Pep Final Pep

8/2/2019 Pep Final Pep

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PAKISTAN ECONOMIC POLICYPOWER CRISIS

Presented by: Hashim Mamsa

Misha Rizwan

Syed Usamah Ahmed


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Situation Overview Energy is the key determinant of economic development and prosperity of

society

The growth prospects of the economy in 2010-11 were constrained by the

availability of energy.

Dependency on the imported oil that put substantial burdens on the economy

The growth of consumers stood at 4.3 percent as it reached 20.1 million

consumers as compared to 19.3 million

Electricity consumption increasing rapidly

Only 65 to 70 percent of the 172 million population has access to electricity.

The demand of electric power could exceed supply by about 6000 MW


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The Current Power Consumption Mix

Encourage attainment of optimal energy mix through fuel substitution by:

promoting energy efficiency

renewable energy

interregional co-operation


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Out of 20,681 MW, the hydro production is

6,555 MW and the thermal production is

14,126 MW

Plagued with inter-corporate circular debt

which constricted growth in the power sector Various organizations in the energy sector had Rs.258.5 billion

1/10 of Pakistans total annual budget

PSO, OGDCL, KESC, PPL, PARCO, PEPCO, SSGCL


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Capacity not sufficient to meet demand

3.07% increase in electricity generation per annum

Set off by 7-8% growth in demand per annum

The demand might increase to 19,245 MW to 20,785 MW by year 2011; 22,448 MW in 2012;

60,000+ by 2020;

while by year 2030, the expected demand on the system would

be more than 75000MW

Potential to generate total 40,000 MW from Hydroresources but due to insufficient exploitation; country isable to extract only 6500 MW from this resource


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Govt. role in Power crisis Iran and

Chinas proposal to Pakistan


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Effects

Low production

Agriculture Sector- not able to export financial and

economic loss Industrial sector being destroyed unemployment

Textile industry capacity reduced

Inflation effecting fixed income group

Oil imports draining foreign reserves and encourage

taking loans fiscal deficit


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To cover for high prices of oil prices ofelectricity increased

Creation of circular debt

Increase in basic necessity leading to increase

in prices of goods & services cost pushinflation

Social effects


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Thar Coal Project

Initial project

1300 MW in 36 months

Increase by 1300 MW each year

Coal resources estimated at over 185 billion tones, including 175 billion tones,

identified at Thar coal fields

Exploited only 3300 metric tons for power generation

Distribution and lease of coalfields for extraction and establishing power plants

400 MW coal based power plant to China National Chemical Engineering Group Corporation

Cougar Energy UK has been allocated Block-III establishment of a 400 MW power plant

Bin Daen Group of UAE has been allocated Block-IV for developing coal mine and installing 1000

MW power plant

Oracle Coalfield Plc. UK has been allocated Block-VI for developing a coal mine and installing

power plant of 300 MW extendable up to 1000 MW


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Unutilized Resources of coal why?

Lack of infrastructure

Lack of foreign investment

Increase in water consumption

Petroleum lobby

Critique Thar coal too moist

High pollution


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CNG Crisis

Start of 2012 was marked by strikes against the

Government by the CNG association due to:

i) Increase in CNG prices

ii) Ban on provision of CNG to transport vehicles


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Governments encouragement of use of LNG and

LPG is a conspiracy against CNG business.

Government claims unavailability of gas while

the Chairman of All Pakistan CNG association

stated there is sufficient gas.

2500 cubic meters gas required for uninterrupted

supply Nov 30 2639 cubic meters of gas

Dec 30 2823 cubic meters of gas


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Government giving the impression that there is ashortage of gas in the country

Fertilizer sector been exempted from tax whileCNG sector pays 46% tax but still not gettingsupply regularly

Government restricting the usage of CNG andforce to convert to LPG which is more expensivethan petrol

CNG sector uses 7.8% of gas in the SNGPL systemwhere as 42% of gas goes to the industrial unit.


