THE ECONOMIC, POLITICAL AND SOCIAL ISSUES, HINDERING THE ADOPTION OF BIOENERGY IN

PAKISTAN: A CASE STUDY

Umair Usman
UCH
Moonoo Chowk, Raiwind/Defence Road E. Lahore, Pakistan
Umair@uch.com.pk, Tel: 92-42-5321636, Fax: 92-42-5321638

ABSTRACT: The paper will inform the audience about the energy crisis that has crippled Pakistan’s economic growth
since the last 6 years, and the role that Bioenergy can play in resolving the issue. In order to help ease Pakistan in its
effort to curb this crisis and to get useful insights into the role that Bioenergy can play in solving Pakistan’s problems,
Business planning for a Small or Medium sized enterprise was attempted. The results were not encouraging and shed
light onto the financial and technical hindrances involved in creating and running Small or Medium bioenergy
businesses in Pakistan. These issues themselves were linked to the more general Social, Economic and Political
barriers for the adoption of Bioenergy in the country. The paper concludes by providing suggestions and
recommendations, as to what the government, private sector as well as the international community can do in order to
overcome the crisis. 
Keywords: Bio energy Policy, Biogas, Bio-ethanol, Third World, Pakistan

1 INTRODUCTION on these failures, new business models are discussed

Energy is considered to be the life line of any
economy. It is a significant determinant of
socioeconomic development and is therefore one of the
most important strategic commodities [25]. Inspite of
this, traditional growth theories focus on labour, capital
and technology as major factors of production and
ignore the importance of energy in the economic growth
process [16].
In the era of globalization, even though dependence
of economies on energy and their demand for it is
rapidly increasing, the supply remains uncertain.
Therefore energy shortage will be one of the biggest
problems facing mankind in the next century [16].
One such country which is already facing an energy
crisis is Pakistan. Energy plays an important role as
compared to other variables included in the production
and consumption function for Pakistan, as it is in an
early stage of development [10]. Already Pakistan’s
economy has been under constant stress due to the
energy crisis [7], leading to a sharp decrease in its
economic growth rate , made even worse by the 2010
flooding [38;39].
In order to study the role that Bioenergy can play in
overcoming the energy crisis, two business ventures
were attempted i.e. selling Biogas plants and Bio-
ethanol. Biomass seemed like a logical alternative
energy solution due to the country’s large agricultural
base. However both businesses failed at the planning
stage of development due to several micro and macro
factors that were identified as hinderances. Reflecting
that can help create a formal Biomass industry led by
small and medium sized enterprises.
However before details of the ventures are looked
into, it is imperative that Pakistan and its energy profile
is studied first, in order to better understand the
country’s basic needs and challenges.
2 PAKISTAN’S ENERGY PROFILE
2.1 Country profile
Pakistan is a middle income economy, with an
estimated population of around 170 million, making it
one of the most populous countries in the world. It is a
founding member of SAARC, G-8 and the OIC. Not
only is it a major military and nuclear power, but is also
South Asia’s second largest economy and a front line
state in the war in terror.
It sustained excellent growth record in the first half
of the 2000s, thanks to liberalization and an opening up
of the economy. Due to economic growth that took
place during that time, the GDP of Pakistan doubled
between 1999 and 2007. This growth in GDP was
higher even than the population growth resulting in an
increase of GDP per capita increased by almost sixty
percent between 2000 and 2008. Recognizing Pakistan’s
economic growth, Goldman Sachs now considers
Pakistan to be among the ‘Next Eleven Countries’ i.e.
nations that are likely to become sizable economic
powers and have greater impact on global business in
the new century [33;36]. Even though Pakistan’s
agriculture, industry, trade and services sectors have
been growing rapidly, the government has remained
negligent to the surge in energy demand, leading to a
massive shortfall in energy suppy, which is only
expected to widen [25].
One of the key strategic objectives of the Musharraf
era was to turn Pakistan into an energy corridor,
connecting Central Asia (China and the oil producing
countries) to the rest of the world (14; 13; 26). However
Pakistan itself is now facing a major energy crisis. To
look into this crisis in detail, it is imperative to look at
Pakistan’s energy profile in detail in order to better
understand the supply and demand of different sources.
2.2 Energy Profile:
The primary energy supply in Pakistan is
concentrated to only a few sources. The average share
of Oil and Gas between the years 1997-2007 was
44.36% and 32.58% respectively i.e. 77% of the total
supply (relatively, Hydroelectricity and coal accounted
for 18% and other sources accounted for 5%). The share
in 2009 stood at 31% for oil (82% is imported) and 48%
for gas i.e. the total share has grown to 79%, where the
share of oil decreased to 31 percent (relatively
hydroelectricity and coal account for 20% and 1 percent
from nuclear and imported energy) [16; 24]. According
to the Pakistan Energy Yearbook, by 2009-2010, after
the share of Natural Gas in the total available primart
energy supply was 48.8% for Gas and 31.4% for oil,
while LPG probided only 0.6% [40]. Hydroelectrcty
provided 10.6% of the energy followed by Coal 7.3%,
while nuclear electicty 1.1%, and imported elecirty
0.1%. Hence Natural Gas saw an increase [40].
