The energy dilemma | Pakistan Today

The energy dilemma

Only a strong domestic industrial and agriculture base can ensure a strong economy of Pakistan, presently, at a critical stage in the wake of rising twin deficits — fiscal deficit and current account deficit.
The planning commission has estimated that the total investment of about $4 billion per annum is required to meet the country’s energy needs which are projected to grow at a pace of 2.0 GW per year in the next five years. According to an updated version of Pakistan Integrated Energy Model Policy Analysis Report, almost 12 GW of new capacity will be added to the system by 2015, of which over 8.0 GW is in the planning stage. The report represents a least cost development path for the Pakistan energy sector that supports the government’s projections for GDP growth.
However, the projections depend on many factors, such as the demand projections, prices assumed for fuel, cost and performance of future technology options, future characteristics of the existing and committed power plants, and demand sector end use technology choices. Growth of Pakistan economy has become a tricky business. No foreign investment can be chipped in without a reliable and affordable supply of energy. Furthermore, as the past several years of load-shedding have demonstrated; not just the economy, but the quality of life of the people of Pakistan will also at stake if the country is not able to identify a reliable roadmap for its energy future. The options are many, and major decisions need to be made by policy makers. The energy requirements would become double than present and it would cross the figures of 120 MTOE (million tonnnes of oil equivalent) in 2015, if the government plans to achieve the growth target. It may be mentioned here that Pakistan meets 80 per cent of its energy requirement through import.
On the other hand, international prices of oil have not only broken the past records, but touching new heights which are directly or indirectly affecting the black gold industry badly. Moreover, the speculators estimate that the oil prices would reach to $100 per barrel, very soon. WAPDA, for producing electricity, purchases oil at a high price and shifts the financial burden on the consumers. High electricity tariff has already imbalanced the entire economy. There is a general impression among the concerned circles that the basic reason of energy crisis is the irrational, short-term and wrong policies of the government. The government should focus to develop and promote other resources of energy like atomic energy, search, and use of natural gas, import of natural gas, solar energy, coal and wind energy, apart from oil.
Energy crisis has declined the industrial production by 50 per cent due to which the rate of unemployment has increased. Pakistan economy is under strong pressure of energy crisis. Agriculture sector has also taken the hit, impacting the farming capacity due to short supply of energy.
Meanwhile, high inflationary pressure, likely to stay at 12 per cent during current year, has shed economic growth further due to limited availability of credit to the private sector. Textile industry is expressing its inability to export inflation.
A dismal industrial growth has resulted in massive unemployment. The textile industry is pursuing the government for sustained gas supply to the Captive Power Plants. The government is unable to do so because of high demand from domestic consumers on SNGPL network. Closing down of gas-dependent mills is leaving labourers out of job on a large scale. As a result, the street crime is on the rise. Many industrialists are receiving threats of kidnap for ransom.
One way of tackling the ongoing energy crisis is permanent closure of gas-dependent Captive Power Plants (CPPs), particularly in textile industry, relatively a cheap fuel against furnace oil to generate electricity. There is a tariff difference of about Rs3 per unit between the mills with gas-dependent CPPs and the PEPCO-fed units. CPPs consume 600MMCFD gas with low efficiency, which means more wastage of precious fuel in generation of electricity. All these CPPs should be handed over to PEPCO for power generation. It should be mandatory for Pepco to ensure 24/7 smooth supply of electricity to the industry. PEPCO can also introduce special tariff for industry, a bit higher than what costs these mills on CPPs. The industry circles have only one apprehension on this arrangement that the government would not be able to ensure priority of electricity supply to industry. They are of the view that they would not only be deprived of their present share in gas, but also electricity supply. The government should act fast and legislate on this point for prudent use of gas as a fuel to produce cheap electricity and keep the industry wheel running.

The writer is President American Business Forum, Chairman and CEO NetSol Technologies, Honorary Consul of Australia for the province of Punjab, Pakistan