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Chapter 3
Pakistan's Energy Scenario, 1988 Onwards
This chapter succeeds the earlier chapter by still looking at the energy scenario of
Pakistan, albeit from a contemporary point of view, unlike the second chapter that is
historical in nature. It focuses on the development of the trends in patterns of
Pakistan's energy sector from 1988 onwards, to the current phase. With the help of
diagrams and tables, this chapter tries to explore the present energy scenario of
Pakistan in terms of its energy requirements and demands, its supplies and available
natural resources. It looks at varied sources of energy available in Pakistan. It, then,
delves into examining various issues like the energy requirements in the different
sectors of Pakistan's economy and polity, by which sources of energy they are
fulfilled, and whether the energy supply in Pakistan is able to meet the energy
demands of the country at all, thereby examining the energy potential of the country
as well. Based on empirical evidences, this chapter examines policy options available
to Pakistan for meeting its growing energy needs.
Post 1988 Scenario
Pakistan's economy experienced a change, even though gradual, post-1988. This was
a result of the Government's decision to pave the way for widespread privatization
into the economy1• As a result of this, the energy sector also experienced changes2
•
The situation in the energy scenario in the post-1988 environment upto the present
times is analysed below.
1 Bokhari, Syed Anwar-ul-Hasan (1998), "History and Evolution of Privatisation in Pakistan", Paper presented at the ''National Seminar on Privatisation" held on 18-19 September 1998. The seminar was jointly arranged by the International Labour Organisation and Pakistan National Federation of Trade Unions. [Online: Web], Accessed on 15 July 2007, URL: http://www.policy.hu/bokhari!Histort'lo20and%20Evolution%20of%20Privatization%20in%20Pak.pdf 2 Marshuk Ali Shah, (2002), "Private Sector Investment in the Energy Sector: Case of Pakistan", Presentation for the Asian Development Bank, 07 February 2002, Karachi, Pakistan.
96
Policy to Encourage Private Sector Investment
Recognising the importance of the power sector in the economic development of the
country, the Government in the 1980s increased the allocation of the public sector
outlay from 30% to 40%3• The electricity sector, too, experienced deregulation and
private sector investment as the growth and demand investment requirement far
exceeded the public sector contributions4• In 1985, the Government had introduced a
policy inviting private investment in the power sector that was subsequently revised in
1994. Essentially, it was to make way for a single-window clearance facility in the
form of the Private Power Infrastructure and Board (PPIB). The PPIB was set up as an
autonomous organisation to deal with private investors and to assist them in signing
agreements and receiving approvals from Government departments. Terms and
conditions were clearly defined for the potential private investors to diminish the time
spent in negotiations. The Independent Power Producers (IPPs) were allowed to
choose a technology fuel and sight location and also to make their own arrangement
for the import and transport of fuel and for the development of Port handling
facilities. Government guarantees were introduced for payment obligations for public
sector utilities such as W APDA and KESC and state-owned fuel suppliers. Financial
incentives for power generation companies including exemption from corporate
income tax, custom's duty, and import licence fees and other surcharges for the term
of the power purchase agreement were provided. Private power generation companies
were allowed to issue corporate bonds and shares at discounted prices to enable a
higher rate of return proportional to the risk. Foreign banks were allowed to
underwrite the issue of shares and bonds by private power projects. The earlier limit
of 5% on investment equity in associated under taking was abolished. Private
3 Bhattacharya Subhes C. (2006), "Power Sector Reforms In South Asia: Why Slow And Limited So Far?" Energy Policy: 35(1): 37-332. 4 Baxter, Craig and Charles H. Kennedy (ed.) (2000), Pakistan 2000, Karachi: OUP.
97
generating companies were allowed to register anywhere in the country to avoid high
stamp duty and allow registration of debt documents. 5
This approval of the Privatisation Commission was based on a mix of " strategic
sale" and ''management contracts"6• Implementation of the restructuring programme
was expected to bring about a gradual transition from the integrated state owned
utility to a decentralised system with separate generation, transmission and
distribution entities having substantial ownership and management thereby reflecting
and encouraging a commercial and competitive operating environmene.
These 1990 reforms had the special character of focussing on stimulating economic
growth through increased private-sector investment and productivity. The main thrust
of these reforms was to free up markets, thereby reducing the economic role of the
government8, to increase investment, improve service and strengthen the sector's
financial performance.9 In terms of implementation, the reforms centred on the
disinvestment of public enterprises, deregulation and denationalisation10• The 1990
reforms, introduced by the Nawaz Sharif Government focused on the following: a) to
quickly hand over public economic assets to the private sector b) to restructure public
enterprises before privatising them, c) to concentrate on making an enabling
environment11• This was done with the larger focus of the private sector being able to
5 Government of Pakistan (1994), "Policy Framework and Package of Incentives for Private Sector Power Generation Projects", March 1994, (Online: Web), Accessed on 17 October 2010, URL: www.ppib.gov.pk/PowerPolicy1994.pdf 6 "Pakistan's Karachi and Water Sewerage Board", [Online: Web] Accessed on 22 April 2007, URL: www.worldpsi.org!femplateRedirect.cfm?template=/ContentManagement/ContentDisplay.cfin&ContentiD=7552 7 Peterson, George E. (2002), "Pakistan's Fiscal Decentralisation: Issues and Opportunities", [Online: Web], Accessed on 25 April 2007, URL: http:/1209 .85.17 5.1 04/search?q=cache:TI3wkT69 _lMJ :www.pakdevolution.com/publications/publicati ons/F1.pdf+decentralisation+pakistan+seperate+transition+generation&hl=en&ct=clnk&cd=1&gl=in& client=firefox -a 8 State Bank of Pakistan, "Financial Sector Reforms During 1990s", URL: http://www.sbp.org.pk/publications/fsa/index.htm 9 Vucetic, Vladislav and Achilles G. Adarnantiades (2009), Hathaway, Robert M. and Michael Kugleman (ed.) Powering Pakistan: Meeting Pakistan's Energy Needs in the 21st Century, Oxford University Press: Oxford 10 Rosett C. (1991) ''Pakistan's Free Marketeer", The Wall Street Journal, II July 1991. 11 WTO (1995), World Trade Organisation, Trade Policy Reviews: Second Press Release And Chairperson's Conclusions, "Pakistan: February 1995; Trade Policy Review Body: Review Of Pakistan Trade Evaluation", URL: http://www.wto.org/english/tratop _ e/tpr _ e/tp4_ e.htm
98
perform better than the government but at the same time making sure that the latter
must ensure an enabling environment that will advance the development of the private
sector12• This strategy of achieving private sector lead development, was, however, in
direct contrast to many other ''third world" countries and according to a viewpoint,
reflected the preferences of the US, Japan and West Germany, that were Pakistan's
major aid donors at that time and whose economic largesse was crucial to the aim of
bringing about rapid industrialisation 13•
However, these reforms had been preceded by two other sets as well. The one in the
1970s were introduced to deal with a series of balance of payments problems
stemming from the sharp increases in oil prices and decline in prices of Pakistan's key
imports14• In the 1980s, they were introduced again as there was a requirement for
structural adjustment to strengthen productive capacity15.
The Deficit of Energy Security In Pakistan
In a world where the amount of energy consumed is an indication of the economic
prosperity of a country, Pakistan holds the thirty second position as far as world
primary energy consumption is concerned.16 Per capita energy consumption IS
estimated at 14 million Btu17 only as compared to developed countries.
12 Burki, Shahid Javed (1992), "Privatisation, Deregulation, Regulation and Good Governance: A New Economic Development Paradigm for Pakistan" in Nasim, Anjum (ed.) Financing Pakistan's Development in the 1990s, Lahore University of Management Sciences, Karachi: Oxford University Press. 13 Weiss, Anita M. (1991), Culture, Class and Development in Pakistan, Bellevue: West View quoted in Talbot, Ian (2005), Pakistan: A Modern History, Delhi: Foundation Books. 14 Aghevli B. et. al. (1987), "Growth and Adjustment in South Asia", quoted in Looney, Robert E. (1997), The Pakistani Economy: Economic Growth and Structural Reform, London: Praeger 15 Looney, no. 14. 16 EIA (2010), Energy Information Administration " Pakistan Energy Profile", [Online: Web], Accessed on 25 October 2010, URL: http://www.eia.doe.gov/country/country _energy_ data.cfm?fips=PK 17 "Meeting Pakistan's Energy Needs", Speech by Mukhtar Ahmad, Advisor to the Prime Minister of Pakistan, June 2006, Woodrow Wilson Centre.
99
Table 3.1: Primary Energy Supply and Per Capita A vailabilitv
Energy Supply Per Capita Year Million TOE Change(%) Availability (fOE) Change(%)
1998-99 41.72 0.31
1999-00 43.19 3.51 0.32 1.28
2000-01 44.4 2.82 0.32 0.63
2001-02 45.07 1.5 0.32 -1.25
2002-03 47.06 4.41 0.32 2.86
2003-04 50.85 8.06 0.34 5.25
2004-05 55.58 9.26 0.36 6.45
2005-06 58.06 4.18 0.37 2.48
2006-07 60.62 4.33 0.38 2.61
2007-08 62.92 3.78 0.39 2.86
2008-09 62.55 -0.58 0.38 -2.27
Jul-Mar
2008-09 47.1 0.29
2009-10 46.8 -0.64 0.28 -3.09
Source: Government of Pakistan (2010), Economic Survey of Pakistan 2009-10
Per capita energy consumption is often seen as the level of development of a country,
and Pakistan's low per capita energy consumption points to the fact that it is a poor,
developing nation18• Moreover, It is often known as an "energy profligate" and an
"energy deficient" country lead by the consumption of fossil fuels 19• Since the
productions of these are not sufficient to meet the energy demands of the nation, it is,
therefore, also a net importer of energy, as seen in the Table 3.1 above.
Despite Pakistan's low standing on the world scene in terms of energy consumption,
however, demand for energy in Pakistan has grown manifold in recent years, in
18 Rai, G.D. (2006), Energy Sources, Delhi: Khanna Publishers, Parikh, Jyoti K. (1980), Energy Systems and Development: Constraints, Demand and Supply of Energy for Developing Regions, Delhi: Oxford University Press. 19 EEIU (2005), Eco-Ethics International Union, "State of Pakistan's Environment", URL: http://www.eeiu.org/chapters/multan/reports.html
100
keeping with this trend throughout the South Asian region20• A growing economy and
rising population, that requires more energy for their multipurpose uses, are the
primary two reasons for the growth of such a huge demand in energy. However, the
supply of energy to meet this demand is not enough. While energy requirements in
2007 were 58 Mtoe, it is being forecast to increase to 360 Mtoe by 2030, by the
Planning Commission of Pakistan21• In fact, even till as recently as 2008, Pakistan
was facing a gap of 4500 MW between the demand and supply of electricity,
registering a shortfall of 40r<P. There has been a slow but sure energy crisis emerging
in Pakistan since 2005. The cumulative effect of the energy crisis on the economy is
estimated at over 2% of GDP during 2009-10 alone.23 This very situation translates
into a condition of"energy insecurity" for the country. In today's world, the concept
of security has acquired a much more multi-faceted form than before. The dimension
of energy, forming on such facet of the term, is regarded as a "strategic commodity".
A "strategic commodity" has two components, as discussed in Chapter 1. Firstly, it is
essential for the economy of a country. Secondly, its supply is uncertain and may
present a risk to the socio-economic fabric of the nation?4• This is true for Pakistan.
Due to increasing demand but an indigenous supply that is not able to match up to the
demand, there is a deficiency in Pakistan's energy scenario that robs it of energy
security. All attempts at fulfilling this deficiency from imports have risks attached to
it, making the nation further vulnerable in the Realist perception, in terms of having
soft borders with outside powers25•
20 Khan, Shaukat Hameed (2009), "Technology Status and Costs of Emerging Alternative Sources", Hathaway and Kugleman, no. 9 , EIA (2006), Energy Information Administration, "South Asia Overview'', URL: http://209.85.175.104/search?q==cache:lguEdAoBVeUJ:www.apotokyo.org/biomassboiler/D 1_ downloads/presentations/Nepal_ Program _DEC2006/Country _Papers/Paki stan/Pakistan_ CP .doc+pakistan+current+energy+mix+of+different+types&hl=en&ct==clnk&cd==3 &gl=i n&client==firefox-a 21 "OGCON-2007 Inaugural Session: Minister's Speech", Address by Mr. Amanullah Khan Jadoon, Minister for Petroleum & Natural Resources, 3rd Pakistan Oil and Gas Conference, 18-19 February 2007, Deloitte, [Online: Web], Accessed on 16 May 2008, URL: http://www.pakoilgas.com/ Agenda.htm 22 Asif M. (2008), "Sustainable Energy Options for Pakistan", Renewable and Sustainable Energy Reviews, 13(4): 903-909. 23 Government of Pakistan (2010), Economic Survey of Pakistan, "Energy'', URL: www.finance.gov.pk/survey _ 091 O.html 24 Sahir Mukhtar H. and Arshad H. Qureshi (2007), "Specific Concerns of Pakistan in the Context of Energy Security Issues and Geopolitics in the Region", Energy Policy, 35(4): 2023-2030. 25 CFR (2007), Council on Foreign Relations, Bajoria, Jayshree "The Troubled Afghan-Pakistani Border", URL: http:/ /www.cfr.org/publication/14905/troubled _afghanpakistani_ border.html
101
Its growing economy is mainly supported by Pakistan's industrial sector that has been
expanding at a target growth rate of 12.5%26• With the growing demand for energy
due, the energy sector is expected to play a critical role in economic and social
development, all the while aiming for a balance between energy security and
sustainable developmene7, including such issues as environmental security and
human development, especially when in the latter category, other countries of the
region have climbed up from low to middle category of human development index
(HDI), Pakistan continues to remain in the low categorr8.
In 2007, Mukhtar Ahmad, the then Advisor to Pakistan's Prime Minister on Energy
listed out the major policy objectives for Pakistan's energy sector. These are29:
a) To have an adequate and affordable energy supply to meet the needs of an
expanding economy.
b) To guarantee security of energy supply through a balanced energy mix and
maximum indigenous resource utilization.
c) To ensure long term validity of the energy sector through appropriate
distribution of responsibilities, (policy formulation, regulation and
administration), through a rational industry infrastructure (Government's
"strategic" presence, public-private ownership, exclusive private ownership)
and through a sustainable pricing regime (cost-of-service, transparent and
targeted subsidies.)
Thus, Pakistan's energy vision in the ongoing balance of country dynamics is to
explore energy resources including hydel, thermal, nuclear, gas and LNG, apart from
importing gas and electricity from neighbouring regions, with a view to lessening
26 "Vast Opportunities of Pakistan's Trade with UK", Pakistan Times 26 August 2005, [Online: Web], Accessed on 5 April2008, URL: http://pakistantimes.net/2005/08/26/business3.htm 27 National Strategies for Sustainable Development (2000), "Pakistan's National Conservation Strategy: Renewing Commitment to Action", Report of Mid-Term Review, November 2000. [Online: Web], Accessed on 6 March 2007, URL: http://www.nssd.net/country/pakistan!mtrchl.htm 28 U.N. (2009) United Nations, "Human Development Report 2009 - HDI Rankings", URL: http://hdr.undp.org/enlstatistics/ 29 Ahmad, Mukhtar (2007), "Pakistan's Energy Strategy and its Role in South Asia", Presentation given by Mukhtar Ahmad, Advisor in matters of Energy to Prime Minister, Shaukat Aziz, February 19, 2007.
102
dependence on oil, due to its tenacity to drain the national coffers30. Apart from this, it
is also to create an environment conducive to the participation of the private sector
and to develop an energy scenano m the context of the regional perspective,
enhancing participation in the sector, including manufacturing of plants and
equipment by strengthening regulatory frameworks and related institutions and
development of infrastructure. 31
Pakistan's primary energy supplies in 2004-05 amounted to 55.5 MTOE, though
demand was more. Oil and gas formed the bulk of this supply of primary energy,
contributing about 80.1 %, of which oil contributed 29.4%, gas 50.3% and LPG 0.4%.