Looking at total consumption of each source, the
average percentage share of oil in energy consumption
was 40.9% during 1998 to 2007, followed by gas
34.6%, electricity 15.7%, coal 7.5% and LPG 1.3%
[16]. By 2009-2010 however, the consunption was
highest for gas at 43.9%, followed by oil at 27.9%,
electricty at 15.6% and coal at 11.0% and LPG at
1.5% [40]. Noting consumption of energy by sector, the
industrial sector consumed 37.3% of the energy,
followed by transport sector with a share of 32.2% and
domestic sector with a share of 22.2%. The agriculture
sector, government and the commercial sector
respectively consumed only 2.6%, 2.5% and 3.3%. By
2009-2010,the industrial sector consumed the most
energy at 40.25%, followed by transport at 30.06%,
domestic use making up 21.56%, commercial sector
3.95%, Agriclture 2.19% and others including
government making up 1.98% [40].
During the 1980s, about 86% of the energy demand
was met by domestic sources and remaining 14% gap
was filled by the imports [7]. By 2008-2009 Pakistan
met 75% of its energy needs by domestic resources
including gas, oil and hydroelectricity production and
only 25% of the energy needs were managed through
imports. [24]. However by 2009-2010, 33.3% of the
total energy consumption in Pakistan was imported, of
which oil was the major contributor [40]. Oil and Gas
have therefore taken major share in the energy mix and
are likely to maintain their dominance [16], and more
significantly dependence on imported oil is putting
pressure on the already fragile economy.
It can be seen from the above that Pakistan’s
energy supply is dependent largely on Oil and Gas (as
well as electricity), while the share of imported energy
is increasing over time as well. It can be noted therefore
that shortages or difficulties in imports can have
disastrous effects on industry and transport, and
therefore cripple the industry.
2.2 Energy crisis:
During the mid 2000s, Pakistan achieved an average
economic growth rate of 7.6%. Assuming the growth of
6-7 percent could have been maintined, it was believed
that energy demand would growth at 8% or rougly
double within a decade [23]. However insufficient
generation and exploration, limited planning and
negligence of successive regimes, and inefficient use
and wastage of energy resources [30], has created an
acute energy crisis in Pakistan since 2006. [24; 26; 7].
Table I: Energy Supply and Demand Gap (MTOE:
Millions of Tons Oil equivalent)
[16]
Looking to the future, according to Pakistan’s Energy
Security Plan for 2005-2030 [16], the total primary
energy consumption in Pakistan is expected to increase
seven times to 360 MTOE and over eight-fold increase
in the requirement of power by 2030 (Table I) and
therefore the supply and demand gap of energy is likely
to widen.
The issues with the supply-demand gap were not
taken very seriously by the govermment and the
country’s economy was therefore adversely affected.
Pakisan’s GDP growth rate plummeted to just 2.3% in
2008-2009 growth, and 4.1% in 2009-2010. During this
period, the energy crisis caused the large scale
manufaturing sector declined by 7.7%, while overall
manufacturing declined by 3.3% [7]. It must be noted
however that as GDP growth declines, the estimations
of the widening gap of supply and demand already
discussed might not materialize, however severe
shortages will probabaly remain. Infact in the next three
to four years Paksitan is likely to face major shortage of
natural gas, electricity and oil, the three major sources,
that could choke the economic growth. It is important to
note for further discussion that the biggest shortfall is
expected in the natural gas supplies [16].
Overall it can be noted that the demand-supply gap
has been increasing and is likely to increase in the
future, exerting strong pressure on the energy resources
in the Country, paticularly Natural Gas [16; 33].
2.2.1 Gas
Natural gas has emerged as the most important
fuel in the recent past and the trends indicate its
dominant share in the future energy mix as well [25].
Demand for natural gas in Pakistan increased by
roughly 10 percent annually from 2000-01 to 2007-08,
reaching around 3,200 cubic feet per day (MMCFD)
against the total production of 3,774 MMCFD. By
2008-2009, the demand for natural gas exceeded the
available supply, where the country had a production of
4,002 MMCFD gas against demand for 4,731 MMCFD,
indicating a shortfall of 729 MMCFD [29][40]. By
2009-2010, production was up by only a further 61
MMCFD to 4063 MMCFD [40]. Hagler Bailly, a global
management consulting firm warned in a 2006 study
that Pakistan is going to witness gas shortage beginning
in 2007, and the defecit will grow until it cripples the
economy by 2025, when shortage will be 11,092
MMCFD (Million standard cubic feet per day) against
total 13,259 MMCFD production i.e. demand will be
24351 [8].
