Amidst the raging RPP-IPP controversy, with the government high-ups projecting rental power as the sole solution to the power problem, Engr Mohammad Yaqoob of Institute of Engineers Pakistan (IEP) has come up with a novel idea: the construction of pumped storage plants and dams on a priority basis.
He has claimed, at a press briefing, that the planning, designing and tender documents of the pumped storage plants could be prepared in about six months, if the task is assigned to suitable engineering firms. And the system can be installed in about one year. Engr Yaqoob has rightly said that RPPs are no solution to the power problem as most of the plants are oil/gas-based, while the gas supply is insufficient even for the operations of some of the existing IPPs.
Without going into the technicalities of Yaqoob's proposal regarding the pumped storage plants, or how far these will prove effective in the existing power crunch, we believe that part of the proposal concerning a fast-track construction of dams needs to be implemented. A comparative study has shown that IPPs have a definite edge over RPPs, which the government is planning to induct to fulfil its promise of putting an end to loadshedding by December 2009.
According to figures quoted in the report, the cost of power produced by RPPs will be Rs 14.65/kWh, while the cost of generation though new IPPs will be Rs 11.77 per kilowatt-hour. Secondly, RPPs are being offered a "machinery mobilisation advance", which is equivalent to the payment of 14 percent of their five-year rental, while IPPs are given no such advance.
Thirdly, if the PPIB brings in 1,900 megawatts of rental power, the country will have to pay two billion dollars a year in annual fuel supply payments alone. The total annual cost of RPPs, to the economy, as calculated by him, comes to $3 billion. And we were complaining against the high cost of IPPs!
The energy odds stacked against the economy are quite high, worsened by the shenanigans of the well-connected energy lobbies, believed to be operating in cahoots with powerful "stakeholders." Add to this the energy bureaucracy's cumbersome functioning, and its own preferences, and you get the type of brew we are all wallowing in.
According to one estimate, Pakistan's total energy requirements will increase by 350 percent over the next 20 years, while during this period the percentage of Pakistan's total requirement, to be met from indigenous sources, will fall from 72 to 38 percent, which means an additional pressure on our foreign exchange reserves, among other things.
An important handicap that needs to be overcome is the low efficiency of Pakistan's thermal power generation, which ranges from around 32 to 35 percent, as against the global average of around 54 percent. It is said that we can attain a higher generation capacity by simply switching to newer production technologies. But these technologies have not only to be cost-effective, but also more efficient to fit the bill.
Power distribution losses stand at around 23 percent, whereas these should be no more than three percent, which means that as much as 20 percent of total power produced fails to translate into revenue generation. The salvation of the economy, and of the people at large, lies in fast-track implementation of short-duration hydropower projects.
According to an expert, water worth $60 billion goes waste each year in one form or the other essentially due to a serious lack of adequate storage capacity. It is said that the country has to at least double its generation capacity within the next 10 years to be able to attain sustainable growth.
In practical terms, this means that we have to build three Kalabagh-sized dams over the next 12 years to have sustainable water storage capacity. These run-of-the-river projects will add 20,000 megawatts of inexpensive power to the national grid that would help steer Pakistan on the path to becoming an industrialised economy.
But back to the real world of IPPs, RPPs, and power outages. The government needs to initiate fast-track steps to ease the power crunch, so that the breathing space it provides can be used to figure out how to ensure speedier implementation of projects. As a first step, effective measures should be launched to minimise line losses by controlling power theft in its myriad manifestations, as well as through a pragmatic cut in free power supply entitlements of the high-ups, which will help save a substantial amount of electricity.
Secondly, the government should re-start the IPPs that have been closed down, in order to reduce the supply-demand gap. If implemented, these steps will certainly help reduce the need to involve RPPs, and hence the additional burden it will impose on the economy, and indirectly to the end consumers.