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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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