Energy Issues in Pakistan

 Introduction
A specter is haunting Pakistan – the specter of power crisis. According to the Ministry of
Finance, the energy crisis is the largest single drain on Pakistan’s economy, shaving off up to 2
percentage points from annual gross domestic product growth in the country.
 Tracing the Origin of the Crisis
While 2007 is considered the starting point of the ongoing energy crisis, the issue has its roots in
policy decisions taken two decades ago. In 1994, when only 40% of the population had access to
electricity, Pakistan was facing power shortages of about 2,000 MW during peak load times
(Pakistan, 1994). The government of the day assessed that the average annual increase in power
demand would be about 8% in the short to medium term, and generation capacity of the order
of 960-1,300 MW would have to be added to the system annually from the mid-1990s onwards
to meet the demands of a growing economy. The scale of investment required was deemed to
be well beyond what the public sector could muster.
A power policy was thus issued in 1994 that offered an attractive package of incentives to
foreign investors, including a tariff ceiling that resulted in returns on investment of 15-18%, a
minimum required equity investment of just 20%, and a host of fiscal and security incentives (for
details, see Pakistan, 1994). More importantly, the policy effectively transformed the fuel mix
for energy generation in the country. In the 1980s a little over 60% of Pakistan’s power was
generated from hydropower. The 1994 power policy, on the other hand, was designed to
encourage the quick installation of thermal power plants, the bulk of which were fuel oil based.
The government of the time considered this strategy to be the optimal one, not only because of
the relative ease with which thermal power plants could be added to the generation mix
compared to hydropower resources, which would take much longer, but also because key
proposed hydropower projects, for which feasibility studies had been prepared, were
controversial for political reasons.2 By 2013, however, the proportion of power generation from
hydro and nuclear sources was about 36%, while the proportion of generation from furnace oil-
fired sources was almost equal at 35% (EAW, 2013: Table 14.6). Gas-fired plants accounted for
29% of power generation, while coal-fired plants accounted for a minuscule 0.1% of generation.
Thus, in less than two decades the fuel mix for power generation underwent a significant
transformation.
 Causes of Energy Crisis in Pakistan from 2008-2015
1. Flawed and ad hoc policies of successive governments
2. High dependence on imported fuel
3. Failure to exploit national resources
4. Cost-recovery difference
5. Outdated infrastructure
 Energy Projects installed under CPEC
 Under CPEC’s “Early Harvest” scheme, energy projects are slated to provide around 10,400
MW of electricity in the coming years – around $30 billion has been earmarked for these
projects. The “Early Harvest” scheme highlights coal as an essential fuel source, with coal
providing most of the country’s new electricity. In the Punjab province, a massive $1.8 billion
coal power plant (3,200 MW) under CPEC is now fully functional. Furthermore, three huge
coal-based projects are expected to be built in the Sindh province – which also produces
around 63% of the country’s gas – and a 660 MW one to be built in the Balochistan province.
It is estimated that in 2018 the energy crisis will subside or at least significantly improve as
Pakistani and Chinese officials see most of the “Early Harvest” projects being completed
before 2019. Due to the power crisis, Pakistan has also been focusing on LNG imports, which
began in 2015 to fill the power deficit. Pakistan’s LNG demand has been rising as LNG imports
have doubled to $965 million in the current fiscal year from the previous year.
Under CPEC, a major gas pipeline that will stretch for 711 km from Gwadar to Nawabshah in
Sindh, connecting to the main south-north gas trunk line, is currently under construction by a
Chinese company. Under the same project, an LNG re-gasification terminal will also be
constructed at Gwadar seaport. This pipeline project is supposed to be an alternative to the
Iran-Pakistan gas pipeline. Vis-a-vis oil, the province of Khyber-Pakhtunkhwa (KPK) is
presently the largest producer in Pakistan – it produces above 50% of national output. KPK
also produces 510 tons of LPG every day and 40 million cubic feet of gas. Under CPEC, a Euro-
VI crude oil refinery will be established in Kohat district of KPK, which will process local and
imported crude oil into LPG, kerosene, motor oils, diesel, and other products. The refinery will
produce around 15,000 barrels per day (BPD) and is estimated to cost $300 million.
Not only is CPEC focusing on coal, oil, and gas, it is also diversifying into alternative energy
such as wind and solar power. Pakistan aims to generate 25% of its electrical demands by
renewable sources by 2030. The second phase of the Quaid-E-Azam Solar Park near
Bahawalpur (900 MW capacity) will be completed under CPEC’s umbrella by the company
Zonergy.
Vis-à-vis wind energy, one of the main projects includes the creation of Dawood wind farm (50
MW) which is in its culminating stages. Linking Gwadar’s warm water deep-sea port to
Western China is daunting yet not impossible as Pakistan and China already enjoy trade and
tourism through the Karakoram Highway, which stretches from Punjab in Pakistan to Kashgar
in China. Under CPEC, new roads from Gwadar will connect to a revamped Karakoram
Highway to Kashgar.
Initially, CPEC may have seemed like an overly ambitious plan being implemented in an erratic
country, but due to the recent idyllic period Pakistan has enjoyed, many CPEC projects have
come to fruition & will soon pay dividends. This encouraging period can be attributed to the
2015 Zarb-E-Azb operation which has curtailed Pakistan’s other great nemesis, terrorism, to a
major degree. The relatively sparse amount of terrorist attacks around the country recently
has augmented Chinese confidence and is attracting other international investors.
 Impacts of energy crisis on Pakistan (Economy, Industry etc)
1. Circular debt: massive blow to economy
 2. Economic meltdown
3. Massive blackouts
4. Low exports
5. Industries retreat
 Solutions for energy crisis (Dams, etc)
1. Diversifying energy supplies
2. Privatizing energy companies
3. Pakistan should exploit its unharnessed hydrocarbon energy resources
4. It must capitalize its renewable energy resources
5. Pakistan can harness energy from its sugar mills

