ASSESSMENT OF ENERGY
AND POWER SITUATION IN PAKISTAN AND GAP ANALYSIS:
Assessment of the energy and power sector achievement s presents impressive gains in addition of power
generation capacity and in adding LNG to the system, which eliminate both
electric power load shedding and gas rationing in the immediate future. This
impressive performance does mask some areas that need attention, these are:
Energy Sector:
1.
Energy
mix. The energy mix has been “rectified’, to an extent, by addition of
local and imported coal. Imported coal plants have already been added, Thar
coal plants are in the process of being added. By 2023 the mix would be
corrected in so far as coal in total mix is concerned. The glaring failure has been the stagnated
share of hydroelectric energy in total energy, up to 2018; even up to 2023 this
share will not change.
2. Indigenous sources of energy. Capacity
addition in the power sector and induction of LNG in to the system has
eliminated shortages, this however has been achieved, partly, by addition of
coal fired power generation (capacity based on imported coal) and addition of
two LNG terminals that will allow RLNG to replace depleting domestic gas
supplies. The share of imported energy in total energy has risen from 67% in
2015 to 69% in total commercial energy; this ratio is set to increase in 2017
and onwards, with increased supplies of imported coal. During the period 2018
to 2023, the share of imported energy will be somewhat reduced by addition of
Thar coal but this will be offset by increasing RLNG supplies to cater for
depleting domestic gas supplies and to feed newly constructed LNG based power
plants .Thar coal will assist in improving share of local energy sources in the
energy mix, the share of other local coal is stagnate and is not set to
increase, unless special attention is accorded. Share of biomass has also not
registered a significant increase, although bagasse based power plants have
been induced and are also scheduled to be added in the period 2018 to 2023 (due
to over capacity there are attempts to reduce the number of bagasse based power
plants and also the regulator is offering guaranteed off take only in the cane
crushing season) Use of biogas, bio mass, solar and wind will need to be
increased to achieve the self reliance targets. Conversion of tube wells to
solar, biogas and bio mass need to be accelerated. Exploration for gas and oil
has not received international attention due to: Decreasing size of finds; and
partly due to regulatory dysfunction exploration activity has faltered (although it must be pointed out that oil and gas exploration activities
registered increase by eighty percent with forty percent success rate. Oil and
Gas Exploration and Production companies drilled over one hundred and
seventy-nine exploratory and one hundred and ninety-four appraisal wells
resulting in one hundred and one new discoveries during the past four years,
which is eighty percent higher than the finds made during same period of the
previous government.) . Shale gas and off shore drillings have not taken
place, although in recent moves government has formed a consortium of two local
firms to drill for shale gas. .:
3. Energy efficiency. The above analysis
shows that there has been a small change in Energy GDP ratios. Energy
efficiency and conservation has received insufficient attention during the
period. Publically owned generating
plants have not been turned around and continue to operate much below their
design efficiency. Losses in gas and electricity sector are still high. Losses
in the electricity sector have come down to about 17 %. This is still
significantly higher than the 10% loss figure deemed reasonable for Pakistan
.Unidentified gas losses have increased to about 12% these are much above
international norms. Power sector savings would be
significantly higher when seen in the context of efficient LNG based plants now
being lined up for commercial operations and would run at up to 62 per cent
efficiency compared to a maximum of 45pc plant efficiency a few best maintained
furnace oil-based projects could run at. Shifting from carburetor based car
engines to EFI (efficient fuel injection) engines would also be an energy
saving move. Pricing is an essential
instrument of energy demand management not only of its direct effect on the
level of energy consumption but also because it indirectly influences the
choice of energy-using technology. If energy prices are set below the economic
cost of supply, the wrong priorities may be set for investments that will
consume energy and technologies may be chosen whose use in not in the nation’s
economic interest . At artificially low prices consumers will not have
enough financial incentive to improve efficiency of energy use.
