Energy Crisis in Pakistan by Awaam

ENERGY CRISIS IN PAKISTAN By Awaam

Website: http://www.thevision21.org/ Blog: http://awaam.wordpress.com/ Phone: 92-51-250 5030

ENERGY CRISIS IN PAKISTAN By Awaam After thoroughly suffering from the electricity shortage and being humiliated completely, reacting in a typical Pakistani way that is to analyse only after a crisis has set in rather than before, we decided to look into this matter at depth. To our utter surprise we found that while there were many articles passionately discussing various political issues around this matter, there was hardly any objective analysis in a dispassionate manner. Most crucially there is failure to understand this crisis in the broader terms of energy shortage. In this paper we shall try to define the scope of this problem, identify the reasons thereof and try to present possibilities of a comprehensive solution. Do we have the energy crisis of electricity crisis? How are both related? Is there a comprehensive solution to these problems? What is that solution/s? Life on Earth is driven by energy. Energy is more than a need. It is a fundamental requirement and energy per se is crucial to provide for adequate living such as food, water, health care, education, shelter and employment. Electricity is the most convenient form of energy available to Human beings. This energy is fundamental to human well being and prosperity. The strong correlation between the availability of electricity and the level of human social development has been known since at least 1895 with the electrification of Niagara Falls with the then new polyphase alternating current (AC) technology invented by Nikola Tesla. Therefore the energy crisis is a crisis of human development. It is indeed a matter of life and death. According to a survey done by Gilani Research Foundation nearly 53 percent of the Pakistan’s population remains without electricity far more than 8 hours daily through out the year. Due to this crisis the daily life has come to a standstill. Even more ominously the shortage is endangering the future economic and social prospects of the country, putting its very fabric under strain. What we have found in our research however, with a stunned disbelief is, that electricity shortage which is just a manifestation of wider energy crisis is hardly understood by general public and there is the general lack of public consciousness about the immediacy, severity and depth of the energy problem. For the ordinary people, electricity shortage is a calamity of enormous proportions. With their civic and economic life crippled by endemic electricity



shortage, the public still do not completely understand the reasons behind this shortage. Worse is the unjust, inhuman and immoral fact that people have to pay the exorbitant rates set by the government for whatever little electricity is available. The federal minister for water and power says “The costliest electricity is the one which is not available at all”. Well, who can know this better than the people who are actually paying for this ‘costliest electricity’, through economic and social hardship? This crisis is a manifestation and a direct result of a deeper rooted problem of institutional decay, structural malaise that afflicts the State and political narrow mindedness and short termism. All these are the consequences of the policies of the elite class and serve their interests only. The rental power plants are, for example, a quick and dirty fix. More than likely vested interests, rather than the interest of Pakistani public have been served in the way this decision has been reached and pushed. The pits is that we are now having Americans come over to sort out as basic a problem as this. It seems there is no end to the depths we will fall to. What are the consequences? Dr Khalil Ahmed of Alternate Solutions Institute has succinctly put this in the following words: ‘It is to live in a Guantanamo Bay of uncertainty’. He says ‘even if we do not resort to unruly economic, social, moral, psychological behavior, we feel depressed to the core of our deepest selves and what is more dangerous is that our trust in the system, nation and country evaporates in the air, …. transforming us, the lowly citizens of this elitist country into neurotic and psychotic beings’. The multidimensional ongoing energy crisis has been having a knock on the life of every Pakistani. Without sufficient energy the wheel can't run on roads, industry and agriculture can't sustain, hospitals and operation theaters can't function, schools and laboratories can't work and public and private sector businesses can't operate. Electricity, which is the lifeblood of modern societies, provides a wide range of services essential to everyday life, including running hospitals, schools and businesses, heating, cooling and lighting in homes and in work, preserving food commercially and at home, pumping fresh water supplies and sewage, maintaining the flow of traffic, operating communications systems, internet and information portals and providing power for a wide range of appliances. Low access to better energy services is one aspects of poverty as energy choices of poor households are influenced by the poverty. However, the deprivations caused by energy scarcity on human development are much more significant than the energy poverty itself. Such deprivations have a larger impact



on rural households in general, and women in particular. For instance, heavy use of biomass affects women's health due to indoor air pollution, and the heavy workload for managing biomass resources not only consumes maximum time and energy of women but can cause miscarriage and uterine prolapsed impacting negatively on their production and reproduction capacities. The industrial output has fallen precipitously and this too at a time when foreign exchange is more than a gold dust for us. The situation has shaken the confidence of industrialists in its day-to-day operation. The haunting situation with loadshedding and power breakdowns is leaving industry with a thin margin to stay competitive in local and international markets. There are even examples of export deadlines being missed and companies getting black-listed, thanks to the national grid.

Pasha and Gellerson (1988) and Ali (1990) calculated the loss in industrial output from factory closures due to power cuts. The former suggested that it might be 9 percent of annual industrial output. The latter puts the annual cost in lost GDP at 1 billion dollars. Using the production function approach, USAID (1988) estimated the cost of load-shedding at nearly 2 percent of GDP and a fall in manufactured exports of 4 percent.

In other words, it is not that life has come to a stand still. It has actually given way to degradation, chaos and death.

What is the origin of Crisis Pakistan electric power sector is characterised by chronic problems of low productivity, higher system losses and low financial profitability. Then there are acute shortages. Despite nearly 8% annual increase in the demand of electricity, no power plant or power generation unit has been installed for last 8-9 years in Pakistan. This, surely, is one major reason for such a short fall? But why have we come to this pass? Why no such plant has been installed? Where were the planners and people in authority? Were they not thinking? Were they not concerned? Or even why should it depends upon individuals to have to be concerned and think? Where is the institutional responsibility? Then there are technical problems and financial losses due to under pricing and subsidizing, on the ground of poverty alleviation and industrial development ,and the defaulted payments. Analysis brings for the various factors that have combined together to land Pakistan into this mess. Monopolisation: In Pakistan, the government has monopolized the generation, transmission and distribution of electricity. This monopolization has destroyed the



spirit of entrepreneurship. For example KESC’s even after privatization is a monopoly although it may have changed hands. The monopoly does not have to worry about the competition. It can therefore continue to operate with neglect and inefficiency. Since the market is guaranteed for the monopoly, it does not have to worry about its customers or their problems. It has no incentives to respond to them and their problems. And since it has no one to answer to, it works with complete impunity, responding only to the interests of an elite class and neglecting the masses. Tenenbaum et al. (1992) argue that "when the state owns, nobody owns; and when nobody owns, nobody cares". This then is the situation in Pakistan. Institutional decay: There is chronic and persistent lack of planning in Pakistan. Or alternatively there is poor planning. And as they say ‘Piss poor Planning leads to Piss Poor Performance’. Pakistan has a huge capacity for hydropower and large deposits of coal, but Pakistan been slow to exploit those resources. Why? Institutional decay and breadwon is the answer. For example in 1990s, while construction on Kalabagh was delayed, successive prime ministers, including Benazir Bhutto, did not even order the national Water and Power Development Authority to prepare feasibility studies on other dam proposals. When serious power shortages occurred in the 1990s, Bhutto embraced thermal power projects backed by foreign investors. There was talk of kickbacks in return for generous terms. The cost to Pakistani masses was heavy. Heck does any one care? But the more worrying question that no one seems to ask is that why did Bhutto or any other prime Minister had to order to prepare such reports? Is it not the job of WAPDA and Ministry for Power to be doing the planning themselves? Should they not be projecting the population growth, looking at the environment, analyzing the international energy markets, studying the developments in the energy sector? Is that not why they are there? Why should they be waiting for someone’s orders? The answer is obviously not. When they only serve the vested interests and executive jobs in these institutions are distributed at the whim of powerfuls, without any regard to the merit and on the basis of nepotism and favourtism, then why should WAPDA or any one at the MINISTRY care. And if someone does who is going to listen to them? Corruption: The ‘C’ word. There is no dearth of investors in Pakistan who have the capacity to set up and operate power plants, and no one minds making a handsome profit. And the official governmental policy gives extremely generous incentives, including no income tax and guaranteed return up to 15 %. The problem is that by the time a potential investor is through paying the bribes to the relevant ministers and his subordinates, the project feasibility has gone through the roof.