Other sources included coal 7 .6%, hydro electricity 11.0% and nuclear electricity
1.2%32. This is indicated in Figure 3.1 below:
Figure 3.1: Primary Energy Supplies (2004-05)
Coal 6.5
50 Gas
Renewable 0
Source: Government of Pakistan (2005), Pakistan Energy Yearbook 2005
30 Hakeem, Fazal (2008), "Overcoming the Energy Crisis in Pakistan", [Online: Web] Accessed on, 12 March 2007, URL:www.optblog.com/ .. ./overcoming-the-energy-crisis-in-pakistan/ 31 "Introduction", Hathaway and Kugleman, no. 9, "Energy Security" (2005), [Online: Web] Accessed on 21 March 2007, URL: http//: www.Pakistan.gov.pk. 32 "Industry Overview" no. 77
103
A table depicting primary energy supplies by source from 2003 to 2009 is given
below:
Table 3.2: Primary Energy Supply from Source (TOE) (2003-2009)
Source 2003-04 2004-05 2005-06 2006-07 2007-08 Oil"1 15,221,024 16,329,979 16,411,034 18,188,280 19,206,441
29.9% 29.4% 28.3% 30.0% 30.5% Gas 25,254,481 27,953,380 29,169,971 29,304,612 29,863,194
49.70% 50.30% 50.3% 48.40% 47=50% LPG"2 205,526 251,789 400,430 470,998 418,952
0.40% 0.50% 0.70% 0.80% 0.70% Coal 3.300,491 4,227,842 4,049,654 4,426,678 5,783,844
6.50% 7.60% 7% 7.30% 9.20% Hydro
Electricity 6,431,312 6,127,429 7,366,452 7,626,755 6,851,955 12.60% 11.00% 12.70% 12.60% 10.90%
Nuclear Electricity 420,135 667,234 592,887 546,159 734,537
0.80% 1.20% 1% 1.00% 1.20% Imported Electricity 17,418 26,050 34,775 40,781 47,550
0.00% 0.00% 0.10% 0.10% 0.10% 50,850,387 55,583,703 58,026,004 60,604,262 62,906,473
100% 100% 100% 100% 100% Annual Growth
Rate 8.06% 9.31% 4.39% 4.44% 3.80%
1) Excluding petroleum products exports and bunkering 2) Include imports and production from field plants
2008-09 20,103,060
32.1% 30,241,540
48.30% 401,705 0.60%
4,732,823 7.60%
6,631,841 10.60%
385,165 0.60%
54,266 0.10%
62,551,399 100%
-0.56% 14.12%
Unit:TOE %Share ACGR 5.70%
3.70%
14.30%
7.50%
0.60%
-1.70%
25.50%
4.20%
3) Converted@ 1000Btu/K.Wh to represent primary energy equivalent ofhydro and nuclear electricity as if it was generated by
using fossil fuel 4) W APDA imported electricity from Iran since Oct 2002 Source: Government of Pakistan (2009), Pakistan Energy Yearbook 2009
Pakistan consumed nearly 58 million TOE of primary energy in 2005-06, ofwhich 23
million TOE was used for electricity generation while the remaining 35 million TOE
104
was used by the industry, transport, domestic use, commerce, agriculture and
government. 33 This is indicated in the pie chart below.
Figure 3.2: Final Energy Consumption By Different Sectors (2005)
2%.agrl culture
2~'->other govt
3%commercal 2Pt.>domestic
Source : Government of Pakistan (2005), Pakistan Energy Yearbook 2005
Figure 3.3: A Comparison between Energy Consumption by Source (2003-04 /2008-
Q2}
(Z003-04)
'---------
Source: Government of Pakistan (2010), Economic Survey of Pakistan 2009-10
33 Khan, no. 20
105
The current energy matrix in Pakistan is a composite of various types of energy34• As
of2008-09, the percentage share of gas in the primary energy mix stood at 47.5%, Oil
at 30.5%, Hydel at 10.9 %, Coal at 9.2%, Nuclear at 1.2% and LPG at 0.7%.35
Table 3.3: Annual Energy Consumption (2007-10)
Petroleum Products Gas Electricity Coal
Fiscal Tonnes Change (mmcft) Change (Gwh) Change M.T* Change
Year (000) (%) (%) (%) (000) (%) 07--08 18,080 7.3 1,275,212 4.4 73,400 0.9 10,111 28.1
08--09 17,911 -0.9 1,269,433 -0.5 70,371 -4.1 8,390 -17
Avg. 10
Years 0.5 6.8 5 12.5
Jul-Mar
08--09 12,892 931,700 55,614 4,822
09-10 13,937 8.1 959,475 3.0 54,653 -1.7 5,304 10.0
• -Million Tonnes
Source: Government ofPakistan (2009), Economic Survey of Pakistan 2009-10
The following sections look into the status of various sectors of energy in the present
context, starting from 1988. They include: 1. Power; 2. Oil; 3. Gas; 4. Coal; 5. Hydro;
6. Nuclear; ?.Renewable and Traditional sources to a very small extent.
34 Iqbal, Farkhand and Basharat Hasan Bashir, "Pakistan Country Paper", [Online: Web], Accessed on 5 June 2006, URL: http://209.85.175.104/search?q=cache:1guEdAoBVeUJ:www.apotokyo.org/biomassboiler/D 1_ downloads/presentations/Nepal_ Program _D EC2006/Country _ Papers/Paki stan/Pakistan_ CP .doc+pakistan+current+energy+mix+of+different+types&hl=en&ct=clnk&cd= 3 &gl=i n&client=firefox-a 35 Malik, Arshad Maqsood and Ashfaq Ahmad Shaikh (2009), "Country Report on Energy Security and Power Crisis", [Online: Web], Accessed on 12 October 2010, URL: eneken.ieej.or.jp/data/3147.pdf
106
Natural Gas
According to the Pakistan Ministry of Petroleum and Natural Resources, " "natural
gas" means petroleum which at standard atmospheric conditions of pressure and
temperature ts m a gaseous phase, including non-hydrocarbon gas, which is in
association with and produced at the surface together with such gaseous
hydrocarbons"36
The Seventh Plan (1988-93) had laid down a fully planned out strategy for the
development of gas as a credible source of energy in Pakistan, especially during a
time when there was a move away from the consumption of oil, due to the soaring
world prices, that had continued to be the prime source of energy for the country since
its independence37•
The plan had envisaged that future plans for gas consumption in Pakistan should be
supply driven instead of demand driven38. The approach adopted in the Seventh Plan,
therefore, was to first estimate the available gas supplies, and then allocate those
among various sectors39• Average supply for natural gas was expected to increase
from 1,200 MMCFD (equivalent to 1,071 MMCFD from Sui fields due to higher
average thermal content of Sui gas), in 1987--88 to 2095 MMCFD (1,776 MMCFD
Sui equivalent) in 1992-9340•
36 Government of Pakistan, no. 32. 37 Associated Press of Pakistan, "Senate Body for Accelerating Oil, Gas Exploration" [Online: Web], Accessed on 7 June 2008, URL: http://www.app.com.pk/en _/index.php?option=com _ content&task=view&id=53804&1temid=2 38 Smith, Michael R. (2003), "The Future for Asia-Pacific Oil and Gas", [Online: Web], Accessed on 16 December 2007, URL: http:/1209 .85.175.104/search?q=cache: UQnuwuoiZwJ:www.energyfiles.com/articlesfiles/Future%2520for>lo2520AsiaPacific%2520(Sept%25202003).pdf+gas+plan+pakistan+supply+driven&hl=en&ct=clnk&cd=10&gl=i n&client=frrefox-a 39 IMF (1998), International Monetary Fund, "Pakistan: Enhanced Structural Adjustment Facility Policy Framework Paper 1998/99-2000/01", URL: http://www.imf.org/extemal/NP/PFP/pakistan!INDEX.HTM 40 World Bank, (1988), Vedavalli, "Petroleum and Gas in Non-OPEC Developing Countries: 1976-1985", URL: http://wwwwds. worldbank.org/extemal/default/WDSContentServer/WDSP /IB/2003/0 1/23/000178830 _981 019034 00638/Rendered/INDEX/multiOpage.txt
107
The development that was envisaged for the existing fields, during this plan period is
as follows. In the Pirkoh gas field, sixteen wells had been drilled so far and thirty
additional wells were to be drilled and processing and surface facilities provided41•
Reservoir studies were to be undertaken and water injection initiated, if required42• In
the Loti gas field, five wells had been drilled and were awaiting surface facilities
during this Plan period43• In addition, 13 wells were to be drilled and surface and
processing facilities provided. Similarly, for Sui, seventy-eight wells had been drilled
at Sui so far while seven development wells and one deep well along with seismic
prospecting was to be completed during this Plan period, to appraise deeper prospects
in the Sui field44• In the Bodh Blek Fields in the Badin Block, which comprised of 17
fields (including oil fields for associated gas), 75 wells had already been drilled45• An
additional66 wells were to be drilled during the Seventh Plan. In Mari, one deep well
was to be drilled to appraise deeper prospects46• Reservoir studies were to be
undertaken here as well and a development plan prepared if found feasible. In Uch,
the second well had been re-appraised by the OGDC. Four additional wells to
appraise deeper prospects were to be drilled during the Seventh Plan47• In Qndhkot,
twenty wells had been drilled up till 1988. In addition 12 wells had to be drilled to
develop the existing horizon and appraise deeper prospects in the Mazarani gas field
41 World Bank (1985), "Pakistan and the World Bank: Partners in Progress", URL: http://wwwwds.worldbank.org/extemal/default/WDSContentServer/WDSPIIB/2006/02/14/000090341
20060214143854/Rendered/INDEX/34897. txt 42 AAAS (1998), American Association for the Advancement of Science, Nizamani, Aijaz et. al, "Case Study: Pakistan: Population and Water Resources", [Online: Web], Accessed on 17 March 2007, URL:http://www.aaas.org/intemational/ehn/waterpop/front.htm, Sherbinin Alex de and Victoria Dompka, Water and Population Dynamics: Case Studies and Policy Implication [Online: Web], Accessed on 17 June 2006, URL: http://wilsoncenter.org 43 OGDCL, Oil and Gas Development Corporation Limited "Loti Gas Field", URL: http://www.ogdcl.com/about-us/Fields.html#top 44 Government of Pakistan, Ministry of Petroleum and Natural Resources, "Gas Pricing Policy", [Online: Web] Accessed on 12 October 2006, URL: http://www. pakistan. gov. pk/ divisions/Contentlnfo .j sp?DiviD=49&cPath=7 68 _ 805&ContentiD=4 5 81 45Zaigham, Nayyer Alam and Khalil Ahmad Mallick (2000), "Prospect of Hydrocarbon Associated with Fossil-Rift Structures of the Southern Indus Basin, Pakistan", APG Bulletin, 84(11 ): 1833-1848. 46 "Mari Gas Company Limited", Economic Review, February I, 1992. 47 Kalim, Mohammad, (2003) "Gas Industry of Pakistan- A Historical Perspective of Gas Market Transformation", Escon (Private) Limited, Karachi, [Online: Web], Accessed on 5 August 2008, URL: http://www.igu.org/html/wgc2003/WGC _pdffiles/1 0379 _1 044716730 _ 2356l_l.pdf .•
108
during the Seventh Plan period was in the category of a dormant gas field48• Two
wells were to be drilled during this Plan period to appraise the field. Similarly, in the
Sari/Hundi/Kothar gas field, there were 5 wells at this time. The fields were dormant
due to low wellhead pressure. An additional two wells along with a compression
system were to be completed to meet the projected target49• In the Nandipur/ Punjpir
gas field, nine wells had been drilled. Two additional wells along with surface
facilities were to be completed during the Seventh Plan50. Development of dormant
gas Fields; Uch, Nandpur, Panjpir and Zin was planned as well so that they could be
used for power generation. Efforts were also to be made to harness the energy
available in other dormant gas fields to augment supplies. 51•
Regarding the policy for the utilisation of gas, priority was to be allocated to the use
of gas as feedstock for the fertilizer industry and the replacement of high-speed diesel
(HSD) in power generation52• The strategy envisaged for the Seventh Plan regarding
hydrocarbons was the replacement of kerosene in the domestic sector, replacement of
furnace oil in the industrial sector and the substitution of furnace oil in power
generation53. Regarding Natural Gas transmission and distribution, transmission
facilities associated with Loti, Pirkoh and Sui were to be enhanced and transmission
lines provided for connecting the Adhi and Dakhni fields54. The capacity bf the
Kandhkot- Guddu pipeline was to be increased to augment supplies from Kandhkot.
However, in lieu of the additional Kandhkot gas, Sui gas was to be released from the
Guddu power station for meeting demand on the network system. This was to include
48 Zaigham, Nayyer Alam and Khalil Ahmad Mallick (2000), "Prospect of Hydrocarbon Associated with Fossil-Rift Structures of the Southern Indus Basin, Pakistan", APG Bulletin, 84(11): 1833-1848. 49 AAAS, no. 42, Sherbinin and Dompka, no. 42. 50 OGDCL, no. 43. 51 Government ofPakistan, no. 51. 52 Ahmad, Adeel and Mithilesh Kumar Jha (2008), "Status of Petroleum Sector in Pakistan- A Review", [Online: Web], Accessed on 17 December 2007, URL: http://www.ogbus.ru/eng 53 Ex-President of Pakistan, General Pervez Musharrafs Address at the Seminar of Human Development Forum, January 24, 2002, Islamabad, (Online: Web], Accessed on 14 November 2006, URL: http://209.85.I75.104/search?q=cache:Lzc9WxsIkoJ:presidentofpakistan.gov.pk/FilesSpeeches%255CPolicy%255C I 0282004I24333PM I 0202004800 26AMword%2520file.pdf+substitution+of+furnace+oil+in+power+generation+pakistan&hl=en&ct=cl nk&cd=2&gl=in&client=firefox-a 54 Kuo, ChinS. (1994), "The Mineral Industry ofPakistan", (Online: Web], Accessed on 15 September 2008, URL: http:/ /209.85.17 5.1 04/search?q=cache:ppweh Uy5s Y J :minerals. usgs. gov/minerals/pubs/country/ 1994/93 24094. pdf+pakistan+natural+gas+transmi ssion+ 1992&hl=en&ct=clnk&cd=33&gl=in&client=firefox-a
109
the completion of the Sui Northern Gas pipeline (SNGPL) project to increase supply
from Sui by 69 MMCFD. Secondly, the completion of (a) phase-I of SNGPL project
VI to transmit an additional 70 MMCFD from Loti and of MMCFD from Pirkoh to
Sui for processing and onward transmission and (b) Phase-II ofSNGPL project-VI for
increasing ex-Sui transmission capability to 650 MMCFD for providing gas facilities
to new cities and towns was to be undertaken. 55 Thirdly, completion of the Sui Gas
Transmission Company's (SGTC) Indus Right Bank capacity expansion project was to
increase in capacity from 175 to 240 MMCFD at Karachi56• Fourthly, completion of
transmission link-up of Badin block fields and construction of pipeline to Jamshoro
with a capacity of 100 MMCFD; was to be undertaken. Fifthly, supply of gas to new
towns within 30 km of the existing system in addition to Pishin and Mastung was also
to be undertaken57• Sixthly, supply of gas to industrial estates under one window
operation was to be undertaken58• Seventhly, provision of about 800,000 new
domestic connections was envisaged, of which at least 50 per cent were to be in the
less developed areas59• LPG production was estimated to increase in the coming years.
The additional LPG was to be produced by Dhodak, Dakhni and Adhi LPG plants60•
The allocation made to all LPG marketing companies except the Southern Gas Co.
Ltd. (SGCL) was subject to the condition that 25 percent of their allocation would be
marketed in the areas of NWFP, F ATA, "AJK" and the Northern Areas. SGCL were
obligated to supply 25 per cent of their allocation in the interiors, of Sindh and
Baluchistan. The increase in LPG production was to be utilized to replace kerosene oil
in areas where natural gas was not available61•
55 ADB (1987), Asian Development Bank, "Southern Gas Transmission and Distribution", URL: http:/ /www.adb.org/Projects/approvals.asp?browse= 1 &query=gas&fld=7 &srt= 1 &ctry= ALL& year= AL L&offset=O 56 ADB (1995), Asian Development Bank, "Impact Evaluation Study of Bank Operations in the Gas Sector in Pakistan", URL: http://www.adb.org/Documents/PERs/ie36.pdf. 57 "Five Decades of SSGC: A Saga of Success", [Online: Web], Accessed on 2 March 2007, URL: http://209.85.175.104/search?q=cache:q4vxKlRUYOcJ:66.175.11.85/gssgclcompany/supplement.pdf+p akistan+badin+block+transmission+jamshoro&hl=en&ct=clnk&cd=2&gl=in&client=firefox-a 58 Bashar, Amanullah (1999), "Karachi: Step Motherly Treatment?", [Online: Web], Accessed on 7 September, 2006, URL: http://www.pakistaneconomist.com/database2/cover/c99-15.asp 59 ADB, no. 56 60 "Liquified Petroleum Gas (LPG), LPG Production in Pakistan; Oil and Gas", Economic Review, June 1, 1991. 61 Government of Pakistan, no. 51.
