Energy Crisis

Energy is essential for the maintenance and development of the quality human life as well as for economic activities. To maintain accelerated growth momentum, the economy needs reliable, uninterrupted and affordable supply of energy. The per-capita consumption of energy is viewed as an important indicator of economic development of any country. Countries with higher Human Development Index (HDI) have higher per capita energy consumption.

The world is facing daunting task to meet the growing energy demand that is likely to double in the next twenty years. We have known for decades that our survival depends on finding new sources of energy. Yet we import more oil today than ever before. (Barack Hussein Obama, 44th U.S. President)  Pakistan is among those developing countries where the need to tackle the challenge is greatest. Its energy demand is projected to reach 129 million tones of oil equivalent (MTOE) in the next 15 years. Ensuring availability of usable and affordable energy is therefore, the bedrock of Pakistan’s current and future developments. In recent years, the energy demand has increased sharply in Pakistan owing mainly to strong economic growth and the attendant rise in per capita income. The supply of energy, on the other hand, has remained far too short to match growing demand because the existing energy resources could not be sufficiently explored and exploited. Consequently, the energy supplies remained deficient to offset  the growing demand of domestic, industrial, commercial and power generation needs. Despite being a high priority item on the economic agenda of the government, the growth of the energy sector remained slow due to a host of factors such as inadequate institutional framework, financial constraints, sky-rocketing oil prices, high risks, low interest of private sector, heavy costs and complex character of hydrocarbon development. To address the issue of demand-supply gap, the government is working on many fronts, including the import of electricity and gas from Iran, utilization of 185 billion reserves of coal, development of small hydro projects, promotion of efficient use of energy, and acceleration of current programmers of alternative energy development.

Total energy consumption mix is changing globally over the years. Oil has been losing its share’ gas and coal has been gaining importance; while the share of nuclear energy has remained stagnant. The International Energy Outlook (IEO) has projected a 50 percent increase in the demand for oil by 2030. Although growth in the energy consumption was 3 percent in 2004, the annual increase of only 1.6 percent would lead to a 50 percent growth in consumption by 2030. There is a growing demand for oil in Asia due to higher economic growth and it is expected that the oil consumption of the Asian region will exceed the North America by 2010; and by 2020 its demand will become nearly half of the world’s total demand for oil. The rising demand for oil and its limited supply has crated deep concern throughout the world as it is believed that nearly all the largest oil fields have already been discovered and are being exploited.

The word energy is used as a synonym of energy resources, and most often refers to substances like fuels, petroleum products and electricity in general. These are sources of usable energy, and can be easily transformable.

Renewable energy sources include solar energy, which comes from the sun and can be turned into electricity and heat. Wind, geothermal energy from inside the earth, biomass from plants, and hydropower as well as ocean energy from water are also renewable energy sources. However, we rely more on nonrenewable sources, which include the fossil fuels -- oil, natural gas, and coal.

The world's population continues to grow at a quarter of a million people per day, increasing the consumption of energy. The per capita energy consumption of China, India and other developing nations continues to increase as the people living in these countries adopt more energy intensive lifestyles. At present a small part of the world's population consumes a large part of its resources, the United States and its population of 300 million people are consuming far more oil than China with its population of 1.3 billion people while the production is not matching the consumption rate. Ours is the most wasteful nation on Earth. We waste more energy than we import. With about the same standard of living, we use twice as much energy per person as do other countries like Germany, Japan, and Sweden. (Jimmy Carter, 39th President of the United States) The uncertainty in Middle East especially in Iraq and Iran has also contributed to this shortage. Hence greater demand and less supply along with instability are adding up to the crisis which has entangled the entire world in its net.

Industrialized nations are dependent on oil, and efforts to restrict the supply of oil would have an adverse effect on the economies of oil producers. For the consumer, the price of natural gas, gasoline (petrol) and diesel for cars and other vehicles rises. An early response from stakeholders is the call for reports, investigations and commissions into the price of fuels. There are also movements towards the development of more sustainable urban infrastructure.