The World Bank in a report about Pakistan states: ‘In addition to technical issues, other factors impede low-cost access to power supply. A stunning 84 per cent of the firms that applied for connection had to make informal payments in order to obtain electricity services — a startling increase from the 25 per cent firms that reported making such payments in 2002.”

According to the former chairman WAPDA, engineer Shams ul Mulk, there is no electricity shortage present in the country and the present electricity crisis is the result of non-payment (of circular debt) to the IPPs. According to the Minister for Power, the total circular debt was to be paid to these IPPs by June 2009, but the government has no fiscal capacity to finance the debt at this time. It is approaching the financial institutions to wriggle out from the circular debt. According to the claims of the officials of ministry, after the debt is cleared the IPPs will function smoothly to meet the demand levels. One wonders how come government has all this money to spend on its non-developmental expenditure and fund the hordes of ministers, parliamentarians and their armies of assistants and advisers. How come the president is flying out every other day and staying in most expensive hotels around the world. But the government does not have any money to pay its internal debts. The independent power sector experts and WAPDA senior officials opine that the reactivation of the closed power units, efficient use of fuel in power projects and the accelerated work on new IPPs can easily bridge the gap between demand and supply of electricity. The official data available on the website of Pakistan Electric Power Company (PEPCO) shows that the production of electricity through the IPPs by end 2009 was projected at 15,900 MW. That does not seem to have happened. Why these IPPs remain incapable to produce at their full capacity is another big question to be answered. And after the C word now the N word. Neglected Efficiency. Neglected improvements in efficiency remain as the single largest untapped source of energy. The chronic pilferage of funds, with lack of investment into the existing structures and into the development and installation of more efficient infrastructure is another major reason for the state we are in. Obviously, with greater availability of electricity there is greater development. But, if the energy is not used wisely to boost human development it does not matter how much energy one produces. This neglect directly stems from the government monopoly. And this brings us to the factor that underlies all these problems. Political wrangling and vested interests.



Pakistan is a mess. It is controlled by a cadre of active and retired military and civil personnel in collusion with landlord Politicians. This elite class controls the country’s biggest, and most important businesses, and holds most of the political power as well. All decisions are based on what serves their interest. Political short termism rules. For example , in January 2006, the federal cabinet approved the construction of five large dams by 2016, including Kalabagh. But rather than starting with Kalabagh as expected, it decided to go for a dam upstream at Diamar-Bhasha, which hadn’t even had a feasibility report. (The other planned dams were not ready for construction either.) The reason for Diamar-Bhasha’s approval was to avoid political controversy in Sindh Province that could adversely affect the re-election prospects of the Pakistan Muslim League, the party in power, in the general elections scheduled for late 2007. What happened afterwards and how events took their own course is history. To summarise, the fundamental reasons, for the ignominious state that we are in are summarized below: 1. Leadership crisis: Lack of vision, Lack of political will, Chronic One man rule (even in the civilian set ups or so called democratic setups) 2. Elite and Rentier classes who are narrow minded and look for the short term gains. There is complete lack of care and apathy among the elites and they are not answerable to anyone. There is no level playing field for business 3. Institutional Decay: Destruction and decay of Institutions, Lack of transparency and accountability, Corruption and Lack of or Poor Planning. 4. Structural Malaise of the Society: Monopolisation, Narrow and shallow Life Values, Feudal and lordship mentality, Provincial and ethnic tensions stoked by narrow minded elite class, 5. Absence of Rule of Law; with no individual liberty, protection of property rights and no peace and security. Will this change? And how? We shall discuss this later. But before we do that we want to expand on the energy crisis and introduce new concepts on how to view it? The Shortage Conundrum



A close study into the long term pattern of electricity absence reveal several patterns of shortage ranging form full access to no access. There are on top of planned load shedding, lengthy and frequent electricity breakdowns. Therefore we observe 1. No access; 2. No availability; 3. Reduced access; 4. Reduced availability; unannounced stoppages; silent unavailability; 5. Under access (breakdowns and unplanned cuts; Planned and unplanned logistic breakdowns) 6. Weak access (weak and reduced voltage) 7. Full access 8. Full availability It is important to grasp these concepts. Because if we are to achieve 100 % provision of electricity for 100 % of the population, it will have to be on the basis of full access and full availability of full voltage, with rare planned interruptions and hardly ever any unplanned disruptions. Anything less than that is not acceptable. And you can bet your life that our politicians will be claiming plaudits on much less than that. But let us go a step further. Broadening the Scope of the Crisis--Energy or Electricity Life on Earth is driven by energy. Autotrophs (Plant world) take it from the solar radiation and heterotrophs (animal world) take it from autotrophs. Homo sapiens ( Human beings) is such a heterotroph; indeed the ability to use this energy outside the body ( extrasomatic use), enables human beings to use far more energy than any other animal that has ever evolved. The control of fire and the exploitation of fossil fuels have made it possible for Homo sapiens to release vast amounts of energy over a very short time period. One way of saying how much energy is used by people around the world is that this energy is equal to the work of approximately 300 billion men. It is as if every one of us has 50 slaves. In a technological society such as the United States, every person has more than 200 such "ghost slaves." The essence of World Energy crisis is simple: the present rate of extrasomatic energy use by humanity is unsustainable. The growth rate of population has outstripped the growth rate of energy production, and this trend continues even as both world population and world energy production increase. The continued depletion of energy resources means that the planet is running out of energy to



support its human population. This realization has led many to conclude that our highly technological extrasomatic civilization is only a very temporary phenomenon. The world energy crisis is evident from many perspectives: global warming, population growth and environmental degradation, sharply rising oil and gas prices and rapid depletion of their supplies, armed conflicts in regions with major oil deposits, higher energy costs to poor nations seeking to develop higher standards of living, and instability of world energy supplies. But there is another perspective which is more relevant to a less developed country like Pakistan, compared to all other perspectives. This is to observe the energy crisis along the Human Development Index (HDI) spectrum. Seen in the terms of HDI for the poorest nations, the crisis is one of survival; and of finding an effective method out of poverty and for this energy is essential. The Human Development concept Human Development is a development paradigm about creating an environment in which people can develop their full potential and lead productive, creative lives in accord with their needs and interests. People are the real wealth of nations. Development is thus about expanding the choices people have to lead lives that they value. And it is thus about much more than economic growth, which is only a means —if a very important one —of enlarging people’s choices. Ironically it was Pakistani Dr Mahbub ul Haq who founded the Human Development Report and this paradigm. He put this framework succinctly in the following words: "The basic purpose of development is to enlarge people's choices. In principle, these choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives." Fundamental to enlarging these choices is building human capabilities —the range of things that people can do or be in life. The most basic capabilities for human development are to lead long and healthy lives, to be knowledgeable, to have access to the resources needed for a decent standard of living and to be able to participate in the life of the community. Without these, many choices are simply not available, and many opportunities in life remain inaccessible.



In seeking these choices human development shares a common vision with human rights. The goal is human freedom. And in pursuing capabilities and realizing rights, this freedom is vital. People must be free to exercise their choices and to participate in decision-making that affects their lives. Human development and human rights are mutually reinforcing, helping to secure the well-being and dignity of all people, building self-respect and the respect of others. What is HDI? How do we measure "human development" in the sense of social and economic well-being? The HDI measures the average achievements in a country in three basic dimensions of human development: 1. A long and healthy life, as measured by life expectancy at birth. 2. Knowledge, as measured by the adult literacy rate (with two-thirds weight) and the combined primary, secondary, and tertiary gross enrolment ratio (with one-third weight). 3. A decent standard of living, as measured by gross domestic product (GDP) per capita at purchasing power parity (PPP) in USD The Human Development Index is the average of three indices: the Life Expectancy Index (LEI), the Education Index (EI) and the GDP Index (GDPI).

