Crippling cost of inaction

Despite the rapidly escalating energy crisis in the country, which has caused heavy losses in almost all sectors of the economy, particularly in the industrial sector, no unified and well-directed approach has apparently been adopted to overcome the crunch. It is feared that the energy crisis, if left un-addressed for long, is going to have a multifaceted deleterious impact on the entire economy, including a steep downturn in the GDP growth rate.
Sajjad Ahmad Qureshi, Director Tariff, Nepra, while addressing a seminar on "Tariff Mechanism for Renewable Energy Technologies" in Karachi, has identified three major causes of the energy crisis. These include: no additional power generation over the past several years; secondly, all outstanding dues of different power producers were not paid in time, which has generated a huge circular debt, and thirdly, there has been a steep rise in the countrys power consumption.
Addressing the same seminar, the CEO of Alternative Energy Development Board, Arif Alauddin, was more specific in identifying the cause, which, according to him, was "inaction" over the last 12 years, which to us seems to be an understatement. Inaction and persistent (wilful?) "go-slow" has in fact been going on over the decades, which has generated a cumulative effect of gigantic proportions.
Allaudin has also disclosed that the energy crunch has led to the cancellation of many foreign investments in the country. According to one estimate, the current daily furnace oil consumption for power generation in Pakistan is at least 30,000 tonnes, because of which the focus has had to be shifted to gas which has in turn generated its own problems.
Meanwhile, rapid depletion of gas reserves, in the absence of any noteworthy new oil and gas discovery, is threatening to deepen the energy crisis in the months and years ahead unless fast-track energy projects are executed. Going by what the various speakers said at the Karachi seminar, it seems that the new favourite of energy bureaucracy is going to be the renewable energy, particularly wind and solar energy. But if past experience is any guide, here too the pace of project execution has been painfully slow.
Plans are afoot to install 100 wind power turbines in remote coastal areas of Sindh and Balochistan. Are these the same projects that were planned way back in 2006? As there has been a steep increase in the use of furnace oil for power generation in Pakistan, electricity has become prohibitively expensive, which has eroded competitiveness of our exports, and has also increased the cost of doing business in Pakistan.
Renewable energy sources such as solar parks and windmills are indeed a viable option, but can these sources make a substantial impact on the overall power supply and demand position fast enough for us to be able to meet our immediate requirements? The Alternative Energy Development Board plans to generate 700 megawatts of electricity by the year 2010 as part of a broader strategy to meet at least five percent of the countrys total requirement.
But will it be possible for AEDB to complete the projects by 2010 ie by the next year? According to one estimate, Pakistan will require an investment of $20.4 billion by the year 2013 for mega power projects, and the existing systems improvement. Can we manage this volume of investment in four to five years? Incidentally, the quantum of initial investment needed for installing a single wind power plant of 50 megawatt varies from $50 million to $80 million.
Moreover, 1,000 to 1,200 acres of land is also required for producing 50 megawatts of electricity. As for solar energy, it is probably the most abundant renewable source of energy available in Pakistan because there is plenty of sunshine throughout the year.
(Balochistan has an average mean sunshine duration of about eight hours a day, which can be harnessed to meet the energy shortfall.) If solar energy parks are established in the coastal regions of Sindh, and a centralised solar energy grid is established it can go a long way not only in meeting the energy shortfall of Karachi, but also of the entire province, or so it is claimed.
The National Institute of Silicon Technology (NIST) is said to have already developed technology to fabricate solar cells on a commercial scale, to be used in establishment of solar parks. Interestingly enough, the discovery of a vast wind corridor at Gharo-Keti Bandar in Sindh in 2006 had apparently prompted the authorities to focus on wind energy. It is argued that if properly harnessed, the alternative sources of energy can reduce the countrys dependence of fuel oil. But the question is: To what extent?
We believe that competing energy lobbies may well be behind such cumbersome and small-scale schemes to capitalise on the countrys energy crisis. Have we not had enough experience of the economically crippling "oil option?" A circular debt of huge proportions has already accumulated, which has become a big drain on the economy, and has fuelled inflation like never before.
Why not at long last focus on fast-track implementation of hydropower and coal projects, with all their huge energy generation potential? The Alternative Energy Development Board plans to set up plants that can generate 700 megawatts by the year 2010. But a single coal plant can produce much more than this quantum.
Why not go in for this option? In fact, Thar coal, after the countrys vast hydropower potential, has a substantial edge over all other non-renewable sources of energy. We believe that our major focus should be on the inexpensive hydropower and coal energy. The leads the Karachi seminar has thrown up need to be closely studied by the political leadership for finding a durable solution to our persistent energy crisis.