by Azhar Bukhari
Opportunities are in abundance
Pakistan only needs a committed push to set right foot for a sparkling era
Pakistan has recently indicated its commitment to renewable energy sources, but realising these in practice could still be a long way off.
The country is blessed with an abundance of renewable energy potential, but so far this remains unharnessed except for a few large hydroelectric projects.
The country, historically an energy importer, is facing serious energy shortages while global fossil fuel prices continue their upward spiral. The effects on the economy are marked: interruptions in energy supply to industry, for instance, have hit the country's exports hard.
Experts are of the view that Pakistan needs to initiate a transition towards greater use of renewable energy as an indigenous, clean and abundant resource.
But the government drive for renewables has its critics. The problem, says an energy expert, is that the alternative energy initiatives have been offered at a stage when the damage has already been done to the economy.
"The gap between demand and supply of power has been allowed to grow by not addressing the interrupted supply to the domestic and agriculture sector as much as the industrial sector," he said. As a result, the cost of energy and energy production has already made Pakistan's products uncompetitive compared with those of India.
He suggested that all the country's power plants should be coal-fired, and all industries that need fuel for heating purposes, such as cement factories, should use coal, a suggestion he justifies on the basis of the huge reserves of coal in the provinces of Sindh and Punjab. The coal reserves’ quality is good and it can be a better substitute than high-priced oil imports.
Ali Zulqarnain, an engineering professor and alternative energy researcher at NED University of Engineering & Technology in Karachi, writes in an article, "There are areas in and around Karachi suitable for installing both solar and wind energy plants to produce cheap electricity. Many science activists also advocate the use of hydropower, since Pakistan is a water-abundant country.”
Interestingly, despite having the world's best water resources, the production of hydropower has been sidelined by the government. If the government had properly exploited hydropower, the country could now be enjoying a 5,000 megawatt power supply from the Kunhar-Neelum-Jhelum river system in Azad, Kashmir, as hydropower projects could also reduce the cost of electricity.
It is worth to mention here that, in 2001, the Water and Power Development Authority of Pakistan identified 22 sites for launching hydropower projects to meet the ever-increasing demand for cheap power. It indicated that about 15,074 megawatts could be generated on the completion of these projects, which would also meet the water irrigation requirements for the growing agriculture sector.
In terms of social equity, renewable energy could also raise Pakistan's present low per-capita consumption of energy and improve access to modern energy supplies, helping to alleviate poverty and reduce the burden on rural women, who collect biomass for fuel.
In the future, Pakistan may adopt other technologies for generating power from renewable energy sources, such as municipal waste and landfill methane geothermal recovery, anaerobic biomass gasification, biological fuels, fuel cells and ocean waves.
Currently, Pakistan is witnessing a serious power crisis due to the depletion of conventional sources of energy. Experts believe that global warming and deteriorating environmental conditions are adversely affecting Pakistan’s water resources. The rivers are dying out at a slow but steady pace and with them, Pakistan’s chances of producing cheap hydropower are diminishing as well.
Although huge coal reserves that can be used for power generation and for resolving the prevalent power crisis have been discovered lately in Sindh, but mining these resources requires immense amounts of investment. Moreover, this is by no means an environment-friendly solution to the problem.
The most appropriate answer, according to some experts, is exploring renewable sources of energy such as wind, solar and even tidal energy. These not only have huge power-generation potential, but are also extremely environment-friendly and are successfully being used for electricity-generation in various countries of the world.
Unfortunately, not much research is being carried out in Pakistan for utilizing renewable sources of energy for power production. This is despite the fact that an Alternate Energy Development Board (AEDB) exists in the country. The purpose of this board is to raise awareness about renewable energy sources and to promote them in the country.
According to some other experts, the total solar energy available to the earth is approximately 3,850 ZetaJoules (ZJ) per year while the worldwide energy consumption was 0.571 ZJ in 2005.
Another area with respect to renewable energy resources is the exploration of wind power, the conversion of wind energy into electricity, using wind turbines. By the end of 2008, the worldwide capacity of wind-powered generators was 95.9 GigaWatts (GW).
