Pakistan should look for all alternatives to increase its electrical energy production by 10,000 MW in two years. This is a very challenging and difficult task. But if it fails to achieve the target, all other indicators will go negative leaving behind a disastrous situation. Pakistan’s Energy Crisis
Energy is assuming central stage due to the rapid economic growth in different parts of the world, pushing energy demand higher. Unfortunately Pakistan is facing major energy crisis nowadays. The energy crisis is affecting all walks of life in the country. The situation further deteriorated because of the stoppage of the supply to industrial units by Sui Gas Company. The Company was already going through a system of load-shedding itself due to excessive use of gas by CNG users. Many electricity generation units were shut off due to non-availability of the gas. The IPPs who were operating on furnace oil could not get the regular supply of the furnace oil due to the circular debt issue. And then naturally the blame game started, starting from the water shortage in Dams to furnace oil transportation problem, violence in Sind and maintenance activity in some independent power producers. The government admitted that in last 10 years not a single MW was added. The fact is that Pakistan is sustaining an acute shortage of Power. Its demand is increasing and production is declining due to aging of the plants. And no solution is in sight. The projects which are in pipeline will not come in line before 2013. And even the magnitude is such that it will not be able to fulfill the demand of today.
The Term Paper on Oil and Natural Gas: Its Effects to America and the Global Economy
Oil and natural gas have a very important role in the lives of almost all people in the world. These have been the primary source of energy that fuels the technological civilization that exists at the present. Its importance could be seen in the everyday lives of most individuals. The moment someone wakes up in the morning and read the newspaper up to the time that same person would sleep in the ...
The energy solution was in building of the big dams but this became controversial issue due to the Kala Bagh dam. Nobody took any step to resolve either Kala Bagh issue or start some new dam. The WAPDA is still in favour of large dams considering that the delay in construction of large dams was the basic reason for the shortage of power. But the construction of big dam will take at least 10 years and we cannot wait that long. If this situation persists, our economy will then come to a stage where it will need any power at any rate. Even today both businesses and households are spending huge sums on the import of power generators and their fuel. The funds spent on these imports are putting enormous drain on the economy. Although larger industries can put more money in the electricity generation, the real problem is with the small and medium enterprises which are facing the real crunch. The SMEs sector has to be facilitated due to its importance as engine of growth in the economy. In the present situation, it cannot afford its own electricity generation.
Expensive import-based, oil-run power generation is not the answer. These have already increased Pakistan’s fuel import bill. Moreover, uncertainty prevailing in the oil producing region is adversely affecting the oil prices which are showing a steady rise in the last few years. A decade ago oil was being traded on $20 and nobody ever thought that the price will cross the $147 mark in a short span of time. There is some drop in the price but oil is still being traded around $90 today. This is putting huge burden on economies of the developing world including Pakistan. The country is facing another problem. Its power generating infrastructure especially thermal units are aging with every passing day and their power generation capacity is reducing. The acute shortage has increased agony of the nation through load-shedding. The economy of the country was on the path of economic recovery but the shortage has further delayed it. The energy shortage is causing at least 3-4 percent loss in the GDP.
The Term Paper on Energy crisis
The gasoline shortages of World War II brought a resurgence of horse-and-wagon delivery. Government actions like tax hikes, nationalisation of energy companies and regulation of the energy sector shift supply and demand of energy away from its economic equilibrium. Market failure is possible when monopoly manipulation of markets occurs. A crisis can develop due to industrial actions like union ...
The shortage along with global financial crisis, war on terror and floods has pushed back the economy into low growth path. The delay in the decision of building big dams has resulted in high cost of electricity generation by imported oil. “An official energy demand forecast indicates that the demand for natural gas, which makes up about 50% of Pakistan’s energy consumption, would increase by 44% to 39 MTOE from 27 MTOE currently.” The crisis is worsened with the shortage of natural gas. Many industrial units are either shutting down their operations or running on their own energy generation. This situation is seriously affecting our competitiveness in the international market. The energy crisis is going to worsen in the coming years due to an increase in the demand and a rather slow improvement in the supply.
