Prioritized Items for Improvement of Pakistan

Report
Pakistan
Energy Crisis:
An Overview
Contents

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
The Power sector was restructured in 1998 with the
creation of PEPCO (Pakistan Electric
Power
Company)…



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:
NATIONAL
TRANSMISSION
& DESPATCH
COMPANY
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.
Agricultur
al 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 Generation Statistics…
Thermal Power
Power
Producer
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
KESC
KESC
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
IPP
Installed
Power Station
Capacity
Thermal Power Station, Muzaffargarh
1350 MW
Thermal Power Station, Guddu
1655 MW
Thermal Power Station, Jamshoro
850 MW
Thermal Power Station, Larkana
150 MW
Thermal Power Station, Quetta
35 MW
Thermal Power Station, Pasni
17 MW
Thermal Power Station, Korangi
316 MW
Thermal Power Station, Bin Qasim
1260 MW
Hub Power Project
1292 MW
AES Lalpir Ltd, Mahmood Kot
362 MW
Muzaffargar
AES Pak Gen, Mahmood Kot
365 MW
Muzaffargar
Altern Energy Ltd, Attock
29 MW
Fauji Kabirwala Power Company,
157 MW
Khanewal
Gul Ahmad Energy Ltd, Korangi
136 MW
Habibullah Coastal Power Limited
140 MW
Japan Power Generation, Lahore
120 MW
Kohenoor Energy Limited, Lahore
131 MW
Liberty Power Limited, Ghotki
232 MW
Rousch Power, Khanewal
412 MW
Saba Power Company, Sheikhupura
114 MW
Southern Electric Power Company
110 MW
Limited, Raiwind
Tapal Energy Limited, Karachi
126 MW
Uch Power Limited, Dera Murad Jamali, 586 MW
Nasirabad
Attock Gen Limited, Morgah Rawalpindi 165 MW
Atlas Power, Sheikhupura
225 MW
Engro Energy Limited, Karachi —– MW
Kot Addu Power Company Limited
1638 MW
(Privatized)
Saif Power Plant Qadirabad, Sahiwal
225 MW
Sitara Energy
80 MW
Nishat Chunian Power
200 MW
Nishat Power Limited
200 MW
Hydro Power
Power
Producer
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
WAPDA
Future
Projects
Power Station
Tarbela
Mangla
Ghazi – Barotha
Warsak
Chashma
Dargai
Rasul
Shadi-Waal
Nandi pur
Kurram Garhi
Renala
Chitral
Jagran (AK)
Khankhwar
AllaiKhwar
Kalabagh
Bhasha
Bunji
Dasu
Nuclear Power
Installed
Capacity
3478 MW
1000 MW
1450 MW
243 MW
184 MW
20 MW
22 MW
18 MW
14 MW
4 MW
1 MW
1 MW
30 MW
72 MW
121 MW
3800MW
4600mw
5400MW
3800MW
WAPDA
WAPDA
WAPDA
WAPDA
KESC
KESC
Power Station
KANUPP
CHASNUPP
CHASNUPP
KHUSHAB
Steam Power
WAPDA
Steam Power Station,
Faisalabad
132 MW
Wind Power
FFC Energy Jhimpir
6 MW
Solar Power
Gas Turbine Power Station, 59 MW
Shahdra
Gas Turbine Power Station, 244 MW
Faisalabad
Gas Power Station, Multan 195 MW
Gas Turbine Power Station,
Kotri
Gas Turbine Power Station,
Panjgur
Gas Turbine Power Station,
Korangi
Gas Turbine Power Station,
SITE
Installed
Capacity
137 MW
300 MW
300 MW
50 MW
Building of solar power plants is underway in Kashmir,
Punjab, Sindh and Balochistan.
Gas
WAPDA
Power
Producer
PAEC
PAEC
PAEC
PAEC
174 MW
39 MW
80 MW
100 MW
Source: PPIB, Ministry of Water &
Power, Alternate Energy
development board
Due to rising demand, power infrastructure
issues, and poor governance severe electricity
shortages have ensued …


ROOTS OF PAKISTAN’S
ENERGY CRISIS

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;







Historic Demand and Supply situation in Pakistan
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
Source: http://en.wikipedia.org/wiki/Energy_policy_of_Pakistan
The Cause and Impacts of power sector circular debt in Pakistan – Planning Commission/USAID
ICCI Electricity Report
A NEW ENERGY MIX FOR PAKISTAN-EMR Consult
Crisis having direct impact on




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
One of the foremost reasons for Pakistan’s Energy crises
is the Circular Debt Issue that needs immediate
remedies…
Primary Causes
2010
(Billion Rs.)
2011
(Billion Rs.)
2012
(Billion Rs.)
Reserve Debt (start of year)
235.65
365.66
537.53
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
Non-Collection of DICSOs Receivables from:
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





Share of Increase in Circular
Debt - FY2011-12




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
Source: PEPCO DISCOs Performance Stats Report
2012, Data from MoWP , USAID PDP Analysis
Distribution companies are facing line losses due to multiple
reasons, but electricity theft and non-payments by the consumers
are burning issues…
Pakistan lost Rs. 90 billion
during the last five years
in electricity theft and
line losses
DISCOS (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
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.
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.
Source: http://freepdfdb.com/pdf/country-report-on-energy-security-amp-power-crisis-68585068.html
ICCI Electricity Report
The News, Daily times, Nation
Pakistan is one of the emerging economies of South Asia, where the
government has declared the Power Sector as its top priority of
investment…
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
requirements on an urgent basis regularly which could be transmitted through Punjab.
Iran
100 MW import project have been finalized and are ready
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.
its
energy
for groundbreaking. Pakistan and Iran would
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.

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.
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 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/USAID
ICCI Electricity Report
USAID
Prioritized Items for Improvement of Pakistan Energy
Crises
The current energy crises in Pakistan warrants
immediate measures for resolution, some
recommendations for improvement are…










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
Source: An Overview of Pakistan Energy Sector Report by Islamabad Chamber of Commerce & Industry
(ICCI), The News
New Government
Plans
"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 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...
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
xiv.
xv.
xvi.
Creation of a Ministry of Energy and Natural Resources through the merger of
Ministries of Water and Power and Petroleum and Natural Resources
Reforms of National Electric Power Regulatory Authority (NEPRA)
Reforms of Distribution Companies (DISCOS)
Reforms of Generating Companies (GENCOs)
Permanent elimination of circular debt
Rationalization of energy tariffs in line with international prices across all fuels.
Reforms of Oil and Gas Regulatory Authority (OGRA)
Aggressive wellhead pricing for Oil and Gas exploration companies in order to
substantially increase production of oil and gas
High priority to import gas through pipelines
Expeditious setting up of coal and LNG import terminals, and coal
transportation facilities
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
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
Developing alternative renewable energy sources, such as solar, wind,
bagasse, biogas, and biomass projects, especially for off-grid and micro-grid
applications.
Setting up national energy efficiency standards.
Introducing solar-thermal water heaters for domestic and industrial use.
Decentralizing and creating a wholesale market for electricity.
Source: http://pkpolitics.com/2013/05/16/pmln-energy-policy/
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.
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