Where is Pakistan on HDI List ? The HDI for Pakistan is 0.551, which gives the country a rank of 136th out of 177 countries.

Table 1: Pakistan’s human development index 2005 HDI value Life expectancy

at birth (years)

Adult literacy rate (% ages 15 and older)

Combined primary, secondary and tertiary gross enrolment ratio (%)

GDP per capita (PPP US$)

135. Ghana (0.553)

122. Bolivia (64.7)

123. Timor-Leste (50.1)

157. Papua New Guinea (40.7)

126. Ghana (2,480)

136. Pakistan (0.551)

123. Pakistan (64.6)



127. Pakistan (2,370)

137. Mauritania (0.550)

124. Comoros (64.1)

125. Côte d'Ivoire (48.7)

159. Senegal (39.6)

128. Angola (2,335)

Source: Human Development Index 2005



Human poverty index

The HDI measures the average progress of a country in human development. The Human Poverty Index for developing countries (HPI-1), focuses on the proportion of people below a threshold level in the same dimensions of human development as the human development index - living a long and healthy life, having access to education, and a decent standard of living. By looking beyond income deprivation, the HPI-1 represents a multi-dimensional alternative to the $1 a day (PPP US$) poverty measure.

The HPI-1 value of 36.2 for Pakistan, ranks 77th among 108 developing countries for which the index has been calculated.

The HPI-1 measures severe deprivation in health by the proportion of people who are not expected to survive age 40. Education is measured by the adult illiteracy rate. And a decent standard of living is measured by the unweighted average of people without access to an improved water source and the proportion of children under age 5 who are underweight for their age. Table 2 shows the values for these variables for Pakistan and compares them to other countries.

Table 2: Selected indicators of human poverty for Pakistan Human Poverty Index (HPI-1) 2004

Probability of not surviving past age 40 (%) 2004

Adult illiteracy rate (%ages 15 and older) 2004

People without access to an improved water source (%)2004

Children underweight for age (% ages 0-5) 2004

1. Barbados (3.0) 1. Iceland (1.4) 1. Estonia (0.2) 1. Thailand (1) 1. Czech Republic (1)

76. Eritrea (36.0) 117. Comoros

(15.3) 148. Timor-Leste (49.9)

38. Belize (9) 120. Burkina Faso (38)

77. Pakistan (36.2)



39. Pakistan (9) 121. Pakistan (38)

78. Rwanda (36.5)

119. Bolivia (15.5)

150. Côte d'Ivoire (51.3)

40. Panama (10) 122. Ethiopia (38)

Source: Human Development Index 2005 Use of Electricity as indicator of HDI As stated before the strong correlation between the availability of electricity and the level of human social development has been known since at least 1895. Several studies for example (‘Understanding the role of energy consumption in



human development’ by Daniel M. Martinez and Ben W. Ebenhack and ‘An Introduction Linking Energy Use And Human Development’ by Manuel Garcia, Jr.) have reinforced this conclusion. These correlations suggest that tremendous gains in human development are possible for the world's poorest, with small incremental access to energy. What is the link between the availability of energy, in the form of electrical power, and the improvement to human development as measured by the United Nations? For 2002, the United Nations indicated that the electricity consumption per capita needed in order to experience a society with a medium level of human development was just over 1000 kilowatt-hours. These studies provide clear evidence that for the use of 1000 kWh, people have risen above desperate poverty to a stable if rudimentary standard of living (e.g., Columbia, Ecuador, Saint Vincent and the Grenadines, Paraguay). An electrical energy use of 2000 kWh, which is close to the world average, can power a society that is a mix of modern technological dynamism and traditional agricultural life (e.g., Brazil, Grenada, Turkey, Iran). At 3000 kWh a high level of socio-economic development is found (e.g., Barbados, Chile, Lithuania, Malaysia). At 4000 kWh development approaches the "high plateau" of HDI near 0.9 (e.g., Hungary, Poland, Libya, Kazakhstan). At 5000 kWh, we should see modern technological societies without regional gaps or minority exclusions (Greece, Malta, Slovakia, Oman). Finally at 6000 kWh, we have entered the realm of the ultimate human development of nation-states (Spain, Hong Kong) Interestingly some nations do a great deal with very little, like Cuba, which has an HDI rank of 52 out of 177 with an expenditure of only 1395 kWh/c. It is as if Cuba generates its social benefits with only 57.5% of the electrical energy one would expect. That is due to the wise choices. From the ‘sustainable development’ point of view, there are three types of improvements to be pursued: 1. Maximizing HDI at any given energy level; 2. Increasing per capita electrical availability at use level of less than 2000 kWh/c; 3.Decreasing per capita electrical use at levels of use more than 4000 kWh without loss of HDI. Chi Seng Leung, associate researcher and Peter Meisen, President, GENI have noted in their article ( How electricity consumption affects social and economic development by comparing low, medium and high human development countries) ‘ we are confident that increasing electricity consumption per capita can directly stimulate faster economic growth and indirectly achieve enhanced social development--especially for medium and low human development countries. The threshold for



moving from a low to medium human development economy appears to transition when 500kwh per capita is attained.’ Other parameters Electricity consumption per capita has a strong correlation to other social development indices ( life expectancy at birth, infant mortality rate, and maternal mortality) and especially to economic indices (such as GDP per capita). Increasing electricity consumption per capita can directly stimulate faster economic growth and indirectly achieve enhanced social development—especially for low and medium human development countries. As noted above in most cases, the threshold for moving from a low to a medium HDI economy transitions when 500kwh per capita is attained. When this minimal amount of electricity is used for pumping water, providing light, and refrigerating food and medicines, a community can significantly improve their living conditions. Electricity plays a key role in both economic and social development. The Critical Thresholds We therefore see that four minimal values can be arrived at. 1. Use of 500 Kwh of electricity per capita per year for moving out of low human development 2. Use of 1000 Kwh of electricity per capita per year for providing a stable but rudimentary level of living. This was recommended as the minimum level by UN in 2002. 3. Use of 2000 Kwh of electricity per capita per year is world average and sustains a mixed modern technological and traditional agricultural society 4. Use of 4000 Kwh or above for well developed societies. Where does Pakistan stand ? The per capita use in Pakistan is 430.183 kWh/ capita (2006 figures). Predictably we are below India and above Bangladesh and Afghanistan. Following statistics tell where we stand in relation to our neighbours. 91 China 2179 kWh 95 Iran 2160 kWh 160 India 466 kWh 165 Srilanka 348 kWh 177 Bangladesh 148 kWh 206 Afghanistan 35 kWh



Clearly as a Society we have not even achieved the first critical threshold of 500 kWh per capita per year use. No wonder that, a majority of our population does not even have stable rudimentary existence. Basic Definitions in Power and Energy Sector It is crucial to understand the basic concepts before we start defining what we need. The term Megawatt is tossed around a lot. Megawatts are basic to understanding electricity planning concepts, but what are they? The answer starts with understanding the basic definition of energy terms. Watts (W) are the yardstick for measuring power. A one hundred Watt light bulb, for example, is rated to consume one hundred Watts of power when turned on. If such a light bulb were on for four hours it would consume a total of 400 Watt-hours (Wh) of energy. Watts, therefore, measure instantaneous power while Watt-hours measure the total amount of energy consumed over a period of time. A MW is one million Watts and a kW is one thousand Watts. Both terms are commonly used in the power business when describing generation or load consumption. Many things can sustain the transfer or consumption of energy on this scale; some of these events or entities include: large electric motors, naval craft, engineering hardware, and some scientific research equipment. A large residential or commercial building may consume several megawatts in electric power and heating energy.

