Power pressure in Pakistan

zoom

It is hoped that work on the Ghazi-Barotha Hydropower Plant, just outside of Islamabad, will provide a good example for the development of other power projects in the country.

zoom

Pakistani protesters shout anti-government slogans during a protest in Karachi last year. The protesters condemned the daily several hour power cuts across the country and alleged over-charging by the electricity company.

How are the Pakistan power and water industries keeping up with a surging demand? Utilities Middle East investigates.

The level of demand for electricity in Pakistan is now greatly outstripping the available supply. The issue has reached such proportions that in the first days of 2009 it was the cause of street protests, with businesses striking over the cuts in energy supplies and electricity and gas shortages.

This follows similar action during 2008 when the country experienced widespread electricity shortages that necessitated load shedding in some areas.

The government, under growing pressure and criticism, was reportedly attempting to secure a US $7.6 billion loan from the International Monetary Fund to address the issue at the same time as protests took place across the country. And with both the population and economic growth in Pakistan expected to continue, so too does the question of how adequate utilities can be provided to enable such development.

In 2004, Pakistan had an installed electricity generating capacity of 20.4GW according to the International Energy Agency (IEA). During that year the country generated 80.2 billion kWh, while consuming 74.6 billion kWh.

However, less than four years later demand is outstripping the available supply and the Pakistani government has estimated that by 2010 it will need to increase its generating capacity by more than 50% from the 2004 figures in order to meet the country's needs.

The Ministry of Water and Power estimates that Pakistan currently has between 25-33% less power than it needs.

In mid-2008 the Government introduced a number of measures in an attempt to conserve electricity. These included the use of daylight savings times whereby the clocks were moved by an hour to ensure natural light was available for longer periods in the evening.

Businesses were asked to close by 9pm and the use of air conditioning in government offices was lowered. Some businesses have also been forced to close for one day a week to reduce the demand on the grid, which has resulted in firms losing business and closing down.

Foreign investment is expected to be one of the primary means of raising the capacity, with a rapid increase already being seen and opportunities opening to firms in the Gulf region among others.

In October 2008 the Pakistani government also received a loan and credit from the World Bank for the partial cost of its Electricity Distribution and improvement Project.

Part of these proceeds is being used to fund a firm to act as an international procurement advisor, with the Pakistan Electric Power Company (PEPCO) mandate to oversee the restructuring of the power sector.

Cause and effects

The Centre for Research and Security Studies (CRSS) has predicted that there will be a 5GW shortfall in supply compared to demand by 2010. The problem has resulted partially due to a recent period of robust economic growth; however the CRSS, among others, attribute the main blame on government policy.

Reforms in the electricity sector over the past 10-15 years have been intended to create a shift from state ownership and the centralisation of infrastructure services such as electricity to private ownership.

The move was made in an attempt to counteract issues such as high network losses, poor service coverage and the need for price subsidies. Currently the sector is part private and part publicly owned.

The failure of state-run power firms to adequately increase their capacity over the past decade has exacerbated the problem reports the Consumer Education and research Society (CERS), stating that they have depended mainly on buying power from independent producers.

The west of the country is experiencing the biggest problems, with Gujarat facing a power deficit of almost 27% in peak hours during 2007-08 and Maharashtra a shortage of 26.4% CERS reports. Gujurat has a capacity to supply 8,885MW - the peak demand is 12,119MW according to CERS.

Within the past 13 years, three separate power policies have been set by the three different government parties in place over the period: the 1994, 1998 and 2002 Power Policies were put in place by the Benazir, Nawaz and current regime respectively.

Of these three policies the 1994 version was the only one to date that has been credited with succeeding in bringing electricity generators to Pakistan reports the CRSS.

As a result of the 1994 policy a total of 15 independent power producers (IPP) set up offices in the country, investing around $3 billion and generating around 3GW of electricity.

The suspension of Justice Iftikhar Muhammad Chaudhry in March 2007 is also recognised by the CRSS as having a significant effect on the country's power sector. Following this event international investors are demanding a high-risk premium to invest in Pakistan.

The country's political instability is a hurdle that any interested power generating firms must overcome. In addition, the low value of the Pakistani Rupee in relation to the Dollar has had a significant effect on investment levels.

Transmission losses of up to 30% due to poor quality infrastructure and the large-scale theft of power are exacerbating the problem of lacking supplies.

In addition, around 50% of the population is not connected to the national grid, with much of the country's rural areas having no access to electricity.

Sources of power

The bulk of the current installed capacity in the country is supplied by conventional thermal plants, with oil, natural gas and coal being the primary fuel sources.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM