As summer temperatures soar, electricity shortfall has reached a level of about 6000 MW. Many violent protests in several cities have commenced, where load shedding is going on for not only hours but for days. The residents of Okara have threatened to blaze Pakistan Electric Power Company (PEPCO) office in the city if the government fails to eliminate the 22 hour load shedding in their area.
With regards to the electricity shortage, PPP blames the previous government and the opposition accuses current government, which does not help in developing timely policies.
While officials said that rental power projects (RPPs) were the only solution for shortage of power, they were opposed by all major political parties within and outside the parliament and an independent third party audit as well.
Officials argued that not only Pakistan but many South Asian countries like Afghanistan, India and Bangladesh are also facing the problem of power shortage.
Power projects
in the pipeline
For more than a decade negotiations are going on for the laying down of international gas pipelines to feed Pakistan, India and South Asian countries. Besides, Turkmenistan-Afghanistan-Pakistan-India Pipeline (TAPI), and Iran-Pakistan-India Pipeline (IPI) are still in the planning stage. The Qatar-Iran-Pakistan Pipeline project was abandoned because Qatar, after waiting for a long time, had finalised to sell gas to other countries.
TAPI project, supported by ADB, World Bank and the US, is still facing several problems. The latest reports indicated that TAPI could be in trouble because countries at the buying end, Afghanistan, Pakistan and India, are seeking uniform gas rates, while Turkmenistan wants separate bilateral agreements for each of the country.
TAPI is a 1,640-kilometre long pipeline, which would deliver 3.2 billion cubic feet gas per day. Pakistan and India would use 1.365 bcfd and Afghanistan will get 0.l5 bcfd. Moreover, Nepal is keen to join TAPI gas pipeline to meet its rising domestic energy demand.
The ADB has agreed to provide funding for the project on behalf of Pakistan to facilitate an early completion of the pipeline. Recently, a meeting was held in Manila between participants of TAPI and ADB. Afghanistan, Pakistan and India said that separate tariffs for each user country will have vast political repercussions in each of the buying country. There was also the question as to which country will pay the laie-packed price, the gas remaining in the pipeline. Turkmenistan insisted this price has to be paid by the user countries, as is the case in other international deals. However, in spite of hurdles, ministry officials still hope that the Gas Sales-Purchase Agreement (GSPA) will be concluded between Turkmenistan and the three buyers by July 31.
India has quit the IPI project, but despite US pressure on Pakistan to quit the Iran gas pipeline project, the pipeline from Irani Paras field has been completed up to Pakistan’s southwestern province of Balochistan. However, Pakistan is still to complete its own part of the project, from the Iran border to Nawabshah in Pakistan’s province of Sindh. Nawabshah is the point where the Iranian gas will be fed into Pakistan’s existing domestic gas network.
Unused resources
Although the above mentioned claims were reiterated daily but in reality no project has been started in the last three years. Contrary to official statements, Water and Power Development Authority (WAPDA) Chairman painted a bleak picture of power shortfall. He said that load shedding might continue till 2018 which means that people have to wait a further seven years for an uninterrupted power supply.
He said that uneven power generation is the main cause of load shedding and that may be avoided by setting up mega hydel projects. If they are started now, it would take at least six more years to complete. It was estimated that power demand could go up to 130,000MW by 2030. The federal government has ‘planned’ to shift 50 per cent power generation from thermal to hydel sources to reduce the oil bill and overcome the power crisis.
The WAPDA chief also disclosed that Gilgit-Baltistan has the capacity to generate 60,000 to 100,000MW hydel and thermal electricity that needs government attention for exploitation of available resources in the area. This shows that in spite of potential, the government is not paying attention to the required aspects of the power shortage. WAPDA has planned to initiate test generation, before making Diamer-Basha dam power units operational. After the completion of raising and upgrading phase of Mangla Dam; power generation capacity would increase up to 15 per cent. The calculation showed that thermal power generation costs Rs10.18 per unit, 870 per cent higher than power generated by hydel sources which is about Rs1.05 per unit. Hydropower generation helped save Rs41 billion in 2010.