There are about 2718 Compressed Natural Gas
(CNG) stations in the country and approximately 1.9
million vehicles are using CNG. Pakistan has seen an
investment of Rs 70 billion being made in the sector,
creating some 100,000 job [23]. Therefore the growth
for CNG has been massive in Pakistan. By 2009, there
were roughly 29,167 vehincles being converted to run
on CNG every month, making Pakistan the third largest
CNG consumer in the world after Argentina and Brazil,
and the biggest in Asia [20; 28], However due to a
shortage of Natural Gas, CNG stations are now required
to go on ‘forced holidays’ for a couple of days a week.
Many CNG stations have also been closed down
indefinately [41]. Even Gas powered generators for
domestic use, have been banned as well to keep demand
in check [36].
Industry too has been made to restrict gas usage to
only 3 days a week. In case a business does not comply,
its gas supply is cut off. In winters, gas supplies to
industry are cut for upto 2-3 weeks at a stretch, when
demand is highest. During the same winter period,
many residential areas, even within major urban centers
have little or no access to gas for weeks at a time [33].
2.2.2 Oil
Oil is the second biggest source of primary energy
for Pakistan, and imports about 80-82% of all its needs
[23]. The issue with oil has to do more with trade
deficits than depletion of resources. Between 2008-2009
(July-March) Petroleum products and crude oil made up
28.5% of Pakistan’s imports, totaling to about $7.4
billion and by 2009-2010, the share in imports had
increased to 29.2% or $7.3 billion [18]. Presently the
figure, according to Pakistan Bureau of Statistic is
around $12 billion [42;43]. Increased use of furnace
oil, of which Independent Power Producers (IPPs) are a
big consumer, have contributed in increasing the import
bill as well, causing import bill to more than double in
the last 10 years alone, putting huge pressure on the
economy.
The problem of expensive imported oil reached its
worst point in 2008, which coincided with the global
recession and therefore hit Pakistan hard. The 2007-
2008 Pakistan Oil bill was an all time high of $11
billion, due to record world oil prices, and the
depreciation in the rupee’s value. This put huge stress
on the trade and current account deficit, and therefore
Pakistan’s reserves. Pakistani bureaucracy rushed to
reach an agreement with the Saudi government to
provide $5.9 billion of Oil on deferred payments i.e. 6
month supply [25]. Prior to this, oil prices in Pakistan
reached unbearable levels and first signs of severe
shortage had begun to appear as the government did not
have the reserves to buy oil [29]. This incident exposed
a major flaw in Pakistan’s energy security.
2.2.3 Electricity
Electricity is another important source of energy in
Pakistan. The average share of electricity as a
percentage of the total energy consumed was about 18%
during 1998-2007]. By 2009-2010, this had reduced to
about 15.6% [40] however in absloute terms electricity
consumption grew in all economic sectors during 2004-
2009 and continued to grow between 2009-2010 as well
[40]. Currently Pakistan is facing severe electricity
crisis as the shortfall has varies between 3000 to 6000
MW [23;44].
The current energy crisis stems from the decline in
hydro sources of energy and over reliance on other
expensive sources of electricity. On top that there are
30% transmission losses due to poor quality
infrastructure and large scale power theft [24]. Another
issue is what has come to be known as circular debt.
IPPs or Independent Power Producers make up around
45% Pakistan’s electricity supply. These IPPs sell
electricity to the government, however they regularly
face delay in their payments due to the fiscal pressures
on the country and the poor financial situation of the
exchequer. Therefore many IPPs temporarliy hault
operations until payments are made [3].
The issue is also related to the problem of oil, as
furnance oil-based thermal plants supply 68% of
generating capacity, far higher than the 30% share of
hydroelectric plants [7]. Rising oil prices and the
depreciation of the rupee have led to rising generation
costs, and as IPPs saw their costs rise, many they were
forced to close down operations temporarily from time
to time as their cash inflows (government payments)
were not sufficient and timely [5]. As a result,
manufacturing costs and inflation are rising and,
Pakistani exports are becoming expensive, further
pushing pressure on the deficit ridden balance of
payments [23]. All of this has negatively impacted
economic growth.
