Pakistan's Limited Choices in Energy
Barq, Sultan Ali, Economic Review
While the development world is vigorously preparing to enter the 21st century, we are still following primitive and colonial methods of public welfare. A country run by ad hocism and an inefficient political and bureaucratic system cannot have foresight for long-term vision and planning. "Nations without vision shall soon perish," said Prophet and King Solomon. The importance of the role of energy in the pursuit of development, prosperity and economic survival is undisputed. Energy is reckoned as the starting step towards any plan for prosperity and development in a country. The energy sector in Pakistan has seriously lagged in achievements despite the loud claims and dreams of successive governments. There are a number of paradoxes haunting the sector and adversely effecting the economy. A partial list of such paradoxes is given below:-
a) Pakistan has the capacity to generate over 30,000 MW of cheap hydel electricity but cannot do so because of regional dis-agreements and feuds.
b) Pakistan has tremendous resources of coal but cannot efficiently make use of them because of technological backwardness, law and order and management issues.
c) Pakistan has substantial oil and gas resources but has not been able to make use of them due to alleged "international reasons" as well as resource management and technological constraints.
d) Pakistan has sufficient land and human resources to grow large tracts of forests (another form of energy) but is unable to do so due to policy, management and bureaucratic constraints.
e) Pakistan wants to generate nuclear power but is unable to make substantial progress due to technological backwardness as well as international hostilities and suspicions about the programme.
It can be inferred that our energy problems are lingering and expanding less due to paucity of resources and more so due to issues like regional disagreements, technological and socio-political constraints, policies, international distrust, myopic bureaucracies and inappropriate level of will and commitment by the leadership. Consequences of the above are that the gap between demand and supply of energy is increasing geometrically. The plans for self reliance, industrialisation, rural electrification and prosperity are falling apart. Let us analyse the situation in a foreseeable timeframe and the options that Pakistan still enjoys in order to meet its targets of development and poverty alleviation. In order to illustrate the issues more candidly, let me give some facts here:-
* Hydel Power is between 600 to 2,000 per cent cheaper than the thermal power.
* Pakistan can generate 30,000 MW of Hydel Power.
* Thermal Power uses natural gas and imported petroleum products.
* Pakistan imports petroleum products using valuable and scarce foreign exchange and receives the price of power generated in rupees. This puts a lot of pressure on the balance of payments.
* Pakistan used to produce 70 per cent hydel and 30 per cent thermal power upto about 5 years ago. This helped in stabilising the prices of power in the past.
* Pakistan is now producing electricity with about 65 per cent thermal and about 35 per cent hydel. With the mix and rising share of thermal power in the system the prices of electricity shall always be increasing vertically and randomly. Electricity being a raw material to the production system increases the costs of production and limits the export competitiveness of the produce.
* Pakistan has until now used only about 9 per cent of its hydel power potential and has unnecessarily increased the share of thermal power.
* For economies like Pakistan is imperative to produce cheap and sufficient power for supporting the economy and reducing poverty.
* It is estimated that the normal demand for electricity around the end of the century (9 years from now) in order to maintain a status quo shall be 20,000 MW and the demand for electricity shall be about 30,000 MW, if Pakistan wants to have an accelerated economic development. …