Elaborating the current status of Neelam Jhelum Hydropower Project, the Wapda Chairman claimed that India could not build dams on three western rivers. However, a 16 kilometer long tunnel of Neelam Jhelum Hydro Project had been constructed.
The WAPDA officials said that the maximum generation capacity in peak hours is about 13,669MW as against demand of about 18,114MW, leaving a gap of 4,445MW.
The officials maintained that about 6000MW shortage was because of short supply of furnace oil as about 20,000 tonnes of oil per day was being supplied to generation companies and independent power producers against a requirement of 28,000 tonnes.
The story of the
circular debt
The officials said that due to circular debt, power companies are unable to pay off their oil bills to suppliers that are resulting in lower oil imports. Therefore, a shortage of around 500MW power is inevitable as a result of less capacity utilisation by generation companies. The gas companies were supplying about 230 million cubic feet of gas per day (mmcfd) to power stations at Guddu and Kotri against the committed value of 700mmcfd.
Minister for Water and Power, Naveed Qamar stated that there will be no additional RRPs while the country will continue to face a 2,500MW shortfall, in spite of full supply of oil and Rs200 billion payment of circular debt. That has led to units operating far below their capacity.
It was suggested that to overcome the energy crisis in the short term, the circular debt should be eliminated immediately so power generating units could use their capacity to their maximum level. In the medium term, the government should reduce line losses, transmission losses that are more than average in the whole region. As a long term policy the government must concentrate on adequate investment to expand generation capacity that includes construction of dams, import of gas and electricity.
No serious measures have been taken by the present government during the past three years of its tenure. The Minister of Water and Power, Raja Parvez Ashraf, lost his post for approving RPPs without considering their repercussions on the economy. This action was criticised across-the-board by the opposition while the then Minister of Finance, Shaukat Tarin succeeded in convincing his cabinet colleagues to agree to a third party audit.
On the other hand, the government had submitted the Letter of Intent to the IMF Board, as a prerequisite to the release of the first tranche, that it would eliminate the corporate circular debt within the fiscal deficit target by the end of March 2009.
However, more than three years have passed and the circular debt has reached Rs300 billion. Pakistan State Oil (PSO) is giving periodic threats to the government that it would be unable to import POL if its dues are not cleared. The government has also failed to reduce transmission losses. A long term strategy was required to eliminate this debt, however, it is has not been included in the Budget 2011-12. Therefore, there is no hope at the end of this tunnel.
Importing power: the long-term
solution
For the long term solution of power shortage, power export offers from different countries should immediately be finalised. Experts say there is no harm in importing power from any country. They cited examples of developed countries of the world who are importing their electricity from other countries. For instance, the US imported 51.396 billion KWH power from Mexico and Canada, in 2008. Canada imported about 19.659 billion KWH. Italy imported 48,570 KWH in 2007, Switzerland’s import was 34,820 KWH, China imported 4,771 KWH and Mexico has also welcomed 484.2 KWH of electricity. India imports about 3,189 KWH of power from Nepal and Bhutan, while Nepal and Bhutan also import electricity.
Despite of severe shortage of power, Pakistan is not importing electricity from any country. The prospects of importing power are being discussed for the last two decades while work on these projects could not yet be started. The US supported Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project is still awaiting the light of the day. The other project was the Iran-Pakistan-India gas pipeline which India later quit due to US and Western disapproval and the project is now simply called IP. Moreover, Iran has made several revisions to the formerly agreed price that further delayed the project. Thus, the projects, IP and TAPI are still in the dialogue and planning stage.
Despite unsatisfactory performance, the government is planning to increase power tariff by up to 6 per cent during the next fiscal year to bridge the gap between the determined and applied tariff for reduction of the subsidy differential.
The increase in power tariff was calculated on the basis of the business plan devised by PEPCO for its distribution companies (DISCOs) for the next fiscal year. There is a gap of Rs1.10 per unit in the determined and the applied tariff and 2 per cent or Rs0.20 per unit increase on a monthly basis would bridge this gap.
It was claimed that the increase would be minimal as DISCOs were directed to expedite the recovery of dues from defaulters. But its success is doubtful because institutions and big business houses are habitual defaulters. Thus, the only choice would be to raise tariffs after every month or two, further burdening the helpless electricity consumers without improvement in performance.