Overall the energy sector of Pakistan is poorly
managed, service quality is low, theft of power and gas
is rampant and until recently, most utilities and oil
products were still receiving heavy subsidies, making
the industry even more inefficient [31]. Therefore, it
can see that Pakistan’s energy mix relies heavily on Oil,
Gas and electricity, all of which are creating uncertainty
for Pakistan’s energy needs. Even though average
consumption of oil is falling, its unstable price creates
havoc for Pakistan. Gas reserves too have depleted and
soon Pakistan will start importing gas from Iran to
fulfill its needs. Coming to electricity, generation is not
keeping up with demand and there is a dire need to fill
the gap as it has already had a significant negative
impact on industry. To get Pakistan out of this crisis
and prepare for the future there is an urgent need to
expand and upgrade the domestic resource base, by
exploring new sources, exploiting existing ones,
improving efficiency, undertaking conservation efforts
and diversify the energy mix through alternative energy
[16; 7]. One of such alternative energy solution is
Biomass, which seems very promising for Pakistan.
3 POTENTIAL FOR BIOMASS:
There are several alternative energy solutions being
implemented throughout the world. Efforts range from
capturing wind power though wind turbines, Solar
energy using PV cells and even capturing kinetic energy
of tidal waves in the oceans to produce what is known
as Tidal Power. Biomass is one such solution which, at
first glance, shows promise and potential within
Pakistan. However to look at the significance and
potential of Biomass as an alternate energy of fuel it is
important to get insights into exactly what it really is.
3.1 What is Biomass?
Biomass essentially is organic matter i.e. plants,
that can be used as renewable energy. The energy
comes from stored sun light through photosynthesis,
known as Bio energy. Unlike Fossil fuels, which have
been created through millions of years of heat and
pressure, Biomass comes from fresh sources that can be
repeatedly grown with relative ease [21]. However,
most Biomass fuels recycle agriculture byproducts. This
can be from, cow dung [biogas] and agricultural
residues [bio diesel or ethanol] or non agriculture
byproducts such as fuel wood from forests. On the other
hand while traditional biomass, relies on such things as
directly incineration firewood or cow dung, sources that
have serious implications for health and emissions [33];
they are still prevalent in developing countries, where
2.4-2.5 billion people still rely on it (mainly for
cooking), a number that is set to increase to 2.7 billion
by the year 2030. Already in the South Asia region, 70-
80% individuals rely in some way on traditional
Biomass. In Pakistan 19% of Biomass energy is sourced
from, cow dung, 22% from crop residue and 60% from
fuel wood [10].
As the source of Biomass is basically agriculture
(and forestry), there is immense potential for Biomass
within Pakistan, which is largely an agricultural based
economy
3.2 Bio energy Potential of Pakistan
Agriculture accounts for 21.6% of the GDP and
employees 43% of the total workforce and is hence the
largest employer while 62% of the population already
lives in the rural areas, where agriculture is the main
source of income [45].
Of the Total area of 79.61 million hectares of the
country, 27% is cultivated while only 8% is forest [12].
The ratio of cultivated land to population is 0.16 ha per
person. Of the cropped area, Food grains are grown on
56%, cash crops on 17%, pulses on 7%, oilseeds on 3%,
fruits on 2%, vegetables and condiments on 1% each,
and other crops, including fodder, on 13%. Most of the
17.2 million hectares of cultivated area is irrigated and
70% of the water is supplied by canals, i.e. the Indus
Basin irrigation system, the largest continuous
irrigation system in the world.Only 30% of water comes
from wells. Traditionally, monsoons in July and August
and conventional winter rains in January and February
have been a source of irrigation as well.
It must be noted that Maize and Sugar Cane, are
both major sources of Bio-ethanol, and are among the
top 5 major crops of the country [7]. Looking at
livestock (as a source of animal waste) while the
contribution of the crop sector declined from 65 percent
of the total agricultural activity in 1990-91 to just 43.9
percent in 2009-2010, the share of livestock has risen
from 30 percent to 53.2 percent over this period, or
11.4% of the total GDP, therefore becoming the biggest
contributor to agriculture [7; 8]. This is derived from an
estimated livestock population of 30.8 millon
Buffaloes, 34.3 million cattle, 59.9 million goats , sheep
27.8 and 610 milion chickens [7], averaging close to 2-
5 cattle per household [22;21]. The estates for making
biogas from these sources varies between 57488
million m³ [4] to around 858,000 million m³ per day
[11], cattle size estimates, and the amount of biogas that
can be produced,
However, even though it looks as if Pakistan is all
set to embrace Biomass, it must be remembered that
the country is currently under severe ‘Water Stress’,
and is likely to become a water scarce nation perhaps as
soon as 2010 [28;27]. The issue has been related to
Pakistan’s mismanagement of water resources as well
as what is allegedly regarded as India’s illegal
construction of dams to collect water for itself, which is
against the Indus Water Treaty. Water scarcity will not
only have a devastating impact on crops, where already
there is a ‘water schedule’ in place to distribute the
limited amount of water to fields at particular times
only [18], it will also likely have an impact on livestock
as well. Already water shortage is leading to the
emergence of ‘waste lands’ that have caused a shortage
of fodder for livestock, a situation that will only worsen
in the future if nothing is done [1].