The power shortage, during the current year is likely to hit 5000 MW during the peak hours and the situation is not going to improve unless some long-run corrective measures are taken immediately. It is anticipated that the overall energy requirement of Pakistan will be about 100 million tons of oil equivalents (MTOE) in 2015. The development of water resources would resolve the problem in the long run but in the short term, there was a limit to constructing costly thermal power projects given their high economic costs. A major shortfall is already there in natural gas supplies, as an official energy demand forecast indicates that the demand for natural gas, which makes up about 50% of Pakistan’s energy consumption, would increase by 44%, i.e. 39 MTOE from 27 MTOE currently.
The issue of energy shortage is not going to go away in a short span of time because of the non-seriousness of the government on the construction of big dams. Currently we are adopting various short-term solutions but this is not the answer to the issue. There were certain assessments that the power shortage issue would be resolved in a short span of time but this was not materialized and we further went into crisis. The picture looks gloomier when the increase in demand over the next five years is taken into account with no investment made in building of big dams. There will be an expected short-fall up to 50% because of increase in demand of natural gas. Pakistan’s total energy requirement is expected to increase by 48% in the coming years. The energy sector in Pakistan comprises 50.4% share of gas, followed by 29% of oil, 11% of hydro electricity and 7.6% of coal. As a consequence, the country has to import energy to cater the needs of the economy. The power sector is particularly in crisis because of inefficiency, mismanagement and dependence on imported oil. According to the Pakistan Energy Year Book 2000-10, the energy generation through oil is 38%, gas 29%, Hydal 29% and others 3%.
The Essay on Energy Current Source Power
As we move towards the future we are beginning to realize that many of the processes that we use in our everyday lives are becoming outdated and harmful not only to us, but also to the environment that we live in. We are looking to make changes in our lives to help not only ourselves but our future generation, thus I believe that we must now start taking these steps. We must start to use other ...
The cost is high but recovery is low. The line losses are almost 30 percent, giving rise to the circular debt issue. Government pumps in billions of rupees but due to line losses after every three months this circular debt again starts showing up. “There should be more emphasis on renewable energy resources but conventional hydro, thermal and coal-fired power plants should be established in the short-to-medium-run.” The most important question now is what will happen if the oil prices further rise. The economy of Pakistan will be worst affected due to its small manufacturing market as compared to major emerging economies like China, India, Malaysia, Indonesia, Philippines and Bangladesh. As a simple rule, the energy cost in the manufacturing sector is at least 33% at the prevailing prices. An increase of energy cost will offset the cost structure of the production and will force the manufacturers to cut on other costs.
They either have to reduce the labour cost or other costs to remain competitive in the market. As energy is behind all the production, the cost is not going to come down. The other option is to improve the quality standards but that requires huge investment in the research and development. So by all the indications smaller economies will suffer badly, however, the major economies like China and India will benefit from this condition. The question remains, are we aware of the gravity of the situation and preparing ourselves to address the situation? Apparently there is no serious effort in evidence to solve this issue on the long term basis. This is the time that Pakistan must assess very carefully that in case of rise in oil prices, what actions it should take to conserve energy and to find the alternate source of energy.
The Essay on Energy Crissis Pakistan
Take the energy sector. Fuelled by a cocktail of US dollars and big business’s traditional soft spot for the ‘stability’ of dictatorship, economic growth went through the roof for a few heady years. Never mind that it was top-heavy and did not benefit the people. Be that as it may, rapid growth coupled with a burgeoning population was bound to increase energy use exponentially. Common sense ...
The situation demands an urgent decision. We already wasted a considerable time and could not invest in energy sector properly. Energy is a key factor for the stability and prosperity of Pakistan. We have to make a decision for the safety, stability and survival of Pakistan. We have to keep our production running otherwise unemployment will rise which will also increase street violence. This is the time to restructure our energy policy. The objective should be to utilize diversified energy resources. An environment should be created where the investments are made in energy sector. Recently Government is advocating a policy of promoting the investment in private sector. Although the response is favourable but the outcome is very slow. Now Government has to make a huge investment in energy sector. And the investment has to be in direct purchase of power plants, manufacturing main and auxiliary units. To achieve this objective, one central ministry should look after the energy issues in Pakistan.
