Pakistan Energy Crisis: An Overview

Power Sector Highlights

Pakistan Energy Stats

Causes of Power Crisis

Circular Debt Issue

GoP’s Initiatives for the Power Sector/Sectoral Recommendations

VTT’s brief Portfolio

Contents

Water & Power Development Authority’s (WAPDA) has been structured into distinct corporate entities comprising of 4 GENCOs, 10 DISCOs and one TransCO (NTDC).

These 10 DISCOs are responsible for distribution to the end users.

KESC meets its overall demand with its own generation plus purchase from NTDC, IPPs and from Karachi Nuclear Power Plant. The Current structure of the power sector is:

The Power sector was restructured in 1998 with the creation of PEPCO (Pakistan Electric Power Company)…

NATIONAL TRANSMISSION & DESPATCHCOMPANY

Energy Sources

Brief Description

Thermal Thermal power generation stands at 8,300MW but the thermal plants have low conversion efficiencies and are expensive to maintain/operate. Most of the thermal power plants installed by IPPs, use furnace oil which has become very expensive over the recent past.

Hydro Power

Only 34 % of total electricity generation is achieved thru hydro power. Currently we are producing 6555 MW against the potential of 41000 to 45000 MW

Wind Pakistan has a potential of producing wind energy ranging from 10000 MW to 50000 MW, yet power generation through wind is in initial stages in Pakistan and currently only a plant of 06 MW capacity has been installed in first phase in Jhampir by a Turkish company and 50 MW will be added shortly.

Solar Pakistan has a potential of more than 100,000 MW from solar energy. Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan.

Agricultural biomass /Biodiesel

Pakistan has planned to generate 10 MW of electricity from municipal waste in Karachi followed by similar projects in twenty cities of the country

Nuclear Pakistan’s nuclear power generation has a capacity of 425 MW, but there are plans to increase this capacity substantially. Source: An Overview of Electricity Sector In Pakistan, Islamabad chamber of commerce & industry

Key Abbreviations: GENCO ( Generation Companies DISCOs ( Distribution Companies) and IPPs(Independent Power Plants)

Power Producer Power Station

Installed Capacity

WAPDA Tarbela 3478 MWWAPDA Mangla 1000 MWWAPDA Ghazi – Barotha 1450 MWWAPDA Warsak 243 MWWAPDA Chashma 184 MWWAPDA Dargai 20 MWWAPDA Rasul 22 MWWAPDA Shadi-Waal 18 MWWAPDA Nandi pur 14 MWWAPDA Kurram Garhi 4 MWWAPDA Renala 1 MWWAPDA Chitral 1 MWWAPDA Jagran (AK) 30 MWWAPDA Khankhwar 72 MWWAPDA AllaiKhwar 121 MW

Future Projects

Kalabagh 3800MWBhasha 4600mwBunji 5400MWDasu 3800MW

Power Generation Statistics…

WAPDA Gas Turbine Power Station, Shahdra

59 MW

WAPDA Gas Turbine Power Station, Faisalabad

244 MW

WAPDA Gas Power Station, Multan 195 MW

WAPDA Gas Turbine Power Station, Kotri

174 MW

WAPDA Gas Turbine Power Station, Panjgur

39 MW

KESC Gas Turbine Power Station, Korangi

80 MW

KESC Gas Turbine Power Station, SITE

100 MW

WAPDA Steam Power Station, Faisalabad

132 MW

Power Producer Power Station

Installed Capacity

WAPDA Thermal Power Station, Muzaffargarh 1350 MW

WAPDA Thermal Power Station, Guddu 1655 MW

WAPDA Thermal Power Station, Jamshoro 850 MWWAPDA Thermal Power Station, Larkana 150 MWWAPDA Thermal Power Station, Quetta 35 MWWAPDA Thermal Power Station, Pasni 17 MWKESC Thermal Power Station, Korangi 316 MWKESC Thermal Power Station, Bin Qasim 1260