The productive capacity of electrical generators operated by utility companies is often measured in MW. On railways, modern high-powered electric locomotives typically have a peak power output of 5 or 6 MW. U.S. nuclear power plants have net summer capacities between about 500 and 1300 MW. Watt and Watt Hours This confusion arises because power and energy are frequently confused by the general public. Power is the rate at which energy is generated and consumed. Watt is the measurement of Power and watt hour is the measurement of the energy. For example, if a light bulb with the power of 100 Watts is turned on for one hour, the energy used is 100 Watt-Hour (W·h) or 0.1 kilowatt-hour, or 360 kJ. This same quantity of energy would light a 40-watt bulb for 2.5 hours, or a 50-watt bulb for 2 hours. A Power Station is rated in watts, but its annual energy output is in watt-hours (or kilowatt-hours or megawatt-hours). A Megawatt-hour is the amount of energy equivalent to a steady power of 1 Megawatt running for 1 hour. Therefore when we say that Pakistan has an installed capacity of 19500 MW it means the total capacity of Power plants is to produce 19500 MW of power every hour.



Energy Production in Terawatt hours: This is the way major energy production or consumption for a period is measured. The period used is often a calendar year or a financial year. A terawatt-hour is equal to a continuous energy production or consumption of approximately 114 megawatts for a period of one year. The terawatt hour (TW·h) corresponds to 1,000,000,000 kW·h or one Million Megawatt hours. It is the amount of energy that would be produced by a 1,000,000 MW generator over a period of one hour, or a 114 MW generator over a period of approximately one year working 24 hours a day for 365 days a year. Theoretically therefore 19500 MW capacity ( in Pakistan) is capable of producing 171 TWh in a year.

1 TWh = 1,000 GWh = 1,000,000 MWh = 1,000,000 000 kWh;

Some Technical aspects of Power Plant Capacity Factor: This is the ratio of what a power plant produces on average and its total or rated capability. For example a 100 MW rated wind farm has a capability of producing 100 MW during peak winds, but it will produce much less when wind speed is less. As a result over the course of a year this farm may produce only average 30 MW of power production. This means the wind farm has a 30 % capacity factor (30 MW average production divided by 100 MW rated capability) Similarly, a 1,000 MW plant may produce on average 750 MW of production over one year period. This is because the plant will shut down for maintenance from time-to-time and the plant may be operated at less than its rated capability. Therefore the plant would have a 75 % capacity factor (750 MW average divided by 1,000 MW rated capability). For renewable energy such as wind or solar, the equivalent of capacity factor is even less because they typically produce less energy than conventional generators since their "fuel source" is intermittent. Then there are common sense basic factors such as that no one generator would be considered sufficient by itself to supply. All generators must be stopped for maintenance and service. Then some types of generators, such as nuclear, wind, and solar, are not normally able to "follow" changes in load. For these reasons power systems require the use of backup generation sources and occasionally electric energy storage, such as batteries, to ensure the amount of power generated always matches the load demand, every second.



Availability factor of a power plant is the amount of time that it is able to produce electricity over a certain period, divided by the amount of the time in the period. Occasions where only partial capacity is available may or may not be deducted. Load Factor: This is calculated by dividing the average load by the peak load over a certain period of time. For example if the residential load was on average 5,000 MW over a year and the peak load was 10,000 MW, then the load factor for residential customers is 50 % (5,000 MW average divided by 10,000 MW peak). To properly plan a power system it is critical to know the peak and average demand. The power system must be designed to serve the peak load although the actual load will vary. The load might be peak at noon, but only 40 to 50 % at midnight. The capacity or load factor are used by planner to get the pattern of this variation. A 50 % load factor would indicate large variations, while a 90 % load factor would indicate little variation. Residential customers to have low load factors that is high variation, while industries will have very high load factors with minimal variation because they operate 24 hours a day, 7 days a week. Ramp up Speed: This is change of power per hour: Watts per hour (W/h) is useful to characterize this ramp-up speed of power plants. For example, a power plant that reaches a power of 1 MW from zero in 15 minutes has a ramp-up rate of 4 MW/h. Hydroelectric power plants have a very high ramp-up speed, which makes them particularly useful in peak load and emergency situations. The Present setup of Electricity market In Pakistan Electricity in Pakistan is generated, transmitted, distributed and retail supplied by the government of Pakistan. That is, it has complete monopoly over the retail and near total monopoly over production directly and complete control indirectly by controlling the private sector. This leads to corruption, nepotism, favourtism, personal gains and political short termism with not regard to planning for future. Two agencies of the government of Pakistan WAPDA - For the whole Pakistan (Except Karachi) and the KESC- For the City of Karachi and its surrounding Areas control everything. There are around 16 independent power producers that contribute significantly in electricity generation in Pakistan. In the total installed capacity, the share of public sector is around 70%, and the private sector is 30%.



Moreover, since the IPPs are using only gas turbines and combine cycle power plants, Pakistan loses the benefits of economies of scale. Such simple-cycle gas turbine plants, without a steam cycle have much lower thermal efficiency and high running cost per hour. These are sometimes installed as emergency or peaking capacity and the intention to run such units only a few hundred hours per year. Therefore, this privatisation strategy has failed to generate competitive environment needed to have an efficient electric power sector which can lead to a cheap and high quality service.

WAPDA is the largest Power utility of the country with a Customer base of over 10 Million. Since October 2007, WAPDA has been bifurcated into two distinct entities i.e. WAPDA and Pakistan Electric Power Company (PEPCO). WAPDA is responsible for water and hydropower development whereas PEPCO is vested with the responsibility of thermal power generation, transmission, distribution and billing. PEPCO has been fully empowered and is responsible for the management of all the affairs of corporatized nine Distribution Companies (DISCOs), four Generation Companies (GENCOs) and a National Transmission Dispatch Company (NTDC). These companies are working under independent Board of Directors.

Ghafoor (1998) noted that not only average labour productivity in the case of WAPDA and KESC was very low, it decreased over time in the case of KESC. Although, the growth in total factor productivity (TFP) was positive in the case of WAPDA, it was negative in the case of KESC, which gave a very low TFP growth (0.41 percent for 1960-95) for the overall power sector compared to that found in other similar studies.

The following information has been sourced from Government of Pakistan websites. Installed Capacity

Electricity - total installed capacity: 19,505 MW (2007) Electricity - Sources (2007)

o fossil fuel - 12,580 MW - 65% of total o hydro - 6,463 MW - 33% of total o nuclear - 462 MW - 2% of total

Electricity - production: 88.42 TWh (2005)

The Projected Demand Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Demand (Summer Peak)

16484 17868 19352 20874 22460 24126 25919 28029 30223 35504 34918 37907 41132

Source: Pepco official Website



For years, the matter of balancing Pakistan's supply against the demand for electricity has remained a largely unresolved matter. Pakistan faces a significant challenge in revamping its network responsible for the supply of electricity. Back in 1999, Ghafoor and Weiss noted in the Pakistan Development Review: “ The electric power sector in Pakistan is growing faster (11 percent) than the average growth rate of other developing countries (10 percent). However, the demand in Pakistan is growing even faster than the supply and therefore power shortage has become a serious problem. The problem is compounded by inefficiency of electric power sector. Moreover there is underpricing, subsidising, overstaffing and inadequate maintenance. Like many other developing countries, Pakistan has also opted for "privatisation" in the form of transfer of ownership as the first best solution. However a wide range of literature argues that such type of privatisation in the case of electric power may not lead to miracles.”

They continue by saying ‘It is noted that the privatisation of electric power sector in Pakistan, as pursued now, may not resolve the problems of this sector. It may ease short-run financial constraints but it may also create a number of long-term problems such as inappropriate planning, greater energy dependence and insecurity. It is also noted that current problems stem primarily from institutional and organisational constraints faced by public sector power enterprises. The key issue may not be a choice between public or private ownership but to determine an appropriate reform package based on either public/private or a mixed ownership structure, that encourages greater private involvement and functions well in the specific environment of Pakistan.’

