Pakistan's Energy Problem & Solution

Attention: open in a new window. PDFPrintE-mail

Economic Updates - Economic Fundamentals

Pakistan needs a range of innovative solutions to overcome the country's acute energy problem. We should develop a strategy for the development and implementation of an Integrated Energy Plan, the setting up of a National Energy Authority and development of alternative energies as a way of weaning Pakistan off its crushing dependency on expensive Middle East oil.

Immediate steps need to be taken to revive the economy and save the country's precious foreign exchange by pursuing smart and innovative polices in the energy sector. The allocation of gas must be prioritised. At the moment, 50% of Pakistan's energy needs are being met from natural gas produced in Pakistan, which is about 4 billion cubic feet per day. The first priority should be the power sector because without power, industries won't run and the whole economy depends on the uninterrupted supply of power. Second priority should be industry, like fertilisers and textiles because these industries create jobs, support agriculture and result in exports for the country, The third sector should be commercial establishments, like hotels. The fourth should be CNG for public transport only and finally, domestic consumption.

At present we are giving too much emphasis to the domestic sector and CNG. The automotive use of gas is taking about 300 million cubic feet of gas per day and if that is used for power generation instead, 1200 megawatts of power could easily be generated. We should stop giving gas to domestic water heating. In India, China, Sri Lanka, Bangladesh and Nepal all domestic water heaters are run on solar or electric. The more gas we give to power sector, the cost of electricity generation will come down and thereby reduce circular debt.

We are also wasting a lot of gas. The line losses of Sui southern and northern are running at over 12%. Since over 4 billion cubic feet of gas is being produced per day, this mean that more than 450 million cubic feet of gas is being wasted in transmission losses, theft and other inefficiencies in the transmission system. Again, another 1300 megawatts of power project could be run if the losses are reduced to 5%.

In the medium-term, we need to look at Pakistan's total energy mix. Pakistan energy mix is highly dependent on hydrocarbons ie 50% is gas, about 30% is oil and only about 20% is hydel, imported coal and nuclear.

We must immediately concentrate on producing indigenous and other local sources of energy. In India, 60% and in China 70% of electricity is produced from coal. We should urgently start a programme to develop the local coal mines and lay a policy stating that all new power projects will be based on imported /indigenous coal and not on oil/gas. We should also convert existing oil fired power generation to coal fired, even if that involves importing coal. This will reduce the cost of electricity.

In the long term we need to develop hydel energy and alternative energy sources like wind and solar. We have a wind corridor near Gharo which according to some experts can produce about 50,000 megawatts of electricity. India is producing more than 10,000 megawatts from wind energy. This is a sort of solution we should be looking at rather than trying to use fuel oil. Beside we have a huge potential for solar energy which has hardly been tapped and which would be ideal for off grid locations.

The government needs to set up a National Energy Authority. If you have a National Energy Authority which not only prepares the plan but is also entrusted the task of executing the plan, we will have a more focused approach to solving the energy problem. This authority would report directly to the Prime Minister and the whole task would be to prepare an Integrated Energy Plan and execute it within the well-defined timeline. If we did this, we would make huge progress in all fields of energy.

We need to have the right policy framework to encourage oil exploration so that we develop indigenous hydrocarbon reserves, as we have a promising sedimentary basin, not fully explored. The locals must be made stakeholders in the area where oil and gas projects are initiated. So, if a gas field is found in Baluchistan, 10% free equity should be given to the locals so they will know that their livelihood depends on that project. They will provide you with the security so that nothing happens to disturb the oil and gas production.

Similarly the Iran-Pakistan gas pipeline is a very good project. Iran is contiguous with Pakistan and the Iranians have already built all the facilities up to the border. This is the most logical pipeline project because Iran has one of the largest gas reserves in the world and we could easily get one billion cubic feet of gas from Iran if we had the political will to resist US pressure and build the pipeline in Pakistan.

Pakistan has a great future. If you get the right people in the right jobs, you will see Pakistan prosper greatly. There are three important factors: you must have a strategic vision, you need people who put national interest over personal interest and you need to have people with competence and integrity to manage the affairs of the economy and of the state. We have tremendous natural resources, an enterprising population; we are geopolitically situated in a very important region, so we have all the key ingredients to move forward at a rapid rate.

Forex open Market rates & comments Archive