10.11.2013 Energy mismanagement
Though blessed with plentiful of resources for obtaining
energy at affordable cost, Pakistan is still finding it hard to meet the ever-growing energy needs. Why?
By Alauddin Masod
Pakistan’s energy sector is in serious crisis, cautions the World Bank. Power shortages not only hurt the country’s industrial, commercial and human needs, these are also causing an estimated annual loss of Rs450 billion (around two per cent of GDP) to its economy.
Talking of power sector’s incompetence, in its October report, the World Bank said: Twelve per cent of electricity bills, involving nearly US$1 billion (Rs105 billion), is not collected. The haunting phenomenon of circular debt would re-emerge if the underlying cause of inefficient system is not resolved. Key challenges in the power sector include: large and growing energy shortages, high energy costs and inefficiencies that prevent it from financing all of its costs. Not only there is a growing mismatch between production and demand which causes huge loss to the economy, the cost of generating energy has also risen due to changes in the supply mix. In the 1990s, energy generation was a mix of two-thirds hydro and one-third thermal. Today, the mix is only 30 per cent hydro and 70 per cent thermal.”
There cannot be two opinions that energy deficit, in particular electricity and gas load-shedding, figures high amongst major challenges haunting Pakistan, bringing to the fore the dire need to tackle this issue on a war footing. When the issue of energy shortage cropped up in late 1990s, the State minions tried to resolve it by opting for furnace oil/gas fired thermal power units because these required less time for commissioning as compared to hydro, nuclear or other sources of cheap energy.
As electricity from furnace oil is costly, continuous reliance on this source has created a host of problems, negatively impacting the national economy due to heavy drain on foreign exchange, ever-swelling circular debt and constant increase in electricity tariff, making the country’s products uncompetitive in the global market. Thus, the need for producing power through affordable sources, like coal (whether imported or indigenous), hydro, solar, wind, nuclear, bio-fuels, etc.
The nature has blessed Pakistan with plentiful of resources for obtaining energy at affordable cost but, unfortunately, we have not been able to exploit them adequately for meeting our ever-growing energy needs. Though coal, gold, copper and stone deposits were discovered decades ago, Pakistan’s mining and quarrying sector continues to depict a dismal growth due to lack of dedicated and focused approach.
Furthermore, Pakistan figures amongst those energy deficit countries which have the potential to augment their indigenous production of oil and gas, but whose energy resources remain inadequately tapped for want of commitment, planning and resources to undertake this vital task. According to experts, Pakistan has gas reserves of 32 trillion cubic feet but, till recently, these were not being fully exploited due to ill-planning and muddle-headed approach of the concerned agencies.
Presently, Pakistan is producing 87,000 barrels of oil and 3,950 million cubic feet of gas per day against the country’s daily requirement of about 450,000 barrels of oil and 5,900 million cubic feet of gas. In other words, currently, the country is facing a daily shortfall of about 360,000 barrels of oil and 1,950 million cubic feet of gas. The shortfall of gas is projected to increase to four billion cubic feet per day by 2025, if new gas fields are not discovered and added to the national network.
The authorities have not been able to make any alternate arrangements for meeting the gas shortfall. Their apathy is causing tremendous losses to the nation and the country. According to Federal Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi, Pakistan suffers a mammoth $2 billion loss every year due to its failure to import liquefied natural gas (LNG). Probably, the loss would be higher if it was calculated in terms of taxation and impact on the business due to the non-availability of gas, he added. The government is now reportedly planning to drill 110 wells, during the current fiscal year, to increase the indigenous production of gas.
With a total coal reserves at 195 billion tons, Pakistan is the sixth largest coal rich country in the world. The aggregate energy potential of Pakistan’s coal reserves is stated to be more than the combined energy potential of the resources that Saudi Arabia and Iran possess. And yet, we spend about US$ 16 billion on oil imports. The estimated value of Thar coal deposits, according to Engineering Development Board’s monthly magazine “Industrial Bulletin” (June 2008) is “$ 8 trillion and if converted into energy its value comes to $ 25 trillion. It has the potential to generate 100,000 MW of electricity for 300 years.” In addition to Thar, the country possesses some 20 billion tons of coal reserves in other regions of the country as well.
Globally, coal is providing 26 per cent primary energy and over 40 per cent electricity; while the share of gas, hydro, nuclear, oil and renewable sources is 21 per cent, 16 per cent, 13 per cent, five per cent and three per cent respectively. On the contrary, Pakistan produces 36 per cent of its electricity from oil (one of the most expensive sources), 29 per cent from gas and 29 per cent from hydro. Coal has gained special importance due to the growing concerns for energy security prompted by apprehensions about fast depletion of the known resources of energy.
Currently, South Africa is the world’s largest producer of electricity from coal, accounting for 93 per cent of its total energy requirement. Other top producers of electricity from coal include: Poland 87 per cent, China 79 per cent, Australia 78 per cent, Kazakhstan 75 per cent, India 68 per cent, USA 60 per cent, Israel 58 per cent, Greece 54 per cent, Czech Republic 51 per cent, Morocco 51 per cent and Germany 41 per cent.
Though already meeting most of its energy requirement from coal, China is now turning its vast coal reserves into barrels of oil at Erdos (Inner Mongolia) where it has set up the biggest coal-to-liquid (CTL) plant outside South Africa. This plant has the capacity to convert 3.5 million tons of coal into one million tons of oil products, like diesel, per year, for use in automobiles. The production of the plant, in other words, would be equivalent to about 20,000 barrels per day of oil. By 2020, China plans to raise its CTL capacity to 50 million tons or 286,000 barrels a day.
Developed about 100 years ago, the fuel produced through CTL technology has a shelf life of 15 years. But, it has been little used, except in Nazi Germany and the apartheid South Africa, which had difficulty in getting oil supplies. Now, apprehensions about depletion of known energy resources and rise in oil prices have revived interest of coal-rich countries in CTL technology. Realising the importance of coal in development, many countries are now switching over to coal to meet their energy requirements. Indonesia and UK are among those countries that have already set up coal-based power plants.
Though found in abundance in most parts of the world, the use of coal as an alternate source of energy in the developing countries has been downplayed by powerful lobbies who do not wish to see coal as a substitute of oil that their principals sell. Resultantly, the share of coal in the energy mix of many developing countries remains very low.
In view of the uncertainty surrounding the price of oil and the tremendous amounts of foreign exchange involved in the import of oil, the authorities need to engage in serious efforts to make optimum use of coal as an alternate source of fuel because it offers a great potential for producing electricity and diesel and thus turning the wheel of economy.
Jatropha plant, according to the Renewable and Alternative Energy Association of Pakistan (REAP), also provides a cheap solution to the energy challenges faced by the country. REAP’s Bio-Diesel Coordinator, Tauseef Iqbal, says that cultivation of Jatropha on one acre of land could produce over 2,000-2,500 litre bio-diesel besides value-added products like methane gas, glycerine and natural fertilizer. Over 100 countries, including USA, Brazil, Australia, Philippines, Thailand, Malaysia, India and China have been cultivating jatropha plant. Even some airlines, it is claimed, have conducted successful experiments of flying aeroplanes with the diesel produced from the jatropha seeds. Pakistan Agricultural Research Council and Pakistan Council for Scientific Research need to study the feasibility of adopting this plant for mass production of bio-diesel.
The writer is a freelance columnist based at Islamabad:alauddinmasood@gmail.com