110
In the 1990s, 16 more gas discoveries were also made, thereby adding 30 to 35 per
cent to the country's reserves. However, due to the financial limitations that Pakistan
faced as far as their development was concerned and, since these fields were in
remote areas they needed common infrastructure to be developed and to connect them
to markets, which was not yet available. Thus, these fields could not be developed
properly. The price of gas was also a contentious issue since it had to balance the
needs of both the consumer and the investor. 62
Pakistan's natural gas consumption experienced an average annual growth rate
(AAGR) of 5.5% in the 1995-2000 period63• In 1999, natural gas remained the most
popular source of energy in Pakistan64 In terms of sectoral consumption, the power
sector accounted for almost one-third of the annual consumption. The demand from
this sector, for natural gas was expected only to increase, therefore, accelerating
growth65• The fertilizer sector, also, a big consumer of natural gas accounted for one
fourth of the total gas consumption using it as both fuel and feedstock66• The
residential sector used gas at an annual rate of 7.6% annually. This was supplemented
by an expansion in the distribution network67.The period between 1990-91 to 2001-02
saw a 3.5% increase in the consumption of natural gas per annum68• As of 1 April
2003, the recoverable reserves of natural gas were estimated at 28.3 trillion cubic feet.
The average production of natural gas during July- March 2002-03 was 2, 648
MMCFf per day, as against 2,256 MMCFT during the same period 1990-91, showing
an increase of almost 5%.
62 Government of Pakistan, no. 5 63 Vahidy et. al. (2002), "Pakistan's Gas Discoveries Eliminate Import Need", Oil & Gas Journal, 100(4), 2002:24-34 64 "Country Profile-Pakistan", [Online: Web], Accessed on 17 March 2008, URL: http:/ /earthtrends. wri.org/text/ energy-resources/ country-profile-140 .html 65 "Energy Sector in Pakistan", Economic Review, 1 August, 2002. 66 World Bank (2003), "Pakistan Oil and Gas Sector", URL: siteresources. worldbank.org/P AKIS T ANEXTN/Resources/pdf-Files-in-Events/Oil-and-GasSector/POGSR-2003.pdf 67 Vahidy, no. 63. 68 Pakistan Almanac 2003-04, Karachi: Royal Book Co.
Ill
Figure 3.4: Sectoral Consumption of Natural Gas (2000-01) (Total=774.4 Billion
cu.ft.)
17.9 general industry
commercia l 2.7
17.1 fertiliserlfeedstoc
k
37.1 power
.6 transport
domestic 18.2
Source: "Energy in Pakistan", [Online: Web] Accessed on 5 April 2008, URL:
www. waterinfo.net.pk/pdf/ep.pd
The main companies engaged in oil and gas production in Pakistan in 2003-04 were
OGDCL, Pakistan Petroleum Limited (PPL), Pakistan Oil Fields Limited (POL), OPI
Gas Pvt. Ltd., Lasmo, BHP Billiton, Mari Gas Company Limited (MGCL), British
Petroleum (BP) (Pakistan) and TULLOW oil.69 The production capacity of these gas
companies during the period 2000-2001 can be seen in Table 3.4 below
69 Pakistan Almanac, no. 68
112
Table 3.4: Production Capacity Of Pakistani Gas Companies (2000-2001)
Ser. No. Company Qty. in Mn. Cubic
Ft./Day
(Jui2000-Mar 2001)
1. LASMO 61
2. MGCL 406
3. OGDC 693
4. OPI 5
5. POL 43
6. PPL 924
7. UIP 206
8. TULLOW 33
TOTAL 2371
Source: "Energy in Pakistan", [Online: Web] Accessed on 5 April 2008, URL:
www. waterinfo.net. pk/pdf/ep.pd
Table 3.5: Drilling Activities (Achievements) (Number ofWells) (2008-10)
July- July-
2008- March March Change Sector 09 2008-09 2009-10 (%)
Public Sector (OGDCL) 30 20 16 -20.00
i) Exploratory 12 7 8 14.29
ii) Appraisal/Dev. 18 13 8 -38.46
Private Sector 56 40 34 -15.00
iii) Exploratory 15 10 10 0.00 iv) Appraisal/Dev. 41 30 24 -20.00
Total 86 60 50 -16.67 Source: Government ofPakistan (2010), Pakistan Energy Yearbook 2010
113
According to 2005 indicators, the demand for natural gas has been increasing from 7
to 8% per annum, regionally70. They showed a fast growing demand for gas as a
preferred source of energy in Pakistan. This was mainly due to the fact that gas is a
relatively cheaper source of energy than oil, the major source of energy in Pakistan till
recent years. Moreover, it is environment friendly. This increase in the demand for
gas, compared to that of oil was in keeping with an lEA study that says that demand
for gas is soon going to replace that of oil and that world gas demand would double
by 2030.1t says that this demand would soon surpass the demand even of oit11• The
US Energy Research Agency also projects that natural gas would become the largest
energy resource globally so that its global consumption share would increase to
27.7% by 2030 and that oil and coal would decrease to 26.25% and 21.18%
respectively72• In 2005, about 72% of total energy requirements were met through
indigenous production, with gas forming the mainstay of the domestic supply of
primary energy supplies covering almost 50% of domestic energy in 2005 73.
Natural gas sectoral consumption during 2005-06 was: power (40.2%), fertilizer
(16.2%), cement industry (1.3%), general industry (22.8%), domestic (14.0%),
commercial (2.4%) and Transport (CNG; 3.2%)74.
In addition, the government has also been focussing on diversification of the supply
of energy, in terms of importing gas and LNG, along with indigenous production of
gas7s.
70 (2005), "Energy Resources and Regional Economic Cooperation", Spotlight on Regional Affairs, 24(4), Islamabad: Institute of Regional Affairs. 71 lEA (2002), International Energy Agency "Conference on Cross -Border Gas Trade", 26 March 2002 at lEA Headquarters, Paris. 72 (2005), Spotlight on Regional Affairs, no. 70 73 Burki, Shahid Javed {2009), "The Weight of History: Pakistan's Energy Problem", Hathaway and Kugleman, no. 9 74 [Online: Web], Accessed on 13 September 2009, URL: Pakistan.Gov.pk%20-%20The%200fficial%20Web%20Gateway%20to%20the%20Govemment%20of1%20Pakistan.webarch tve 75 "Energy Security", no. 31.
114
Furthermore, international investments are also taking place in the Pakistani
hydrocarbon sector. The British Petroleum sees immense potential in Pakistan for the
development of gas, especially in the Indus region, which being an expansive and
ancient river system would have considerable hydrocarbon potential. It has been
continuing exploration activities here, seeing there is great demand for energy in the
country76•
As per 2007 indicators, total resource potential of gas is 282 tcf and its production is
3, 825 Mac/d. The distribution network for gas is estimated to span about 68, 000
kms. and transmission network about 9,063 kms. Domestic consumers of gas in
Pakistan are calculated to be around 4.41 million, while the commercial consumers of
gas are averaged to be about 70, 00077•
Gas exploration chances in the future are bright as well. Pakistan has 28tcf reserves of
gas, by which it ranks 6th in the Asia Pacific region. Pakistan's oil and gas reserves are
located at Sui, Uch, Mari, Qadirpur, Sawa, Zamzama, Kandra, Manzalai, Bhit, Mar
Deep, Kandkot, Miano, Makori, Pirokh and Dhodhak78• The Government plans to
carry out further extensive and active onshore exploration and production in the gas
sector, while some are already in place79•
In 2008, the share of gas consumption increased by 2.8% in the first nine months of
2007-08 fiscal year over the same period of 2006-07. 80 The supply of gas has
exhibited an increase of 1.6 percent during July-March 2009-10. The increase in
supply owes to higher production of 1.6 percent in natural gas during the period under
review. Due to this increase in availability of natural gas, the overall consumption of
76 British Petroleum (2006), "Powering up Pakistan", [Online: Web], Accessed on 14 March 2008, URL: http://www. bp.com/sectiongenericarticle.do? categoryld=90 13063&contentld=702 5 692 77 "Industry Overview'' [Online: Web] Accessed 15 January 2007, URL: http://www.pogeepakistan.com/industry%20overview.htm 78 Hakeem, no. 30 79 Ahmad, Mukhtar (2007), "Pakistan's Energy Strategy and Its Role in South Asia", Presentation given by Mukhtar Ahmad, Advisor in matters of Energy to Prime Minister, Shaukat Aziz, February 19, 2007, Islamabad. 80 Government of Pakistan (2008), Economic Sull'ey of Pakistan, "Energy", URL: www.finance.gov.pk/survey _ 091 O.htrn1
115
gas remained higher during the period. Furthermore, the sector wise consumption of
gas suggests that the household, commercial, fertilizer and transport sector witnessed
positive growth in consumption of gas during 2008-09. More recently, with the
exception of cement and power sectors, many major sectors have witnessed positive
growth rates during July-March FYI 0. The consumption of gas by industry has
witnessed a significant increase of 5.3 percent during July-March 2009-1 0 especially
after the decline of 1.1 percent during 2008-09. The increase in industrial
consumption owes to rise in domestic demand for manufacturing production during
the period. The maximum decline of 72.7 percent has been witnessed in cement
sector's gas consumption on the back of contraction in its external demand during the
period along with the switch over to coal for production. On the other hand, gas
consumption in the transport sector increase due to shift from imported fuel oil to
reJatively cheaper source of gas during July-March 2009-10.81 Decline in power
sector's gas consumption is based on the inter corporate circular debt reason.82
Liquefied Petroleum Gas (LPG)
In 2004, 1000 tons per day of LPG was being produced locally. 29 LPG companies
were involved in marketing the indigenous and imported LPG. This was in
accordance with the Government's efforts to ensure availability of domestic and
imported LPG at competitive and viable prices in rural areas where supply of natural
gas through pipeline is not economically feasible. Since September 2000, moreover,
the Government has deregulated the allocation and price of LPG with a view to
keeping price at a reasonable level. 83
81 Government of Pakistan, no. 23 82 "Circular Debt" is when there is an "imbalance" between cost of generation and distribution and the final tariff. This is the root cause of the "circular debt" issue, with each downstream player in the energy chain being forced to delay payments to upstream entities (for fuel supplies). The net effect is a declining effective utilization of available generation capacity in the system. 83 Pakistan Almanac, no. 68.
116
LPG contributes about 0. 7 percent of the country's total energy supply mix currently.
The main objective to enhance the use of LPG is to stop deforestation in the areas
where the supply of natural gas is technically not viable. As a result of government's
investor friendly policies, LPG supplies have gradually increased. The comer stone of
LPG Policy is to ensure enhanced availability of LPG at a competitive price to the end
consumer. LPG marketing companies have imported around 62,920.3 MTOE of LPG
during July-March, 2009-10.84
Compressed Natural Gas (CNG)
The Hydrocarbon Development Institute of Pakistan (HDIP) has actively been
advocating the use of Compressed Natural Gas (CNG) as an environment friendly
option85. It has been doing this mainly in road transport as an economically viable
inter-fuel import substitution in the petroleum sector, with a view to reduce reliance
on petroleum import and improve the environment86• Thus, in the current energy
scenario, the use of CNG is becoming an extremely important sector of energy. The
commercial application of CNG technology now forms an important element of
Government's petroleum policl7• HDIP's CNG stations at Karachi where
operations are temporarily suspended, and Islamabad, besides converting vehicles
on CNG and dispensing CNG fuel, are developing indigenous technology in the
field and monitor the performance of CNG technology in the country. The CNG
stations of HDIP at Lahore, Peshawar and Quetta are also operational88• HDIP's
CNG stations also act as Advanced Fuel Resource Centres to advise the
84 Government of Pakistan, no. 23 85 Government of Pakistan, Ministry of Petroleum, Hydrocarbon Development Institute of Pakistan "Compressed Natural Gas (CNG)", [Online: Web], Accessed on 15 September 2008, URL: http:/ /www.hdip.com.pk/index. php?id=6 86 Government of Pakistan, Ministry of Petroleum and Natural Resources, "CNG: Inter Fuel Substitution", [Online: Web], Accessed on 17 January 2008, URL: http://www. pakistan.gov. pk/ di visions/Contentlnfo .j sp?Div ID=49&cPath=7 68 _ 815&ContentiD=4840 87 SAARC South Asian Association for Regional Cooperation Energy Centre, "CNG Development in Pakistan", URL: http://www.saarcenergy.org/view _pages. php?pageid= 13
• 88 [Online: Web], Accessed on 07 April2007, URL: http://www.cng.com.pk/hdip.html
117
Government on safety and regulatory aspects and to conduct inspection, training
and human resource development89•
The Government of Pakistan offered number of incentives for encouraging the use
of CNG in the country. These included a) Strong Government commitment to
promote CNG use; b) Liberal policy to provide license for CNG retailing; c)
Deregulated market consumer price ofCNG; d) Natural gas tariff for CNG linked to
petrol ;e) Priority of natural gas connection to CNG stations; f) Exemption/reduction
of import duty and sales tax on import of machinery and equipment, CNG kits and •
cylinders; g) Federal cabinet also proved a package of incentives and
recommendations for replacement of diesel oil with CNG. 90
This provided a boost to the industry and more than 1. 7 million vehicles began using
CNG as fuel. Thus, more than 1-052 licenses for installation of CNG stations were
issued by 2004. 362 stations had already come up by 2004, which included 358 in the
private sector and 4 in the public sector. Many more are under construction in the
private sector so much so that 2063 CNG stations are operational in different parts of
the country, as ofFebruary 2008. With these developments, Pakistan has become the
leading CNG user country in in the world91.
In an effort to reduce dependency on other fuels as well as to improve the
environment, the use of CNG in vehicles is being encouraged. Due to existing price
differential between CNG & Petrol, vehicles are being converted to CNG and
approximately 2.0 million vehicles are using CNG in the country. The Government
has recently approved the project of "Private-Public Partnership Based Environment
Friendly Public Transport System for Major Urban Centers of Pakistan" which is
being actively pursued with the provincial governments leading to gradual phase out
of diesel operated intra- city urban transport to achieve import substitution.92
89 Government of Pakistan, no. 85 90 Government of Pakistan, no. 85 91 Government of Pakistan, no. 86. 92 Government of .Pakistan, no. 23
118
Liquefied Natural Gas (LNG)
The Government is encouraging LNG import by the private sector. Accordingly,
Pakistan Mashal LNG Project (PMLP) was conceived to cater for the energy need of
the country as envisioned in the 25 years National Energy Security Plan and identified
in the Energy Gap Coverage Strategy. PMLP is to be set up on an integrated basis
whereby a private sector project developer will manage the entire supply chain
including procurement and shipping of 3.5 million tonnes per annum, LNG,
construction and operation of an onshore LNG receiving terminal, and delivery of 500
MMCFD regasified LNG to the SSGC's system in Karachi. Mashal (Phase I) will be
based on Floating Storage and Regasification Unit (FSRU).93
The Seventh Plan laid out a general strategy for the oil sub-sector during the 1988-93
period.94Assuming that the demand for petroleum products depended on the fuel
utilization policy, the policy adopted for the Seventh Plan was aimed at (i) replacing
the base year requirement of high speed diesel (HSD) in power generation with
natural gas; (ii) substituting kerosene in the domestic sector with natural gas and
liquefied petroleum gas (LPG); and (iii) use of furnace oil for thermal generation until
coal-fired, hydel and nuclear generation projects could be implemented95• Regarding
the supply of petroleum, the production of indigenous crude in 1987-88 was expected
. to reach an annual average of 43 mbpd (2.1million tonnes)96• In addition, there was
more potential to produce an additional 5,000 bpd, which, at the time, was not being
93 Government of Pakistan, no. 23 94 Government of Pakistan, (1988), Planning Commission of Pakistan, "Eighth Five Year Plan: Energy'', Accessed on 13 March, 2008, [Online: Web] URL: http:/1202.83 .167 .93/pcportal/five%20yeaf'>/o20plans/7th/Part%20III%20E/part3e000 I 0 l.pdf 95 Beg D. and J.R. Armstrong (1989), "Energy Conservation in Pakistan: a Unified Approach", Power Engineering Journal, 3 (6): 337-343. 96 Looney, R.E. (1995), "Pakistan: Energy Development and Economic Growth in the 1980s", OPEC Review, 19(2): 149-167.