How these words ring so true?

Defining the needs in Pakistan According to the government of Pakistan, presently, out of around 170 million population only 65– 70% has access to electricity. This access however must be seen in the perspective of the definitions given in the section ‘Shortage conundrum’ above. This access is almost never full for the overwhelming majority and there is chronic underacess, reduced access and reduced availability, and weak access. Despite the fact that Pakistan government says that it ‘is committed to provide electricity access to total population in the minimum possible time’, there is not even a remote possibility of this happening any time soon. To reflect this sate of affairs the following excerpt has been taken from the website of Pakistan government. We do not know how old this statement is. ‘Demand has outstripped supply of electricity; the country is currently facing power shortages of approximately 2500 – 3,000 MW. It is expected that demand will exceed supply by about 5,500 MW in the year 2010. The



present electricity demand-supply gap, coupled with consistent growth in demand (6-7% per annum), clearly indicates the fundamental need for enhancing the country’s current power generation capability’. It has been reported that even with the added capacity, Pakistan has a long way to go before its energy consumption is on par with the rest of the world. Among the six biggest countries in the world (the other five are China, India, the U.S., Indonesia, and Brazil), the average Pakistani uses just 2.5 barrels of oil equivalent per year. In India it’s 2.7, and in China, it’s 9.4. There is always opportunity in adversity, if one wants to see it and exploit that. One ‘big advantage’ of being undeveloped or underdeveloped is that one can plan and set targets, after having learnt form the mistakes made by others while they were developing themselves. Therefore the goals can be set based on ideals. Therefore we must define the needs of electricity in Pakistan based on the Human Development index requirements. Following paragraphs shall present our calculations based on the four thresholds that we defined above. This is a matter of simple multiplication. Referring back to the section ‘The critical threshold’ there were four critical requirements of 500, 1000, 2000 and 4000 kWh per year consumption. Each of these refers to a different level of development. These figures for a population 170 Million with full access with full availability, with full voltage translate into the following: a. 500 kWh energy use per capita per year requires production of 85 Million MW of electricity per year b. 1000 kWh energy use per capita per year requires 170 Million MW of electricity per year c. 2000 kWh energy use per capita per year requires 340 Million MW of electricity per year d. 4000 kWh energy use per capita per year requires 680 Million MW of electricity per year The present installed cavity in Pakistan of 19505 MW (2007) means working at full capacity of 24 hours per day for 365 days a year, theoretically, the production capacity is just above 170 Million MWh per year. This is just about what you need if we are using 1000 kWh energy per capita per year. At this level of consumption a stable but rudimentary level of living should be possible for everyone in the country. But as we have noticed above, even at the best of times the capacity factor for power production is 75 % in the developed countries. The Alternative Energy Development Board of Pakistan (AEDB) quotes figures of 40 to 80 % for



conventional plants. Let us average this out for a working figure. If we take a working figure of 66 %, the capacity factor in Pakistan is 12875 MW. However if we now factorise the following: a. The high import cost of oil and reducing availability of Gas b. Reduced availability of Hydel power due to seasonal changes c. Non payment of fees to IPPS resulting in their closure ie shutting down of 30 % of production capacity Taking above into account, it is likely that the real capacity factor for Pakistan’s total installed capacity is probably 35 to 50 %. This means the production is at best 7000 to 9500 MW (in 2007) figures. We do not have precise figures for production capacity installed in 2009 but for sake of argument at best guess 12000 MW is being produced in 2009 figures. With the summer peak demand of 17800 MW no further explanations are needed regarding the present crisis. We can arrive at these figures another way as well. The reported energy consumption in 2005 of 88TWh means actual production of nearly 10000 MW. But a closer look reveals an even more harrowing picture in practice. To start with only 65 % of population according to government sources has access. This means that one third of population is completely excluded from even the theoretical existence, never mind the practice. Let us look at some other statistics, these again from government of Pakistan to try to unravel the reality of distribution and expose the inequities and injustices built therein. The reported energy consumption in Pakistan is following:

Electricity - consumption: 74.62 TWh (2004), 88 TWh ( 2005) Electricity - exports: 0% Electricity - imports: 0% Electricity Consumption per Capita = 430.183 kWh/capita (2006)

This means that 170 Million people, using electricity at 430 kWh in 2006 figures (below the basic level of getting out of poverty) consume in all 73 TWh of energy per year. This is consistent with the statistics above ie 74 TWh, albeit 2004. However since one third of population is already excluded only 114 million are really using this energy. The consumption for these 114 Million works out at 649 kWh. This is above the 500 kWh threshold but still well below the 1000 kWh threshold. Now if one takes into account the reality of load shedding, reduced access and availability, under access and weak access, and admission of shortfall compared



to the demand by those in authority, a clearer picture of production and consumption starts emerging. Two inescapable conclusions are obvious.

1. The actual production is well below the installed capacity. One need not repeat one self for the reasons behind this fact. The reasons are none other than what we have discussed above in the section ‘origin of the crisis’.

2. More shameful conclusion is that there are clearly vast inequities in not only access and availability but also in the use of what is available. It is clear that a vast majority uses a small proportion of energy that is available to use and a small minority of elites ends up using the much bigger proportion. Consequently we have a majority that continues to exist in misery and a small minority that lives better and consumes more than even developed countries’ average.

The transmission Infrastructure and problems Electric power transmission is the bulk transfer of electrical energy, a process in the delivery of electricity to consumers. A power transmission network typically connects power plants to multiple substations near a populated area. The wiring from substations to customers is referred to as electricity distribution. The transmission infrastructure in Pakistan is old and creaking. It further suffers from relative lack of investment into its maintenance and development. World Bank reported in 1994 that system losses in the power sector of Pakistan at 24 percent in 1990, were relatively higher than in the UK and the USA. Ghafoor (1998) argues that higher system losses may be due to unreliable and old-age generation plants, low-voltage transmission and distribution lines and inappropriate location of grid stations, as well as some non-technical factors such as inaccurate metering and billing, default payments, un-metered supplies, and theft from illegal connections. However, he also noted that the average generation capacity factors for the sector are as good as for other developing countries. Therefore, shortage of electricity cannot be attributed solely to inefficient use of available installed capacity. What is Potential electricity generation? Hydel Power Potential of Pakistan

Pakistan is endowed with a hydel potential of approximately 41722 MW, most of which lies in the North West Frontier Province, Northern Areas, Azad Jammu and Kashmir and Punjab. However, an abundant hydel potential is still untapped which needs to be harnessed.



The total installed capacity of the hydropower stations in the country is about 6595 MW, out of which 3767 MW is in NWFP, 1698 MW in Punjab, 1036 MW in AJK and 93 MW in the Northern Areas. We noted above that two thirds of Pakistan’s electricity is generated by using gas and oil. As a consequence the indigenous gas is being used and there is a huge bill of import for the oil. Using the hydel power to its full potential means no fossil fuel will be used to generate electricity. The savings in foreign exchange will be massive. In addition there will be reduction on carbon emissions, which can be traded as carbon credits or even used to offset against the use of thar coal as and when needed. Renewable Energy Potential in Pakistan (Source AEDB) ‘Pakistan is blessed with abundantly available and inexhaustible Renewable Energy (RE) resources, which if tapped effectively can play a considerable role in contributing towards energy security and energy independence of the country. Given the current global energy scenario in general and Pakistan’s energy scenario in particular, the adoption and deployment of ARE technologies makes perfect sense as it inherently favours indigenous, inexhaustible energy resources which also happen to be efficient options by default. Another unique feature associated with the deployment of ARE technologies is the positive and various direct & indirect impacts it has on poverty alleviation and accruing social benefits. These technologies can be easily deployed in areas where conventional grid electricity cannot have access and entry due to technical and / or economic reasons. The investment potential for the RE sector of the country from short to medium term is over USD 16 Billion Dollars.’ Wind: 0.346Million MW Solar: 2.9 Million MW Bagasse Cogeneration: 1800 MW Waste to Power: 500 MW Mini & Small Hydel: 2,000 MW Over 30 Million hectares of land potentially available for energy plantations Biofuels AEDB has also initiated biofuels projects in Pakistan. Pilot project for production plant of biodiesel has been implemented. PSO has been successfully engaged and is producing Biodiesel on a limited scale. PSO has also set up a Jatropha Nursery and a Jatropha Model Farm at its installations in Karachi. Several other Jatropha nurseries have also been set up by the private sector. Biomass / Waste to Energy AEDB has facilitated installation of 35 MW through Biomass / Waste to Energy.