Currently, wind produces just over one percent of worldwide electricity use, and accounts for approximately 19 percent of electricity production in Denmark, nine percent in Spain and Portugal, and six percent in Germany and the Republic of Ireland. Pakistan however, lags behind in this area as well, despite the fact that in neighbouring countries, such as India and China, the potential of wind power is successfully being used for electricity generation, albeit at a small scale. More importantly, extensive research is being carried out in this area in these countries.
Another area which needs the immediate attention of local authorities concerned is tidal power, also known as tidal energy. This is a form of hydropower that exploits the movement of water caused by tidal currents or the rise and fall in sea levels due to the tides.
Tidal power is yet to be widely used anywhere in the world, but it also has the potential for future electricity generation. Experts even believe that it is more profitable than wind energy and solar power.
In Pakistan, which has been gifted with over 700 kilometers of coastline, tidal power can prove to be a solution to the perpetual power crisis. In order to do that, however, authorities concerned will have to change their mindset and attitude towards emerging as well as environmental-friendly technologies.
Interestingly, at a time when extensive research is being carried out around the globe for finding cheap sources of energy, many people in Pakistan have not even heard of unconventional technologies being used elsewhere in the world. These include geothermal power, which also has the potential to contribute towards eliminating the persisting power crisis in the country.
Geothermal power is energy generated by heat stored under the Earth’s surface or the collection of absorbed heat in the atmosphere and oceans.
Similarly, biofuels, biomass and wave power are some other potential energy sources which need to be explored by authorities concerned, researchers, and investors, in order to provide electricity to far-flung and remote areas of the country, as well as to meet the growing demand of electricity for industrialization and agriculture.
Most importantly, thousands of tonnes of domestic waste produced daily produced in the country is poorly managed and is dumped without keeping in view its effects on the local environment. This waste can also be used for electricity production by using waste heat electricity generation technology. Even though this method would not be as environment-friendly as renewable energy sources, but it can help diminish the gap in demand and supply of the electricity to Pakistan.
The Explorers...
Monday, August 24, 2009
Friday, August 14, 2009
Nokia providing low-cost durable cell phones
Azhar Bukhari talks with Nokia Care Manager Pakistan, Reza Burney to discuss future opportunities in telecom
It is the need of the hour to enable provision of affordable mobile phones for masses. We will soon collaborate with different cellular phone companies that can offer low-cost services along with a connection to bring to our customers a mobile phone package that would give true value for money.
This was the view point of Nokia Care Manager Pakistan and Afganistan, Reza Burney while exclusively talking to The Post.
Reza said that Nokia has introduced a network of showrooms bearing the name of Nokia Care Centre to provide convenience to Nokia mobile phone users all over the country. He maintained that the facility is currently in Karachi along with other major cities like Lahore, Faisalabad, Islamabad, Multan and more where mobile phones are serviced under the vigilance of highly-skilled and experienced engineers.
He said that Nokia Care has been operative in Pakistan for the past three years. Nokia Pakistan initiated this facility to offer reliable customer service to Nokia users all over Pakistan. To date, 85% Pakistani Nokia consumers have utilized their one-year warranty given to them by different dealers and got their damaged Nokia phones fixed by Nokia Care Centre where all mobile phones are repaired under the supervision of well-experienced engineers who repair mobile phones with the help of latest software which are then returned to Nokia Care customers.
Responding to a question, Reza Burney said that those cities in which Nokia Care is not physically present, Nokia customers are entertained by using the support of a reputable, local courier company that transports the damaged phones of the area to the Nokia Care Centre located in the nearest city. Once refurbished, the mobile phones are returned to customers by using the assistance of same courier company.
He added that cellular phone companies operating in Afghanistan have signed an agreement with Nokia that would make available to Afghani consumers affordable Nokia mobile phones that come pre-loaded with a connection to facilitate easy acquiring of a cell phone which has turned into an essential in today’s world of fast-moving technology. Nokia wants to provide the same ease of acquiring a cell phone for Pakistani consumers in just the same way. To make this possible, Nokia in Pakistan is already in talks with cellular phone companies.