4. LNG supplies. LNG has been added to the
system and after addition of two terminals 1.2 B CFD of gas is set to be made
available to the system. Four LNG based power plants are in the various
stages of development; these will need an additional pipeline to make available
the RLNG to power plants under construction. An agreement with Russia has been
signed for construction of a pipeline from Karachi to Lahore, there is need to
coordinate the timeline for this pipeline with completion schedules of the LNG
based power plants (The gas pipeline project comprises two
portions Karachi to Sawan gas field in Khairpur district and from Sawan to
Lahore. The section 1 and 2 are to be launched and completed by SSGC and SNGPL,
respectively, due to delays in providing financial guarantees and signing of
agreements, the project has by end of 2017 not been launched, with construction
activities to commence in 2018 the project is likely to be completed by end of
2019, this may create some bottlenecks
in flow of RLNG to Punjab and to the RLNG power plants).
5. Structure. Induction of LNG which will include private
sector import and sale of LNG necessitates a revision in structure of the gas
sector. The present is two vertically integrated entities.. Currently
the sector is domination by two
distribution companies (SNGPL & SSGC) there is no provision of third part y use of
transmission. LNG is being presently supplied to power sector. The subsidy to
the domestic customers at cost of industrial customers has been maintained.
With depleting local gas supplies at some point in the future this subsidy has
to be eliminated and LNG will then form a part of the total gas mix and priced
accordingly. Provinces demand a say in oil and gas regulation and in allocation
of concessions.
6. Planning. Presently the energy plan is comprised of a
number of documents. This was basically because the energy sector governance
was split into many different entities. Formation of a Ministry of Energy is a
step towards integrated energy planning.
In the past Integrated Energy plans were prepared, the practice was
subsequently discontinued. There are efforts to prepare an Integrated Energy Plan. US AID funding is available and a team is being assembled to:
provide the tools for preparation of an IEP; and to prepare an IEP. Planning is
presently restricted only to commercial energy, it is very important that
energy planning also encompass non commercial energy. Non commercial energy
data is scarce, although in the near past some gains in this regard have been
made, such as a biomass Atlas of Pakistan has been prepared. Even with scant
data planning should include non commercial energy and HCIP should have their
mandate (and funding) extended so that in future they are also engaged in
collection of statistics related to non commercial energy. There need to be
close linkages of energy planning with water and forest planning , already
WAPDA has complained of disconnect in
hydropower expansion planning and transmission system expansion planning, in
the past transmission lines were not available
even after the power plants were commissioned .Hydropower planning is
split between WAPDA for publically owned plants and PPIB for privately owned
plants . Macroeconomic factors need to
be included in the analysis of different plans. Excessive reliance upon
imported sources of energy will create balance of trade problems. Foreign exchange needs to be
shadow priced.
7.
Energy
Technology Indigenization. Indigenization
does not occur due to lack of an adequate market.
A lot of energy and power equipment is labor intensive, bulky and transport cost sensitive, paving way for
local cost efficiency. Except for turbine-generator, the rest of power
plant (about 50% of the total) can be locally manufactured with lower costs
and higher efficiencies. There is abundant evidence from India and China,
where
coal
power plant and wind power plant are
produced
at 50 per cent of the
price level presenting in OECD countries. Western companies do not even compete when Chinese/Indian suppliers are expected to bid. In automotive sector, vendor industry has been developed largely under tariff
protection, which cannot be done in the case of energy sector, where near
zero tariffs regime exists due to the need of keeping energy prices
competitive, if not low enough. In the case of power (equipment) industry, the Energy Fund may go a long way towards development of local
indigenous industry creating jobs, self-reliance, saving foreign exchange
and reducing costs. Apart from cost reasons,
local availability is
expected to facilitate speedy project completion and
lesser cost escalation risks. Assembly and manufacture of solar panel
and wind turbine blades deserves attention.
8.
Energy for households, cooking. LPG or kerosene is about 10 times more
expensive than subsidized natural gas provided for residential use. The price differential
between natural gas and petroleum-based fuels is exacerbating socioeconomic disparities between the
urban middle class and the rural poor
(and urban consumers in small towns) typical
gas bill for a middle-class household
is about 500 rupees (Rs.),
or about $5 per month, for cooking and water heating, whereas
LPG users spend over Rs. 2000 ($20) per month for cooking purposes alone.