In any case, noting the potential for Bio liquid fuels
and Biogas, it seemed logical to attempt business
ventures in these fields. However, even though there
were apparent opportunities and advantages to enter the
bio fuels market, many unforeseen hindrances were
noted during the business planning process.
4 HINDRANCES TO BIOENERGY VENTURES
Keeping the premise that commercialization of
Biomass solutions could create a private industry for
Small and Medium sized enterpises through
demonstration effects of a profitable model, two
businesses were planned. The intention was to get better
insights into the commercial opportunities presented by
Biomass based businesses and how they can be used to
resolve the energy crisis.
4.1 Biogas
Biogas has several advantages for communities.
Apart from the health benefits of using dung in such a
manner, it not only saves time and money, but the left
over manure from the Biogas plant can be a used as an
even better fertilizer than traditional dung [28;35].
4.1.1 Commercializing Biogas Plants
A simple and cheap fixed dome Biogas plant, was
to be constructed for each home in a village on the
outskirts of Lahore. The location was selected due to
the low levels of penetration by non profit groups such
as SNV and government programmes such as the
Pakistan Domestic Biogas Programme, that support the
establshment of Biogas plants [46]. It was planned that
a household with 4 Buffaloes (a little above national
average for a rural home) would be selected and taught
how to use the plant, in terms of loading, cleaning and
maintenance. Although it was possibel that villagers
would be skeptical in the beginning, particularly
because of the intial cost of the plant, it was assumed
they would agree to use it once the benefits are
understood. However, several unexpected factors were
uncovered that created massive hindrances to the
growth of the idea on a general and massive scale.
4.1.1.1 Micro level Hindrances:
As is with any new idea, there would have been alot
of suspicion, skepticism and resistance to the idea of
using Biogas. However apart from that the real issue
was the intial price. Initial cost of a BioGas plant for a
family was estimated to be around Rs50,000-Rs75,000,
which is very high for a villager in Pakistan . Although
rebates and subsidies of Rs7,500 and over Rs 17,000
respectively are available from the government [6;46],
they are just too small to be of much help. Usually
simply getting access to these rebates and subsidies
requires going through considerable red tape. The cost
of the system would have increased further when it was
realized that the household would need to change their
cooking utensils and stoves to work with the new
supply of energy.
Even if the villagers had accepted to install BioGas
plants, only 4 buffaloes, already an above average
number of animals than in a typical village household,
would not have been enough to support a large family
of six. It must also be remembred that the buffaloes in
villages are usually themselves mal-nutritioned. The
uncertainty of supply was therefore an issue and so even
if the plant was installed, it probably would not have
functioned as a convincing alternate to traditional
methods.
These insights shed light on why not a business
based on biogas plant installation was unlikely to be a
profitable venture and why other small and medium
sized private sector companies would have wanted to
initiate Biogas businesses. It is still a relatively new
product and there is not much awareness among
consumers about its long term financial and health
benefits, making the market too uncertain and
immature. Apart from issues with resistance to change
and uncertainty of supply, the biggest challenge remains
the initial price, which is very high for the average
villager.
4.1.1.2 Macro- level hindrances
Biogas, although subsidized, has not bee pushed out
to the masses the way it should have been. The biggest
promoter and installer of Biogas systems in Pakistan is
still SNV, a Dutch non-profit initiative [28] which
works heavily with the government’s Rural Support
Programmes Network [46] an intiative which is too
small to create massive change. Even though there have
been past claims by the government to promote the
concept, not much has been done and villagers still use
cow dung and other traditional fuels. Therefore
government‘s unwillingness to support the propagation
of the idea seems to be the biggest hindrance to the
growth of Biogas usage.
There are also social issues, such as resistance to
change. Athough discussed earlier at a micro level, at a
macro level too, a large population would not only have
to change the way they heat themselves, their homes or
cook their food, but even change the cooking utensils
they use, feeding habits of their animals and cultivating
and fertilizing their land, in order to adapt to the new
system. It is therefore likely to take some time to catch
on with the masses. Another problem however is that
there are no formal distribution networks for those who
do not have enough of their own manure, which is
likely for villagers with smaller cattle holdings. This
would require heavy government action, and support
from private for and non profit organizations, all of
which have been non-existen..