Reza Burney further added that Nokia devices are the first preference of Asian as well as European citizens. Keeping this in mind, a complete range of latest and beautiful Nokia mobile phones belonging to different series are available in the market and need no introduction. All Nokia Care Centre services are completely online and performance details of every Nokia Care Centre are monitored by Nokia Company itself which is great news for customers.
Answering a question, Reza Burney said that apart from warranty claims, smuggled and stolen mobile phones are never repaired or serviced in any way because Nokia Mobile Phone Company wants to maintain its high-standards and reputation all over the world. After a short verification process, we even entertain those mobile phones at our Care Centers that have no warranty claim. We check such phones and try to fix them if possible. For this particular reason, we serve thousands of customers not in Karachi but all over the country. According to an estimate, currently each Nokia Care Centre is catering around four thousand Nokia mobile phone users in a timely and efficient manner.
Speaking about stolen mobile phones, Reza Burney said that cell phones that are stolen and reported to CPLC (Citizen Police Liaison Committee) by customers are brought to the notice of Nokia Care Centre. Using the IMEI number, which is a unique number to identify a cell phone, the stolen cell phone is remotely blocked and rendered futile for usage. All the details of such stolen cell phones are maintained online by Nokia Care Centre. The entire software system of Nokia Company is kept under high security and this, in essence, is the secret of our success. He maintained that along with promptly fixing the mobile phone brought to Nokia Care Centre by Nokia Customers, we also replace mobile phone parts such as LCDs and various kinds of ICs if required. Damaged mobile phone parts are replaced by our experienced engineers who repair the cell phone and make it ready for regular use. No compromise is made on quality standards while servicing a Nokia mobile phone because Nokia is renowned world over due to the high level of consumer confidence in Nokia products and services.
“To further strengthen consumer confidence and offer greater convenience to our consumers, Nokia will soon establish state-of-the-art labs in different mobile phone markets in Karachi.” Reza maintained that the facility will be equipped with the most advanced tools to fix Nokia phones that will be collected from the mobile phone market everyday.
He said that Pakistan is amongst the top priority countries for Nokia as it is now very much on the global map and up to the mark on everything that is happening in the world.
“Therefore, in Pakistan, the price band for mobile phones may be slightly smaller but there are people who have both the money and the desire for expensive gadgets and that is what we are targeting,” he maintained.
Raza said, Pakistan is a very critical market for Nokia and with a clear market leadership, Nokia has commitment to ensure that its customers are getting quality after sales service for their devices. Nokia Care centers are striving to achieve the objective of servicing the local market with the help of trained technicians backed by company original components, he added.
Burney said that the current era is all about who has the information first. Therefore nowadays people are spending a lot of time online and since they are globally connected at one time, information is at their fingertips. He elaborated that Nokia based their strategies on consumer needs and as marketing strategies were an evolutionary process, it also constantly evolved their techniques based on what the consumers were focusing on.
He believed that the new technologically advanced and expensive products were not creating an undesirable demand in the society but were rather catering to already existent needs of the consumers.
“If we don’t do it, somebody else will,” he further expressed.
Burney said at Nokia they ensured that their products were meaningful and had context rather than being just another expensive product in the market. He said that all their staff was trained in advance to provide after-sales services and customer care.
He said that yet consumers in Middle East and Africa are very conscious about the look of the mobile than the features that were available in it. He voiced that in Pakistan, consumers were more into colors being vibrant due to the bright traditional cultures here, while he added that in Europe, consumers preferred more conservative colors such as black and white.
Burney also put in that since Pakistan was an emerging market, bulk of the consumers segment were those who purchased low cost mobile phones whereas there was also a significant segment that did nothing except make or receive calls.
“Pakistan is following the trend of any emerging country but this time with the launch of N97, Pakistan is ahead of more developed countries,” he added. The Nokia Care Manager also spoke about the pirated versions of their mobile phones that cheated the consumers of their money.
“I feel very passionate and hurt when loyal customers get deceived which also damages the company’s name,” he said. “Because the government has imposed taxes that make no sense, consumers are paying the price, for this country is infested with the grey market,” he added.
He informed that to identify an original cell phone, mobile dealers have a number displayed in their stores which reads ‘SMS warranty check’. A consumer can send in the mobile’s IMEI number to the stated SMS number which would reply back saying that it had original warranty in Pakistan, which in turn help the consumer to identify an authentic mobile phone.