Commercial energy is mainly consumed by the upper and middle classes. The poor
rely upon wood and ion commercial sources of energy. The energy needs of the
poor will be better served if some of the resources spent on subsidizing
commercial energy, were diverted to expanding fuel wood production or
strengthening support for improved stoves.
9.
Province Role. The 18th. Amendment of the
constitution altered the provincial relationship with the federation. Some
issues were shifted to the concurrent list and some were made provincial
responsibility. The provinces, mainly Sindh and KP, have not been satisfied by
decision making in the oil, electricity and gas sectors by: Federal governments;
NEPRA; OGRA; and exploratory regulator. Provinces have demanded greater role in
decision making related to: allocation of exploratory rights; allocation of new
oil and gas finds; electricity, oil and gas pricing; and LNG pricing .Both
provinces (KP and Sindh) have argued that only the Council of Common Interest
(CCI) had the power to formulate and regulate policies on matters pertaining to
Part II of the Federal Legislative List and that they should supervise and
control related institutions. The two provinces have reportedly prepared their
own gas allocation policies for upcoming gas fields by prioritizing industrial
units, power generation and fertilizer plants, residential areas and CNG
stations, in that order. There are also disagreements over
how
to distribute hydro and
coal royalties among provinces, and also the
energy investment-imperiling uncertainty and confusion
arising within provinces following recent
constitutionally mandated decentralization
10. Tariff
Equalization. The
government decision to ring fence the price of expensive, imported LNG
being supplied to Punjab-based factories for over a year, has created a
‘price distortion’ in the country’s energy market: for the first time the same
consumers are getting the same fuel at different prices in Punjab and the rest
of the country. The whole tariff equalization idea need to be revisited. Presently electricity,
gas and oil tariff for the same customer category class is the same. If this regime is maintained the application
of full cost recovery based tariffs will not be possible to implement..
11.
Infrastructure
deficiencies. Qatar Gas had been operating Q-Flex
vessels medium sized ships at sub-par capacity because of port constraints.
Q-Flex vessels were bringing 151,000 cubic meters per trip against its capacity
of 210,000 cubic meters. The Port Qasim authorities need to improve the channel
and create birthing pockets (space) for allowing crossing of multiple ships to
ensure maximum capacity utilization of 142,000 cubic meters per ship that would
enhance supply from the FSRU to 690mmefd. The port operator is charging a fee
for ship and terminal operators to raise funds for additional dredging which
should take place at the earliest. Qatar Gas has been supplying LNG through 74
conventional ships having lower capacity due to port constraints and inducted
only 26 Q-Flex carriers, at suboptimal capacity, after these constraints were
party overcome early this year. Growing
traffic of ships, particularly vessels loaded with Liquefied Natural Gas (LNG),
warranted the need for an additional channel which the authority is now planning
to develop, Port Qasim Authority Chairman .As a safety measure, currently PQA
stops general movement of all ships when a vessel loaded with LNG arrives or
leaves the port, causing delays At
present, a vessel loaded with LNG calls at the port every five days and after
the operation of another LNG terminal by the end of this year, this cycle could
be reduced to every third day ..The traffic will increase after the opening of
another terminal by end of the year. Four more LNG
terminals are in pipeline. Presently around 16 terminals are operating at the
port. In order to meet the needs of China-Pakistan Economic Corridor, Pakistan
Railways is also laying down a dual rail track from Port Qasim up to Pipri
along with a road network Pakistan
will need 25-30 million tonnes of LNG by 2023. The two floating storage
re-gasification units have an annual capacity 4.5m tonnes each. Coal was
being imported and handled at Karachi Port until about two years ago when the
Sindh High Court (SHC) restricted its storage level at the Keamari Groyne because it was polluting the
surrounding area. The court restricted the volume to only 200,000 tonnes
against the storage capacity of around one million tonnes, he added. As a
result, importers could no longer import coal in larger vessels having a
capacity of 60,000 tonnes as they needed a draft of around 13 meters which is
only available in Karachi Port’s berths . However, in order to meet the
economies of scale coal importers found a way out and kept importing coal in
larger vessels having 13-metre draft. But this lengthened the unloading process
as vessels initially unloaded 30 per cent of the coal at Karachi Port and later
reported at Port Qasim where draft is around 10.5 meters. The use of two ports
raised the handing cost of vessels and port charges also doubled. The biggest coal importer currently imports
around 250,000 million tonnes a month, which means four to five vessels with a
load of 60,000 tonnes each have to call on both the ports.