MWIPP Hub Power Project 1292

MWIPP AES Lalpir Ltd, Mahmood Kot

Muzaffargar 362 MW

IPP AES Pak Gen, Mahmood Kot Muzaffargar

365 MW

IPP Altern Energy Ltd, Attock 29 MWIPP Fauji Kabirwala Power Company,

Khanewal 157 MW

IPP Gul Ahmad Energy Ltd, Korangi 136 MWIPP Habibullah Coastal Power Limited 140 MWIPP Japan Power Generation, Lahore 120 MWIPP Kohenoor Energy Limited, Lahore 131 MWIPP Liberty Power Limited, Ghotki 232 MWIPP Rousch Power, Khanewal 412 MWIPP Saba Power Company, Sheikhupura 114 MWIPP Southern Electric Power Company

Limited, Raiwind 110 MW

IPP Tapal Energy Limited, Karachi 126 MWIPP Uch Power Limited, Dera Murad Jamali,

Nasirabad 586 MW

IPP Attock Gen Limited, Morgah Rawalpindi

165 MW

IPP Atlas Power, Sheikhupura 225 MWIPP Engro Energy Limited, Karachi —– MW  IPP Kot Addu Power Company Limited

(Privatized) 1638 MW

IPP Saif Power Plant Qadirabad, Sahiwal 225 MWIPP Sitara Energy 80 MWIPP Nishat Chunian Power 200 MWIPP Nishat Power Limited 200 MW

Thermal Power Hydro Power

Gas

Power Producer Power Station

Installed Capacity

PAEC KANUPP 137 MWPAEC CHASNUPP 300 MWPAEC CHASNUPP 300 MWPAEC KHUSHAB 50 MW

Nuclear Power

Steam Power

Source: PPIB, Ministry of Water & Power, Alternate Energy development board

Wind Power

Solar Power

FFC Energy Jhimpir 6 MW

Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan.

Power outages have led to widespread rolling blackouts that have paralyzed industry and led to major civil unrest.

As of June 2013, the electricity demand stood at about 11,000MW against generation of about 8,000MW. As a result, the utilities were resorting to about 10 hours of load-shedding per day across the country.

This acute energy crises in Pakistan has its roots in the following causes, namely;

Due to rising demand, power infrastructure issues, and poor governance severe electricity shortages have ensued …

Source: http://en.wikipedia.org/wiki/Energy_policy_of_PakistanThe Cause and Impacts of power sector circular debt in Pakistan – Planning Commission/USAIDICCI Electricity ReportA NEW ENERGY MIX FOR PAKISTAN-EMR Consult

Historic Demand and Supply situation in Pakistan

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Lack of Integrated Energy Planning & Demand Forecasting and absence of central & focused entity responsible for the Energy Sector

Circular Debt. Imbalanced Energy Mix with heavy reliance on gas (47.5%) and

Oil (30.5%) (72% imported) Non-utilization of vast indigenous resources of Thar Coal and

Hydel potential Lack of effective project structuring, planning and

implementation of identified and viable projects Transmission, distribution loses/theft Inadequate revenue collection by DISCOs

48.4% decrease in FDI as compare to last year

Closure of Industries resulting in Unemployment (According to the labor department sources, approx. 800,000 labors have lost their jobs )

Agriculture land irrigation Household s, schools and

hospitals

Crisis having direct impact on

Result of the difference between the actual cost of providing electricity in relation to revenues realized by the power distribution companies (DISCOs)

Insufficient payments by DISCOs to CPPA due to poor revenue collection/governance

Delays in tariff determination & fuel price fixation

Delayed payment by the Ministry of Finance Transmission & distribution losses Stay orders granted by courts on fuel price

adjustments charges Unfavorable generation mix of the GENCOs GOPs neglect in promoting demand-supply

management, energy efficiency & renewable energy resources

Improper payment arrears settlement and the need for enforceable authority of CPPA to collect due payments from DISCOs

One of the foremost reasons for Pakistan’s Energy crises is the Circular Debt Issue that needs immediate remedies…

Circular Debt is the amount of cash shortfall within the Central Power Purchasing Agency (CPPA) that it is unable to pay to the power supply companies.

Circular Debt Primary Reasons

Primary Causes 2010 (Billion Rs.)

2011 (Billion Rs.)

2012 (Billion Rs.)