Raza said that Pakistan needs to reduce duties on cell phones to encourage original products to enter the country. He also said that one way to identify a fake was if the product was being sold for half the price, then consumers should be wary of it.
To a question regarding Nokia’s investments into the country, the Care Manager stated that Pakistan was a very important portfolio for the multinational company as with a significant population, it made a lucrative consumer market.
However, Nokia already had nine plants all over the world that were fulfilling their mobile phones demand in the market.
While applauding federal government’s efforts, Burney said that it is fully committed to the development of telecom sector and has taken a number of initiatives aimed at supporting the mobile sector to leverage its strength for growth of economy and social inclusion of all sections of population.
He said that Pakistan has become a destination for investments in IT and has attracted US$ 9 billion Foreign Direct Investment (FDI) which clearly reflects the confidence of the investors.
He said that telecom sector is a high potential area as more and more people are subscribing to the mobile telephone services.
It is the need of the hour to enable provision of affordable mobile phones for masses. We will soon collaborate with different cellular phone companies that can offer low-cost services along with a connection to bring to our customers a mobile phone package that would give true value for money.
This was the view point of Nokia Care Manager Pakistan and Afganistan, Reza Burney while exclusively talking to The Post.
Reza said that Nokia has introduced a network of showrooms bearing the name of Nokia Care Centre to provide convenience to Nokia mobile phone users all over the country. He maintained that the facility is currently in Karachi along with other major cities like Lahore, Faisalabad, Islamabad, Multan and more where mobile phones are serviced under the vigilance of highly-skilled and experienced engineers.
He said that Nokia Care has been operative in Pakistan for the past three years. Nokia Pakistan initiated this facility to offer reliable customer service to Nokia users all over Pakistan. To date, 85% Pakistani Nokia consumers have utilized their one-year warranty given to them by different dealers and got their damaged Nokia phones fixed by Nokia Care Centre where all mobile phones are repaired under the supervision of well-experienced engineers who repair mobile phones with the help of latest software which are then returned to Nokia Care customers.
Responding to a question, Reza Burney said that those cities in which Nokia Care is not physically present, Nokia customers are entertained by using the support of a reputable, local courier company that transports the damaged phones of the area to the Nokia Care Centre located in the nearest city. Once refurbished, the mobile phones are returned to customers by using the assistance of same courier company.
He added that cellular phone companies operating in Afghanistan have signed an agreement with Nokia that would make available to Afghani consumers affordable Nokia mobile phones that come pre-loaded with a connection to facilitate easy acquiring of a cell phone which has turned into an essential in today’s world of fast-moving technology. Nokia wants to provide the same ease of acquiring a cell phone for Pakistani consumers in just the same way. To make this possible, Nokia in Pakistan is already in talks with cellular phone companies.
Reza Burney further added that Nokia devices are the first preference of Asian as well as European citizens. Keeping this in mind, a complete range of latest and beautiful Nokia mobile phones belonging to different series are available in the market and need no introduction. All Nokia Care Centre services are completely online and performance details of every Nokia Care Centre are monitored by Nokia Company itself which is great news for customers.
Answering a question, Reza Burney said that apart from warranty claims, smuggled and stolen mobile phones are never repaired or serviced in any way because Nokia Mobile Phone Company wants to maintain its high-standards and reputation all over the world. After a short verification process, we even entertain those mobile phones at our Care Centers that have no warranty claim. We check such phones and try to fix them if possible. For this particular reason, we serve thousands of customers not in Karachi but all over the country. According to an estimate, currently each Nokia Care Centre is catering around four thousand Nokia mobile phone users in a timely and efficient manner.