Power Sector:
1. Energy mix.
The power generation energy mix has changed with induction of coal and LNG, but
the share of hydroelectric energy in total energy generated has declined.
Energy mix is in the process of shifting from costly imported oil towards coal
and LNG. Renewable and Nuclear share in total energy has also increased. This
trend is set to continue in the period 2018-23. Objective of increased reliance
upon indigenous energy will only be party met as increased Thar coal supplies
with be offset by increased imported coal and LNG supplies.
2. Circular
Debt. Circular debt has been mitigated but not eliminated. Circular debt is the amount of
cash shortfall within the Central Power Purchase Agency (CPPA) that it
cannot pay to power supply companies.
The main causes of circular debt are : Poor governance ; Delay in
tariff determination by an inadequately empowered regulator compounded by
interference and delay in notification by the Government of Pakistan (GoP) ; A
fuel price methodology that delays the infusion of cash into the system ; Poor
collection by DISCOs; Delayed and incomplete payments by the Ministry of
Finance on Tariff Deferential Subsidy (TDS) and Karachi Electric (KE) contract
payments ; Prolonged stays on fuel surcharges by courts ; Transmission and
distribution losses and theft; NEPRA sets tariff at 100% recoveries whilst
DISCOS have managed to collect between 86% to 94% receivables in various years
in the last 10 years or so. In 2015 the Ministry of Water and Power elaborated
a policy for containment of circular debt (managing
Circular Debt Sept., 2015), the salient of this policy were: Circular Debt was to be capped to about Rs.
320 B by 2018; Losses were to be brought down 1.7% by 2018;. recoveries to be
improved by 5% by 2018 ;reduce the gap between
determined and notified tariff
by application of surcharges, reduce TDS ; Privatization of four better performing
DISCOs , proceeds to offset debt held by Power Holding Company ; remove the gap between allowed efficiencies
and actual efficiencies of KE and GENCO thermal power generation capacity heat rate determination for KE and GENCO
thermal plats is to be requested ; Gap between NEPRA allowed losses and actual
losses to be reduced by, losses were to be reduced and NEPRA allowed losses
figure was also to be revised .The Plan
has resulted in capping of circular debt to about Rs. 400 B , losses have come
down to about 17% and recoveries have also improved to about 97% . NEPRA has
revised its allowed losses figures and has allowed KE and GENCOs to conduct
heat rate tests. By application of surcharged TDS has been substantially
reduced; load shedding on feeders has been linked to recoveries. The issue of circular debt has been contained
but not eliminated.
3. Taxes: Power sector is facing serious litigations with
Federal Board of Revenue. Not only the refunds are blocked with FBR but it has
recovered huge amount of money from the bank accounts of Power Sector Companies
through coercive actions like attachment of bank accounts. Non-settlement of
these issues will have serious financial implications for power sector in
future and may become a major hurdle in completion of privatization program.
4. Governance.
The power sector has nominally been restructured and corporatized. In effect these measures were only carried
out due nudge by funding agencies and were only half measures. Publically held
organizations, DISCOs and GENCOs present poor performance and financial
results. After induction of IPPs to the
system and privatization of KE the process was stalled. The move to a multiple
buyer structure has also been stalled
5. Power System
expansion Planning. The
Government has underestimated the need for integrated planning of the sector.