Solar Energy Map Of Pakistan

Thar Coal In 1992, the Geological Survey of Pakistan (GSP) discovered more than 185 billion tons of lignite reserves in Thar coalfield. Thar coalfield extends over 9,000 square kilometers, of which 356 square kilometers has been studied in detail by the GSP, indicating the presence of 9 billion tonnes of coal in four blocks. The main coal-bed thickness ranges from 12 to 21 meters at an average depth of 170 meters. The quality of the coal has been determined on the basis of the chemical analysis of more than 2,000 samples. The grade of the coal ranges from lignite-B to sub-bituminous-A. Half of the world’s electricity is generated from coal. New clean technologies allow for Thar coal to be sued without actually mining it. The coal can be gasified underground by pumping into coal seam, steam and compressed air, at elevated temperatures usually aided by the presence of a catalyst. The resulting gas is called Syngas. This is a combination of Carbon monoxide and Hydrogen. This gas is then recovered as it comes out from beneath the surface. This can then be used for power generation, as a fuel or further converted to natural gas and finally for the production of fertilisers and chemicals. Further this Syngas can be converted to hydrocarbons using the Fischer-Tropsch process. It is reported that it was this technology that kept Hitler's



invasion and military programme going throughout WWII, in the face of supplies from the Middle East were cut-off by the Allied navies. The technology that combines the production of electricity with oil synthesis from coal is called Integrated Gasification Combined Cycle (IGCC). There are many potential advantages to IGCC plants: they are at least 10% more efficient, they use 40% less water, produce around half as much ash and solid waste, and are almost as clean as natural gas-fired plants in terms of their environmental emissions. No less important is to use this "gasification" technology to provide feed stocks for industry and to make fertilisers for agriculture. According to Pakistan Economy Watch the coal deposits in Thar can change the fate of the country if utilized in a proper way. It can save oil import bill, reduce unemployment and help strengthen economy, rupee and FOREX stocks. For this reason Thar Coal is central to Pakistan’s energy solution. Compared to China (78% of energy from Coal), USA ( 60 % ) and India ( 53 % ) Pakistan produces 5 % of energy from Coal. Why? Because it is alleged that there four lobbies which do not want the project to be completed:

a. the importers of generators b. the importers of Oil c. the importers of coal (these three include generals, and bureaucrats as well) d. the political lobby of the supporters of Kala Bagh Dam

The News has reported only a few weeks back in August 2009 that the Thar Coal and Energy Board has approved 4 Thar coal reserves projects to generate up to 2,450 MW power, whose capacity would be increased up to 10,000 MW by year 2020 to meet the growing energy needs of the country. May be some sense has been instilled b recent crisis. Let hope this goes beyond simple announcements, since we have been here before. Electricity Generation by Industrial Sector This is not only going to serve the interest of the industry, it will also provide a massive relief for the national grid. Large-scale textile mills and a number of other industries are already producing their own electricity and thus they are not only self-sufficient but also in a position to sell surplus electricity. The industrial sector should come forward and start producing its own electricity in an attempt to reduce dependency on the unreliable and inadequate national grid. Pakistan therefore has to respond to global price trends in the energy market although the degree of profits government earns on them remains to be a



debatable issue. With in-house electricity generation, the industry will be in a slightly better position to withstand the shocks of increasing fuel prices. The News has reported that there are three main things that can be recommended to industrialists, 1. Reduce energy consumption through applying energy conservation and management measures. Energy conservation is a process of decreasing the quantity of energy used while achieving a similar level of output. It is worth noting that energy conservation is the most economical solution to energy shortages. 2. In Pakistan, the industrial sector in general incorporates considerable energy losses thus lowering the level of overall operational productivity. For example, plants and equipment lack proper calibration and maintenance, and production and assembly lines run low on productivity. The industrial sector, like all others in the country, is not aware of the financial losses being incurred as a result of these inefficient practices. Even the most modern of the industries in Pakistan do not have an internal energy auditing and monitoring policy in place which is a key to energy conservation and management. 3. Thirdly; industrialists, investors and businessmen have to take the energy sector on board as a potential area of business. It is inevitable for Pakistan in order to run its businesses safely to supplement its energy supply end with over one thousand megawatts every year. Electricity generation as Income earner and Economy engine In 2002, the electricity industry issued the following joint statement on sustainable development. ‘The electricity industry supports the aim of the World Summit on Sustainable Development 2002 to reinvigorate at the highest political levels the global commitment to sustainable development agreed upon ten years ago at the Rio Earth Summit. The electricity industry affirms a common goal of providing a reliable, affordable and environmentally responsible supply of electricity to meet the quality of life aspirations of every nation’s citizens. Electricity is uniquely qualified in meeting the goals of sustainable development: social responsibility, environmental stewardship and economic development for a growing world population. It is recognized that developing countries require faster growth in electricity production in order to meet their economic development aspirations. This makes it imperative that further electrification is based on an appropriate mix of primary energy and technologies, which are an essential part of a global strategy to



reduce greenhouse gas emissions. The electricity industry is in a position to introduce such efficient technologies and supports an increase in research and development efforts, and consequent technological innovation, as an important vector to achieve these objectives.’ Here then is an ideal business opportunity. The electricity industry is ready to invest massively in infrastructure, technology, research and development and in human resources. Let us take the example of Solar energy. German firm Siemens in a joint venture with ABB Ltd and Deutsche Bank AG is working on producing electricity from Solar Energy IN Western Sahara Desert. The project plans to use high-voltage cables to move power from sparsely populated areas of North Africa under the Mediterranean to Europe. E.ON AG “is convinced that the future belongs to solar technology in the long term,” Herve Touati, managing director of E.ON’s climate and renewables unit, said. Pakistan can be producing and exporting solar electricity to India, Far East, Central Asia, Russia, and even China. Limitations of the Private Sector

It is pertinent here to point out why it was not easy to privatize the power sector in entirety and initially. The development of the electric power sector has a prominent place in national development. However it has special characteristics like capital intensiveness, technological complexity, long project life, long gestation period and comparatively small and a spatially dispersed electricity market. It therefore did not attract private investors in its initial stages. Therefore, public ownership alone could ensure the desired level of production and distribution needed to accelerate and strengthen agricultural and industrial development.

The other factors that private investors find difficult to deal with are geographical difficulties, lack of infrastructure facilities and the development of undeveloped areas. Therefore, like many other developing countries, a monopolistic, vertically integrated, public electric power sector was developed in Pakistan. This was also favoured by the donor agencies (the World Bank and the IMF) because of its relatively large absorptive capacity and government guarantees for credit [Barnett (1992)].

State V Private argument

We have criticised the State’s monopoly above and pointed out its serious shortcomings. So we must present the alternative view. This view is that is that ownership per se is much less critical than institutional and organisational constraints faced by an enterprise.( Ghaffor and Weiss 1999).



