The Way Forward (2013-2023) Energy Plan
For Pakistan (JR09)
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Executive Summary
The
2009 energy recovery plan and 2013 power policy objectives have partly been
achieved. Capacity has been added. Imported and local coal capacity has been
added or will be added in the next two years, thereby addressing the power mix
issues to an extent. Losses numbers have gone down to about 18% and recoveries
have increased to about 96%. The gap between supply and demand of gas has also
been bridged, by end of the year 2017, by the commissioning of two LNG
terminals and LNG import agreements The
first terminal Elengy Terminal Pakistan Limited is a 100% owned subsidiary of
ENGRO, the company, which has been created to establish and operate a terminal
for the handling, re-gasification, storage, treatment and processing of
Liquefied Natural Gas (LNG) constructed in Port Qasim Karachi. In line with the
approval, LNG Services Agreement has
been signed between SSGC and Elengy Terminal Pakistan Limited (ETPL), with
capacity to re-gasify 600 mmCFD . The second terminal which also has the
capacity to re-gasify 600 mmCFD per day has been commissioned by the Associated
Group. Annex 1 provides an assessment of
the energy sector including a gap analysis.
Both power and gas shortages have been
addresses and in the next five years there will be need to move forward in both
areas. Failures include: regression on
regulatory issues; indifferent power system planning; recoveries issues has not
been completely solved, better numbers have been achieved by imposition of
surcharges which has brought down the magnitude of cross subsidy. Industrial
cross subsidy to domestic (high industrial tariffs have impacted upon export
competitiveness) and inter DISCO cross subsidy has not been tackled .Progress
on hydropower has been less than desired no major hydropower dam is currently
under construction Dasu is also stalled, little work was possible on major
water storage and power dams , although Neelum Jhelum and Tarbela extension are
nearing completion and a number of high head medium/small output plants have
been commissioned) . Dependence upon foreign fuels still persists adding to the
growing balance of trade and reserves problems. Privatization and restructuring
issues have received much attention, curtsey IMF Program (since concluded), but
has seen little progress. Privatization of the four performing DISCOs is deemed
to be crucial since the proceeds will write off the circular debt parked in the
Power Holding Company. In recent moves GoP is considering bifurcating three
DISCOs so as to make these more attractive to investors. Market reform and
regulation issues also received little attention, in some ways regulatory affairs
have received a setback. Moving towards a multi buyer market structure is seen
as a must for the sector to perform.
Local gas
and oil output has increased but the progress on exploration has been poor,
insufficient progress has been made on: shale gas; tight gas; off shore
exploration. Some of this could be explained by security conditions but these
are getting better and Majors drill in
places with even worst security conditions .Mining of local coal ( except Thar
where considerable and significant progress has been made) has not received
much attention . Energy efficiency and conservation has received very little
attention. Non commercial energy issues have received very little attention.
Biomass and solar utilization in agriculture pumping received limited
attention.
There has
been impressive progress but there is still work to do, areas where the short
term efforts are to be focused to achieve medium and long term objectives are: Self Reliance – the energy mix has been
altered but the share of foreign energy in total energy is still not addressed,
there is need to encourage – hydropower, solar, wind, biogas, biomass to
correct this energy mix in the medium and long term. Mapping of oil and gas
resources and accelerated exploration of oil and gas would help, do to would be
exploration for shale gas and off shore gas .; Indigenization of energy
investments Pakistan still relies very heavily upon imported technology in
the energy sector, there is need to put in place policies and procedures to
encourage increase in local content in energy investments ; Governance – The liberalization of the
power system and the oil and gas system is stalled and there is little progress
in moving towards a free market system,
Government interference in day to day affairs has in fact increased , there is
need to fix the financial dysfunction and put in place a transparent and
independent regulatory system , after which the remaining entities in the power
sector and oil and gas sector are to be privatized . Poor and non professional
decision making along with misplaced priorities have resulted in circular debt. Improved and
professional decision making will help in resolution of the financial
dysfunction of the sector.
Objectives
of the Strategic Plan
The strategic directions for developing energy sector include:
1.
Optimize the utilization of country’s indigenous resource base especially hydropower to reduce the dependence on imported fuel through an institutionalized strategy. Thar coal utilization is in hand,
coal other than Thar needs attention. Conversion of Tube wells to biomass,
biogas and solar needs to be pursued as means of avoiding imported fuels.
Wind and Solar would also contribute in imported fuel substitution. Accelerated
exploration for gas and oil including tapping shale gas and off shore
hydrocarbon resources also need attention.
2.
The assurance of supply of energy at
optimum and competitive price to all
sectors of economy. Efficiency and energy
conversation needs special attention. Cross subsidies need to be removed;
Industry needs to be provided energy including power at cost recovery based
tariffs.
3.
Indigenization of energy investments including provision of
employment to local people by means of enhanced exploration of indigenous resources within the country
and putting in place incentives for local manufacture or assembly of energy
equipment and systems . Encouragement to local contractors and consultants
needs to be made a part of the national energy policy.
4.
Creation of a conducive and healthy environment for the participation of private sector in energy sector development under the supervision of effective,
independent and transparent regulatory authorities.