The decision makers went through a number of mid-course corrections in their
planning (examples are Gadani coal projects, Nandipur project and Guddu project
and two imported coal plants in Karachi had to be switched to domestic coal due
to the burden on foreign exchange) which suggests that the government was
moving too fast down the road to commissioning new power plants, and neglecting
to carry out a proper feasibility study of all the requirements before
induction of larger scale power generation into the system. Other decisions
like a cap on imported energy and shut down of furnace oil power generation
capacity were also taken in haste
without due process .Power system expansion planning is fragmented , a host of
institutions carry out such expansion planning , these are : WAPDA ; NTDC; Planning
Commission ; PPIB ; AEDB ; CPPA ; NEPRA ;
Provincial Governments ( and Ministry of Finance , which has
considerable clout in decision making in the energy sector ) . These are not closely coordinated efforts.
NTDC was previously engaged in Power System expansion planning, WASP was
utilized to prepare optimized plans, this has been discontinued and a
consultant updates the already prepared Master Plan. This update is not
integrated into decision making process.. The main reason for the significant
delay in most of the hydropower projects is the absence of any coherent
and comprehensive energy policy: Development planning for the hydropower sector by the federal government is essentially left to WAPDA for the public sector and to PPIB for the
private sector after the 2002 Power policy. Although both the organizations
used to work under the same ministry, there was no link
between their
respective priorities resulting
in a lack
of mutually
complementary development plans. With new arrangements
water and hydropower is with Ministry of Water and Power with Ministry of
Energy, there is high possibility of even greater lack of coordination in
hydropower affairs. The planning and regulation regime comprising
ministry of energy, NEPRA, NTDC, PPIB, AEDB and CPPGA is a product of slow
evolution wherein we made a transition from public sector to a diversified
power portfolio comprising private sector run Independent Power Producers
(IPPs) and eventually where producers and buyers will be in direct contracts . This process needs to be
constantly monitored and tweaked to suit our needs in the transition period. Regulation
of Generation, Transmission and Distribution of Electricity Bill 2017 requires
the federal government to prepare and prescribe a national electricity policy
and plan with the approval of the CCI from time to time for the development of
power markets, input and assistance from the National Electric Power Regulatory
Authority (NEPRA) would also be required for the development of the policy and
plan
6. Macroeconomic
factors.
Macroeconomic factors need to be included in the analysis of
different plans. Excessive reliance upon imported sources of energy will create
balance of trade problems. Foreign
exchange needs to be shadow priced. In any economy suffering from lack of
foreign income and from balance of payment problems, the conventional methods
of assessing then economic merit of an intervention in overall terms may lead
to the wrong conclusions. It is essential in such circumstances for shadow
pricing to be applied to the foreign currency component so as to be able to
form an estimate of what economic disincentive the foreign expenditure
entails. State Bank of Pakistan’s FX
reserves declined from US$ 18.0 billion by end December 2016 to US$ 16.5
billion by end of March 2017. Exports and remittances have declined. Growth prospects of Pakistan’s economy from
FY18 onwards would largely depend upon the planned infrastructure projects and
capacity expansion in industries .In order to make these plans a success,
enhanced coordination amongst all Public sector institutions would become
crucial. Also continuity and consistency in policies especially those related
to investment and industry would be necessary to ensure sustainability of the
growth momentum. Growth would be essential to offset decreasing FX reserves.
7. Fuel
planning. The
Oil Companies Advisory Council (OCAC) has
advised creation of a proper forum for planning of energy supplies to
the power sector .The forum should comprise the representatives of
the NPCC, WAPDA, ministry of energy,
power division and petroleum division and PSO and be tasked with the planning
for energy supply of the country for the next three months. Reduction in furnace oil utilization by power
plants has resulted in production difficulties in local refineries. Abrupt and
isolated fuel substitution decisions are likely to cause issues elsewhere in
the fuel chain. Recent decision to reduce furnace oil use by power sector has
had an impact on refineries. An integrated decision making approach would consider for all costs involved in the
process of production and transformation of an energy source, where direct
fuel price comparison forms only one of
the many criteria for a decision on whether or not to chose a particular fuel
source . Intended conversion of furnace oil based capacity to LNG should
undergo a detailed analysis and in any case the conversion should be proven to
be economically justifiable.