4.1.2 Commercializing Bio-ethanol fuel:
Petrol or gasoline, although decreased in
significance in recent years, is still a major fuel for the
transport industry [40] and therefore it was natural to go
for a Bio-ethanol plant with a capacity of annual
production of 1 milion gallons, with the support from
American consultants. Sweet Sorghum was chosen as
the feedstock for several reasons. It can give 2-3 crop
rotations a year and unlike maize, or sugar cane, is not a
major food source. Fuel grade ethanol was initially to
be marketed directly to domestic car owners and
businesses to reduce their cost of fuel by making their
own E-10 or E-20 ethanol mixtures. However, even
before the business begun there were several limitations
that stopped its inception.
4.1.2.1 Micro Level hindrances
A major problem was the availability of Sweet
Sorghum. It is usually not sown on a large, commercial
scale anywhere in Pakistan, as it is not used as cattle
fodder or as a human food source. Due to little market
value there is just not enough supply for a medium
scale business of the sort. Maize and Sugar Cane could
have been used, but due to the exploitative nature of
food distributors in Pakistan, and the reputation of
Biofuel businesses to increase food prices [47], it was
not attempted.
Another problem was the continuous power
shortages in the city of Lahore, where the plant was to
be based. At the time of planning, 12-14 hours of power
outages were common, while the system being
employed needed to be in continuous operation, as it
did not re-start well. Employing a generator using diesel
or an ethanol mixture itself, was not found to be
feasible either.
This brings us to the issue of financial feasibility.
Although cost savings were identified when used with
petrol (an E-10 to E-20 mixture was envisioned), the
margin was not large, and slight changes in petrol,
power or feedstock prices could have offset any price or
cost advantage of the fuel. At the time government had
already pointed to increasing electcity bills, which
would have further decreased the financial feasiblity of
the whole plant. If a power generator was to be used, it
was impossible to sell the product on a ‘price’ basis,
due to higher costs. Ethanol based fuels were never
going to sell on the fact that they were ‘eco friendly’
and ‘renewable’ in a price conscious market like
Pakistan in any case. Overall the system was too
expensive (fixed and running costs) for it to be a viable
business, unless subsidies were available, but there
were none.

4.2.1.2 Macro level hindrances
Government support had been promised since
General Musharraf was in power, however even though
a policy was drafted, it was never implemented.
Therefore government delay in taking action can be
noted as a major hindrance to the promotion and
adoption of Biomass.
A major, and perhaps the biggest hindrance to the
development of Bio-ethanol is the market price of
crops. Sugarcane and Maize, are still the best
contenders for making Biofuels as they are grown on a
massive scale that can be used as feedstock. However
even slight shortages in supply can cause the prices to
rise exuberantly. In Pakistan, this is due to the illegal
cartels who control food distribution and supply and
regularly exploit rumours of slight shortages for which
Bioethanol and Biofuels can be a catalyst as they have
been for food prices around the world [47]. This could
have a devastating impact on inflation and the quality of
life for the common man. Moreover, slight changes in
prices can also impact productions costs and hence
viability and profitability of businesses unless long term
contracts could be negotiated with suppliers.
A major hindrance is also the issue of creating and
setting up a distribution network. No Small or Medium
business can expand on ethanol based fuels by
themselves and therefore distribution agreements with
powerful ‘Oil Marketing Companies’ (OMC) is
necessary. Approaching a massive OMC is not an easy
task and creating a market through direct marketing will
be a slow process that can take a long time, if ever, to
reach the masses. This issue was was to be resolved in a
government draft, which was planned years ago but is
still at the preliminary stage of its implementation [6;
24]. However the energy crisis itself also feeds into the
problem of large scale manufacturing (which includes
producing ethanol), which has been declining since a
couple of years, due to ever increasing costs of
production [7] and were discussed earlier while looking
at the financial feaisblit of the proposed ethanol plant.
A major hindrance, to the adoption of both Biogas
and Bio-ethanol that was identified was the
unwillingness or the half hearted support of the
government to such efforts in terms of passing
legislation, enforcing laws and providing subsidies [5].
Another problem is the fact that the political system is
highly corrupt and non transparent, which means
usually funds are not acounted for. Another issue is that
usually official policies change with successive
governments [32] and unless there is deep involvement
of foreigners and the private for and nonprofit sectors,
such policies are unlikely to sustain over a longer
period.
5 RECOMMENDATIONS
It is apparent that there are no quick solutions to the
problem of energy in Pakistan, however many
possibilities exist to create a successful future.
For the mass promotion and acceptance of biomass,
it is imperative that the private and public sector work
together. Neither the public, nor the private sector alone
has the will and the resources to create a sustainable
biomass industry on their own. This includes federal
and local governments and agencies, businesses and
industry associations, universities, supra national
agencies such as Asian Development or World Bank as
well as not for profit organizations.
Universities could train personnel, undertake
research, disseminate information and overall develop
the necessary human resource, banks can help fund
projects, and of course entrepreneurs could organize all
these resources and networks to make it happen. The
public sector on the other hand would need to promote
the industry by controlling market prices and overall
supply of feedstock, especially food items and manure.