The government had planned five major initiatives, including three gas import pipelines, the Gwadar port as energy hub and the LNG import to meet these energy requirements. But four of these measures, namely the three import pipeline projects, are uncertain at present, while concentration on energy facilities in Gwadar would chiefly depend on security situation, besides oil and gas import pipelines. “For example, if we start building 1-3 KW micro hydro, wind or solar power plants in Pakistan — sufficient to provide energy to one home — we can sell electricity to individual families direct at low installments. The cost will be recovered in the utility bills.” There should be more emphasis on renewable energy resources but conventional hydro, thermal and coal-fired power plants should be established in the short-to-medium-run. The strategy should be to explore indigenous local resources.
For example, furnace oil plants are best suited in Karachi where the port and refinery facilities are available. Gas plants to be installed in Baluchistan, Sind and KPK near to existing gas fields. KPK should explore medium, small and micro size hydro projects. Sind must use its coal reserves. Wind turbines to be installed in coastal belt, and Punjab must explore bio-gas and city waste plants. From US and Europe we should borrow and purchase the technology to manufacture various power plants in Pakistan. For example, if we start building 1-3 KW micro hydro, wind or solar power plants in Pakistan—sufficient to provide energy to one home — we can sell electricity to individual families direct at low installments. The cost will be recovered in the utility bills. The IPP and captive power plants should be allowed to import furnace oil duty-free. This way the existing power plants will again become operational.
The Term Paper on Energy Crisis in Pakistan 2
... converts the kinetic energy into mechanical and electrical energy. Being bestowed with natural resources, Pakistan is passing ... production of electricity from Furness Oil. Pakistan has to import this oil from the international ... of economy and Industrial sector. The major crop of Pakistan is Cotton, which contribute ... are dependant on Coal, Petroleum, and Gas. In this context, the Pits-Burgh ...
The efforts should be made to implement Iran-Pakistan gas pipeline project on urgent basis. Moreover, one additional pipeline for crude oil to be installed to reduce our dependence on sea route. Pakistan is in need of energy very badly and urgently. Pakistan should look for nuclear energy possibilities. Pakistan is one of seven countries in the world who has an indigenous capability to operate the nuclear power plant for the last forty years. Pakistan should look for all alternatives to increase its electrical energy production by 10,000 MW in two years. This is a very challenging and difficult task. But if it fails to achieve the target, all other indicators will go negative leaving behind a disastrous situation.
Besides generating more energy, one easy option for all energy users is to conserve energy. A dedicated campaign of energy conservation is needed to spread the awareness of energy conservation programmes. In many countries, people on voluntary basis adopted easy ways to save energy and achieved up to 20 percent savings in energy. We can study the behaviours of modern nations and can adopt the same strategies to conserve energy. Generally major energy consumers have little or no awareness of energy-saving procedures. While purchasing the machinery, very little emphasis is given on electrical or mechanical efficiency of the plant. The result is that our production units are consuming much more energy than their competitors resulting in high cost of their products and it is not competitive in international market. Energy conservation is indeed energy production. So if an investment is made in this sector, it will pay back in 3-5 years. This is the responsibility of Government to start various energy conservation programmes suited for various industries.
The Term Paper on Energy Crisis in Pakistan – Essay 2
... current requirement reaching 361MTOE. Pakistan’s energy requirements are fulfilled with more than 80% of energy resources through imports. On the other ... residues and water spending). Hydrogen gas is currently produced at a net energy loss from natural gas, which is also experiencing declining ... 31.1 per cent, agriculture 14.3 per cent, other government sector 7.4 per cent, commercial 5.5 per cent and ...
Gas Sector: Pakistan mostly relay on indigenous natural gas which is the largest source of energy supply in Pakistan. Currently, this sector contributes 27.7 million Tonnes of Oil Equivalent {TOEs} (45.4%) in the overall energy supply of the country, followed by mainly imported oil products at 21.3 million TOEs (34.9%).
The other sources have relatively smaller contribution e.g. hydel power at 7.5 million TOEs (12.3%), coal, mainly imports, at 3.7 million TOEs (6.1%) and nuclear power at 0.8 million TOEs (1.3%).