8. Transmission
planning. During the last few years transmission
system has presented some problems as
in many instances transmission was not in place to deliver already commissioned
capacity. In some cases transmission was unable to deliver the full capacity of
a plant. The transmission system master plan does provide detailed plans but
these are apparently not implemented in the order and timeline required by the
newly added generating capacity. There are also frequent changes in generation
addition plans and matching changes in transmission plans are not made or
implemented to adapt to these changes. Transmission requirements to deliver the
additional capacity that is being added are being studied by NTDC and it’s
expected that by 2020 the transmission system will be in a reasonable shape to
serve peak demand. The present
arrangement is that secondary grid
system planning is with DISCOs , this has resulted in issues , this decision
needs to be reviewed and at least
planning of the secondary grid system needs to revert back to NTDC planning ( with
capacity enhancement and capacity
building of NTDC planning)
9.
Thar Coal development. Thar coal mining is on track and the progress
is satisfactory, there is however, need to ensure water supply for SSRL
Thar Coal Block-I Mine Mouth Power Plant during its construction and operation
period by Government of Sindh (GOS). Resettlement of the people also needs
special attention. This is because a large portion of Thar population is
nomadic and therefore has no claim to any piece of land; special provisions
have to be made to compensate these nomadic people for the loss of their
grazing lands and cattle. Sindh government is an equity share holder in the
Thar coal development and is also an environmental watch dog, a potential
conflict of interest situation, this needs attention.
10. Solar
O&M. Pakistan must carefully evaluate its solar projects and look at
water-conserving options from around the world to maximize gains. For instance,
Israel a world leader in water conservation dry-cleans solar panels: instead of
using water, the 20-acre Kibbutz Ketura solar park in Israel uses a crew of
small robots to push the accumulated dirt as they glide along the surface of
the panels. Itself solar-powered, the process is remote-controlled and can be
repeated every night or as required. However, lack of trade relations with Israel
prompts to look for alternatives. For example, in 2010 the prestigious MIT
Technology Review highlighted research from Boston University that exploited
the fact that dust particles are either charged or can be charged, and
therefore a small amount of electric current can repel these charged particles.
Moreover, to bolster plans for a $109 billion solar industry in Saudi Arabia,
the King Abdullah University of Science and Technology (KAUST) has produced
solutions that are reportedly optimized for hot and arid climates.
11. Tariff
distortions. Electricity
tariff subsidizes domestic consumption
at the cost of industrial consumption.
Comparison of the financial tariff to tariff based on marginal costs has
been made. The marginal Cost estimates (at an oil price of $ 52/bbl) are presented as follows:
|
Table - : LRMC Estimates
|
|||
|
(Based on oil price of US$52)
|
|||
|
Voltage Level
|
Capacity
|
Peak Energy
|
Off Peak Energy
|
|
$/kW
|
c/kWh
|
c/kWh
|
|
|
Gen
|
417
|
10.24
|
6.39
|
|
500 kV
|
506
|
10.41
|
6.51
|
|
220 kV
|
540
|
10.59
|
6.58
|
|
132 kV
|
623
|
10.91
|
6.74
|
|
66 kV
|
718
|
11.23
|
7.00
|
|
11 kV
|
755
|
13.72
|
8.96
|
|
0.4 kV
|
970
|
16.35
|
10.25
|
Source: Consultant
Tariff from LESCO
web site had been compared with a tariff calculated based on marginal costs.
This comparison is presented as follow:
|
Tariff : Financial vs. Marginal
|
||||
|
Tariff Rs./kWh
|
||||
|
Customer
|
Financial
|
|||
|
Category
|
Financial
|
Marginal
|
% Marginal
|
|
|
Industry
|
13.46
|
11.59
|
16.19
|
|
|
Domestic
|
10.25
|
15.29
|
-32.98
|
|
|
Commercial
|
16.30
|
15.14
|
7.65
|
|
The domestic
financial tariff is about 33% lower than the tariff based on marginal costs.B1
industry financial tariff is 16% higher than the economic tariff. Financial and
tariff based on marginal costs for medium sized commercial customers is about
even. The share of domestic consumption in Pakistan is much greater than in
most countries at its stage of development. The reason is that the state
subsidizes domestic consumption, especially for more affluent households. This
happens at the cost of power for industrial consumers. This is one reason why
compared to the size of the economy, the country remains less
industrialized. High energy cost impact
profitability of investors. Basing electricity tariffs on the long run marginal
cost ensures that both the level and structure of tariffs reflect the cost of
expanding the power system.