119
harnessed due to refinery constraint. However, production from existing producing
fields was likely to decline to 37,300 bpd during the Seventh Plan period. Additional
production of 38,700 bpd was estimated from new discoveries and the unutilized
potential from already discovered fields (5,000 bpd) was to bring total production at
the end of the plan to 76,000 bpd97• Indigenous production, by the beginning of the
Eighth plan was expected to meet 25 per cent of oil demand (with conservation) as
compared to about 23 per cent at the beginning pf the Seventh Plan. The deficient
supply was expected to be met through imports, expenditure on which was expected
to rise to about $1.8 million from about $1 million considering the rise in imported
crude oil prices98• In addition, $0.2 billion was to be paid to international oil
companies operating in Pakistan for their share in local production99•
The main features of the Seventh Plan regarding the exploration and development
programme included the development of geologically attractive blocks by seismic
prospecting, issuing requests for proposals for exploratory drilling and visits by
delegations to attract international companies for exploration, increasing private
sector investment in exploration by offering better producer prices and other
incentives. A policy package was to be designed to include he following in this
regard. Also, minimal or no discount in crude oil prices for offshore discoveries was
to be made. Exploration activities were to be extended to offshore and less explored
on-shore areas through incentives. Expeditious appraisal and development of Adhi,
Dhodak, Chak Norang Gullarchi, Layari, Hallipota Lashari South, Thoara, Sono,
Lashari Centre, Kunnar, Ghughro and deeper prospects in the Dakhni fields were to
be explored. In view of the demand for petroleum products and the expected increase
in indigenous production, the existing refineries also needed to be upgraded. This was
97 "An Overview ofOGDC" (1994), Economic Review, 1 October, 1994. 98 "Foreign Economic Relations: Foreign Trade", [Online: Web], Accessed on 9 March 2007, URL: http://countrystudies.us/pakistan/47.htm 99 Government of Pakistan, (1988), Planning Commission of Pakistan, "Eighth Five Year Plan: Energy", Accessed on 13 March, 2008, [Online: Web] URL: http:/ /202.83.167 .93/pcportaVfive%20yeaf'l/o20plans/7th!Part%20III%20E/part3eOOO 10 1.pdf
120
to increase crude processing capacity by 15,000 bpd. 100
The Eighth plan summarized many factors responsible for inadequate indigenous
production of oil and gas, reflected in the number of wells drilled, investment and area
prospected. These included the lack of information about the area to be explored,
better geological prospects and incentives available elsewhere in the world, lack of
discovery of large resource of oil reservoirs in oil discovered so far, security concerns
and the drawbacks and shortcomings of existing petroleum policies. 101
Taking due cognizance of the factors mentioned above, the Government set up a new
strategy for the petroleum policy during the Eighth Plan period. 102. The salient
features of the policies and strategies related to exploration and development of oil
and gas covered two aspects namely, the procedural and regulatory measures 103:
i) The procedures for expeditious disposal of concession applications were stream
lined. It was decided to introduce a new concession, award process through
competitive bidding for the work programme, thereby introducing transparency and
mining discretion. All applications for exploration licenses were to be decided within
60 days, except for contested applications. Furthermore, it was decided to create a
negotiation cell in the Directorate General Petroleum Concessions (DGPC) for
expeditious disposal of applications in accordance with the deadlines.
ii) Special measures for Operations in Baluchistan and Tribal Areas: A high level
committee was to be formed to review operational and security problems in
Baluchistan and the Tribal Areas ofNWFP. Special economic benefits were also to be
given to industrial operations in these areas.
100 ibid 101 ibid 102 Ghouri, Salman Saif (1996), "Pakistan's New Petroleum Policy 1994: An Immense Promise", Energy policy, 24(5): 477-88. 103 Government of Pakistan (1997), Ministry of Petroleum and Natural Resources, "Petroleum Policy 1997", [Online: Web], Accessed on 27 June 2006, URL: www.mpnr.gov.pld
121
A problem faced during the Seventh Plan period (1988-93), relating to oil, was the
inadequacy of the refineries to be able to refine produced crude oil. In the beginning,
there were three oil refineries operating in Pakistan: two near Attock and one near
Karachi. The quantity of oil being produced in the South soon exceeded that being
produced in the North, but was not capable of being refined at the Karachi refinery in
he South which could cater only to lighter imported crude. Inadequate transportation
infrastructure made it impossible to ship the crude to the Attock refineries. The Eighth
Plan, therefore, anticipated upgrading these refineries and constructing and improving
the pipelines carrying oil to the refineries104.
Pakistan imported almost 90% of its oil requirements in the 1970s, and despite
domestic oil production having gone up four-fold in the 1980s due to setting up of
new oil fields in Sindh105, almost three-quarters of oil requirement was still imported
during the early 1990s106• Pakistan, due to this dependence, was rendered extremely
vulnerable during the GulfWar (1991), as more than halfofthe country's oil came
from imports from Kuwait107• Also, another ill effect of the Gulf crisis was that,
while, in the early 1980's, labour remittances from the Middle East were so
significant that Pakistan was a net beneficiary of the oil price increases during the
Gulf war, these declined at an annual rate of 10% to $1,356 in 1989-90, as there was a
massive return of overseas workers to domestic labour force108• These problems of
increase in prices paid for oil imports, loss in labour remittances, and problems of
resettlement of displaced overseas workers became a huge crisis for the government.
104 "Pakistan - The Economy'', [Online: Web], Accessed on 17 June 2006, URL: http://www.mongabay.com/reference/country_studies/pakistan/ECONOMY.html 105 Belokrenitsky, Vyacheslav (1991), Capitalism in Pakistan: A History of Socio-Economic Development, New Delhi: Patriot Publishers. 106 Dunn, Karen Turner (1991), "Pakistan's Energy Position: Problems and Prospects", Asian Survey, 31(12): 1189. 107 Anwar, Tilat (1996), "Structural Adjustment and Poverty: The Case of Pakistan", Pakistan Development Review, 35( 4): Part II: 911-926. 108 Kazi, Shahnaz (1993), "The Economic Impact of the Gulf Crisis on Pakistan", Wickramasekara, Piyasiri (2006), The Gulf Crisis and South Asia: Studies on the Economic Aspect, Geneva: International Labour Organisation Office.
122
The government responded by increasing domestic oil prices, encouraging energy
conservation, and seeking soft loans from the international community109• "What
really matters in an energy system which is largely supplied by finite resources is their
"conservation". Within this broader meaning of energy conservation, the renewable
sources must be included in the series of 'conservation" technologies and their
effects."110
As a result of the Gulf Crisis, during the 1980s, therefore, indigenous production of
crude oil increased sharply, from almost 4.0 million barrels from FY 1982 to 22.4
million barrels in 1992. Oil exploration was vigorously pursued in the 1980s and 90s
and a number of new discoveries were made as well111• While the Gulf Crisis had
played an extremely important role in making Pakistan start its own indigenous
production of oil, a big booster was also the Government policy to open the power
sector to private investment in 1997.This led to an addition in the country's thermal
capacity by over 3000 MW by IPPs, increasing to 5500 MW in 2000 taking the total
generating capacity of the country over 17 GW112•
The petroleum policy of 1994, succeeded to a large extent in developing Pakistan's
upstream sector. However, it failed in developing the downstream sector, offshore
areas and the Baluchistan Basin113• The 1997 policy was based on a review of the
1994 policy. The policy also emphasised on building a strong indigenous exploration
and production base to achieve greater self-reliance and cost effectiveness. It also
sought private sector investment in oil and gas114• As a part of the privatisation policy
109 Dunn, no. 106. 110 Tosato, et. al (1984), Energy After the Eighties: A Cooperative Study by Countries of the lEA, Oxford: Elsevier, an Energy Technology System Analysis Project. 111 'Pakistan: Energy', [Online: Web], Accessed on 17 January 2008, URL: http://www. photius.com/ countries/pakistan/ geography/pakistan _geography_ energy.html, 112 Vahidy, no. 63. 113 Ghouri S. S. (1996), "Pakistan's New Petroleum Policy 1994: An immense Promise", Energy Policy, 24(5): 477-488. 114 Siddiqui, R. (2004}, "Energy and Economic Growth in Pakistan", Pakistan Development Review, 43(2}: 175-200.
123
the Government in 2000 initiated the process of setting up the Natural Gas Regulatory
Authority and the Petroleum Regulatory Board. Authorities also sought to foster
competition and improve efficiency and availability through the augmentation of the
transportation and distribution network and improved regulation. 115The Privatisation
Board, in 2000, decided to privatise six oil wells and a number of gas discoveries that
had been made in the late 90s116. The sale of 26% stake in the Oil and Gas
Development Corporation's asset, especially in the Qadirpur gas field and the
Dhodhak and Dullian oilfields is estimated to have raised $400-500 million.
Furthermore, the divestment of the exploration and production company, Pakistan
Petroleum Limited (PPL ), was being negotiated with the International Finance
Corporation, which had invested about $50 million and held 6.09% equity in the
company117• The government also envisaged a divestment of up to 26% of its direct
holding in Sui Southern Gas Transportation Company. The divestment of the entire
oil and gas industry in Pakistan was expected to generate $14 billion, while the sale of
20-30% of the government's holdings were estimated to generate an investment of
$50 million-60 million by the end of2000118.
The remaining recoverable reserves of crude oil in April 2003 were estimated to be
302 million barrels in the country. The average crude oil production during March
July 2002-03 was 64, 907 barrels per day as against 64, 361 barrels per day during the
same period in 2001-02, showing an increase of 0. 8%119•
115 "Energy Policy in Pakistan", Petroleum Economist [Online: Web], Accessed on 10 November 2010, URL: http://www.petroleum-economist.com/ 116 Government of Pakistan (2007), Privatisation Commission, "Pakistan Implementing Comprehensive and Broad-Based Privatisation Programme", [Online: Web], Accessed on 14 March 2007, URL: http:/ /www.privatisation.gov. pk/Handout/HO-AR-07 I Apr-07/H0-1 0407%20Pakistan%20Implementing%20Comprehensive%20and%20Broad%20based%20Privatisatio n%20Program.htm 117 Shaikh, Hafeez (2004), "Government to get Rs. 5.6 Billion through IPO of Pakistan Petroleum Limited Shares", [Online: Web], Accessed on 15 July 2007, URL: http://www.privatisation.gov.pk/Handout/HO-AR-04/July-04/H0-07704%20Goverment%20to%20Get%20Rs.%205.65%20billion%20through%201P0%20of0/o20PPL% 20SharesHandout.htm 118 Government of Pakistan, no. 5 119 Pakistan Almanac, no. 68
124
Indigenous production of crude oil during 2002-03 was 64,268 barrels per day. This
production met only 17% of the country's oil requirements and 83% was imported.
Sectoral oil consumption during the year 2002-03 was 49.1% in transport, 36.6% in
power 9.8% in industry, 1.7% in the domestic, 1.6% in the government sector and
1.2% in agriculture120.
A comparison between crude oil production between the 1990-2001 and 2008-2010
periods is given below in Figure 3.5 and Table 3.6 respectively.
Figure 3.5: Crude Oil Production (Barrels Per Day) (1990-2001)
66,000
64,000
62,000
60,000
58,000
56,000
54,000
52,000
50,000
48,000
64,349 c=.
61,390
,.:::::;: 59,987
-~
57,549 5~76 57,762 - 1--- "'"•"'+" H 56,284 F
- r- _F - """" " .,..,,55,723 -.... , .. uc v-I
F
- - - .0::: - - _Fi_ - -
- - - r- 1--- - - - -- - -
- - - ~ r-- - - - - - -
- - - - - -1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000-
91 92 93 94 95 96 97 98 99 00 01
Source: "Energy in Pakistan", [Online: Web], Accessed 5 April 2008, URL:
www. waterinfo.net.pkfpdf/ep.pd
120 Muneer T. and Asif M. (2007), "Prospects for Secure and Sustainable Electricity Supply for Pakistan", Renewable and Sustainable Energy Reviews, 11(4): 654-71.
125
Table 3.6: Crude Oil Production (Barrels Per Day) (2008-10)
July- July-March March
Change Region 2008-09 2009-10 (%)
Northern Region 26,888.20 27659.17 2.9
Dewan 197.64 102.02 -48.4
OGDCL 15,351.43 15,095.14 -1.7
OPII 401.01 532.93 32.9
POL 3.839.05 4,079.64 6.3
PPL 4,672.11 4,635.96 -0.8
MOL 2,426.96 3,212.47 32.4
Southern Region 39,643.29 37,586.52 -5.2
OGDCL 25,393.15 21,83.2 -14.6
BP (Pakistan) 9,654.17 12,002 24.3
PPL 146.74 411.86 180.7
BHP 2,720.06 2,949.74 8.4
OMV 64.25 70.05 9
ENI 386 340.87 -11.7
OPII 1240.36 - -100
MGCL - 2.28
Petronas 38.56 126.8 228.5
Total: 66,531.49 65,245.69 -1.9
Source: Government of Pakistan (2009), Economic Survey of Pakistan 2009-10
Average consumption of petroleum products saw an increase from 1990 to 2001-02.
On average, the energy consumption increased by 4.6% per annum to almost 40% by
2000 from the 1990s, while it was negligible in the 1980s, due to lofty global prices, a
consequence of the Gulf Crisis.121. However, escalating prices of this source ever
since, have made its continued use highly undesirable. In 2002, Pakistan was
121 Pakistan Almanac, no. 68
126
importing two-thirds of its total requirement of fuel oil. It was estimated that at the
projected consumption rate, it was poised to become one of the largest importers of
fuel oil in the Asia-Pacific region by 2005, causing a hefty depletion in its foreign
exchange reserves122•
As a result, oil consumption registered a decline in certain sectors like the cement
industry and the power industry, which shifted to gas as well as in the agriculture and
household sector. However, other sectors such as transportation, industrial and other
government sectors showed an increase in the use of oil. 123 Pakistan's refining
capacity has also been in need of overhaul. It was planned to increase the same by the
commissioning of the Pak-Arab refinery in Punjab, the Iran-Pakistan refinery n
Balochistan and the Mid Country refinery project near Multan124• In addition, two
more refineries were being planned at Badin in Sindh and Korangi near Karachi. The
latter was being planned by the Pakistan State Oil, in collaboration with Hyundai, of
South Korea 125•
The price of Petroleum products was regulated by the Government using a strategy to
recover the cost of distribution and transportation. In addition, excise duty and
regulatery duty surcharge were levied on products such as high-speed diesel, furnace
oil and high octane burning component. Taxation was high for products such as motor
spirit and high-speed diesel that are consumed by the high-income groups and low for
kerosene and light diesel oil, which was used by low income groups. 126
As far as transportation of oil is concerned, the Pakistan State Oil (PSO) was the
largest company involved in the storage, marketing and distribution and related
activities of oil. A new 900 km crude pipeline had been planned by the Government
122 Vahidy, no.63. 123 Ali, Fahd (2005), "Pakistan's Future Energy Needs", South Asian Journal, No. 9: 49-58. 124 Presentation by Ahmad, Munawar B., Managing Director, Sui Southern Gas company Limited (SSGCL), (2007), "Pakistan: Asia's Emerging Energy Hub", 3rd Pakistan Oil and gas Conference, Islamabad. 125 Baloch, Latif (2005), "KARACHI: 14 Schemes along Coast nearing Completion: WB team told", Dawn, May 16,2005. 126 126 Government of Pakistan, no. 5
127
from Port Qasim to Mahmood Kot. The contract had been awarded to Pak Arab
refinery (Parco). Another pipeline was being put into operation by the PSO. It is an
80km, 14-inch pipeline from Zulfikarabad terminal to the hub power plant to transport
up to 18.32 million barrels of fuel oil. Another pipeline from Zulfikarabad to J anshoro
is also being planned by PS0127•
As of 2007, Pakistan's total oil resource potential was 27 billion barrels, its refining
capacity stood at 12.82 million tonnes/year, the consumption of oil amounted to 18.5
million tonnes/year and imports, about 14 million tonnes/year. The demand for oil
was more than supply128• Sectoral oil consumption during the year 2005-06 was:
power (28.8%), transport (55.8%), agriculture (0.6%), industry (11.5%), domestic
(0.9%) and government (2.5%)129•
The balance recoverable reserves of crude oil in the country as on January 1st 201 0
have been estimated at 303.63 million barrels. The average crude oil production
during July-March 2009-10 was 65,246 barrels per day as against 66,531 barrels per
day during the corresponding period of last year, showing a decrease of 1.9 per cent.