The country has seen rapid growth in the consumption of indigenous natural gas in all sectors of the economy whether it is residential, commercial, industrial, transport or power. This is the result of liberal government policy on the price control and use of CNG. Over the past 15 years, the CNG sector has shown enormous growth in the consumption of gas. The outcome of this policy was a vast natural gas distribution and transmission network in the country. Moreover, the low gas prices provided a significant disincentive to the investment in this sector. No significant new investment came to this sector in the past 15 years. The indigenous reserves of natural gas depleted at an alarming speed.
The gas crisis is now taking its toll on the job market of the country, rendering millions of workers jobless especially in the industrial cities of Punjab. Textile is the major industry in the country employing millions of workers. Regrettably, cut in gas supply only to Faisalabad was causing one billion rupees loss daily to the economy and $3 billion annual to exporting sector. A survey shows that about 3 million workers are being affected by the gas load-shedding. The steel industry is the second largest exporting industry and provided employment to 500,000 people but now 300,000 people were unemployed after the gas crisis.
The country has to seriously try to increase gas supplies. In the past 15 years it could not increase gas supplies, either through increased domestic exploration activities or via imports of liquefied natural gas (LNG) or regional gas pipeline imports. The forecasting on the current gas policies indicate that Pakistan’s natural gas supply will sharply decline from current 4 billion cubic feet per day (bcfd) to less than 1 bcfd by 2025/26. This will result into a heavy gas/energy shortfall reaching at 8 bcfd (over 50 million TOEs) by 2025/26. The economy will face the brunt of this shortage and it will depress Pakistan’s average GDP growth rate. Moreover the possibility is that Pakistan will not be able to develop its other indigenous energy sources such as hydel power and coal by 2025/26 under current policies, and the energy import requirements of the country may grow from the present 30% to over 75% of the energy mix by 2025/26 costing over $ 50 billion per annum in foreign exchange. It has to take some measures to ensure continuing gas supplies to its residents, industry and commercial enterprises.
Because the price is an important instrument to bring efficiency in the gas usage, so government-controlled natural gas pricing which is significantly lower than pricing of alternate fuels should be readjusted to resolve the high gas demand and low supply situation. The mechanism of pricing slabs for different gas consumption levels is also not working and it has created demand distortion as well as encouraged unethical practices. The need of the time is to make the natural gas pricing be compatible with pricing of replacement fuels in different sectors (LPG, fuel oil, LNG/pipeline imports) via an enhanced gas surcharge and pricing for new natural gas supplies, both domestic and imports, be de-regulated. At the same time the price slabs be abolished, with a single natural gas price for all volumes. The other important issue of the gas sector is that this state-controlled resource is being used for political leverage, resulting in over-commit-ment of gas supply leading to natural gas shortages.
There is no check on the theft and it reached at alarming proportions. The existing gas utilities be unbundled and a single state-controlled natural gas transmission company be created for transmitting gas on an open-access basis. Natural gas distribution & marketing be privatized to multiple gas companies to provide improved business discipline and customer management. A competitive gas market be created with de-regulated prices and open-access to the gas distribution grids for third-party gas suppliers. Natural gas theft be declared a “non-bailable offence” with a high penalty. Gas price incentives for the exploration and production (E&P) in Pakistan are not attractive for major new investments to be undertaken. Security situation and uncertainty in continuity of E&P policies by successive governments are barriers for major E&P investments.
The exploration sector needs to be progressively de-regulated and, as a first step, be allowed to sell new natural gas discoveries at market-based pricing. Exploration sector be able to sell natural gas directly to consumers via open access to the gas transmission and distribution grids. Pakistan’s current credit rating of below investment grade is not conducive for long-term LNG contracts, in which the LNG suppliers require payment securities. Pakistan does not possess LNG import infrastructure and its current port conditions are inadequate for large-sized LNG vessels. Merchant LNG import terminals be set-up by the private-sector, under capacity-utilization guarantees by the government for an initial period, to enable early spot/short-term LNG imports. Import terminals needs to be opened to create a competitive LNG market. Development of ports be undertaken by the government on a fast-track basis to provide accessibility for large-sized LNG vessels.