12. Investor confidence. Investors shy away from the energy sector
due to the following reasons: (a) fragmented
energy governance in
Pakistan (b) low revenue collection by existing energy generation and distribution companies, (c) persistent transmission and distribution losses and theft of
both power and gas, (d) distorted fiscal incentives through SROs regime and (e) lack of favorable regulatory and operational environment for
alternative
energy projects. The business community also pointed out the ambiguous role of the state‖ in the energy market. The state apparatus in Pakistan persistently
controls prices, supply quotas and also the import of energy inputs through which power is generated. Such a heavily regulated environment is acting as
a barrier to entry for new firms which intend to invest in the energy
sector. Foreign investors have also pointed towards controversies surrounding the privatization of DISCOs, for example K-Electric, where the
federal government continued to subsidize the operations of this entity after several years of
its privatization.
13. Share of hydropower in energy and power mix.
Energy and power data suggest that hydropower share in total mix has stagnated
and this trend is likely to continue to 2023 , in fact in 2023 hydropower share
will decrease slightly compared to 2017
.There are several reasons for this . the last many hydropower plants added to the system in the public sector have faced inordinate
delays ( Golen Gol, Allai Khwar, Khan Khwar, Nelumn Jhelum , Jinnah, Gomal Dam,
Punjab and KP Low heads and Tarbela extension ) have also registered
significant cost escalation
.Insufficient studies, mismanaged resettlement and land acquisition,
, indifferent contract management, and funding woes triggered these
delays . The unresolved issue of the (‘profits on hydroelectric power
generation ‘) royalty also creates indirect hurdles in development of
hydropower. Friction between KP and the centre on this issue has starved KPs
hydroelectric power potential to be severely underutilized, in evidence the
better utilization of AJ&K hydropower potential as compared to KPs potential
(KP hydropower potential is generally more economic to AJ&Ks mainly due to
superior geology. Large hydro’s take more than 5 years to complete therefore
the government which has a mandate for 5 years is not interested in projects
that will complete after its tenure completion. There is very little
coordination between Provincial/local governments and Federal governments
related to execution of hydropower plants. Land acquisition and resettlement
issues are poorly tackled. Preconstruction facilities and infrastructure for
construction receives insufficient attention, these all emanate from
indifferent feasibility studies that are poorly monitored and controlled. HEPO
has been weakened, underfunded and its ability to provide guidance in
hydropower issues has been compromised. Capacity building has not received much
attention. KP has faced issues with transmission lines, there have been
instances where power plants were ready
but transmission lines were not. Rules on who has responsibility to construct
lines and methodology of resolving transmission issues are not available. KP
has now called for building two 500 kV lines for evacuation of power from
Chitral. They neither have the financial capability nor the technical
capability to perform this task. Small hydropower plants are having issues with
approvals, CPPA now wishes to offer: pay what you take basis for contracting
capacity; this is the result of faulty planning. Small plants also have trouble
getting approval of DISCOs to connect their plant to the distribution system.
