By Raashid Wali Janjua
For an energy starved country such as Pakistan affordable energy assumes top priority. Unfortunately due to our lopsided national power policies and the baleful effects of politics on policy formulation we have entered a vicious cycle of power crisis. The crisis is evident from a reversal of hydel-thermal ratio in national power mix from 70:30 in 60s to its exact reverse in present times. The reliance of an oil importing country such as Pakistan on thermal power generation is a sure recipe of power policy failure. Burning furnace oil and using costly imported gas to generate electricity that fuels all economic and industrial activity in the country, is an egregious flaw our policy planners could have done without. A nation’s energy mix policy is a true barometer of its industrial solvency where in the commodity and product markets the economically priced products successfully compete for a share.
A cursory survey of the world energy scene reveals that the nations all successful industrialized economies base their power generation and energy mix on their indigenous resources that offer the best comparative advantages. In case of USA, thermal, renewable and nuclear account for 62.9 percent,17 percent, and 20 percent of its total power generation capacity. In case of India energy mix is hydel (14 percent), thermal (68 percent, 59.8 percent coal), renewable (16 percent), and nuclear (3.22 percent) and in case of China the same ratio is 19.8 percent, 62 percent, 14 percent, and 2 percent respectively. The much hullabaloo of environmental lobbies about coal in China and India ignores the convenient truth that China and India till very recently relied on 56.4 percent and 59.8 percent of coal for power generation. When India attained independence she had 508 megawatts of hydel generation through dams which has been expanded to 44594 megawatts now. Compared to above we have attained a measly 6481 megawatts figure despite a potential of 50000 megawatts.
Unfortunately due to our lopsided national power policies and the baleful effects of politics on policy formulation we have entered a vicious cycle of power crisis. The crisis is evident from a reversal of hydel-thermal ratio in national power mix from 70:30 in 60s to its exact reverse in present times. The reliance of an oil importing country such as Pakistan on thermal power generation is a sure recipe of power policy failure
The result of above has been our high cost of electricity that makes our exports uncompetitive, disincentivizing our industrialists to enhance productivity. Besides exports loss the quality of life for average citizen also goes down significantly. A useful indicator of a country’s economic growth trajectory is the ratio of installed electricity capacity vis a vis the population. Pakistan’s installed capacity ratio is 122 megawatts per million of population that is far below economies like China, South Africa, Brazil, Mexico, and India that have a capacity of 1188, 836, 649, 470, and 246 megawatts per million. One of the important indices of the national development is the per capita consumption of electricity. The consumption obviously increases if cheap and plentiful electricity is provided by the government. In Pakistan’s case the average electricity consumption per year per person is 396 kwh that is far below the figures of BRICS countries like Brazil (2455), Russia (7448), India (746), and China (4265).
What should be our national energy mix to generate affordable power in sufficient quantity for our population? Pakistan’s current energy mix stands at thermal (oil, gas, and coal) 65.5 percent, hydel, 28 percent, nuclear 3.1 percent, and Renewable Energy (Wind, Solar, and Bagasse), 3.4 percent. As indigenously available and cheap resources hydel and renewables should be our priority in national energy mix followed by indigenous Thar Coal, nuclear, and low BTU local gas fired plants. Our energy mix should ideally have hydel (50 percent), renewables (15 percent), thermal (25 percent, Oil/Gas 15 percent and coal 10 percent), and nuclear (10 percent). The above energy mix should be so planned as to be attainable in the next 15 years. The above plan should be in sync with a realistic development plan of national electricity transmission and distribution network to evacuate the generated electricity. It is no use having a tap with no pipes. Our present electricity crisis primarily is due to two main reasons highlighted above i.e skewed national energy mix based primarily on costly imported fuel and inadequate electricity evacuation capacity.
Pakistan is blessed with a goldmine of economically viable renewable energy i,e wind and solar potential of approximately 55000 megawatts. Ruefully we have so far tapped it parsimoniously developing 1185 mw of wind and 438 mw of solar energy plants. On world renewable energy map the power generation from wind as a percentage of total energy mix for countries like USA, Denmark, UK, China, Germany, India, and Spain is 11.9 percent, 45 percent, 23 percent,18 percent, 46 percent, 14 percent, and Spain 26.5 percent respectively. In Pakistan’s case the same figures come to 5.5 percent. Fauji Group of Companies were the pioneers in Pakistan that established the first commercially developed wind IPP at Jhimpir (50 mw), and Gharo (100 mw). The first tariffs awarded by the government to wind IPPs were on cost-plus basis with wind risk covered to incentivize the pioneering developers. Since those early days the government has awarded tariffs to several IPPs for wind on cost plus as well as upfront basis with IRRs within range of 15-17 percent.
However, things have unfortunately changed for the worse after the early promise due to two factors. One was the avarice of the LNG lobby that did not want the renewable revolution to take off so fast as to upstage their hefty profits and the other the poor state of the national transmission and distribution grid. In addition to above two factors another factor was the cautious approach of the regulator i.e NEPRA which wanted to keep the cost of generation through wind and solar low for the consumers. Ideally in order to encourage private sector a balance has to be struck between the profit margins of the investors and the interests of the consumers. For a nascent industry the national planners in power sector need to take into account certain impediments in the way of investors while framing policies. It is felt that the competitive bidding process for the wind, solar, and hybrid solar projects would complicate things for small and medium sized investors leaving the turf clear for big investors with deep pockets and expertise.
The sudden change of policies and slow decision making by the regulator i.e NEPRA and the government agencies like Alternative Energy Development Board, the relevant ministry and CPPGA have thwarted our renewable revolution. The cheap and indigenously available resource that nature has endowed us with is being frittered away due to policy failures. The government besides correcting its energy mix balance should seize the renewable moment in keeping with the global trends. All those projects that were in advanced stage of tariff hearings should be awarded tariff before introducing the competitive bidding policy to build investor capacity and confidence. The wind and solar projects that are in pre development stages having secured LOI should be communicated to the policy parameters of competitive bidding without wasting any further time with a clearly defined road map of 15 percent wind and solar energy projects in national energy mix within next 15 years.
The renewable energy policy and the national energy mix policy should be announced as early as possible to finish this cloying policy hiatus. We as a nation have dithered on this vital policy front for far too long; any further delay might cost us beyond our imagination.
The writer is a PhD scholar at NUST; email email@example.com