Pakistan’s Energy Crises— Brief Chronicle

Sustainable and affordable energy supply is necessary for the socio-economic development of a country. Pakistan’s current energy mix includes hydel, thermal (coal, gas and furnace oil), nuclear, and recently renewable energy for electricity generation; and gasoline, diesel, and CNG for transport applications. The electricity generation capacity of Pakistan was modest (10.7 MW) at the time of independence, but rose significantly during the 1960s due to the Indus Water Treaty and the subsequent construction of the Warsak Dam, Mangla Dam and Tarbela Dam. As a result in 1984 the energy mix was approximately 60% hydel and 40% thermal.

During the 1980s, electricity generation rapidly grew to over 7,000 MW, but as demand overshot supply, load-shedding took place for the first time. The foundation of private sector participation in power generation was laid during this period.

Under the Strategic Plan for Power Sector Privatizationof 1992, WAPDA was restricted from constructing more dams, and the focus shifted heavily in favor of thermal power generation, which increased power generation costs. Moreover, the issue of dam construction was politicized to the extent that a there was a complete halt in further dam construction.

The GoP gave lucrative incentives to foreign private investors in the power sector; through the Power Policy 1994, the Private Power & Infrastructure Board (PPIB) was established to encourage private investors – Independent Power Producers (IPPs)– to enter the power generation sector in Pakistan. The decision to bring in IPPs was detrimental for the power sector for several reasons: the capital cost is very high, generation costs of IPPs are high because most of them run on expensive imported FO because of gas shortages, IPPs were incentivized with “no-risk” and high profits, and commitments were far in excess of demand and the units run far below their installed capacity.

A Task Force was constituted by the Cabinet in 2001, it was mandated to prepare an Energy Security Action Plan to recommend energy security enhancement measures, energy mix, energy efficiency and conservation measures, and RE promotion. The Task Force did not make much progress till 2004, but in 2005 it was reactivated; it prepared the Energy Security Action Plan 2005. This plan adopted an integrated, holistic, consultative and coordinated approach, and called for a huge increase in generating capacity to more than 160,000 MW by 2030, by utilizing indigenous resources (coal, gas, hydel, nuclear, oil and renewable).The Plan could not be implemented, mainly due to the absence of complete understanding and appreciation by the leaders and bureaucracy. Also, personal interests were given more importance than national interests. Politicizing the issue of water resources and dam construction was another major reason for non-implementation of this very viable and well-thought out plan. Had this plan been implemented in letter and spirit, there would not have been any energy crisis today.

Pakistan was hit by its worst power crisis in 2007; production fell by 6,000 MW and massive blackouts followed suit. In 2008, availability of power in Pakistan fell short of the demand by 15%. Load-shedding and power blackouts became more and more severe.

Summarizing the mistakes that have led to the present energy crisis, poor strategic planning and lack of prudence and foresight has been the major cause of the country’s energy woes. Adopting the popular mantra of privatization, liberalization and deregulation, the GoP outsourced power generation to private sector, giving decision-making in the hands of multinationals and foreign investors at the cost of national sovereignty. Excessive involvement of the private sector in power generation is the single biggest reason for the unprecedented rise generation costs.

 

Komal Waseem

Student IMCG, Islamabad

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