It would also play a major role by disseminating
information among rural areas where the private sector
does not have sufficient networks, and also provide help
in providing funds and subsidies to these projects. Other
stake holders and international agencies such as USAID
and the World Bank can also be involved for providing
funding and expertise. However the major role will still
be of the government which would have to bring all
stake holders together. Red tape would have to be
reduced, the transfer of funds would have to be made
transparent and fair, and ensure that there is total
commitment to resolving the issue of energy shortage,
for the long term.
5.1 Possible Biogas Public-private partnership for
households
A possible business model for a private-public
partnership could be based on Community Biogas
plants, which at one point was to be attempted on a
large scale by the government [19]. The federal
government could help acquire and direct funds from
local governments to subsidize community plants,
which will help involve the whole community rather
than a household and therefore reduce resistance to
change and lower costs. Knowledge and expertise
would be brought in by the private sector, which will
also monitor progress, conduct R&D and improve the
design. The private sector will also be responsible for
establishing a constant supply of raw material by
providing sufficient quantities of manure when not
available. They can also provide after sales service for
which they can charge a minimal price and also help
install standardized kitchen utensils. An area could be
identified by the government, which can then work on it
together with private vendors, or, it can be the other
way around as well. The government can identify what
vendors to work with based on experience, expertise
and finance. This approach is similar to the partnership
between the private plastics firm ‘Sintex’ and the Indian
government, which have been working together for the
development of rural biogas [15]. An excellent
initiative by the Punjab government has been the [46],
which has brought toogether companies and NGOs to
share expertise and finance and build Biogas plants;
however it is not being attempted as a profit seeking
venture and includes no partners from the business
community.
The biggest role would be played by the
government however, which will have to pass new
legislation that would make Biogas compulsory and
eventually ban the use of traditional manure
incineration. This will require strict policing of the new
local laws. It is possible that the government’s Gas
distribution company, the Sui Southern or Northern
Pipelines, could help spread awareness and educate
villagers about the benefits of Biogas, as it is directly
responsible for the distribution of natural gas.
Consultants can also be hired in order to learn from
expertise of the ones who have been successful at
Biogas deployments. Working with non-profit
organizations such as SNV, which has had immense
success in Asia, will be necessary. The Indian
Government, which has deployed community biogas
plants on a large scale, and has had public-private
partnership program in place since a couple of years,
can also be asked for support [15].
However a major hindrance to such a system would
be the issue of availability of suitable land. Even though
it might be leased from a private landholder, or
provided by the government, it would definitely slow
the process as land ownership can be a serious issue in
the rural area. A short term disruption of availability of
fertilizer in a community may also arise until slurry can
be used. A long term disadvantage of such a system
is that it can eventually lead to a higher market price of
manure, which is widely used as fertilizer. Another
problem in the long run could be animals that are
acutely malnourished, as they might be fed to produce
manure rather than quality meat and milk, however this
might already be the case, as manure can be used as
fertilizer or sold in the market.
Of course such a system is for domestic use of bio
gas only, and Natural gas for transportation will require
a different model than this, characterized by a
distribution channel that connects the rural and urban
areas of the country. On the other hand, gas for industry
too will require a different model. Large scale systems
might be more efficient in the case of industries and can
be more useful in the development of a Bio Mass
industry than small and medium business ventures. An
excellent recent example of an industrial venture into
the use of Biomass can be that of Nishat mills,
Pakistan’s largest textile company, which is using
municipal waste and other Biomass sources to generate
up to 70% of its electricity in one of their factories [49]
and the parent company’s (Nishat Group) cement plant
has also started heavily relying on rice husk among
other sources of Biomass. Although these examples are
not regarding the use of Bio Gas specifically, they
provide an excellent examples of private and
independent intiaives and business models in the
Biomass sector by large, financially strong business
conglomerates can be a source of developing expertise
and examplery intitiatives that others can then emulate
and follow [50].
5.2 Possible ethanol fuel Public-private partnership for
use in transport
The cost of producing ethanol fuel is still high,
therefore the best way to produce it would be to take the
path the government has been trying to attempt for a
couple of years. Pakistan has a massive sugar refining
industry that uses sugar cane to make refined sugar.
Many of these are already producing ethanol, and they
are most likely to already have the existing scale,
financial strength, and the cost base, to produce ethanol
in large quantities, on their existing sugar mills [9]. The
government would have to work with these Sugar Mill
owners and give them incentives to start producing fuel
grade ethanol from Sugar cane. One of the incentives
that can be given to these Sugar Mill owners would be a
fixed price of ethanol, independent of market price. On
top of that, simply finding a steady buyer would be a
great incentive as well, as it would help reduce overall
risk and uncertainty. The role of foreign private and
public sector would be to support in terms of expertise,
technology transfers and of course, bringing in funds.