Agricultural production is also heavily dependent on hydrocarbons for energy, in the form of petroleum to power machinery and transport goods to market. Another important input is fertilizer usage that is highly dependent on natural gas for its production and sometimes for fueled irrigation. Between the late 1940s and early 1980s, as the Green Revolution transformed agriculture around the globe, world grain production increased by 250%. The energy for the Green Revolution was provided almost always by fossil fuels. Hence, it can be concluded that the 20th century population explosion is strongly correlated with the discovery and extraction of hydrocarbons. However with this population explosion there is also a rise in the energy demands of the world.

The major causes of the current global energy crisis can be determined from the following facts: There is a sharp rise in the oil prices since 2003. This is caused by continued global increases in petroleum demand coupled with production stagnation, the falling value of the U.S. dollar, and a myriad of other secondary causes. Like Central Asian energy crisis 2008, caused by abnormally cold temperatures and low water levels in an area dependent on hydroelectric power. Despite having significant hydrocarbon reserves, in February 2008 the President of Pakistan announced plans to tackle energy shortages that were reaching crisis stage. At the same time the South African President was appeasing fears of a prolonged electricity crisis in South Africa. Similarly, China experienced severe energy shortages towards the end of 2005 and again in early 2008. During the latter crisis they suffered severe damage to power networks along with diesel and coal shortages. Supplies of electricity in Guangdong province, the manufacturing hub of China, are predicted to fall short by an estimated 10 GW. Furthermore, it has been predicted that in the coming years after 2009 that the United Kingdom will suffer an energy crisis due to it's commitments to reduce coal fired power stations, it's politician's unwillingness to set up new nuclear power stations to replace those that will be de-commissioned in a few years (even though they will not be running in time to stop a full blown crisis) and unreliable sources and sources that are running out of oil and gas. It is therefore predicted that the UK may have regular blackouts like South Africa.

Pakistan is in the grip of a serious energy crisis that is affecting all sectors of the economy and the various segments of the society. As the situation stands to-day, there are hardly any immediate solutions to resolve the issue. A change of attitude and a change of life style is needed at the national level which should be triggered by the ruling elite and followed by all segments of the society that have access to electricity. At best there could be some short and long-term solutions to the crisis but they need immediate planning and execution with an enormous investment. Pakistan is estimated to have 200 trillion cubic feet of Gas reservoirs and approximately 200 million barrel of oil, but most of them are untapped. Pakistan relies on importing fifty percent of its required quantity. Tarbella, Mangla and Warsak dams are major storage of hydel power. Coal is also fueling the industry in Pakistan. At present total power production capacity of electricity in the country is about 19,500 MW, out of which Hydel Power is only7,500 MW, balance of 13,000 MW is thermal either using Natural Gas or Furnace Oil. Small capacity of 450 MW is Nuclear and only 150 MW is through coal.

The energy consumption of Pakistans per capita is only 15 MMBtu, as compared to 104 MMBtu for Malaysia, 106 MMBtu for Iran, a EU average of about 170 MMBtu, and world Average of 68 MMBtu. Thus it is essential for Pakistan to increase its per capita Energy availability and consumption to at least 50% of the world level to about 35 MMBtu in the medium term (2012- 2020). Only then could we claim to be energy sufficient and have a reasonable measure of the quality of life for the citizens.

In the current scenario, the nation is faced with electric power shortages of about 3,500 MW. If we consider the load of the industry of about 1,500 - 2,000 MW, which has been shut down, due to unavailability of power, as well as gas, then the actual shortfall is in the 5,000 MW range. Part of the shortage is attributable to non- payment of subsidies by the government, and non-payment by KESC and FATA for power supplied. This has resulted in a circular debt of over Rs. 300 billion in the energy sector. Consequently the oil companies have not been paid and have held up oil supplies to the IPPs and GENCOs. At the same time the gas supply shortage is in the range of 500 MMcfd - 800 MMcfd mostly in the SNGPL area. As such nearly 3,000 MW of capacity with the IPPs, and GENCOs has been made idle, while the government is busy signing up new rentals and IPPs with tariffs in the 10-15 cts/kwh range. There also has been no analytical study of the cost impact and its effect on the tariff. So the Ministry of Water and Power is playing a waiting game with frequent hints of further escalation of power tariffs.