Reserve Debt (start of year) 235.65 365.66 537.53

Non-Collection of DICSOs Receivables from:

Federal Govt. 1.79 1.57 0.19

FATA (78.34) 4.30 13.42

Provincial Govts. 16.72 36.07 15.84

AJK Govt. 2.00 5.50 6.05

Tube wells (Agri) 3.46 (3.68) (3.12)

Private Consumers 25.59 39.29 54.55

KESC 4.04 (1.79) 13.78

Total Non-collection (24.74) 81.26 100.69

Tariff & Subsidy Issues 154.75 90.62 234.18

Total Circular Debt 365.66 537.53 872.41

Source: PEPCO DISCOs Performance Stats Report 2012, Data from MoWP , USAID PDP Analysis

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Source: http://freepdfdb.com/pdf/country-report-on-energy-security-amp-power-crisis-68585068.htmlICCI Electricity ReportThe News, Daily times, Nation

Distribution companies are facing line losses due to multiple reasons, but electricity theft and non-payments by the consumers are burning issues…

Pak-UK Chamber of Commerce & Industry President has urged upon the authorities to reduce 44 per cent losses and thefts in the electricity being produced in the country. 

Pakistan lost Rs. 90 billion during the last five years in electricity theft and line lossesDISCOS (Losses/Theft) Billion

(PKR)

FESCO 0.6

GEPCO 0.360

LESCO 2.35

MEPCO 0.280

SEPCO 3.6

HESCO 7.47

PEPCO 16.17

KESCO 59

Rs 360bn receivables strategy is required by PEPCO:More than Rs 360 billion became overdue towards public holding offices of central and provincial governments along with local power consumers, which created hurdles in minimizing the circular debt volume of the power sector.

The Government of Pakistan is taking all the necessary measures to build a more conducive environment, to resolve issues as quickly as possible. Long term planning and goals must be focused towards streamlining the foreign policy according to the country’s economic and energy needs. Improving and increasing ties with future energy rich countries must not be neglected.Electricity Agreements / Prospects with Other Countries

Brief details

China Ongoing projects include Karot, Taunsa, Kohala and Bunji hydro-power Projects China has offered help in the construction of 50 MW wind power project in Jhampir (Sindh) that is to be completed in 2012 Moreover, China has planned to invest in 300 MW solar power projects in Pakistan.

India India has offered to provide Pakistan with 5,000 megawatt electricity to fulfill its energy requirements on an urgent basis regularly which could be transmitted through Punjab.

Iran 100 MW import project have been finalized and are ready for groundbreaking. Pakistan and Iran would move forward on import of 1,000 MW power project from Iran.

Tajikistan Central Asia South Asia (CASA-1000) is one of the biggest regional projects through which Tajikistan would export up to 1000 MW of electricity to Pakistan.

Germany AZUR energy group of Germany planned to setup 50MWAtt solar project in Pakistan, for which a feasibility report and site surveys of Multan and Bahawalpur were conducted.

Qatar Pakistan is also interested in importing 500 million cubic feet per day of LNG from Qatar that produces 77 million tones per annum of LNG. The imported LNG will be initially provided to the power houses in the country to generate 2,500 mega watt of electricity.

Norway Norwegian company NBT has expressed interest in establishing a 500-megawatt wind power project in Pakistan, by investing about $1 billion in alternative energy

Kuwait Kuwait has extended $40 million to Pakistan for the construction of the de-sander, a vital part of the strategic $333.3 billion Neelum-Jhelum hydropower project. Upon its completion it will generate approximately 1,000 MW of electricity.

Pakistan is one of the emerging economies of South Asia, where the government has declared the Power Sector as its top priority of investment…

Pakistan is a suitable country for the installation of solar, wind power, coal fired plants, and can become an Asian leader in renewable energy due to its strategic endowments…

Pakistan falls under the list of countries with ‘Excellent’ category wind speed of 7.7 m/s.

As per a USAID Report, Pakistan can potentially produce 132,000 MWh of wind energy. The wind corridor, in Sindh province, alone has the ability to generate 40,000 MWh of wind electricity.

The ratio of Debt to Equity is 80:20, with a guaranteed return on equity, by the government, in the form of partial paybacks of fuel costs, operations and maintenance cost, and taxes/duty.

Pakistan has potential of more than 100,000 MW from solar energy. Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan.