The help of experts from Brazil and the US, which are
by far leaders in terms of technology and prevalence of
Bio-ethanol, will be necessary. Work has already begun
on such a business model, however it is currently at the
testing stage and only the government owned ‘Pakistan
State Oil’ sells it at a discounted than normal petrol. It
is currently being minimally supplied in the south of the
country in selected outlets and although planned, it is
still not available throughout the country at massive
scale in the past 2 years as only approx 5067 TOE are
being used and has only recently begun to be recorded
by government statiscs [40]. There has also been
increased talk of Brazil sharing technology and
knowhow on the issue, although progress on this is yet
to be made [48].
It must be remembered that this model needs to be
further expanded to include all Major Oil Marketing
Companies and perhaps also encourage mill owners to
use multiple feed stocks, such as Maize or Sweet
Sorghum as well, rather than just sugar cane, in order
ease the supply pressures that will be put on sugar cane.
Therefore the most important role of the
government would be to control the prices of Sugar
Cane and Sugar Cane products, and therefore prices in
the market, which would be highly open to exploitation
by distributors to produce artificial shortages in such a
condition. Hence it is apparent that the possible
setbacks of this model is that if it is not implemented
correctly with proper policing, sugar supplies can fall
(genuinely and artificially) as resources are diverted to
making ethanol, ultimately resulting in high prices (and
rising imports) of Sugar (or any other crop). Ideally, a
non food source should be used as feedstock; however
that will require heavy investments of time and effort
before a complete industry can be established, as such
crops usually have little market value and therefore are
short in supply to begin with. It must be kept in mind
thought that this whole model would require the scale
of the business to increase. As discussed regarding
Biogas, unlike Small and Medium businesses, such
large commercial ventures initiatives and work more
efficiency as well as impact as they could be backed by
powerful business houses with better finances and
management skills.
At the end, it must be remembered that the problems
of an inattentive and negligent governance, corruption
and misappropriation of funds is something that is
likely to continue in the current political and
bureaucratic culture in Pakistan. It is a long term
challenge and needs to be solved for any real progress,
in any field. Already Pakistan’s current energy policy is
not being implemented; an example can be the much
delayed Iran-Pakistan gas pipeline which has gone
through delays partly due to negligence of the
government as well as complex geo political hurdles.
[5]. Also Pakistan dwells in a fragile political system
that is both corrupt and uncertain. Usually, policies are
not retained or sustained over longer periods and
successive governments. Stakeholders such as the IMF,
or Asian Development Bank, whose help would be
needed in acquiring fund and expertise, could become
tools of accountability. Also involvement of other stake
holders such as universities, domestic and foreign
private and public sector companies and nonprofit
organization, could help keep accountability, and also
make sure that policies transcend governments.
6 CONSLUSION
Even though the crisis Pakistan faces is severe, if the
intenrational community works with the private and
public sector organizations in Pakistan, in a ‘war like
urgency’, not only can the problem be solved, but
Pakistan will be able able to become an economy with a
broad energy mix and heavy reliance on bioenergy.
Therefore becoming self sufficient to a very large
extent, and in the process developing new technologies,
develping new businesses and a vibrant bioenergy
industry, as well as generating continuous economic
growth and prosperity.

The energy crisis in Pakistan is deep and worsening.

By 2030, energy supply and demand gap is expected to
increase to over 140.9 MTOE i.e. 64% of the total
supply [16]. Due to Pakistan’s large agriculture base,
Biomass is one of the alternative energy solutions that
can help ease this crisis. However it cannot be done by
the private or public sectors alone, and would require
help of all kinds from foreign governments, agencies
(e.g. The World Bank or USAID), technology
companies, nonprofit organizations (such as SNV),
universities and consultancies, in order acquire the
expertise and the funds to make it all happen.
It must be remembered though that there are serious
long term issues that need to be overcome for any real
progress. One such issues is that of water stress that
Pakistan is under. Water could soon be scarce in
Pakistan, which can have a significant negative impact
on the economy in general and the agriculture sector,
including crops and livestock, in particular (1; 28; 30).
Overall, Pakistan’s culture of corruption [51] and
the inability to implement and sustain policies with
changing governments is another major issue. This can
be overcome by involving as many stakeholders as
possible, including international agencies, foreign and
domestic private companies, therefore helping put
pressure on successive governments to continue
legislation and government initiatives.
However, Bio Energy alone cannot solve Pakistan
problems. With all the issues arising from Biomass, and
other sources of energy, it is imperative Pakistan
utilizes its immense Hydro, and Wind power potentials
as well as well as other potential mega projects in non
renewable energy sources that are being considered that
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