The situation appears even more distressing when we consider that Pakistan is blessed with a hydel potential of 45,000 MW power generation capacities, an equal if not more capacity for alternative energy. On the primary fuel side, our coal reserves are estimated as the 2nd largest globally. However, with the essential planning not in place and adequate project development and financing arrangements not carried out, the much talked about projects are mostly pipe dreams. Further, Pakistan’s location as the obvious Energy Corridor for Asia, with potential of developing energy hubs at Karachi and Gawadar, raises the multi billion dollar question, as to what has gone wrong, why we are still in the dark and not on track, and what can be done about it.

It is essential, as a first step to understand what are the sources of primary energy and their availability and quantum in Pakistan, as well as globally, and what form and from what sources, energy can be imported by Pakistan. Secondly, what are the mechanics, modalities and financial outlays required to convert the primary energy to useable forms of energy, and thirdly, what is, and what should be an optimal Energy mix for Pakistan and to what extent Pakistan can meet its own energy requirements in the short, medium and long term? The time is NOW to move ahead towards formulating a comprehensive energy plan that will provide energy sufficiency, sustainability & sovereignty and provide cost effective and reliable energy in a competitive environment to business, industry and the citizens of Pakistan.

Energy sustainability can only be possible if the energy mix is such that it provides for an affordable price level for industry, business and various economic levels of the citizens. Further the energy supply has not only to be maintained, but increased to meet the continuing rise in demand. This again would require a total revision of the Energy Mix, having a larger component of cheaper and sustainable sources of primary energy such as Hydel and indigenous gas, coal and nuclear. A one sided approach to rely heavily on hydel generation is not prudent, as there is a drop of nearly 70% in power output between the summer high and winter low. Alternate energy (wind and solar) whereas considered politically correct and fashionable to talk about, is a much more expensive option, with current wind power projects being given a tariff of above 13 cts/kwh as compared to past IPPs of 6 cts/kwh, and new IPP projects (gas based) of 7-10 cts/kwh.

Of crucial importance to Pakistan is Energy Sovereignty in the current geo-political scenario. As a Nation we cannot afford to be held hostage, either to obnoxiously high prices of oil or gas in the world markets, or the risk of suspension of Oil and Gas/LNG supplies during a regional conflict. This would clearly put the National sovereignty at risk. Thus it is essential for Pakistan to consider multiple supply sources of oil and gas (Proposed Asian Energy Corridor), as well as multiple import modalities and forms of energy (Oil / Gas Pipelines, LNG, LPG, EHV Electricity). Such multiplicity of energy forms, sources and import modalities reduces the risk factor on any one being disrupted.

It must also be considered that the current primary energy mix comprises of about 48% local gas, 25% imported oil, 5% local oil, 13% hydel, 7% coal and 2% nuclear, LPG and others. Our saving grace is the 48% local gas. This mix is however not sustainable, as local oil production is not forecasted to increase while local gas production will be on the decline after 2010, and as it is, it cannot meet the current surge in demand. The projections for gas in the Energy mix in the 2010 - 2030 scenario continue to have a level of about 48% based on import of 2.7 bcfd by 2015 and 5.8 bcfd in 2020 thru Transnational pipelines and LNG.

Some other ways to cater energy crisis globally can be suggested as: In order to control energy crisis, the oil rich countries are required to ensure the optimum utility of their energy resources. This will result in increase of production and consequently the growing demand can be met. Stability of Iraq and Iran are also important in this regard. Iraq alone is capable of pumping 10 million barrel a day which is a significant amount. This will also reduce the price of oil which is also a major concern for weak economies. Secondly, accessibility of oil and gas can be made efficient through development of pipeline projects. IPI project and South stream projects can be useful in this regard.