Alternative Energy Development Board (AEDB) is working for 20,000 solar water heaters in Gilgit Baltistan.

Pakistan has estimated as the world's third-largest known coal reserves of 33.0 trillion tons in the south-eastern part of the country i.e. Thar

The electricity production from coal is also cheaper than thermal generation as 2 percent usage of Thar coal could produce 20,000 Megawatts electricity.

Pakistan’s coal reserve has ‘ZERO’ contribution in it’s energy mix. Hence, there is a substantial room for investment considering , Abundant coal reserves, and a guaranteed 17% USD based return.

Source: The Cause and Impacts of power sector circular debt in Pakistan – Planning Commission/USAIDICCI Electricity ReportUSAID

Promote hydro power and other domestic alternate sources of energy including solar, wind, coal and agriculture biomass/biodiesel

Energy conservation and demand management programs be initiated GOP to remove the current overhang of circular debt and prevent its

recurrence Power sector reforms to be initiated and existing power plants be

overhauled to achieve maximum efficiency Undertake policies/programs to improve governance/performance of

energy sector entities› Decrease costs and Increase cash flows› Ensure operational/financial integrity of the sector› Implement international best practices including smart

metering / automated meter reading (AMR) systems and Time of Use (TOU) tariff

Resolve Tariff and subsidy disputes between provincial governments and CPPA/DISCOs

Curb electricity thefts with stringent penalties Political appointment culture needs to be replaced with

professionalism/merit Fuel allocation policies be introduced Relocate gas towards power production as its cheaper than imported

furnace oil

The current energy crises in Pakistan warrants immediate measures for resolution, some recommendations for improvement are…

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Source: An Overview of Pakistan Energy Sector Report by Islamabad Chamber of Commerce & Industry (ICCI), The News

"The government has planned to gradually retire the power sector's huge circular debt to streamline the electricity generation chain that would bring the load-shedding under control.”

"The malfunctioning hardware as well as the incompetent operators at different power plants will be replaced, adding lists of all those who had so far been found sleeping on their jobs are already on the concerned authorities tables"

New Government

Plans

i. Creation of a Ministry of Energy and Natural Resources through the merger of Ministries of Water and Power and Petroleum and Natural Resources

ii. Reforms of National Electric Power Regulatory Authority (NEPRA)iii. Reforms of Distribution Companies (DISCOS)iv. Reforms of Generating Companies (GENCOs)v. Permanent elimination of circular debtvi. Rationalization of energy tariffs in line with international prices across all fuels.vii. Reforms of Oil and Gas Regulatory Authority (OGRA)viii. Aggressive wellhead pricing for Oil and Gas exploration companies in order to

substantially increase production of oil and gasix. High priority to import gas through pipelinesx. Expeditious setting up of coal and LNG import terminals, and coal transportation

facilitiesxi. Development of Thar coal fields and setting up of at least 5,000 MW of new coal

fired power plants under the lPP mode in Sindh. This will both create employment in rural Sindh and help solve our energy crisis. The plants to be designed on lignite quality coal and at first to be run on imported coal and when Thar coal is available, the plants to be switched to domestic coal

xii. Developing consensus among the various stakeholders to facilitate setting up hydropower projects by the Federal and Provincial Governments. This will augment and conserve our water resources and also generate less expensive and clean electricity

xiii. Developing alternative renewable energy sources, such as solar, wind, bagasse, biogas, and biomass projects, especially for off-grid and micro-grid applications.

xiv. Setting up national energy efficiency standards.xv. Introducing solar-thermal water heaters for domestic and industrial use.xvi. Decentralizing and creating a wholesale market for electricity.

New Government has summarized some key problems in the current system and has proposed short, medium and long term solutions to resolve the energy crisis and they are highlighted in the 16 points...

These measures will not only solve Pakistan’s lingering energy crisis but also shift the focus of the energy sector from high cost imported fuels to indigenous energy resources and reduce the total energy import bill and add at least 3.5% to the annual GDP. At the same time investment of about US$ 20 billion to generate 10,000 MW of electricity in the next 5 years will stimulate overall growth of the economy.

Source: http://pkpolitics.com/2013/05/16/pmln-energy-policy/

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