Speaking about stolen mobile phones, Reza Burney said that cell phones that are stolen and reported to CPLC (Citizen Police Liaison Committee) by customers are brought to the notice of Nokia Care Centre. Using the IMEI number, which is a unique number to identify a cell phone, the stolen cell phone is remotely blocked and rendered futile for usage. All the details of such stolen cell phones are maintained online by Nokia Care Centre. The entire software system of Nokia Company is kept under high security and this, in essence, is the secret of our success. He maintained that along with promptly fixing the mobile phone brought to Nokia Care Centre by Nokia Customers, we also replace mobile phone parts such as LCDs and various kinds of ICs if required. Damaged mobile phone parts are replaced by our experienced engineers who repair the cell phone and make it ready for regular use. No compromise is made on quality standards while servicing a Nokia mobile phone because Nokia is renowned world over due to the high level of consumer confidence in Nokia products and services.
“To further strengthen consumer confidence and offer greater convenience to our consumers, Nokia will soon establish state-of-the-art labs in different mobile phone markets in Karachi.” Reza maintained that the facility will be equipped with the most advanced tools to fix Nokia phones that will be collected from the mobile phone market everyday.
He said that Pakistan is amongst the top priority countries for Nokia as it is now very much on the global map and up to the mark on everything that is happening in the world.
“Therefore, in Pakistan, the price band for mobile phones may be slightly smaller but there are people who have both the money and the desire for expensive gadgets and that is what we are targeting,” he maintained.
Raza said, Pakistan is a very critical market for Nokia and with a clear market leadership, Nokia has commitment to ensure that its customers are getting quality after sales service for their devices. Nokia Care centers are striving to achieve the objective of servicing the local market with the help of trained technicians backed by company original components, he added.
Burney said that the current era is all about who has the information first. Therefore nowadays people are spending a lot of time online and since they are globally connected at one time, information is at their fingertips. He elaborated that Nokia based their strategies on consumer needs and as marketing strategies were an evolutionary process, it also constantly evolved their techniques based on what the consumers were focusing on.
He believed that the new technologically advanced and expensive products were not creating an undesirable demand in the society but were rather catering to already existent needs of the consumers.
“If we don’t do it, somebody else will,” he further expressed.
Burney said at Nokia they ensured that their products were meaningful and had context rather than being just another expensive product in the market. He said that all their staff was trained in advance to provide after-sales services and customer care.
He said that yet consumers in Middle East and Africa are very conscious about the look of the mobile than the features that were available in it. He voiced that in Pakistan, consumers were more into colors being vibrant due to the bright traditional cultures here, while he added that in Europe, consumers preferred more conservative colors such as black and white.
Burney also put in that since Pakistan was an emerging market, bulk of the consumers segment were those who purchased low cost mobile phones whereas there was also a significant segment that did nothing except make or receive calls.
“Pakistan is following the trend of any emerging country but this time with the launch of N97, Pakistan is ahead of more developed countries,” he added. The Nokia Care Manager also spoke about the pirated versions of their mobile phones that cheated the consumers of their money.
“I feel very passionate and hurt when loyal customers get deceived which also damages the company’s name,” he said. “Because the government has imposed taxes that make no sense, consumers are paying the price, for this country is infested with the grey market,” he added.
He informed that to identify an original cell phone, mobile dealers have a number displayed in their stores which reads ‘SMS warranty check’. A consumer can send in the mobile’s IMEI number to the stated SMS number which would reply back saying that it had original warranty in Pakistan, which in turn help the consumer to identify an authentic mobile phone.
Raza said that Pakistan needs to reduce duties on cell phones to encourage original products to enter the country. He also said that one way to identify a fake was if the product was being sold for half the price, then consumers should be wary of it.
To a question regarding Nokia’s investments into the country, the Care Manager stated that Pakistan was a very important portfolio for the multinational company as with a significant population, it made a lucrative consumer market.
However, Nokia already had nine plants all over the world that were fulfilling their mobile phones demand in the market.
While applauding federal government’s efforts, Burney said that it is fully committed to the development of telecom sector and has taken a number of initiatives aimed at supporting the mobile sector to leverage its strength for growth of economy and social inclusion of all sections of population.
He said that Pakistan has become a destination for investments in IT and has attracted US$ 9 billion Foreign Direct Investment (FDI) which clearly reflects the confidence of the investors.
He said that telecom sector is a high potential area as more and more people are subscribing to the mobile telephone services.