During the period under review, 27,659 (42 percent) barrels per day were produced in
northern region and 37,586 (58 percent) barrels per day in southern region, as against
26,888 (40 percent) barrels and 39,643 (60 percent) barrels produced per day
respectively in the same period last year. During July-March 2009-10, production
crude oil has increased by 2.9 percent from northern region whereas productions
decrease in southern region by 5.2 percent as compared to same period's overall 1.9
percent oil production decreased in the country. 130
127 Government of Pakistan, no. 5 128 Industry Overview", no. 77. 129 Government of Pakistan (2005), Ministry of Petroleum and Natural Resources, "Pakistan's Primary Energy Supplies 2005-06", (Online: Web], Accessed 28 February 2008, URL: Pakistan.Gov.pk%20-%20The%200fficial%20Web%20Gatewayl'/o20to%20the%20Government%20of%20Pakistan.webarch ive 130 Government of Pakistan (2010), Economic Survey of Pakistan, "Energy", URL: www.finance.gov.pk/survey _ 091 O.html
128
Power
The power sub-sector in the Seventh Plan (1988-93) accounted for 72 per cent of the
investment by the public sector in energy and 26 per cent of the
total investment in the-public sector131• The country had been facing the problem of
load shedding since the early eighties while demand continued to grow in the grid
system without any signs of deceleration, while supply was less. The Seventh Plan
sought to redress this situation132•
The Seventh Plan (1988-93) laid down a few broad objectives for the power sector.
These included the completion of schemes started in earlier plans, continuation of
programmes to use indigenous sources of energy such as Lakhra coal and hydel,
bringing oil and gas plants on line to meet the short-term need of eliminating load
shedding and to balance the country's generation capacity by providing greater
thermal generation which is unaffected by seasonal water fluctuation, laying the
groundwork for projects to cater to the needs of the Eighth Plan, initiating work on
large and medium hydels, including detailed engineering of Basha dam, a run-of-the
river project at Ghazi Ghariala to assure significant contribution from low cost,
indigenous resource-based generation; and putting maximum reliance on the private
sector to help relieve the financial burden on the public sector in the Seventh, Eighth
and subsequent plans. 133
The Government of Pakistan followed an active policy of privatisation of all energy
sectors in the 1980s.134 As a result of this policy, 127 proposals were received both
from local and foreign investors that meant a capacity addition of almost 26,000.
Menthe 1292 MW oil-fired Hub River Power Project is the first and the largest
131 Tahir, Pervez (2000), "Economic Policies Continuation: A Critical View of the Eighth Plan 1993-98", The Lahore Journal of Economics, 5(1 ): 121-134. 132 Mahmud, Syed F. (2000), "The Energy Demand in the Manufacturing Sector of Pakistan: Some further Results", Energy Economics, 22 (6), December 2000: 641-648. 133 Government ofPakistan, no. 51. 134 Looney, Robert E. and Peter C. Frederiksen (1995), "Privatization Of Public Sector Enterprises In Pakistan: Prospects For Reducing Regional Imbalances", Review of Urban and Regional Development Studies, 7(2): 143-152.
129
privately financed IPP in the Indian sub-continent135• The project has provided a good
precedent for similar innovative power financing in the future. It was promoted by
National Power of the UK, Xenel Industries of Saudi Arabia, the Commonwealth
Development Corporation, Japan's Export-Import Bank and the World Bank, which
granted the project guarantee against political risk136• Pakistan has continuously been
taking aid and assistance from the IMP and the World Bank under hard conditions137•
Financial closure of seven other IPPs followed soon after the Hub River Project.
Under the new policy the Government planned to develop hydropower projects on a
BOOT basis and coal based thermal projects on a BOO basis. The Government had
received proposals for the generation of 7.5 GW of hydropower in the NWFP. The
Mataltan Hydel Power Company and the provincial Government ofNWFP signed an
agreement for the construction of an 84MW hydropower project at Mataltan 138•
During the Eighth Plan (1993-98), power generation was to increase from 9786 KW
to 16 MW, oil production from 60000 to 123000 barrels a day, gas production by 38%
and refining capacity by 18%. An important target was also the electrification of 19,
700 villages139•
WAPDA and KESC were faced with a number of problems since the 1990s.Some of
these were inefficient operations, high T &D losses, deterioration in infrastructure due
to inadequate renovation and maintenance 140, non-payment of electricity bills,
especially from the provincial governments, thereby reducing cash flow 141, a highly
distorted tariff structure with a heavy subsidy to the agricultural and domestic sectors,
135 "Power: 4x323 MW Hub River Thermal Power Plant", [Online: Web], Accessed on 15 August 2007, URL: http://www.descon.com.pk/Sectors/Power/mWHubRiverThermalPower.aspx 136 Inter-American Development Bank, "Directory of Innovative Financing: Pakistan", URL: http:/ /www.iadb.org/sds/ifm/publication/ gen _151_ 64 _ e.htm 137 Musarrat, Razia (2006), "Pakistan and the New World Order", Pakistan Vision, 7 (I): 117-147, Nayak, Pandav (1988), Pakistan: Political Economy of a Developing State, New Delhi: Khama Publishers. 138 Government of Pakistan, no. 5 139 Latif, Abdul (2004), The Implementation of Energy Policy in Pakistan, Karachi: Royal Book Co. 140 "W APDA, KESC Fail to Achieve Targets despite Rs. 55bn. Help", Dawn, 25 August 2003. 141 Chaudhry, Muhammad Bashar (2002), "Reforming Pakistan's Power Sector", Pakistan and Gulf Economist, 15-21 July, 2002, [Online: Web], Accessed on 17 August 2007, URL: http://www.pakistaneconomist.com/issue2002/issue28/i&e3.htm
130
and free supply to federally administered tribal areas and "Azad Jammu and
Kashmir", resulting in losses of over Rs. 30 bn. in 1977/78.142
Other constraints included associated over-pricing in the industrial and commercial
sector to a point where captive generation may become a more attractive
alternative143, the induction of a substantial amount of high-cost power from the
private power producers, which coupled with the slower than expected growth in
power demand, had placed a financial burden on W APDA, which was obliged to
purchase a large proportion of the high-cost power144and the government policy of not
increasing tariffs, in effect from February 1997 to March 1998145.
Figure 3.6: Energy Supply for Power Generation (2005)
Nuclear, 3%
Gas, 55%
Source: Government of Pakistan (2005), Pakistan Energy Yearbook 2005
142 Kemal, A.R. et. al. "Economy and Government: Privatisation and Regulation in Pakistan", [Online: Web] , Accessed on 17 January 2008, URLwww.competitionregulation.org.uk/conferences/mcr02/pide.pdf 143 Government of Pakistan (2005), Ministry of Petroleum and Natural resources, "Natural Gas Allocation and Management Policy", [Online: Web], Accessed on 22 September 2007, URL: bttp://209 .85 .17 5.1 04/searcb ?q=cache: W6n_q YL8RoOJ :www.pakboi.gov.pklpdf/N atural%2520Gas%2 520Allocation%2520-Management%2520Policy%25202005.pdf+captive+generation+WAPDA+KESC&bl=en&ct=clnk&cd = l&gl=in&client=ftrefox-a 144 Chaudhry, no. 141. 145 ADB (2000), Asian Development Bank, ''Pakistan", [Online: Web], Accessed on 26 September 2008, URL: www.adb.org/Documents/Books/ AD0/2000/pakistan. pdf
131
In 2003-04, the total installed capacity of electricity generation stood at 19,478 MW
as against 17,776 MW in 2002-03, showing an increase of9.6%146• The energy supply
from different sectors for power generation in 2005 can be seen in Figure 3.5 above.
The power demand was projected to grow with an ACGR of7.9% during the MTDF
2005-10 and increase from 15500 MW in 2005 to 21500 MW in 2010. WAPDA and
KESC were to continue their expansion programme for primary transmission,
secondary transmission and grids artd distribution programme to eKpand the power
network. Energy genenttion was planned to increase at an average annual compound
rate of 7.9 percent to reach 128670 Gwh by the terminal year of MTDF. The energy
sale was expected to increase at an ACGR of9.4 percent from 66100 Gwh in 2005 to
103500 Gwh in 2010. 147
In order to increase the production of power to keep up with the rising demand, the
government, in 2007 decided to undertake the following policies148:
a) Import of Electricity from Central Asian states: Further work to evaluate the
technical and economic aspects of power import to be evaluated.
b) Hydroelectric Generation: Proposals were invited from the private sector for 7
projects with a total capacity of 1,620 MW.
c) Power Generation from Thar Coal: Private sector was involved in preparation
of feasibility studies for mining and power generation.
d) Power Generation from Imported Coal: Work was initiated for involving
private sector in setting up power generation units in the coastal areas.
e) Power Generation from Renewable Sources: A framework was drafted and
incentive package defined for fast-track capacity additions.
In addition to the above, the government planned to divest 51 percent of its
146 "Pakistan: Power crisis feared by 20Q7''; fOnlintl' We\,] A""".,;ijt;U 13 Mnr~h 20M. Wll ' !!!~~N:
www,~nflrl[ybu lh=tin nctl!l33 .huul. ••
7 uov~rnmcnl nf JJnf:::::~:m (W01J. lil::;"!!iiu}f. CU1111Hiss•vnl MErfiWll Term l>evelopment Fr«mcwork JfJW Hi: ~unHn-w; Web) A~~essed on 17 0Gtobcr JQlO, URL! hHp;//www.planningc.;ommi~~ion.g~v.pk/riv(!o/o::!OV<rar'YuZOflllllY.html I'IH Ahmed, Mukhtur (.Z009J, "Meeting Pakistan's Energy Needs" in Hathaway and Kugleman no. 9.
132
shareholding in some specific concerns to give majority ownership and management
control to the private sector149: a) Power Generation and Distribution: Ashore Power
Company, Faisalabad Electric Supply Company, and Peshawar Electric Supply
Company, b) Oil Marketing: Pakistan State Oil Co. Ltd., the largest oil marketing
company in the country with approximately 70 percent share of the market, c) Gas
Transmission and Distribution: SNGPL and SSGCL, state owned utilities that
currently account for over 86 percent of the gas transmission and distribution business
in the country, d) Petroleum E&P: Pakistan Petroleum Ltd. and Oil & Gas
Development Co. Ltd., state owned companies that account for 45 percent of gas and
53 percent of oil production respectively in the country. In the case of Oil & Gas
Development Co. Ltd, divestment of 10-15 percent equity through simultaneous GDR
offering and domestic secondary offering was to precede the divestment of 51 percent
shares
The Structure of the Power Sector
The structure of the power sector is an integrated one that consists of two utilities: the
WAPDA and The KESC150• It also consists of the Pakistani Atomic Energy
Commission (P AEC) that owns nuclear power plants that are connected to the
W APDA and the KESC151. It also consists of IPPs that are connected to the national
grid at different points152•
149 Ahmed, Mukhtar (2007), "Meeting Pakistan's Energy Needs", Hathaway et. al. Fuelling the Future: Meeting Pakistan's Energy Needs in the 21'1 Century, Washington D.C.: Woodrow Wilson International Centre for Scholars. 150 Khan, Rafique Ahmad "Some Reflections On The Effectiveness OfNEPRA Established Under The Act Of 1997" [Online: Web], Accessed on 15 September 2006, URL: www.iepkc.org/about_in/power.htm 151 Khan, Zafar Ali (2007), "Pakistan Power Structures and Regulations", [Online: Web], Accessed on 17 January 2008, URL: http://209 .85.175.1 04/search?q=cache:KE8rrwVr6o8J:ficci.com/mediaroornl speechespresentations/2007/march/PPT/Session2/Zafarali.ppt+PAEC+part+of+power+sector+pakistan&hl=en& ct=clnk&cd=9&gl=in&client=firefox-a 152 IAEA (2007), International Atomic Energy Agency, "Pakistan", URL: http://209.85.175.104/search?q=cache:gCqMJsj7oTwJ:www-pub.iaea.org/MTCD/publications/PDF /cnpp2003/CNPP _ Webpage/PDF /2002/Documents/Documents/ Pakistan%25202002.pdf+IPPs+connected+to+national+grid+pakistan&hl=en&ct=clnk&cd=2&gl=in& client=firefox-a
133
Thus, the four mam public sector organisations involved in power generation,
transmission and distribution of electricity in the country are WAPDA, KESC,
KANUPP and Chashma Nuclear Power Plant, with the latter two belonging to the
PAEC153• WAPDA and KESC are interconnected through a 220-kilo volt double
circuit transmission line. It is W APDA, however, that dominates the power sector as
can be seen in Table 3.7 below154•
Table 3.7: Power Generation, Transmission and Distribution, (2002-03)
Name of Installed Installed
Power Capacity %Share Capacity %Share %Change
Company 2001-02 2002-03
WAPDA 9930 56.1 9694 54.7 (2.4)
Hydel 5009 50.4 5009 51.7 0.0
Thermal 4921 49.6 4685 48.3 (4.8)
IPPs 5549 31.4 5816 32.8 4.8
Nuclear 462 2.6 462 2.6 0
KESC 1756 9.9 1756 9.9 0
Total 17697 100 17728 100 0.2
Source: Government of Pakistan (2003-04), Hydrocarbon Development Institute of
Pakistan (HDIP), as cited in Pakistan Almanac (2003-04)
Apart from these, Independent Power Projects (IPPs), private sector entities involved
in power generation are also part of the Pakistani power structure. As has been
discussed above, his has been a result ofthe IPP policy of 1994, reviewed in 1998 and
finally in 2002, which resulted in the setting up of a Private Power Infrastructure
Board (PPIB), that has provided a one-window support to the private sector155• The
153 "Investment in Pakistan", [Online: Web], Accessed on 7 January 2008, URL: http://www.kpmg.com.pk/download/Investment.s/Chapter%20 1 %20-%20Pakistan%20in%20Brief.pdf. 154 Government of Pakistan, no. 5 155 Government of Pakistan, Ministry of Water and Power, [Online: Web], Accessed on 19 September 2006, URL: http://www.ppib.gov.pk/mwp.htm
134
NEPRA was also set up in 1997, by the Government for purposes of regulating the
power hectoring 1998156, the government also went ahead with reorganising the
WAPDA157, organising it into nine distribution companies called DISCOS, one
National Transmission and Distribution Company (NTDC) and four thermal
generation companies called GENCOS158• The hydroelectric power development and
organisation functions continued to remain with WAPDA. In order to carry out this
restructuring and reorganisation, a facilitating company called the Pakistan Electric
Power Company (PEPC) was also incorporated in 1998159•
While the KESC got transferred into private hands in 2005, when 73% of its shares
were sold to private investors, W APDA has, however, restructured itself into fifteen
incorporated entities, all ofthem state-owned.160
The number of consumers of electricity since 1990 has increased considerably due to
rapid urbanisation, extension of electricity grid supply to unelectrified areas and
rural/village electrification. The rural/village electrification programme is an integral
part of the total power sector development in order to increase the productive capacity
and socio-economic standard of the majority of the Pakistani population living in the
rural area. The table below indicates this trend. 161
The consumption of electricity increased by 4.9% during the period between 1990-91
to 2001-02, along with an increase in consumption of oil and gas. Sector-wise,
consumption pattern of electricity by different economic groups shows that the
domestic group is the largest consumer of electricity of 2002 -03 (44%), followed by
industrial (28.8%), agriculture (12.7%), bulk supply (9.2%), commercial (5.3%) and
156 NEPRA, National Electric Power Regulatory Authority, [Online: Web], Accessed on 23 January 2007, URL: http://www.nepra.org.pklindex.htm 157 Malik, Afia (2007), "Effectiveness of Regulatory Structure in the Power Sector of Pakistan", Seminar by Malik, Afia, Pakistan Institute of Development Economics, [Online: Web], Accessed on 26 November 2008, URL: http://www.pide.org.pk!index.php?option=com _ content&task=view&id= 175&1temid=407 158 Chaudhry, no. 141 159 Government of Pakistan, no. 5 160 Chaudhry, no. 141 161 Pakistan Almanac, no. 68
135
traction (0.02%). 162 A~ per the Pakistan Economic Survey 2003-04, the household
sector continues to be the largest consumer of electricity accounting to 44.2% of total
electricity consumption followed by industries 31.1 %, agriculture 14.3%, other
government sector 7.2%, commercial5.5% and streetlight 0.7%163•
Total installed generation capacity witnessed an increase of 2.1 percent during 2009-
10 against the 1.0 percent growth in corresponding period in 2008-09. With the share
of 31.6 percent in total installed capacity during 2009-10, private sector witnessed the
prominent growth of 7.1 percent in its installed capacity during the period under
review. On the other hand, installed capacity of WAPDA declined by 0.5 percent
during July-March 2009-10. Furthermore, the installed capacity of KESC stood at
1,955 MW during the period under review. 164
Table 3.8 below shows the electricity generated by W APDA between 2006-10.