14. Surplus
capacity. The planned and ongoing g power plants suggest that there
is likely to be a surplus capacity of about 5000 MW. This is presented as
follow s:
|
Power Balance PEPCO System
MW
|
||||||||
|
Derated
|
||||||||
|
MW
|
Total
|
|||||||
|
Capacity
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
MW
|
|
Hydro WAPDA
|
6902
|
2483
|
2160
|
11545
|
||||
|
GENCOs
|
4367
|
1320
|
720
|
6407
|
||||
|
Nuclear
|
1246
|
1100
|
1100
|
3446
|
||||
|
Hydel IPP
|
342
|
79
|
125
|
102
|
197
|
1004
|
1849
|
|
|
Thermal IPP
|
11391
|
2973
|
2120
|
1253
|
2640
|
1950
|
1320
|
23647
|
|
Bagasse
|
258
|
77
|
583
|
144
|
1061
|
|||
|
Wind
|
784
|
149
|
299
|
1224
|
2456
|
|||
|
Solar
|
400
|
30
|
600
|
600
|
1630
|
|||
|
Import
|
1000
|
1000
|
||||||
|
Total
|
25690
|
5791
|
3727
|
2099
|
6481
|
4770
|
4484
|
53041
|
|
Realistic
|
25690
|
5791
|
3395
|
1192
|
3740
|
3770
|
99
|
|
|
G Total
|
25690
|
31481
|
34876
|
36068
|
39808
|
43578
|
43677
|
43677
|
|
Demand MW
|
24138
|
25227
|
26348
|
27420
|
28601
|
29822
|
31085
|
|
|
Surplus MW
|
1552
|
625
|
8528
|
8648
|
11207
|
13756
|
12592
|
|
|
Spinning reserve MW
|
1931
|
2018
|
2108
|
2194
|
2288
|
2386
|
2487
|
|
|
Routine maintenance MW
|
2141
|
2623
|
2906
|
3006
|
3317
|
3631
|
3640
|
|
|
Balance MW 4.3 % growth
|
-2520
|
1612
|
3514
|
3449
|
5601
|
7739
|
6465
|
|
|
Winter Demand MW
|
21145
|
22099
|
23081
|
24020
|
25054
|
26124
|
27230
|
|
|
Availability Winter MW
|
21300
|
25239
|
28294
|
29367
|
32733
|
36126
|
36215
|
|
|
Spinning reserve MW
|
1692
|
1768
|
1846
|
1922
|
2004
|
2090
|
2178
|
|
|
Winter Balance MW
|
-1537
|
1372
|
3367
|
3426
|
5674
|
7912
|
6806
|
|
|
Demand at 7% growth MW
|
24138
|
25828
|
27636
|
29570
|
31640
|
33855
|
36225
|
|
|
availability MW
|
25690
|
31481
|
34876
|
36068
|
39808
|
43578
|
43677
|
|
|
Spinning reserve MW
|
1931
|
2066
|
2211
|
2366
|
2531
|
2708
|
2898
|
|
|
Routine maintenance MW
|
2141
|
2623
|
2906
|
3006
|
3317
|
3631
|
3640
|
|
|
Balance MW 7% growth
|
-2520
|
964
|
2123
|
1126
|
2319
|
3383
|
914
|
|
|
Note :Hydro availability varies
due to hydrological variations
|
||||||||
Source: NTDC, Consultant
The above
estimate does not cater for hydrological variations which could drive hydro
capacity to much lower levels than indicated. Tarbela plant factor has varied
from 45% to 50%, Mangla plant factor has varied from 54% to 70% during the
period 2010 to 2015. Pakistan hydrology is cyclic with 10
years cycles, the last 8 to 10 years have been wet, and therefore there is
reasonable possibility that the next 10 will be dry years. The above
calculation or estimate is based on average hydrology but if the next 10 years
are dry the excess capacity will not be there any more, it may even result in
shortages. Economic growth, during the period 2108 to 2023, could pick
up ( already in 2017 economic growth was 5.3% and the forecast for 2018 is
5.7%, the projections for Pakistanis economy is generally good except for
macroeconomic issues and political
instability fears ). Demand forecasting
needs attention, already there is overcapacity and there are now efforts to:
only contract bagasse based capacity (only energy supplied in the cane crushing
season will be accorded dispatch priority off cane crushing season energy will
only be procured on pay what you take basis) and small hydropower plants on pay
what you take basis; there is also effort to delay completion of some power
plants funded under CPEC. This will cost in either excessive capacity payments
or in lost investor confidence. Capacity availability also varies with months,
in winter months hydro availability is a fraction of total hydro availability.
Power balance at 7% demand growth would, however, wipe out the surplus and
plants that are now being deferred or postponed would need to be pushed.
