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Pakistanís energy sector needs long-term sustainable policy
If we analyse the financial and economic impacts of the current years load-shedding the cost could be up in the billions. The demand for electricity is growing at an average rate of 9.5 per cent per annum over the past four years and a stagnant power supply and growing demand has created severe power shortages in the country

Coal energy: In Pakistan, coal reserve is estimated at 185 billion tons, which, according to Dr. Akram Sheikh (ex-Deputy Chairman, Planning Commission) is equivalent to at least 400 billion barrels of oil, in other words equivalent to the oil reserves of Saudi Arabia and Iran combined. According to the vice chancellor of Punjab University, Professor Dr. Mujahid Kamran, these coal reserves equal to 618 billion barrels of crude oil. At $50 per barrel this asset is worth up to $30.0 trillion and equivalent to more than 187 times of Pakistanís current GDP. By using only two per cent of these colossal reserves we can generate around 20,000mw of electricity for almost 40 years.

Coal is found in all the four provinces of Pakistan, Tharcoal being one of the biggest coal mines in the world, it would turn out to be a less expensive fuel for power generation and other process industries. To achieve a share of about 20 per cent in the energy-mix by 2030, the existing efforts to exploit coal, are not enough.

The government, as a first step, has addressed the challenges of identifying availability of coal resources to meet the energy needs of the country and reduce dependency on its fast depleting supply of natural gas and oil. Currently, the share of coal in the overall energy-mix is only 7.4 per cent while in India; the share of coal is more than 60 per cent. At present, about 53 per cent of the total coal production in the country is being utilised in the brick kilns industry and the second major coal consumption industry is cement.

Overall, energy is the single most important input for rapid socio-economic development and national prosperity. It is the basic requirement for driving the engine of growth up to the desired level. This is the reason for rapidly growing economies like China, Russia, Brazil and India are doing all it takes to increase their energy supply. With the rapid growth of Chinaís economy, its production and consumption of energy is also increasing significantly. The output of coal which is Chinaís primary source of energy was equivalent to 2.37 billion tons in 2007, while consuming 2.65 billion tons, making China the second largest energy user in the world. With the accelerated development of industrialisation and urbanisation in China, and the intensified integration of the global economy, it has assigned top priority on energy supply issues.

To meet her growing energy demand China has made a comprehensive plan to improve both energy availability and an energy-mix. Presently, coal provides 70-75 per cent of the energy in China. It plans to increase the share of alternative energy to 15 per cent and that of nuclear energy to 5 per cent in its total energy mix. The present shares in the energy mix for India are: coal 60 per cent, hydro power 20 per cent, oil and gas 11 per cent alternative 6 per cent and nuclear 3 per cent. It also aims to increase the share of nuclear and alternative energy in the overall energy mix. The country is making an all out effort to increase the share of nuclear energy to 6 per cent by 2025 and boost the capacity of other renewable sources of energy from six to ten per cent in the energy mix by 2025. It is also planning to establish coal powered-power stations with zero emissions for the long run in collaboration with some advanced countries; it presently also has a million solar installations operating in her vast rural areas.

According to some estimates, Pakistanís demand for electricity by the year 2015 will be nearly 22 per cent greater than the anticipated supply. By 2030 this energy deficit will be 64 per cent. These are threatening figures and estimations especially when Pakistan needs to jump start the economy as fast as possible. If we analyse the financial and economic impacts of the current years load-shedding the cost could be up in the billions. The demand for electricity is growing at an average rate of 9.5 per cent per annum over the past four years and a stagnant power supply and growing demand has created severe power shortages in the country, ranging between 4,000 to 5,000mw.

If adequate attention and appropriate investment is made, Pakistan can also achieve rapid progress in its energy sector, in the line of target propounded by Vision 2030. The existing lower price of crude oil in fact, provides a unique opportunity to rapidly develop Pakistanís energy sector. Crude oil price in the international markets have come down to such a low level (around $40 per barrel at present) that it can be termed as a windfall, especially for oil importing countries. A few months ago, the price curves of crude oil and refined oil were rising steeply, shaking the macro economic foundation of most non-oil producing countries including Pakistan. Looking at the POL import bills of Pakistan during FY08 and FY09, we see that in FY08 POL imports at $11.38 billion which constituted 28.5 per cent of the total imports. In FY07 the POL imports at $7.34 billion which constituted 24.0 per cent of the total imports. During July-December of the current fiscal year, the imports of POL at $5.88 billion constituted 30.7 per cent of the countryís total imports. Due to lower oil prices at present Pakistan will have to pay less during the second half of FY 09, and if this trend persists for a short-term it will give a real benefit to the country. Now, if during FY09 the import bills come down say by $2 billion from $11.4 billion in FY08, due to lower crude oil prices, this $2 billion may be termed as net saving. Pakistan may strive to invest this net savings for the rapid development of its energy sector. A sub sector-wise priority list of energy could be prepared and the net savings of $2 billion invested accordingly in addition to PSDP allocation. Fortunately, Pakistan has a number of readily exploitable energy heads and if even 50 per cent of it is utilised Pakistan could be a net exporter of energy to other neighbouring countries within a decade. Apart from accelerated development of oil, gas and hydel potential three most potential energy areas namely coal energy, nuclear energy, which is renewable energy need urgent attention,

Renewable energy: Pakistan has a huge reservoir of renewable sources of energy including biomass, wind energy, solar energy and ocean tidal power in the vast coastal areas of Sindh and Balochistan. During the fiscal year 2005-06, the government of Pakistan initiated several new projects on renewable energy. It approved a number of recommendations under the Energy Security Action Plan in 2005-06 including development of wind and solar energy to ensure that at least 5 per cent of total power generation capacity is met through these resources by 2030.

For windmills, potential areas are Karachi, Thatta Quetta, Jiwani, Hyderabad and other areas on the coastlines of Sindh and Balochistan. Two-thirds of Pakistanís 170 million populations live in its villages. For them, local-energy sources hold a great promise. Pakistanís wind power potential is estimated at 20,000 megawatts but no major break through has yet been made. On the other hand, Germany is generating 18,000 megawatts, Spain 8,000 megawatts and the United States 7,000 megawatts using their wind power. Pakistan needs to make an all-out effort to push forward its wind energy programmes. The same applies to solar power. The countyís government has also chalked out a comprehensive plan to expand nuclear power generation capacity to 8,800mw by the year 2030 and to minimise capital costs; Pakistan Atomic Energy Commission (PAEC) is planning to build multiple units on the same site. For manufacturing of nuclear fuel, the PAEC is establishing a Pakistan Nuclear Power Fuel Complex (PNPFC).

If the country is to be successful in its motivated plans for economic progress, quality of living has to be increased, followed by optional utilisation of indigenous energy resources especially coal and renewable. Pakistanis must get serious about their future energy needs. A well defined mission, a vision strategy and going for renewable and clean coal energy options would reduce Pakistanís energy environmental and economic problems which would improve the socio economic conditions, and would lead to a better Pakistan for its entire population. For this a new and vigorous initiative is essential.


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