Table 3.8 : Electricity Generation by W APDA (2006-1 0)
Year Hydro Share(%) Thermal Share(%) Total 2006-07 31,942 36 55,895 64 87,837 2007-08 28,667 33 57,02 67 8,269 2008-09 27,73 33 5,14 67 84,377
July-March 2008-09 20,665 34 40,653 66 61,318
2009-10 21,101 33 43,64 67 64,747 Source : Government of Pakistan (20 1 0), Pakistan Energy Yearbook 2010
Village Electrification Programme
In order to giVe a rural electrification a major boost, a crash programme of
162 Pakistan Almanac, no. 68 163 "Pakistan: Power crisis feared by 2007'', [Online: Web] Accessed 13 March 2008, URL: http//: www .energybulletin.net/83 3 .html. 164 Government of Pakistan, no. 23
136
electrifying 7700 villages by June 1995 was planned to be launched for which donor
funds were to be available from OCEF and IBRD. Subsequently target of 4000
villages was fixed for the balance of the Eighth Plan period165•
WAPDA by this time had already initiated preparation of a master plan for village
electrification, effective system management and expansion166• Towards this end,
mapping of existing feeders was put in progress. Regarding future expansion in new
areas, WAPDA was to carry out a survey of all areas and prepare a master plan for
electrification for the whole country167• Initially, however, priority was to be given to
electrification of areas within 20 km of the existing grid stations. Expansion in the
system though rural cooperatives would also be encouraged. Ministry of Water and
Power was to also install a system of monitoring of progress in achieving physical
targets ofvillage electrification, distribution of power and STG facilities168. In view of
the fact that a large part of the country is without electricity, it has to be recognised
that all far-flung areas could not be covered by extension of grid169• In order to meet
the needs of these areas, a programmed for providing decentralized electric power in
the far flung areas through diesel, solar or wind energy would be prepared and
implemented by WAPDA170• In principle, this programme was to focus on areas that
were not likely to get electricity in 10 years or those which were beyond 20 k.m. from
the grid system 171.
165 Government of Pakistan, Ministry of Local Government and Rural Development, Local Government and Rural Development Division "Tameer-e-Watan Programme (1991-93 and 1998-2000)", [Online: Web], Accessed on 6 April 2007, URL: http://www .aaas.org/international/ehn/waterpop/front.htm http://www.pakistan.gov.pk/divisions/Contentlnfo.jsp?DiviD=45&cPath=618 _ 621 &ContentiD=3270 166 FAO (1997), Food and Agriculture Organisation, Hafiz, Seema, "Appendix 7: Country Case Study: Water Policy Reform in Pakistan", URL: http://www .fao.org/docrep/006/ad456e/ad456eOd.htm#TopOfPage 167 "WAPDA to recover Rs. 69b from NWFP, Sindh and FATA", Daily Times, Jan 20,2004, [Online: Web] Accessed on 17 February 2006, URL: http://www.dailytimes.com.pk/default.asp?page=story_20-1-2004_pg7 _27 168 Government of Pakistan, Ministry of Water and Power, URL: http:/1202.83.164.26/wps/portal/Mowp 169 Government of Pakistan, Economic Survey of Pakistan 2004-05, Part -III, URL: www.accountancy.com.pk/docs/Economic-Survey-2004-05-Part-III.pdf 17° Central Asia/South Asia Electricity Trade Conference, May 8-9, 2006, Islamabad. [Online: Web] Accessed on 22 March 2006, URL:http://www.pakistan.gov.pk/ministries/water-powerministry/media/NewBackgroundPaperforiSBMay.doc. 171 Government of Pakistan, no. 94.
137
The "Vision -2025 Programme", envisages many hydel projects like the Golan Gol
(106 MW), Khan Khwar (72 MW), Allai Khwar (121 MW), Duber Khwar (130 MW)
and Jinnah (96 MW), which were planned to be completed by 2008.Additionally, in
order to met the power demand in the coming years, the WAPDA has proposed to
install two high efficiency combined cycle power plants on natural gas of 450 MW
each, at Faisalabad and Balloki172 •
•
Table 3.9: Village Electrification (By Number)
Addition during the Progressive Growth Year year Total (%)
2006-07 14,203 117,456 14 2007-08 10,441 127,897 9 2008-09 9,868 137,765 8
July-March 2008-09 5,566 133,463 2009-10 9,273 147,038 10
Source: Government of Pakistan (2010), Economic Survey of Pakistan 2010
The village electrification growth rate during July-March 2009-10 increased by 10.0
percent over the 5.7 percent rise during the same period last year. Furthermore, the
number of electrified villages has increased from 137,765 by 30th June 2009 to
147,038 by the end ofMarch 2010. 173
The demand for coal during the late 80s was very low. However, the Plan estimated
the total demand for coal to be around 7 million tonnes in, 1992-93, with substantial
demand coming from the private sector. Various policy initiatives were taken during
the Seventh Five Year Plan to create a better environment for the development of
172 Pakistan Almanac, no. 68 173 Government of Pakistan (2010). Economic Survey of Pakistan, "Energy'', URL: www.finance.gov.pk/survey _ 091 O.htm1
138
coal. They included establishment of coal-fired power plants, introduction of coal in
cement and other energy-intensive industries to replace furnace oil, promotion of coal
briquettes as a substitute for kerosene oil and firewood, rationalisation of energy
prices to promote the use and development of coal, establishment oflarge-scale power
plants at or near the major coal fields to be preferred over imported coal by taking into
account socio-economic benefits, such as, employment and foreign exchange savings,
high priority to be given to coal exploration, especially in the hitherto unexplored
areas, major policy issues at the federal level in future be referred to the Energy
Policy Board, regulatory measures to be strictly enforced for royalty collection and to
control health and safety hazards in coal mining and mining rules and regulations to
be amended to allow (a) use of coalmines as collateral against loans; (b) merger of
smaller units into bigger economic units for purposes of mining on a cooperative basis
and (c) enhancement oflease tenure. 174
The Eighth Plan also set up a few policy objectives, keeping in mind that a well
conceived development strategy would be completed on priority basis so that a viable
and cheaper alternative to imported oil becomes available175. Under the Pakistani
constitution, coal is a Provincial subject. Elements of the coal policy for the Eighth
Five Year Plan are given below, while the details of policies and instruments to
implement these policies were to be determined by the Provinces176: Firstly, Thar coal
and other similar finds were to be used primarily as fuel for electric power plants with
unit size of 200 MW or larger. Secondly, for improving the level of confidence about
coal reserves for its mining, GSP as well as the Provinces were to embark upon a
coordinated programme for closed space drilling to supplement the resources
available to both these agencies.
Figure 3. 7 below points to coal production in the decade between 1990 and 2000-01.
174 Government of Pakistan, no. 51. 175 "Pakistan", [Online: Web], Accessed on 22 December 2008, URL: http://www.jantb.com/pakistan.htm 176 Government of Pakistan, no. 94
139
Figure 3.7: Coal Production (Million Tonnes) (1990- 2000-01)
4
4 ~-------------~
31
3
3
31
4 ~
,, '' f--;
I -·~
3~~~~~~~~~~~~s=~~~=r~~·L_=r~~ 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01
Source: "Energy in Pakistan", [Online: Web] Accessed on 5 April 2008, URL:
www. waterinfo.net.pk/pdf/ep.pd
The share of coal in power generation during the Seventh Five Year Plan had been a
mere 0.76%. The Plan had envisaged increasing the share of coal with the coming up
of a 280 MW of coal based generation capacity. 150 MW of this was to come from
the public sector while the remaining was to come from the private sector. However,
the share of coal in the national primary energy mix had only been declining since
independence, primarily due to a number of problems that had beset the coal sector
like bureaucratic hurdles and lack of proper infrastructure and also the increase in use
of natural gas as a preferred source of energy as compared to coal. However, there
were plans to increase the share of coal in the primary energy mix from 5% in 2003 to
20% by 2010, with the discovery of large coalfield having 175 billion tonnes resource
potential at Thar desert.
The cement industry also prepared itself for the use of indigenous coal rather than
furnace oil, as used earlier, a move that would save the exchequer about 50% foreign
exchange, being spent on coal177. Thus Pakistan was aiming to use coal as an
alternative to fuel oil. Already a power plant using Lakhra coal has been completed in
177 Pakistan Almanac, no. 68
140
the Sindh province178• The consumption of coal had been increasing very
inconsistency on an annual basis, showing wide fluctuation, since independence. The
annual trend of energy consumption recorded an annual growth of 1.2% annually179•
Coal consumption during 2005-06 was divided between brick kilns (54.7%), cement
and other industry (36.0%), power (1.9%) and coke use (7.3%). The brick industry
was the biggest user of coal in 2005, consuming about 4.2 million tonnes annually. 180
Cement manufacturing industry as well as boilers of textile and sugar industries
turned potential candidates for shifting from furnace oil/gas to coal for the reasons of
high prices of oil in international market and availability of coal as a cheaper source
of indigenous energy. During the MTDF period, all the cement plants were to be
converted to coal, resulting in increase of coal demand to 2.5 million tonnes.
Installing indigenous coal based power plants was to also increase the coal share in
power sector. The utilization ofhard coal of Punjab, Balochistan and NWFP was to be
enhanced in brick kiln, cement industries and in town gasification by enhancing coal
production from mines through improvements in mining techniques. Efforts were to
be made to mechanize the operational coalmines. To enhance the exploration and
evaluation activities during the MTDF period, the Geological Survey of Pakistan
(GSP) was to complete evaluation and appraisal of coal in various coalfields in
Balochistan, NWFP, and "Azad Jammu and Kashmir". 181
According to a 2007 survey, total proven reserves of coal in Pakistan are 185 billion
tonnes, production of which is 4.06 million tonnes and consumption, 5.60 million
tonnes. Demand is therefore, more than supply in the case of coal 182.
178 Government of Pakistan (2007), Ministry of Petroleum and Natural Resources, "Fossil Fuel Overview", [Online: Web], Accessed on 13 March, 2008, URL: bttp://202.83.164.26/wps/portal/Mopnr 179 Pakistan Almanac, no. 68 180"Energy in Pakistan", [Online: Web] Accessed on 5 April 2008, URL: www. waterinfo.net.pklpdfi'ep.pd 181 Government of Pakistan, no. 147. 182 "Industry Overview'', no. 77
141
Table 3.10: Production of Coal (000 tonnes) (2000-2009)
Year Imports Production Total 2000-01 950 3,095 4,045 2001-02 1,081 3,328 4,409 2002-03 1,578 3,312 4,890 2003-04 2,789 3,275 6,064 2004-05 3,307 4,587 7,894 2005-06 2,843 4,871 7,714 2006-07 4,251 3,643 7,894 2007-08 5,987 4,124 10, Ill 2008-09 4,652 3,738 8,390
July-March 2008-09 3,000 1,822 4,822
2009-IO(e) 3,600 1,704 5,304 Source: Government of Pakistan (2005), Medium Term Development Framework
2005-10.
After witnessing a decline of 17.0 percent in 2008-09, the total production of coal has
increased by 10.0 percent during July-March 2009-10 over the corresponding period
of 2008-09. This improvement owes to increased import of coal during the period as
indigenous production of coal witnessed a decline 6.5 percent during the period under
review. As a result, share of coal imports in overall availability of coal, increased
from 62.2 percent in July-March 2008-09 to 67.9 percent during current fiscal year.
About 58.9 percent of total coal in the country has been consumed by the brick kilns
industry whereas 39.6 percent was consumed by cement industry during the period of
July-March 2009-10. The coal consumption shares of brick kilns and power sectors
decreased by 2.4 percent and 35.8 percent respectively during July-March 2009-10
against the same period in 2008-09. Due to price differential between coal and furnace
oil, almost the whole cement industry has been switched over to coal from furnace oil.
Operational coal mines decreased production by 15 percent from 4.12 million tonnes
in 2007-08 to 3.49 million tonnes in 2008-09. 183
183 Government of Pakistan, no. 23
142
Nuclear
The Pakistan Atomic Energy Commission (P AEC) is responsible for all nuclear
energy and research applications in the country. Under the P AEC, there operate one
small (125 MW) Canadian PHWR nuclear power reactor that has been in operation
since 1971, and under international safeguards, the KANUPP, CHANSUPP-1 and
Chashma-2.
KANUPP and CHASNUPP have both been running successfully, and according to the
safeguards set by Pakistan Nuclear Regulatory Authority184• The construction of a
CHANSUPP twin, Chashma-2 started in May 2005 185• Enriched fuel for the reactors
was imported from China.
The Energy Security Plan of 2005 has called for an increase in generating capacity to
more than 160,000 MW by 2030 from 19,540 MW in 2005 186.This included plans for
lifting nuclear capacity by 8400-8800 MW by 2030 from 400 MW in 2005, 900 MW
of this by 2015. 187The Government, under this plan had also announced building two
more Chinese reactors, of 600 MW each. Pakistan also possesses a 1 0 MW research
reactor, Parr-1, of 1965 vintage operated by the Pakistan Institute of Technology188•
Pakistan's 50 MW PHWR reactors near Khushab, which started operations in 1988,
has the dubious standing of a "multipurpose" reactor due to its potential to produce
weapons-grade plutonium189• Another small uranium centrifuge enrichment plant at
Kahuta has also been operated by the P AEC since 1984 and does not have any
apparent civil use. It has not under safeguards190• Even though Pakistan is not a party
184 Pakistan Almanac, no. 68 185 World Nuclear Association (2008), "Nuclear Power in Pakistan", [Online: Web], Accessed on 16 January 2007, URL: http://www.world-nuclear.org/info/infl08.html 186 Ali, no. 123 187 "Pakistan Approves 25 Year Energy Plan", Pakistan Times, [Online: Web] Accessed on 12 June 2010, URL: http://pakistantimes.net/2005/03/23/business4.htm 188 [Online: Web], Accessed on 6 August 2006, URL: http://www.fas.org/nuke/guide/pakistan/facility/rawalpindi.htm 189 "Khushab Reactor", [Online: Web], Accessed on 11 July 2008, URL: http://www.powerset.com/explore/go!Khushab 190 "Pakistan's Nuclear Weapons Programme", (2008), [Online: Web], Accessed on 16 July 2007, URL: http://thecurrentaffairs.wordpress.com/tag!kahuta/
143
to the Nuclear Non-Proliferation Treaty, it does have its main civil reactors under IAA
safeguards.
The Pakistan Nuclear Regulatory Authority is responsible for licensing and
supervision, and in respect to CHASHMA, it works closely with China's NNSA!91
K-1, a CANDU type plant has been in commercial operation since 1971. K-1, after
completing its designed life of 30 years has been operating on extended life of 15
years. K-1 generated 456.94 million kWh of electricity during the period of July
March 2009-10, raising its lifetime generation to 12.82 billion kWh. C-1, a
Pressurised Water reactor type plant with a gross capacity C of325 MWe, has been in
commercial operation since September 2000.