 Alternate renewable energy resources potential in Pakistan (wind, solar, hydel)

1. Solar Potential
According to the World Bank, utilizing just 0.071 percent of the country’s area for solar
photovoltaic (solar PV) power generation would meet Pakistan’s current electricity demand.
From the results, it was concluded that covering 100 km2 area of land with PV panels can
produce energy equivalent to 30 million tons of oil equivalent (MTOE) in Pakistan.
2. Wind Energy Potential
Pakistan has several well-known wind corridors and average wind speeds of 7.87 m/s in 10
percent of its windiest areas including Jhampir.
3. Biomass
Biomass is typically derived from plants, animals, and agricultural wastes. It has been in used for
various applications such as cooking, heat, fuel, and electricity in rural areas. Pakistan is an
agricultural country where most of its population (around 70 %) lives in remote areas. Hence, the
availability of biomass is very extensive particularly from agriculture and livestock sources,
including crop residues and waste from animals. These wastes amount to 50,000 tons day−1 of
solid waste, 225,000 tons day−1 of agricultural residue, and approximately 1 million tons day−1 of
manure. Currently, Pakistan has more than 5000 installed biogas plants to meet its domestic fuel
needs. These plants are efficiently producing up to 2.5 million m3 of biogas annually together
with 4 million kg year−1 of bio-fertilizer.
4. Hydro
5. Tidal Energy
There are many other new energy resources that could benefit Pakistan, such as ocean energy,
including marine current power, osmotic power (from salinity gradients), ocean thermal energy,
oceanogenic power (from surface waves), wave energy, and tidal power.
However, Pakistan has yet to move in this direction, despite having various strategic locations
with high tidal current velocities or strong ocean currents along its 990km coastline. According
to a study conducted by the National Institute of Oceanography, creek network in the Indus
deltaic region, extending over 70km along the Arabian Sea, can alone generate 900MW tidal
power.
 International Energy projects of Pakistan and their benefits (IP gas pipeline, TAPI, CASA 1000)
Pakistan
1. IP gas pipeline
  Introduction
Also called a peace pipeline, the length of the pipeline is 2775km to supply gas to
Pakistan from Iran. Under which Pakistan was reportedly supposed to receive as many
as 750MMCF of natural gas from Iran daily through an agreement, but due to the
imposition of sanction on Iran by US, this project could not see the light of day.
 Benefits
I. Cheap electricity generation
II. Pakistan can overcome gas shortages
III. Pakistan can supply gas to other countries thereby earning revenue.
 Conclusion
2. TAPI
 Introduction
The Turkmenistan–Afghanistan–Pakistan–India Pipeline (TAPI), also known as Trans-
Afghanistan Pipeline, is a natural gas pipeline being developed by the Galkynysh – TAPI
Pipeline Company Limited with participation of the Asian Development Bank. The
pipeline will transport natural gas from the Galkynysh Gas
Field in Turkmenistan through Afghanistan into Pakistan and then to India.
[4]
Construction on the project started in Turkmenistan on 13 December 2015, work on
the Afghan section began in February 2018, and work on the Pakistani section was
planned to commence in December 2018.
 Benefits
 Conclusion
3. CASA 1000

 Conclusion