POWER OUTAGES: Usman Farooqi, a research analyst from Alfalah Securities, said: "Load shedding is a common feature in Pakistan, but unlike our neighbour, industrial units are not given too much preference over residential units in terms of energy consumption. It is estimated that around 0.75 - 1.25 percent of economic growth is lost each year due to power outages.
With the country plagued with an incessantly volatile political environment, preference for energy supply to industries at the expense of consumers has always been seen as a gift to the opposition.
Until some major policy decision is made on how to resolve the energy crisis, industrial units should be prioritised.
A dam at Kalabagh is one obvious choice but apart from its political complexities. The Kalabagh dam, if constructed, would initially add 2400MW of installed capacity, which could be upgraded to around 3600 MW in a couple of years. This is apart from the fact that its reservoir could store around 6.1MAF of water out of the around 26MAF, which are let down below Kotri. Thus Kalabagh could be crucial in exploiting Pakistan's hydropower potential in generating electricity. At present, hydropower electricity comprises about 32 percent of the total electricity generated and presents the cheapest and most reliable source of electricity generation in the long run.
The government's strategy on the dam issue has been to play a waiting game. It has recently allowed industrial units to generate their own electricity. Apart from that it has asked for tenders from various foreign private power producers.
"We estimate that if the targeted foreign and local investment to the tune of USD 3.0 billion is attracted over the next four years, these measures could add around 2000MW of power in the coming five years" Farooq said.
COAL RESERVES: Given the current pace of economic growth however and for long-term needs, the government needs to either construct the Kalabagh dam or work on a war footing to exploit the coal reserves in the Thar area.
Reserves in the Thar area are one the largest in the world, amounting to around 75-100 billion tons of coal.
Major power plants of 200-300MW 'each' can be set around that area, especially given that the Thar coal is superior in quality in terms of low calorific content to the Indian coal (coal forms 54 percent of India's energy mix as compared to 5 percent for Pakistan). Most of the thermal power generation in Pakistan at the moment is gas-based. With an estimated 15 years of gas reserves left as a result of expected doubling of consumption by 2010 (to 75bn cusecs per year), coal along with hydel power would be the nutrients to serve the energy needs of the present and future generations.
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