The crime of energy

Wednesday / Oct 28 2015

Newspaper : The News

The global energy scenario is undergoing profound changes on several accounts. First, the oil prices have dropped, making it relatively uneconomical to invest in new oil shale oil and gas explorations as long as the oil prices remain relatively low.
Second, there are significant developments taking place in solar cell technologies, and the prices of solar based installations have dropped to about half of what they were about three years ago. Third, there have been exciting developments in alternative sources of energy which promise to change the way our world will be generating energy 30 years from now. These include the development of more efficient wind turbines, use of bio fuels, generation of hydrogen as a fuel from water by catalytic cleavage of the hydrogen-oxygen bonds, and the possibility of nuclear fusion finally becoming possible after decades of frustrating research.
Pakistan has the fifth largest river system in the world, and our hydropower potential is estimated to be 46,000MW, although we have been able to exploit only about 14 percent of this potential. About 4500MW of power can be generated by the installation of low-cost hydel plants on the riverheads in Punjab.
The energy sector presents a sad state of massive and rampant corruption by those in power for the last 30 years. In 1984 about 59.3 percent of Pakistan’s electricity was produced by hydroelectric power plants. This should have been expanded – being the cheapest source of electricity. However, corrupt leaders with vested interests came in the way and decided to import expensive oil-based plants. By 1990, the share of electricity generated from hydroelectric power dropped to 45 percent, and the continued corruption subsequently has further reduced it so that it now stands at only about 29.3 percent of the total energy mix. In contrast, oil has grown to 37.8 percent and gas stands at about 30 percent.
The massive construction of dams and reservoirs was deferred repeatedly and expensive oil based power plants, often obsolete, were imported, thereby bringing the industrial sector to its knees because of the high cost of power generation. Despite having one of the largest coal reserves in the world, we ignored the use of coal for electricity production, although in India 55 percent of the energy requirements are met by coal, while in China this stands at 67 percent.
Under a highly biased power policy that was steeped in corruption, a major crime against the nation was committed in 1994 when independent power producers (IPPs) were allowed to set up operations in Pakistan. The policy was promoted by the international finance institutions that readily agreed to make loans available for these projects. Low efficiency and obsolete single cycle generation plants were established by the IPPs as they were guaranteed costs plus 15 percent profit. The IPPs were guaranteed a return on costs, however high they may be. The Rental Power Plants (RPPs) present an even more shameful story of corruption.
It has been stated that the World Bank played a negative role in leading Pakistan in the wrong direction in the energy generation sector and many have accused this organisation of joining hands with corrupt governments, eventually bringing Pakistan to its knees economically. In an article by Fahd Ali and Fatima Beg it is stated: “Declaring itself one of the government’s main advisors in power policy matters (World Bank. May 11, 2001)., the World Bank is also partly responsible for the IPP debacle”.
For example, it should have strongly advised the government to lower the offered tariff as soon as it became clear that too many IPPs were being accepted. The World Bank also admits to some of these errors (World Bank. May 11, 2001). It criticises its own preparation of PSEDP 1 and 2 and states that the long-term credit fund (LTFC) and its future were not given adequate thought. It goes on to say that the Bank should have ensured the NDFC was able to manage this fund (Dawn. July 9, 2001. ‘NDFC insolvent, says WB report’).
The Bank’s Implementation Completion Report (2001) states: “Insufficient attention was devoted during appraisal of PSEDP 2 to the affordability of private power in Pakistan”. (
A judicial investigation into this national disaster is warranted, and if the World Bank is found guilty, then the organisation should not be allowed to operate in Pakistan again. More recently it has been alleged that the sharp rise in costs in the Nandipur Power Project is also due to corruption, though this remains to be proved.
It is notable that hydel power has a relatively low production cost – it varies between Rs1.18 and Rs4 per unit. The cost of electricity production from coal is also quite low, about Rs6 to Rs7 per unit. However, with thermal power plants, the cost can vary and it can be as high as Rs25 per unit. Since these have been running well below their capacity, the cost often exceeds Rs50 per unit.
The agreements with the IPPs force the government to pay a certain amount irrespective of production. Wapda was officially forbidden from building thermal power plants so that our leaders could get huge kick-backs by opening the doors to foreign imports of obsolete and inefficient power plants – a criminal act that has doomed the nation for decades to come.
Pakistan has coal reserves that are estimated to be about 186 billion tons. The proven reserves are about 579 million tons, which should last for 180 years. The Thar coal fields can produce about 50,000MW of electricity and 100 million barrels of oil each year for the next 500 years. However, instead of properly using this huge wealth, our corrupt leaders obtained huge kick-backs and piled up billions of dollars abroad by opting for expensive imported power plants based on oil.
Today coal contributes only 0.1 percent for electricity production in Pakistan. There are also large unused gas reserves in Pakistan. The Tal Block near Kohat has estimated gas reserves that are comparable to those in Sui which need to be exploited immediately. There is also huge scope for renewable sources of energy – wind, solar, biomass, algae – that need to be exploited.
When I was the Federal Minister of Science and Technology in 2000, we had funded a project for the wind mapping of Pakistan. The data collected at different heights across the country over a two year period by the Pakistan Meteorological Department revealed an extraordinary fact: there was potential of up to 50,000 megawatts of electricity generation from wind power alone in the area in the coastal areas of Sindh and Balochistan, particularly in the region between Kati Bandar, Gharo and Hyderabad.
We should establish plants to make wind turbines within the country, as is being done in India and China, and manufacture our own wind mills in order to utilise this huge potential. Nuclear power plants are also an excellent option, though their installation has been opposed by certain vested interests in Pakistan.