Organisational constraints include the managerial and operational constraints for a given market structure. For instance, higher system losses may be due to inappropriate location of generation plants and the national grid station, voltage of transmission lines and age of plants. Then there are some non-technical problems such as undeveloped anti-theft laws, poor metering system, inefficient measures of security and inadequate maintenance.

Institutional constraints include government and regulatory bodies. Poor financial performance may also be due to price setting and subsidizing. Poor managerial performance may be due to lack of autonomy in investment and capacity expansion decisions. Another reason is that WAPDA and KESC have failed to recover defaulted payments from their respective defaulters.

Thus, institutional constraints coupled with organisational constraints are responsible for poor financial performance, which in turn is responsible for inadequate capacity expansion. The experience of Public owner ship shows that it may lead to political interference and centralisation, excessive size may lead to the problem of inflexibility and limited skills, poor capabilities of regulators and management may lead to lack of professionalism, and unclear objectives may lead to proliferation of bureaucratic regulations and controls on managerial freedoms. Moreover, as the power sector is not capable of financing its future investment, capacity expansion depends on government resources, which are shrinking overtime, so new sources of financing need to be found. This analysis does not necessarily support a strictly privatisation-based reform. But rather a restructuring combined with reforms and partial privatization at a gradual pace.

What are the possibilities and what can be done? In 2007 Iran news wrote the following about the electricity shortage in Pakistan. “In the wake of the looming energy crisis in Pakistan, the supply end has to be substantially increased on a war footing in order to avoid any severe consequences that such a massive shortage of energy as experienced in the recent months could damage the socio-economics and the sovereignty of the country”. The complete solution of the energy crisis is only partly a matter of physics. In fact this is the smallest part. A complete solution will mesh together many socio-economic factors, because a complete solution will have to become part of the fabric of the society being powered. It is also evident from studies that in many cases the expenditure of significant electrical energy per capita does not translate into the level of human development that could be had. This is because if there is inequitable distribution



and injudicious use the advantages that accrue are not gained. Any energy technology will affect HDI through its impacts on life expectancy, education and literacy, and gross domestic product as experienced down at the individual level (GDP/c). Directing the expenditure into the right direction and channeling it to produce the right results is the crux of this conundrum. The "right choice" depends on where Pakistan is at present on HDI-kWh spectrum. Population growth is the most fundamental factor in the increasing demand. One has also to consider how, as Pakistan progresses, it will probably change to reduce waste, pollution, greenhouse gas emission, security concerns, political strife and debilitating financial costs. Evolving to cleaner, safer, renewable and indigenous electrical energy production is an integral part of raising the national standard of living Planning Issues The discussion above brings forth two factors that are important to understand what a MW of generation capacity is worth? The first factor is how much electricity the power plant itself produces, which can be calculated by knowing the plant's rating and capacity factor. Second, the location of the plant is very important as the amount of electricity consumed in shall vary form region to region. This would be especially so if you take into account the various levels of availability and access that we have discussed above. One will also have to take into account that location of various industries throughout the country, the existing supply infrastructure at present, the projected population growth and its distribution, the urban migration projections, the increased demands if the HDI index parameters are to be fulfilled and the remoteness of certain areas of population especially in rural areas and underdeveloped areas. These considerations are crucial because this means that plants should be as close to the locations they are serving as possible since one does not want transmission losses, and large spending on infrastructure to carry this electricity. The availability of fuel that will power this plant and its accessibility to the where the plant is located then becomes another crucial factor. This in turn is joined at hip with the issue of transport, communication, human skill availability, and the energy needed itself for this transport and communication. The logical conclusion then is that the Power Ministry should



include transport fuels, renewable energy, conservation initiatives and the carbon trading mechanism. The specific socioeconomic, political and strategic circumstances of Pakistan are neither to be forgotten nor to be left to the last, when making any plans. The plan When we sit to write a plan it will have to take into account all the planning issues discussed in the preceding section. To start with the needs of Pakistan will have to be defined in terms of HDI as we have discussed above. The population growth issues and the distribution of this population will have to be known. This will form the basis of total demand and requirement. The economic growth, and development issues and what vision do we have for the future of our country and future generations; these will all determine the targets and goals that we develop. These objectives and targets then have to be set in measurable and transparent terms. Various options for generation, production, transmission and distribution and use of energy, power and electricity have to be outlined. The pros and cons of each option will have to be discussed. The tradeoff and disadvantages have to be weighed for each option. The main objectives that clearly stand out are that we have to consistently increase our Human development Index and Human Poverty index; there has to be uninterrupted and consistence of supply to the business, industrial and agricultural sectors; the cost of energy is to be lowered; there has to be energy security and finally there has to be the development of indigenous resources and saving of foreign exchange. The Measurable Targets We have developed the following measurable goals and objectives in line with the discussion above. Objective one: Equitable and just distribution and availability to every single citizen Objective two: Full access and full availability of full voltage, Objective three: Defined Figures for installed capacity and production a. 1000 kWh energy use per capita per year requires 170 TWh of electricity consumption



b. 2000 kWh energy use per capita per year requires 340 TWh of electricity consumption c. 4000 kWh energy use per capita per year requires 680 TWh of electricity consumption Remembering that the present consumption levels are at about 85 TWh, the targets above can be achieved only by producing electricity two, four and eight times the production levels at present. This means an installed capacity of 40000 MW, 80000 MW and 160000MW. However if we take a capacity factor of 50 to 65 %, then these figures should be even more than that. We therefore present the following figures as targets that are to be achieved. a. Installed capacity of 60000 MW to be able to supply 100 % of population and bring them all to a level of stable rudimentary existence b. Installed capacity of 100000 to 120000 MW to sustain a mixed modern and agricultural society c. Installed capacity of about 250000 MW to bring to the level of developed societies. This is ten times more than the present installed capacity. Working at 60 % installed capacity will produce about 1300 TWh. But this target can be achieved within next 15 to 20 years. Thereby, changing the fortunes within a generation. These targets may look big under the present circumstances, but consider that US Produces approximately 4500 TWh, China 3500TWh, Japan 1100TWh and India 800TWh, at present. Think what they may be producing in 15 to 20 years. We want to add a caveat here. We are not saying that if somehow we called in the bankers and technicians and installed this much capacity in one go, this in itself will be sufficient to make us a developed country. Nothing can be further from truth. What we are saying is that the prerequisite to enable us to install such production capacities, including political and institutional reforms, socioeconomic structural changes, economic reforms and knowledge and skill required, along with the transparency and accountability to ensure equitable and just distribution, will necessarily bring those changes that will drive development. In other words without these changes such development will simple not happen. These reforms we will discuss next. How can this be done ?



The challenges faced by Pakistan are by no means easy. It is indeed the case that the matter of reforming the electricity supply network is just not about short term and often incomplete measures of the kind that Pakistanis have been accustomed to. In fact this involves fundamental political, economic, social, judicial and institutional reforms of the kind that will change the structure and nature of nation for ever and set it on a sustainable path of progress and prosperity. Pakistan is going through what many describe as existential crisis. And almost everyone agrees that the most fundamental and significant reason underlying this crisis is the inequities and injustices that have been prevalent in the state of Pakistan. Therefore the last thing one may want is that power generation and distribution is a source of any inequities. The situation demands a collective effort on the part of all stakeholders of society, including civil society and citizens, policy and decision makers, scientists and academia, industrialists and entrepreneurs and the government. The industrial sector accounting for nearly 32 percent of the total national primary energy consumption has play a critical role in this regard. Some of the actions they can take have been discussed above. Diverse and sustainable supplies of energy are required now, and in the future, in order to sustain growth and competitive economies. Policymakers have responsibilities to develop policies and measures, and an adequate framework in a consistent and coherent way that creates the stability necessary to support the electricity industry’s operations. The electricity industry believes that “policies and measures which are consistent with liberalised and competitive markets will, in the long term, have a great chance of successfully delivering the economic, social and environmental objectives of nations” However it is important to recognise that, in introducing such policies and measures, policymakers and the electricity industry should take into account the need to ensure both security and stability of supply and protection of the environment. The technologies in isolation hardly bring changes and empower people. Unless they are integrated with other services such as credit facilities, extension services for proper use and implications of technologies, appropriate delivery mechanism. In addition unless the subsidies are made pro poor, the majority in rural areas will not be able to access such technologies. Even if we could set aside the vast funds which are necessary to finance such a turn-around, the time taken to ensure the supply of all the technical ingredients in itself makes the task formidably challenging. In the environment which prevails across the world today, even buying from international market is difficult with long