Monday, August 3, 2009
No way out of increase in power tariff
by Azhar Bukhari
The countrymen, willingly or unwillingly, will have to pay Rs 12-14 per unit, if the government continues following the current electricity generation process, as 70 per cent of total power production is coming from thermal power plants either using Natural Gas or Furnace oil, while the cost of furnace oil for generating one unit of electricity is about Rs 16-18.
The experts of energy sector have revealed that total installed power production capacity in country is about 19,500 MW, out of which Hydel Power is only 6,000 MW, balance of 13,500 MW is thermal using Furnace Oil. Currently, total demand of power in country is stood at 15,000 MW and the production is varying between 11,000 to 12,000 MW, as the gap between demand and supply is of about 3,000 to 4,000 MW.
A prominent analyst on power issues, on the conditions of anonymity as he considers advocating increases in tariff could go wrong to his repute said either the present government nor the previous government was responsible for current power crisis, it was the entire electricity generation system which brought up an issue to a young crisis.
He said that a comparatively cheaper fossil fuel, natural gas was to be provided for 5,800 MW to various thermal plants, but in actual fact much less gas is being made available, the deficiency is being filled through high-cost furnace oil. It is worth to mention here that in the recent past, only furnace oil was used as fuel for about 9000 MW generation.
Current price of furnace oil is about Rs 39,500 to 40,000 per ton, which amounts upto Rs 39.5 per kg. On an average one kg of furnace oil produces 3.8 kWh of electricity. Therefore, one unit (kWh) of the electricity produced by all thermal plants using furnace oil is Rs 16 per unit. According to WAPDA/IPP agreement, the private power producers will charge WAPDA the actual fuel cost for which they have a direct contract with PSO.
Focusing only how to counter terrorism, the federal government is also constantly ignoring writing on the wall, which is clearly indicating that Pakistan has entered into an arena of power crisis. Admitting this reality, Prime Minister Gilani has told the countrymen that electricity was not such a thing which could be bought from the market it is to be generated and the process of electricity generation takes time. This is why the elected opposition is hesitant to stand with the people on the issue.
Thus, coping with energy problems is no longer a matter of days or months, even though the government would enhance the production yet it could not sustain current power tariff, as the only solution lies in complete overhauling of electricity generation structure.
However, the production cost of furnace oil electricity is Rs 16 per unit but adding to it the transmission, distribution cost (including loses), the total cost of such electricity works out to approximately Rs 20 per kWh. The difference between WAPDA tariff and the furnace oil electricity is Rs15 per kWh. It is estimated that the country consumes at least 27 billion units of electricity produced annually through furnace oil, which amounts to the total deficit of Rs 435 Billion. If WAPDA has to balance its books it would require a subsidy of Rs 435 Billion. This deficit is somewhat reduced due to cheap power produced through hydel energy and natural gas, but the deficit cannot change substantially, unless bulk of electricity is produced through hydel energy.
A deficit of Rs 300-350 Billion cannot be sustained, the government does not have resources to pay such a huge subsidy, the only remaining way to decrease the deficit is to increase the power tariff, which would not earn good name for the federal government and could also cost its regime. The cost of production is already high at red level in the country, if the government decide to further increase power tariff, it could reversely effect large scale manufacturing sector resulting more difficulties both for countrymen and the federal government.
In the absence of extremely heavy subsidy, WAPDA has to delay payments to IPPs and also to the oil companies. The result is that IPPs are now producing much less electricity than their capacity.
Thus Pakistan can’t afford electricity produced through oil, but interestingly Prime Minister, Yousaf Raza Gilani has directed Ministry of Water and Power to ensure daily delivery of 35,000 tons of furnace oil for power plants, which would cost Rs 41.475 billions per month.
According to the experts, another factor of increasing cost of power production is that the IPPs, and WAPDA owned thermal plants are averaging about 50 percent plant factor, as they are not being used to their potential level. It is estimated that 70 to 80 percent plant factor is quite feasible and require only better maintenance of such plants. Moreover, a higher plant factor on these power stations can provide 20 to 30 percent more energy, which could evade the current shortage to a certain extent. Improving the plant factor of the existing plants is far more economical than setting up new plants, although new plants will still be needed.