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Inflation Crisis The increase in the energy prices have led to an

increase in inflation in Pakistan

The high prices of fuel and electricity combined have

created long-term cost push inflation

Increased prices affected various income groups

Petrol prices increased to Rs. 97.66

CNG price increased to Rs. 70.15 in sindh zone


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The increase in prices of petrol is due to crude oilprices increase globally - $ 105.43

Oil price increase has lead to the increase in the perunit cost of electricity

The rise in CNG prices as claimed by the governmentis due to:

gas shortage

increase in the consumption of CNG

Standard of living effected leading to increase inprices of other commodities


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Causes of Power Crisis Economic & Political instability

Government has undertaken projects which have not proved to beneficial

IPP program in 1990 turned out to be counter productive

Dumping of WAPDA development program in 1980

Barring WAPDA from thermal generation in 1990

Binning of the state engineering corporation plan to indigenize power plants in1990s

Persistent shelving of the Kalabagh dam

Approval of RPPs in Zardaris government was not beneficial to pakistan


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Siltation process Usable storage capacity of Tarbela Reservoir being reduced

from 9.68 million acre feet to 6.77

Siltation is increasing due to rampant deforestation in

catchments of the river Indus

Aging Equipment

Power losses due to faulty distribution system Transmission and distribution losses increased by 0.2% in July toMar 2010-2011 period

Power purchase decreased due to unavailability of DHA cogen80 MW power station

Hydro power capacity has remained static at 6555 MWover the past 10 years

The controversy regarding the construction of Kalabagh

dam


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Alternative Energy Sources


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Coal- is it effective in the long run?

Thar coal has a fixed carbon content of less

than 22 % and has to be converted into

electricity onsite

Strip mining requires abundant water

Contaminate water supply

Technology like underground coal gasification

the solution?


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Better options: Wind

Energy

Conversion of wind energy into a useful form of energy using:wind turbines to make electricity,

wind mills for mechanical power,

wind pumps for water pumping and drainage

Wind power as an alternative to fossil fuels

AEDB is currently facilitating 21 projects having the capacity of

50 MW each Pakistan Economic Survey 2010-11

Incentives to IPPs like tariff determination announced byNEPRA


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Wind energy - continued

The cost of equipment is high as the demand

is increasing

In the long run Pakistan can enter into

technology transfer agreements with foreign

manufacturers to domestically produce it


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Nuclear Energy

Safe, economical andenvironmental friendly

Enhances security of electricity

supply

Currently PAEC is successfullyoperating three nuclear power

plants. KANUPP

CHASNUPP I

CHASNUPP II


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Nuclear Energy- Continued

Government has mandated PAEC for installationof 8800 MWe Nuclear Power capacities by 2030

Pakistan planned to purchase two nuclear power

plants from China


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Natural Gas- exploration and import

Government has announced incentives like

security guarantee and better prices to

international gas exploration companies Pak

Defense

In terms of gas import

IPI gas pipeline

TAPI gas pipeline


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Solar energy

Advantages manifold over the disadvantages

Solar energy can be used for industry dependent

on steam generation by oil and gas fired boilers

Pakistan has a solar potential of 5-6 KWH/m/day

off irradiation in most areas

AEDB plans to provide electricity to 400 villages

using solar home systems


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Solar Energy- continued

Street lights and billboards

can be taken off from the

grid by converting the loads

to solar

AEDB involved in a pilot

study with the World Bank

to study replacement of

conventional water heaters

with solar ones


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Bio Diesel

Biodegradable and non toxic

Can be blended with standard diesel and used invehicles

Government has given a target of replacement 5% of

the total petroleum diesel consumption with biodiesel by 2015

PSO provided with a Production Plant of Bio diesel


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Solutions andRecommendations


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Initiate the building of the Kalabagh dam

Complete the construction of the Bhasha dam

Government taking initiatives for paying off circulardebt

De-silting to prolong the life of Tarbela Dam

Monitoring and taking action to minimize power theftsand non payment of bills

Attracting FDIs to in est in the


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Attracting FDIs to invest in the

power sector

Repairing the grid stations and

employing means to recover line

losses

The use of alternate energy sources

can reduce inflation caused as a

result of inflation

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