To resolve the energy challenges, renewable energy resources can play an important role. More importantly, renewable energy can take electricity to remote rural areas, where power transmission becomes too expensive. The importance of alternative sources of energy e.g. wind, solar and bio-fuels, has risen due to rocketing oil prices, fast energy demand and geographic location of Pakistan. The coastline of 1,046 km provides ample opportunity for the installation of wind turbines. Similarly, two-third of Pakistan’s area receives sufficient sunlight which provide incredible opportunity for solar power generation. Despite this bestowed potential, Pakistan’s renewable generation capacity stands only at 180 MW.

The government has established the Alternative Energy Development Board (AEDB) to foster the development of renewable energy sources and has set a target of at least 5 percent renewable energy of the total electricity generating capacity of the country (9,700 MW) by the year 2030.

Wind energy is environment-friendly and cheaper than natural gas even. Pakistan has been blessed with an enormous potential of Wind Energy. The 1.046 km coastline of Sindh has been identified as having wind power potential of 50,000 MW. The government has assigned        AEDB to ensure installation of 700 MW wind power in coastal areas of P        akistan by the year 2010. AEDB has issued LOIs to 93 national and international investors for 50 MW wind power projects each and one LOI for 5 MW wind project. 33,976 acres of land (19,807 aces in Gharo and 14,169 acres in Jhimpir) has so far been provisionally allocated to 21 investors.

Pakistan has so far not used its solar potential to save on conventional energy sources. The solar potential exists in central and southern parts of the country where it receives 2,142 kWh of solar irradiation/m2/year. The government has assigned AEDB to electrify 7,874 remote off-grid villages in Sindh and Balochistan using alternative technologies particularly solar energy under ‘Roshan Pakistan Program’. AEDB has electrified 1,762 remote off-grid homes in 31 villages in all the four provinces. Another 3,000 remote off-grid homes in District Tharparker, Sindh are in process of electrification using solar energy, out of which 700 homes have already been electrified. The entire 100 villages are expected be electrified by June 2008.

Bio-fuels (ethanol and bio diesel) are strong contenders for provision of efficient and sustainable energy. Pakistan has started work on both the bio-ethanol (sugar-ethanol) and the cellulose biomass-bacteria route. AEDB has initiated the projects for bio-fuels in Pakistan. A pilot project of using Ethanol as n alternative fuel for vehicles has been launched in cooperation with HDIP and PSO. Furthermore, pilot project for production of bio-diesel has been successfully implemented and using local agriculture bio-diesel has been produced and used for village electrification.

Government has also introduced “The National Policy for Power Co-Generation by sugar industries (the Co-Gen Policy). Co-Generation is a highly-efficiency energy system that produces both electricity (mechanical Power) and valuable heat from a single fuel source. Pakistan has a potential of generating more than 3,000 MW of electricity through co-generation from its existing sugar industry.

If an energy shortage is prolonged a crisis management phase is enforced by authorities. Energy audits may be conducted to monitor usage. Various curfews with the intention of increasing energy conservation may be initiated to reduce consumption. To conserve power during the Central Asia energy crisis, if authorities in Tajikistan may order bars and cafes to operate by candlelight. Then why not he lavish and ostentatious life style can be strictly checked through the word of law.   

Even in the worst kind of energy crisis energy rationing and fuel rationing may be incurred. Panic buying may beset outlets as awareness of shortages spread. Facilities close down to save on heating oil; and factories cut production and lay off workers, thus leading towards stagflation.

Due to a lack of political viability on the issue, government mandated fuel prices hikes are unlikely and the unresolved dilemma of fossil fuel dependence is becoming a wicked problem. A global soft energy path seems improbable, due to the rebound effect. Conclusions that the world is heading towards an unprecedented large and potentially devastating global energy crisis due to a decline in the availability of cheap oil lead to calls for a decreasing dependency on fossil fuel. Other ideas have been proposed which concentrate on improved, energy-efficient design and development of urban infrastructure in developing nations.