C-1 generated 2063.94 million kWh of electricity during July-March 2009-10, raising
its lifetime generation to 19.46 billion kWh. The construction and installation
.activities of C-2 are in progress as per schedule. The C-2 is expected to be operational
by 2011.192
The Pakistan Atomic Energy Commission was initially established as Pakistan
Atomic Energy Committee in 1955, the Ordinance for which was made and
promulgated by the President of Pakistan on 27th May 1965, which was later on
approved by the National Assembly on 21st July 1965193• PAEC was established for
the promotion of peaceful use of atomic energy in the country, the discharge of
international obligations connected therewith, the execution of development projects
involving nuclear power stations and matters incidental thereto in the fields of
agriculture, medicine and industry. The P AEC has a Chairman and four full-time
working members (representing finance, technical, power and administration), and
four part time members, appointed by the government of Pakistan (GOP) 194• PAEC
reports to the Pakistan Atomic Energy Council consisting of 22 members and is
191 "Pakistan", [Online: Web], Accessed 12 Mar 2007, and URL: http//country.studies.us/pak/html. 192 Government of Pakistan, no. 23 193 PNRA (2006), Pakistan Nuclear Regulatory Authority "Country Report on Control of Radiation Protection Practices In Pakistan", [Online: Web], Accessed on 16 January 2007, URL: http://www.rca.iaea.org/members!Projects/RAS9029/ Appendix%20%20 18A %20CountrY'Io20Report% 20Pakistan.doc. 194 Government of Pakistan, Pakistan Atomic Energy Commission Foundation, [Online: Web], Accessed on 20 October 2008, URL: http://www. paec.gov. pk/paec-fond/functions.htm
144
headed by the Minister in charge of Atomic Energy195• Since the inception ofPAEC,
this portfolio has always been retained by the various Prime Ministers of Pakistan or
by the Executive Head of the government. and for the execution of development
projects including nuclear power stations and the generation of electric power196•
PAEC also represents Pakistan's membership in IAEA197
Figure 3.8: Structure Of Pakistan's Nuclear Sector
Abbreviations:
Pakistan Atomic Energy Council
Member Technical
I Chair Man P AEC
I Member Power
PlEAS
PINS TECH
Agricultural Centres Medical Centres
I Member Administrator
KANUPP
CHASNUPP
INUP
KINPOE
ICCC
Exploration, Mining and Refining
PlEAS: Pakistan Institute of Engineering and Applied Sciences
PINSTECH: Pakistan Institute ofNuclear Science and Technology
KINPOE: Karachi Institute of Nuclear Power Engineering
KANUPP: Karachi Nuclear Power Plant
I Member Finance
195 IAEA (2003), International Atomic Energy Agency, "Pakistan", [Online: Web], Accessed on 18 September 2008, URL: http://wwwpub.iaea.org/MTCD/publications/PDF /cnpp2003/CNPP _ Webpage/PDF /2000/Reports/P AKIST AN.pdf. I% Government ofPakistan, no. 194. 197 IAEA, no. 195.
145
CHASNUPP: Chashma Nuclear Power Plant
INUP: Institute ofNuclear Power
KNFC: Kundian Nuclear Fuel Complex
ICCC: Instrumentation, Control and Computers Complex
Source: Government of Pakistan, Pakistan Atomic Energy Commission Foundation,
[Online: Web], Accessed on 20 October 2008, URL: http://www.paec.gov.pk/paec
fond/functions.htm
The P AEC is also responsible for the operation and maintenance of nuclear power
plants in the country. The National Centre for Non Destructive Testing (NCNDT)
supports the quality assurance programme for nuclear power plants, particularly
concerning the in-service insp~ctions for selected components of KANUPP198. The
Pakistan Welding Institute (PWI) provides guidance in the application of relevant
codes and standards and for improvement of the quality of welding in the country199•
Other P AEC research centres (e.g., PIN STECH) provide valuable backup research
and analytical services as required200• The P AEC has also been in charge of initiating
nuclear fuel cycle activities with a modest prospecting programme in the early
1960s201. A number of promising areas were located some of which are even now
being explored. Uranium ore has beet). mined and the first ore processing plant using
this indigenous ore has been in operation for some time202• Essential laboratory
facilities have also been set up to support the exploration and ore process
development work. Kundian Nuclear Fuel Complex (KNFC) has the facility for
fabrication of fuel for KANUPP. Appropriate radioactive waste management systems
have been designed for KANUPP and CHASNUPP to remove radioactive liquid,
198 ibid 199 Government of Pakistan, no. 194. 200 Government of Pakistan, Pakistan Atomic Energy Commission, Pakistan Institute of Nuclear Science And Technology, [Online: Web], Accessed 15 August 2008, URL : http://www.paec.gov.pk/pinstechl 201 Government ofPakistan, no. 194. 202 "Bayswater Uranium Corporation Start Phase 4 Drilling Programme at Elkhorn Project", [Online: Web], Accessed on 11 January 2007, URL: http://paguntaka.org/2008/08/11/uranium-mineexploration-bayswater-uranium-corp-start-phase-4-drilling-program-at-elkhom-project/
146
gaseous and solid wastes arising from the plant. These waste management systems
operate by collecting, storing, allowing sufficient radioactive decay and process the
waste through filtration, ion exchange, evaporation, solidification, vitrification and
drumming203• Sufficient storage capacity is provided for the entire fuel discharged
during the life of the plant. High-level liquid wastes will be suitably located and
converted into solid wastes. These solid wastes are, then, packed in standard drums
for storage and subsequent removal to off-site disposal facilities for permanent
buriae04•
P AEC has developed expertise in energy forecasting, power plant economics,
generation expansion and electric power system analyses, and pre-project planning
(e.g. economic and financial analysis, feasibility studies, bid document preparation &
evaluation, etc.). Design and Engineering ofN.PP was initiated in 1980 and a formal
Design & Engineering Department (DED) was set up within CHASNUPP in 1985.
P AEC has also developed non-destructive testing (NDT) and quality assurance (QA)
capability05• The National Centre for Non Destructive Testing (NCNDT) and
Pakistan Welding Institute (PWI) have been set up and P AEC has trained a large
number of personnel in public and private sector206•
The estimated hydel potential of the country during the Eighth Plan was in the range
of26,563 MW out ofwhich 3768 MW ofpotential had already been exploited, by, the
end of the Seventh Plan. Preliminary ranking of a number of sites on Indus River for
future development had already been done whereas projects of Kalabagh Dam, Basha
203 IAEA (2003), no. 195 204 ibid 205 Government of Pakistan, PAEC (2003), Pakistan Atomic Energy Commission, NDT, National Centre for Non- Destructive Testing Commission, Newsletter, Online: Web], Accessed on 26 September 2008, URL: http://wwwpub.iaea.org/MTCD/publications!PDF /cnpp2003/CNPP _ Webpage/PDF /2000/Reports/P AKIST AN .pdf. http://www. paec. gov. pk/newsletters!ndt-nl/ apr-jun-02 .htm
206 IAEA, no. 195
147
Dam and, Ghazi Barotha were at various stages of preparation and implementation207•
Besides the large hydel stations, there were a number of sites where small and mini
hydels were planned. These hydel projects could meet local needs. Salient features of
the policy for hydel development, adopted for the Eighth Plan included the
development of large and medium hydel plants and investigations and development of
small and micro hydel projects by the Provinces concerned for meeting local
demand.208
When Pakistan got independence in 1947, it inherited 60 MW generation capacity for
its 31.5 million people. The pace of electric power infrastructure development gained
momentum by the year 1970 and within the next five years, the instilled capacity rose
from 36 MW in 1970 to 1331 MW in 1975, with the setting up of a number ofhydro
and thermal power units209• In the year 1980, the system cap~city touched 3000 MW
and, thereafter it rapidly grew to over 7000 MW in 1990-91210•
Since the 1990s, thus, the installed capacity has more than doubled, with both thermal
and hydropower playing third part211• From 1960 to 2003, the installed capacity of
hydropower generation had increased at 48% per annum. At the same time, however,
the share of hydropower generation installed capacity in total electricity generation
mix decreased from 70% in 1960 to 28.3% in 2003 due to percentage increase of
other sources212• The electricity generation capacity in the country rose to 19,547 MW
in 2007, out of which 7707 MW was generated through IPPs. The installed electricity
generation capacity in Pakistan in 2007 was 19,547 MW out of which only 6599 MW
207 World Bank (2004), "Energy and Infrastructure Unit: South Asia Region", URL: http://wwwwds. worldbank.org/ 208 Government of Pakistan , no. 51. 209 "$2.9 Billion required for Power Projects", [Online: Web], Accessed on 21 April 2008, URL: http://www.paktechsearch.com/outlook.asp 210 Mirza et. AI. (2007), "Hydropower use in Pakistan: Past, Present and Future", Renewable and Sustainable Energy Reviews, 12(6): 1641-51. 211 Government of Pakistan (2006), "Policy for Development of Renewable Energy for Power Generation Employing Small Hydro, Wind, and Solar Technologies", [Online: Web], Accessed on 15 September 2007, URL: 02.83.164 .26/wps/wcrn/ connect/27 d8 708046f9dc6f9fl 5 ff0561 b29469/PakistanREDevelopmentPolicyDec092006.pdf? 212 AsifM., no. 22
148
carne from hydropower.213 Of the total estimated hydropower potential in Pakistan in
2008, which was more than 42 GW, only 6.5 GW had been tapped by then. The
addition of 1450 MW capacity during 2001-05 through the Ghazi Brotha hydropower
project resulted in change in the hydro/thermal ratio from 0.40 in 2001 to 0.53 in 2006
The present installed capacity of hydropower generation is 5041 MW. Out of a total
potential of 40 GW, only 16% has been developed by 2008214•
Hydropower is increasingly being seen as an important source of energy in Pakistan.
The fact that it is non-polluting, environment friendly, low cost, relying on proven
technology, makes it an attractive source of energy. The Government aims to change
the hydel-thermal ratio in the national energy mix in favour of hydel power by the
year 2025. To achieve this, the government intends to pursue 'fast track development
ofhydel power generation.
Hydel energy is particularly useful for Pakistan as it lacks adequate supplies of non
renewable energy sources like oil and gas215. Hydropower projects have the inherent
ability for instantaneous starting, stopping, load variation, etc. and help in improving
the reliability of the power system. They are the best choices for meeting peak
demand216• The generation cost is not only inflation free but also reduces with time. In
2000-01, the average cost of hydropower generation in Pakistan was about 0.20 per
Kwh. Hydropower projects also help in opening avenues for development of remote
and backward areas217•
The installed capacity ofPEPCO system is 18,233 MW as of March 2010 with hydro
6,555 MW and thermal 11,678 MW. The hydropower capacity accounts for 35.95
percent and thermal 64.05 percent.218
213 Mirza, et. al. No. 210 214 Muneer and Asif, no. 120 215 "Proper Usage ofHydel Power To Overcome Energy Crisis", The Nation, October 6, 2008. 216 Mirza et. al. no. 210 217 "Facts about Hydropower", Wisconsin Valley Improvement Company Accessed on I March 2008 [Online: web] URL: http/: www.wvic.com/hydro-facts.htm. 218 Government of Pakistan, no. 23
149
Further development in the hydroelectric sector has slowed down due to long-lead
time, political conflicts and high capital cost of dams219• Another obstacle is a number
of additional sites with major potential exist in the mountainous North but are areas
that are very difficult to access and becomes very costly due to the huge costs
involved in transmitting electricity to the South of the countrr20•
The three main rivers, Jhelum, Chenab and Indus travel across the country to reach
the Indian Ocean and are the main source of hydro electricity in Pakistan. A large
proportion of the hydro generators are located at the two large damn sites of Mangla
and Tarbela. The Tarbela is located on the Indus river in the NWFP and has an
installed capacity of 2,164 MW while the Mangla is located on the Jhelum river in
"Azad Kashmir" and has an installed capacity of 800 MW221• The Neelam river in
"Aiad Kashmir" also offers huge potential for small-scale hydro projects222.
The organizational and institutional infrastructure of the hydel sector of Pakistan
comprises of the following organizations.Z23The Ministry of Water and Power: This
organization plays the lead role in the implementation of all policies pertaining to
water and power issues in the countif24; Water and Power Development Authority
(W APDA): This organization, when established in 1958 had a massive agenda to
attend to including generation, transmission and distribution of electrical power
together with irrigation, water supply, drainage and flood control. It owns about 54%
of the country's total electric power generation capacity and serves 88% of all
electricity customers of Pakistan225; Private Power and Infrastructure Board (PPIB):
The was established in 1994 by GOP as an extension of the Ministry of Water and
Power for encouraging participation of private entrepreneurs in the power
219 Muneer and Asif, no. 120 220 "Pakistan Energy", Accessed on 23 April, 2007, [Online: Web] URL: countrystudies.us/pak/html 221 "Pakistan Energy'', no. 220 222 ''Need for Effective Energy Policy Stressed to Exploit Potential", (2007) Pakistan Tribune, 14 June 2007, [Online: Web], Accessed on 12 March 2007, URL: www. Paktribune.org. 223 Mirza et. al., no. 210 224 Government of Pakistan, no. 155. 225 Government of Pakistan, Water and Power Development Authority, [Online: Web), Accessed on 16 September 2007, URL: www.wapda.gov.pk/
150
generation226; Karachi Electric Supply Corporation (KESC) : KESC was established
in 1913 and is one of the oldest utilities in the South Asian region. It caters for the
electric power requirements of Karachi. KESC are principally engaged in the
generation, transmission and distribution of electricity to industrial and other
consumers within its licensed areas227; National Electric Power Regulatory Authority
(NEPRA). NEPRA was established under the Regulation of Generation, Transmission
and Distribution of Electric Power Act 1997.The main functions of NEPRA are to
grant licenses for generation, transmission and distribution of electric power,
prescribe and enforce performance standards for generation, transmission and
distribution companies, and determine tariff, rate etc. for the supply of electric power
services. Being a regulator, NEPRA is responsible for all matters related to the tariff
of electric power in the countri28; Energy Wing (Planning and Development
Division): The Energy Wing was created in 1988 under the Ministry of Planning and
Development to undertake technical, financial and economic appraisal of generation,
transmission and distribution projects submitted by WAPDA, KESC, etc. The Energy
Wing also prepares short-and long-term energy sector programs, including forecasts
on supply and demand of utilities229; Sarhad Hyde! Development Organization
(SHYDO). In 1986, the Government ofNWFP established SHYDO for carrying out
hydropower prospects, hydropower development and to act as a utility company for
the isolated rural communities. With the assistance of W APDA and German Agency
for Technical Cooperation (Deutsche Gesellschaft fur Technische Zusammenarbeit,
(GTZ), SHYDO has prepared a master plan for the development of more than 6000
MW hydropower potential identified in NWFP. It has successfully completed
feasibility studies of several hydropower projects ranging from 8 to 125 MW.
226 Government of Pakistan, Private Power Infrastructure Board, [Online: Web], Accessed on 27 August 2007, URL: www.ppib.gov.pk/mwp.htm
227 Government of Pakistan, Karachi Electric Supply Corporation Ltd. Government [Online: Web], Accessed on I 7 October 2007, URL: www.kesc.com.pk/ 228 Government of Pakistan, National Electricity Power Regulatory Authority, [Online: Web], Accessed on 16 July 2007, URL: http://www.nepra.org.pk/ 229 "Pakistan: Coal Power and Generation Potential", [Online: Web], accessed on 5 March 2007, URL: ww.nepra.org.pk!Policies/Coal%20Potential%20in%20Pakistan.pdf
151
Presently, SHYDO is implementing 81MW Malkand-III hydropower projece30,
Punjab Power Development Board (PPDB). PPDB was created in Punjab's Irrigation
Department in 1995 for the promotion of hydropower generation in canal sites in
PURjab. At different canals, about 324 potential sites of medium and low head were
identified, with a total estimated capacity of 5895 MW231, Irrigation Power
Department Sindh (IPDS). IPDS is responsible for the hydropower development and
identification of suitable sites on canals and barrages in Sindh232, "AJK" Hydro
ElectQ.c Board ("AJK" HEB) and "AJK" Private Power Cell ("AJK" PPC). In order to
exploit the plentiful hydropower resources of AJK, the Government of AJK
established the AJK HEB in 1989233, Northern Areas Public Works Department
(NAPWD). This was established to provide electric power to the isolated network of
the Northern Areas23\ Pakistan Council for Renewable Energy Technologies
(PCRET). This was created in 2001 by merging National Institute of Silicon
Technology (NIST) and the Pak~stan Council for Appropriate Technology (PCATi35,
Alternative Energy Development Board (AEDB) was created in May 2003 to at as a
central national body on the subject of renewable energy36.