waiting lists. Indeed, Pakistani officials are all too aware of international market conditions which only add to the difficulty surrounding their task. Though sorting out global market conditions are just not in reach of one country alone, other matters are indeed within Pakistan's grasp. The social, political, economic and institutional reforms that are required to set the ball rolling have to be undertaken as a matter of urgency and as a collective 1. Decision making has to rise above the narrow party political and regional interest and all decisions must be taken in national interest in a transparent and accountable way. Political interference to serve narrow and personal interests must be stopped immediately and for good. The grievances and reservation of smaller provinces, underdeveloped regions and deprived areas must be addressed in an open and transparent manner within a national framework. 2. More importantly once such firm decisions have been made , the business, growth and wealth creation opportunities that these decisions will create, must be open to all, must be within the framework of law, transparent, accountable and provide a level playing field. These opportunities must not become a source of kick backs and commissions. There should not be any handing contracts to favourites, elites and the inefficient on the basis of favourtism, nepotism and a share in spoil for the decision makers. 3. Transparency and accountability are the key words. Without the rule of law and Justice (RLJ), there are simply, no prospect of any reform taking place or embedding into the national structure, national character and national psyche. RLJ is the absolute fundamental and the first requirement for any successful reform. Only then there will be peace and security, protection of property rights, protection of market against distortions by and the interference of those in power and elite class, assurance against corruption, nepotism and favourtism. Only RLJ can protect the institutions against the taking over by elite and rentier class.

4. Institutional and organisational reforms. Institutions and organsiations provide the mechanism of delivery for the decisions made by the representatives of the people, in the public interest. Ghafoor ( 1998) has pointed out that there are four main steps involved in the performance of a public enterprise. These are:

a. Explicitly defined goals and objectives.

b. Identifying required changes in organisational culture.



c. Identifying required changes in institutional culture.

d. Implementing the changes.

The argument that current problems stem primarily from the institutional and organisational constraints faced by public sector power enterprises has been presented above. Properly restructuring the sector, making it transparent and accountable is essential. To encourage private sector involvement the government of Pakistan under the heading ‘Why to Invest in the power sector in Pakistan’ lists the following factors among other: Strong and increasing Demand for Electricity, World-Renowned Companies Already Operating in Pakistan, Transparent Regulatory Environment, One-Window Facility and Investor-Friendly Policy, Availability of GOP’s Guarantees, Predictable Multi-Year & Long-Term Tariff,, Risk Coverage for Exchange Rate Variation, Protection against change in Duties & Taxes and Political Risks, Income Tax Exemption, Abundant Potential, Availability of Skilled Manpower and Availability of Financing

It all sounds great on paper. Now lets pause and think about it. How many private investors will look at Pakistan, find its peace and security stable, look at the circular debts owed to IPPs and believe the guarantees of GOP or what it says, or believe in the claims of transparent regulation when 84 % of deals involve commissions taking ? Hardly any, we bet.

The issue is not the ownership, either public or private, but rather to find an appropriate reform package based on either a public or private or mixed ownership structure that will function well in the specific environment of Pakistan.

5. Restructuring and de-Monopolisation of the Market : It is essential that generation, transmission and distribution functions need to be separated. Every function should have its own independent management and financial system: whether under public or private ownership, joint ventures or under contractual arrangements with the private sector whilst retaining public ownership. The transmission sector should buy electricity from the generation sector. This process will lead to transparent business relations between these sectors and management (public or private) can clearly understand the flow of financial resources from one sector to another. Moreover, it will also help in identifying where in the system as a whole there is excess labour and low productivity. In many countries it is the generation or generation and transmission, that has stayed in the Public hands with transmission and distribution or distribution alone being given into private hands. This is then cared for by



transparent and accountable regulators. In Pakistan it is reverse. The generation has been passed onto private hands who can either hold you to ransom or are treated so badly to scare any future investor away. And distribution, which is what really impacts the citizens, as customers and where the customer and provider response is crucial has been left into the hands of all powerful and inefficient public utilities. Such are the ways of this country. 6. Integrated and coordinated Planning : This in turn is joined at hip with the issue of transport, communication, human skill availability, and the energy needed itself for this transport and communication. The logical conclusion then is that the Power Ministry should include transport fuels, renewable energy, conservation initiatives and the carbon trading mechanism. 7. Investment into Human Capital to expand the skill base and all the ancillary benefits that will flow form educated and well informed citizenry. 8. Education and Efficiency As pointed out above the inefficiency and losses in transmission and distribution remains one of the main sources of increasing the provision of the electricity. In addition, public education is crucial to teach about the efficient use of electricity that is available. These include the need to turn around popular habits which hardly help to curtail the usage of electricity, with wastages and deliberate inefficiencies being the principal factors. But the lead for such an endeavour must come in part from Pakistani leaders. Simple measures such as use of energy saving products, use of solar in public utilities, use of small winds etc will go a long way towards contributing to the alleviation of the shortage. Why has It not been done by now? Simple. Lack of political will, corruption and piss poor governance Will it be done? This is billion dollar question. We do not believe the present lot of politicians and people making the governing class are even interested in alleviating this problem. In fact if anything the crippling nature of this crisis provides opportunity for rentier class to charge illegal rents and serve vested interests and distribute favours. Only a new generation of leaders born out of these sufferings may have enough commitment, focus, will and courage to implement what is needed. Is anyone listening?



References: Agha, A. (2008) Pakistan Electricity crisis – a real perspective: The Nation Available at http://www.opfblog.com/2583/pakistan-electricity-crisis-a-real-perspective/ Abbasi, A. (2009) WB paints gloomy picture of Pakistan power sector: The News Available at http://www.thenews.com.pk/top_story_detail.asp?Id=23158 Ahmad, K. (2009) Electricity crisis & Fundamental Crisis: Pakistan Observer: Available at http://pakobserver.net/200907/27/Articles03.asp Cecelski, E. (2000) The Role of Women in Sustainable Energy Development: National Renewable Energy Laboratory Available at http://www.nrel.gov/docs/fy00osti/26889.pdf CIA, (2009) The World Factbook - Rank Order - Electricity- production available at https://www.cia.gov/library/publications/the-world-factbook/rankorder/2038rank.html Energy Information Administration (2001) World Net Electricity Consumption by Region, 2001-2025 Available at Energy Information Administration [EIA], (2008) Energy profile of Pakistan: Energy and Geography Available at http://www.eoearth.org/article/Energy_profile_of_Pakistan Human Development Index (2005) United Nations Development Report (UNDP) Available at http://hdr.undp.org/en/media/HDR05_HDI1.pdf Kardar, S. (2009) Restructuring the Power Sector: The News International Available at http://www.thenews.com.pk/print1.asp?id=201843 Leung, C. S., Meisen P. (2005) How electricity consumption affects social and economic development by comparing low, medium and high human development countries, Available at http://www.geni.org/globalenergy/issues/global/qualityoflife/HDI-vs-Electricity-Consumption-2005-07-18.pdf



Qadri, M. (2009) Pakistan’s power politics: guardian.co.uk Available at http://www.guardian.co.uk/commentisfree/2009/aug/02/pakistan-power-shortages-energy Saleem, F. (2009) Cost of Rental Power: Capital suggestion: The News Available at http://www.thenews.com.pk/daily_detail.asp?id=192192

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