Government funding for alternative energy is more likely to increase during an energy crisis, so too are incentives for oil exploration. Moreover, there are other ideas from scientists like: Professor Egil Lillestol has been trying to convince Norway that a nuclear reactor based on thorium would be a viable solution to the worlds growing energy demands without the environmental impact of coal, or the hazards of traditional nuclear energy. In order to support his argument, he claims that, there is no danger of a melt-down like the Chernobyl reactor. It produces minimal radioactive waste and can burn Plutonium waste from traditional nuclear reactors with additional energy output. It is not suitable for the production of weapon grade materials so there is no danger of nuclear proliferation. The energy contained in one kilogram of Thorium equals that of four thousand tons of coal while the global Thorium reserves could cover the world’s energy needs for thousands of years. Norway has an estimated 180 000 tons of Thorium which based on the current price of oil is equivalent to 250 thousand billion US$, or 1000 times the Norwegian oil fund.

Coal is China’s main source of energy providing around 70 % of its total demand. Its has launched Eleventh Five Year Plan 2006 – 2010 that establishes a fundamental energy strategy based on coal that includes production of coal fired electricity. China’s rocketing economy has driven the coal industry into a new era of efficient utilization. In pursuance of this strategy China will consume about 2.2 billion tons of coal by 2010. During the last few decades China has achieved enviable technological breakthrough in coal powered thermal electricity projects. Pakistan can benefit from its experience and expertise in utilizing its own coal reserves. Total coal reserves in Pakistan are estimated t 185 billions tones out of which 176 billion tones are located in Thar District of Sindh alone.

Pakistan’s present installed capacity of both hydel and thermal electricity generation is about 19500 MW whereas it has a hydel potential of more than 40000 MW. Now when the oil import bills have started to rise, it is most opportune time to develop and utilize sources of indigenous energy and eventually reduce dependency on imported oil. To give boost to coal powered electricity, Sindh Coal Authority and China’s Machinery and Trade Corporation have entered into an agreement for geological survey of Sindh coal fields for installation of a power plant there.

To meet the energy requirements of the country till 2030 the development of power projects will have to be planned meticulously and implemented with courage and commitment. Political short-sighted considerations and provincial prejudices should not be allowed to take precedence over larger national interests.

It has been estimated that total energy requirements of the country by 2030  will be around 160000 MW (round figure) whereas present generation capacity of the system is only 19000 MW. With the rapid growth of population and ever-increasing energy demand to keep pace with economic progress, this huge energy deficit has to be bridged up through hydel, thermal, nuclear and coal power stations. Fortunately Pakistan is capable of meeting this target with the potential at its disposal. For example its hydel potential is close to 40000 MW, Gas can produce 50000 M, coal can produce more than 50000 MW and the balance of 10000 MW can be produced with the help of nuclear power plants. A stage may come in too distant a future when coal takes over the entire power generation of the country.

Energy crisis of Pakistan, in a way, is the outflow of provincial prejudices that have plagued the national life for the last many decades. The project of Kala Bagh Dam was conceived almost half a century ago. Had it been constructed on time Pakistan would not have faced the kind of energy problem that it is confronted with today. All sorts of unreasonable objections have been raised from time to time and answered by competent authorities but to no avail.

A similar fate is staring the Gwadar mega project in the face. It has been built by China and Balochistan is its biggest beneficiary but its own provincial leadership is raising all kinds of frivolous objections to make it controversial by giving the project serious prejudicial twist. Like Kala Bagh this project too is directly linked to the resolution of country’s energy problem. It is time for the national leadership to realize the extreme multiple importance of the project and save it from falling victim to imaginary provincial misgivings. It is only to be hoped and prayed that this Project may not fall into the hands of egocentrics and myopic leaders.

Energy Crisis has incarnated a multi-headed monster which is eating away the politico-socio, Techno-Industrial as well as Economic fabrication of society bit by bit as termite eats away wood. It has hollowed the foundations of Pakistan ranging from Agriculture, Health, Education, Industrial, Environmental to transoceanic changes, treating contemporary age. In the age of intelligence and energy, it is mandatory for Pakistan to exploit the renewable as well as competitive energy resources in order to keep pace with the advancement of the superpowers.