23° Farooqui, G.H. (2008), "Sheshi Hydro Power Project ofSHYDO", Online: Web], Accessed on 18 September 2008, URL: http://wwwpub.iaea.org/MTCD/publications/PDF /cnpp2003/CNPP _ W ebpage/PDF /2000/Reports/P AKIST AN.pdf. http:/ /www.groundreport.com/ Arts_ and_ Culture/Sheshi-Hydro-Power-Project-of-SHYDO 231 "PG: PPDB asked to meet power demands of Punjab: Minister'', Pakistan Press International, 29 April 07, Online: Web], Accessed on 21 September 2008, URL: http://wwwpub.iaea.org/MTCD/publications/PDF /cnpp2003/CNPP _ Webpage/PDF /2000/Reports/P AKIST AN.pdf. http://www.accessmylibrary.com/coms2/summary _ 0286-30652817 _ITM 232 Irrigation and Power Department, Government of Sindh, Irrigation and Power Department, [Online: Web] Accessed on 17 March 2007, URL: http://www.aaas.org/internationaVehn/waterpop/front.htm www.sindh.gov.pk/dptllrrigation%20&%20Power/contactus.htm 233 Mirza, et. al., no. 210 234 "Community-Based Renewable Energy Development In The Northern Areas And Chitral, Pakistan", [Online: Web], Accessed on 6 July 2008, URL: http:/ I cdmpakistan. gov. pk/ cdm _doc/ community"/o20based%20renewable%20energy"/o2 Odevelopment %20in%20northern%20areas%20of%20pakistan.pdf 235 Government of Pakistan, Pakistan Council for Renewable Energy Technologies, [Online: Web], Accessed on 17 March 2007, URL: http://www.aaas.org/internationaVehn/waterpop/front.htmwww.pcret.gov.pk/ 236 Government of Pakistan, Alternative Energy development Board, [Online: Web], Accessed on 12 March 2008, URL: http://www.aaas.org/internationaVehn/waterpop/front.htmwww.aedb.org/
152
Renewable Sources of Energy
In view of the fact that fossil fuels are fast depleting off the face of the Earth, and
their limited supplies are under constant threat due to such factors as terrorism and
Pakistan's energy mix consisting mainly of fossil fuels237, Pakistan's energy security
is in grave danger. Where energy security means a consistent and continuous
availability of sufficient energy in various forms at affordable prices, these conditions
must prevail for long if they are to provide security for any country. During a panel
discussion in Islamabad on 2ih March 2006, Nobel laureates Prof. Charles Townes,
Ivar Giaver and Gerardust Hroft also stressed on the importance of renewable sources
of energy for Pakistan, along with nuclear238• The fast depleting reserves of gas and
the enormous expenditures that use of oil entail, for Pakistan, make both sources of
energy, fulfilling 79% of Pakistan's energy requirements239, an unsustainable option
for the long term, thus paving the way for a greater use of renewable sources.
Keeping this in mind, there is great stress on renewable sources, like wind and solar
energy as they are not limited in nature and can be a source oflong-lasting energy40•
Keeping this in mind, the Government of Pakistan set up the Alternative Energy
Development Board in 2006. The Chair of this Board reports directly to the Prime
Minister. The agenda of the Board was to exploit renewable energy, also known as
'soft energy'241 in a major way. The various sectors of energy that are seen to have
potential in this regard are wind, solar, micro wind, solar photovoltaic, solar thermal,
biofuels, biomass and micro-hydee42• The Board has been successful in spreading
237 Mirza, et al ,no. 210 238 Hakeem, no. 30 239 Hathaway, Robert M. (2007), "Introduction", Hathaway et. al., no. 149 240 World Energy Council (1996), Asish K. "Development of Alternative Energy Resources", Asia Energy Vision 2020:Sustainable Energy Supply, International Seminar, New Delhi: Concept Publishing Company 241 A term coined by Amory Lovins, as quoted in Forbes Ian A. (1978), "Energy Strategy: A Time for Realism", Corpulas, Milton R. (ed.), Energy Perspectives, Washington D.C.: Heritage Foundation. 242 Mukhtar A. and Arshad H. Qureshi (2006), "Assessment Of New And Renewable Energy Resources Potential And Identification Of Barriers To Their Significant Utilization In Pakistan", Renewable and Sustainable Energy Reviews, 12 (1): 290-98.
153
awareness among policymakers on the need to stress on alternate sources of energy43•
According to the Board, the meaning of "alternative or renewable energy" means
energy that is produced by alternative or renewable resources as compared to the
conventional or that are replenished naturally, which do not deplete when consumed
and are non-polluting and environmental friendly44• Though renewable sources are
important for the future of Pakistan, there is a view, however, that they should be seen
as supplementary resources and not as alternatives till a proper institutional structure
and infrastructure for their development is completely in place245.
In view of high capital costs of solar and wind systems and the resource constraints,
the policy during the Eighth Plan continued to emphasise on the demonstration and
utilization of these sources of energy in far flung areas only, where conventional
sources of energy are not readily available. Moreover, this was to be the responsibility
of the organizations responsible for delivery of conventional energy. Pilot scale
systems in far-flung areas were preferred to rather small installations near the urban
areas as in the past. Some integrated projects (hybrids of wind, diesel and solar) were
to be established and operated by the agencies such as W APDA so that the cost of
maintenance was also reduced as well as the locations of the plants could be
coordinated with the programmers of transmission development and isolated diesel
generating sets. Similarly, solar water heating was to be promoted by gas and oil
companies246• For wind Energy, a wind resources programme was to be initiated so
that specific projects could be formulated depending upon the wind regime247• Imports
of equipment for use of renewable energy were to be considered for taxes and duty
243 Government of Pakistan (2008), Alternative Energy Development Board, [Online: Web], Accessed on 23 March 2008, URL: http://www.aedb.org/ 244 AEDB (2006) Alternative Energy Development Board, "Acts, Ordinances, President's Orders And Regulations", [Online: Web], Accessed on 23 March 2008, URL: http://www.aedb.org, Government Of Pakistan, Law, Justice And Human Rights Division, Islamabad, The 11th May, 2006", The Gazette of Pakistan, 13 May, 2006, Islamabad, Accessed on 15 May 2008, [Online: Web] URL: http://www.aedb.org/ordinance.php 245 Mukhtar and Qureshi no. 242. 246 Kumar, Amit (2000), "Energy Scenario in South Asia", Energy Technology News, Issue 1, [Online: Web] Accessed on 23 April2007, URL: http://www.teriin.org/opet/articles/artl.htm 247South Asia Regional Initiative (SARI), "Pakistan Energy Overview", URL: http://www.sarienergy.org/Pagefiles/Countries/Pakistan_ Energy_ Overview.asp
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exemptions248•
In terms of available solar energy, Pakistan is judged to be amongst the richest
countries in the world, having an annual global irradiance value of 1900-
2200 kWh/m2249• The best way to utilize solar energy is through photovoltaics that
convert the sun's energy directly into electricity. Since the late 1990s, Pakistan has
shown encouraging development in this field250• The National Institute of Silicon
Technology (NIST) under the Ministry of Science and Technology has already
developed the know how and technology to fabricate solar cells modules and
systems251. The photovoltaic technology is particularly suitable for small power
requirements and remote area applications252• It is thus quite relevant to Pakistan in
the area of rural electrification. About 17 stations have been installed in Pakistan in
the 1970s. Both the private and the public sectors are involved in the development of
this technology in Pakistan. There is also another type of solar technology that is
simpler, more low cost and can be more easily adopted This can be used for cooking,
heating and cooling of buildings, generation of high temperature steam, heating water
for domestic and industrial applications and for drying agricultural products under
controlled conditions of temperature. This technology can be utilized in solar dryers,
solar cookers, solar water heaters and solar desalinisers. Two plants consisting of 240
stills each with a capacity to clean 6 thousand gallons of water per day has been
installed at Gwadar already53•
248 Government of Pakistan, no. 94. 249 M. Asif (2009), no. 22 250 "Development of Alternative Energy Resources Urged", Daily Times 26 January, 2007. 251 Kabir, Aamir, "Prospects for Solar energy in Pakistan", Dawn 3 March, 2003 [Online: Web] Accessed on 12 February 2007, URL: http://www.dawn.com/2003/03/03/ebr1l.htm 252 Azfar A Khan, Air Cdre (R), "Solar Panels: Less Costly, If Produced Locally" Business and Finance Review, [Online: Web] Accessed on 12 February 2007, URL: http:/ /j ang.com. pk/thenews/ oct2008-weekly/busrev-06-1 0-2008/pS .htm 253 Anwer, Kurshid (2001), "Pakistan: Country Paper", Regional Seminar on Commercialisation of Biomass Technology, Economic and Social Commission for Asia and Pacific, 4-8 June 2001,Guangzhou, China.
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Regarding wind energy, about 30 windmills for pumping water were installed for
experimental purposes in different parts of Sindh and Baluchistan254• This project
suffered however due to the low quality of the mill and lack of infrastructure and
maintenance255• A local manufacturer, Merin LTD had also been engaged to fabricate
windmills to lift water. A proposal for wind survey had also been launched to provide
authenticated data of wind speed at different altitudes.
Pakistan Council for Appropriate Technology (PCAT), on a cost-sharing basis
installed 253 "run of river type" plants with a total capacity of 4 MW in the NWFP256•
The civil works including construction of power channel, powerhouse, electric poles
and the distribution networks were done by the beneficiaries themselves, while the
Institute provides mechanical equipment as well as technical expertise and
supervision. These plants were useful in providing electricity for light during
nighttime and also in small industrial units. In 2000 the Government had planned to
install another 300 plants through the PCAT257•
Under the MTDF, The AEDB was to facilitate alternative/renewable energy projects
and develop and implement off-grid electrification programme of rural areas.
Intensive efforts were to be made to ensure the installation of 100 MW wind power by
December 2005 at Kati Bander and Gharo Sindh and 700 MW by 2010. At least 5
percent of total national power generation capacity was to be met through these
resources by 2030 (i.e. 9700 MW). In addition, under the remote village
electrification programme, 54000 homes would be lit by solar/wind/micro
hydropower during the MTDF. AEDB would also undertake a comprehensive plan
for the development of solar products like, solar lights, solar fans, solar cookers and
solar geysers through the participation of private sector?58
254 (AEDB) Alternative Energy Development Board, "Resource Potential of Wind Project", URL: http:/ /www.aedb.org/respotential_ micro wind. php 255 Mirza, Umar K. et al (2007), "Identifying and Addressing Barriers to Renewable Energy Development in Pakistan", Renewable and Sustainable Energy Reviews, 13(4): 927-931. 256 Anwer, no. 253. 257 Anwer, no. 253. 257 Latif, no. 257. 258 Government ofPakistan, no. 147.
156
Bio waste is another area of renewable energy that is an economical and environment
friendly way of producing energy through disposing of municipal waste that is
collected in tonnes in cities everyday59• In recent years, waste-to-energy technologies
have been developed to produce clean energy through the combustion of municipal
solid waste in specially designed power plants equipped with the most modem
pollution control equipment to clean emissions260• AEDB has signed a contract with a
foreign firm for carrying out a feasibility study for generating up to 1 0 MW of
electricity from Municipal Solid Waste in Karachi. The study is currently underway
and would lead to establish a 10 MW Waste-to-Energy power plant in Karachi.
AEDB has initiated a project for carrying out detailed studies for biomass I Waste-to
Energy projects in 20 cities of Pakistan. Companies have been short listed for
issuance ofRFPs on basis of Expressions of Interest (EOI) submitted by them.261Yet,
solid waste management practices differ for developed and developing nations.
Developing countries like Pakistan, suffer from a vacuum as far as far as the running
of concerned institutions is concerned, in matters of responsibility delegation and
policymaking. There is also dearth of sufficient information and policy regarding this
energy sector in Pakistan. As a result, much has been achieved in this direction in
Pakistan so far. 262
Traditional Sources of Energy
During the Seventh Five Year Plan of 1988-1993, the government aimed at certain
objectives. At that time, mainly the traditional sources of energy were understood to
259 "Energy from Bio-waste", [Online: Web] Accessed on 01 April 2007, URL: http://www.auroville.org/research/ren _ energy/biogas.htm · 260 Bade 0. et al. "Integrated Concept for Decentralised Waste Water and Biowaste Treatment", [Online: Web] Accessed on 3 April2007, URL: http://cgi.tu-harburg.de/-awsww/NW/pdf/470.pdf. 261 Government of Pakistan, no. 23 262 Abbasi, Arshad H. "Waste to Energy needed in Pakistan", [Online: Web], Accessed on 16 March 2008, URL: http://www.altemative-energy-news.info/waste-to-energy-pakistan/
157
be "renewables", as mentioned in the plan document as well263• Thus, Renewable
energy resources were derived almost entirely from biomass and fuel wood
constituted about 32 per cent or 1-L.5M TOE of total energy supply in Pakistan in
1987-88. In 1993, it was estimated that 90 per cent of the rural households and 60 per
cent of the urban households met their energy needs by use of biomass, including fuel
wood264• The contribution of solar, wind and mini-hydels, although small (less than
5MW), was measured by the positive impact they had on the quality of life in rural
areas. Thus, under the Seventh Plan a detailed master plan for renewable energy
development was planned ensuring proper institutional arrangements under which
coordination and leadership for the development of renewable resources, including
biomass, wind, solar and small hydels was integrated. Such an integrated approach
had been lacking so far265•
Similarly, under the Eighth Five Year Plan, traditional sources such as biomass were
again bracketed with renewable sources, like wind and solar. Again, based on a study
of the plan period of the Sixth plan, it was found that bio mass contributed as the main
source of energy among all the Traditional sources?66 Thus, various plans were laid
out develop it better, along with those for wind, solar and biogas. Thus, those laid out
for Biomass were Improvements in efficiencies of utilization of biomass (thus,
increase inefficiency of cook stoves, etc.), promotion of better utilization and
distribution practices of crop residues, improvement in the market structure for
firewood and crop residues267 and the promotion of forestry and increase in the
availability ofbiomass268•
263 "Pakistan: Pakistan Community-Based Renewable Energy Development in Northern Areas and Chithral", [Online: Web] Accessed on 12 May 2007, URL: http://www.evd.nllhome/index.asp 264 FAO (1997), Food and Agriculture Organisation, "FAO Corporate Document Repository: Rural and Urban Wood Energy Consumption", URL: http://www.fao.org/docrep/w7519e/w7519e08.htm 265 Government of Pakistan, no. 94. 266 Krisna V.V. and S.T.K. Nairn "The Islamic Republic of Pakistan", [Online: Web] Accessed on 23 June 2007, URL: http:/ /portal. unesco .org/ education/en/files/ 5 56001 11999616085Pakistan. pdfi'Pakistan. pdf. 267 Anwer, no. 253. 268 Ilyas, Syed Zafar (2006), "Biogas Support Program Is a Reason for its Success in Pakistan", American-Eurasian Journal of Scientific Research 1 (1): 42-45
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Bagasse, dung and firewood furnished about 32% of all energy in FY1988. Some
localities were denuded of firewood and had to resort to commercial energy sources
such as coal and kerosene?69•
Biogas
The Government of Pakistan started a comprehensive biogas scheme in 1974 and
commissioned 4,550 biogas units by 1990 throughout the counttY70• The units were
designed to provide 3000 and 5000 cubic feet of biogas per day for cooking and
lighting purposes271• This programme was developed in three phases. During the first
phase 100 demonstrations were installed under a Government grant. During the
second phase the cost of the bioga~ was shared between the beneficiary and the
Government. During the third phase while the Government withdrew financial
support it continued to provide the technical support. This marked the end in progress
of this project, however. Pakistan has a big potential for using biogas energy in rural
areas272•
269 Latif, no. 257. 270 Qaseem, Navida et al (2005), "Dissemination of Cooking Energy Technologies for Sustainable Household Consumption in Pakistan", Journal of Rural Problems, 41 (1 ), 206-211. 271 Hassan, Majid ul (2002), "BT To Light Up Villages In Pakistan", Dawn, September 14, 2002. 272 Anwer, Kurshid, no. 253.
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