The current power crisis is grossly due to high dependency on precious fossil fuels, since the government is busy only to counter terrorism the country has to prepare itself at least for the next several years to cope with power crisis, as no immediate cheaper alternate solutions are available. The only residual way for the government to decrease both fiscal and WAPDA deficit is to increase the power tariff.
Moreover, prominent Hydel Projects have not been undertaken, neither the indigenous coal mining has started, investments in the existing as well as new gas field have been lacking. The policy orientation needs a drastic modification and indigenous resource like hydel energy production as well as development of coal mining and new gas fields should be the top priority.
The countrymen, willingly or unwillingly, will have to pay Rs 12-14 per unit, if the government continues following the current electricity generation process, as 70 per cent of total power production is coming from thermal power plants either using Natural Gas or Furnace oil, while the cost of furnace oil for generating one unit of electricity is about Rs 16-18.
The experts of energy sector have revealed that total installed power production capacity in country is about 19,500 MW, out of which Hydel Power is only 6,000 MW, balance of 13,500 MW is thermal using Furnace Oil. Currently, total demand of power in country is stood at 15,000 MW and the production is varying between 11,000 to 12,000 MW, as the gap between demand and supply is of about 3,000 to 4,000 MW.
A prominent analyst on power issues, on the conditions of anonymity as he considers advocating increases in tariff could go wrong to his repute said either the present government nor the previous government was responsible for current power crisis, it was the entire electricity generation system which brought up an issue to a young crisis.
He said that a comparatively cheaper fossil fuel, natural gas was to be provided for 5,800 MW to various thermal plants, but in actual fact much less gas is being made available, the deficiency is being filled through high-cost furnace oil. It is worth to mention here that in the recent past, only furnace oil was used as fuel for about 9000 MW generation.
Current price of furnace oil is about Rs 39,500 to 40,000 per ton, which amounts upto Rs 39.5 per kg. On an average one kg of furnace oil produces 3.8 kWh of electricity. Therefore, one unit (kWh) of the electricity produced by all thermal plants using furnace oil is Rs 16 per unit. According to WAPDA/IPP agreement, the private power producers will charge WAPDA the actual fuel cost for which they have a direct contract with PSO.
Focusing only how to counter terrorism, the federal government is also constantly ignoring writing on the wall, which is clearly indicating that Pakistan has entered into an arena of power crisis. Admitting this reality, Prime Minister Gilani has told the countrymen that electricity was not such a thing which could be bought from the market it is to be generated and the process of electricity generation takes time. This is why the elected opposition is hesitant to stand with the people on the issue.
Thus, coping with energy problems is no longer a matter of days or months, even though the government would enhance the production yet it could not sustain current power tariff, as the only solution lies in complete overhauling of electricity generation structure.
However, the production cost of furnace oil electricity is Rs 16 per unit but adding to it the transmission, distribution cost (including loses), the total cost of such electricity works out to approximately Rs 20 per kWh. The difference between WAPDA tariff and the furnace oil electricity is Rs15 per kWh. It is estimated that the country consumes at least 27 billion units of electricity produced annually through furnace oil, which amounts to the total deficit of Rs 435 Billion. If WAPDA has to balance its books it would require a subsidy of Rs 435 Billion. This deficit is somewhat reduced due to cheap power produced through hydel energy and natural gas, but the deficit cannot change substantially, unless bulk of electricity is produced through hydel energy.
A deficit of Rs 300-350 Billion cannot be sustained, the government does not have resources to pay such a huge subsidy, the only remaining way to decrease the deficit is to increase the power tariff, which would not earn good name for the federal government and could also cost its regime. The cost of production is already high at red level in the country, if the government decide to further increase power tariff, it could reversely effect large scale manufacturing sector resulting more difficulties both for countrymen and the federal government.
In the absence of extremely heavy subsidy, WAPDA has to delay payments to IPPs and also to the oil companies. The result is that IPPs are now producing much less electricity than their capacity.
Thus Pakistan can’t afford electricity produced through oil, but interestingly Prime Minister, Yousaf Raza Gilani has directed Ministry of Water and Power to ensure daily delivery of 35,000 tons of furnace oil for power plants, which would cost Rs 41.475 billions per month.
According to the experts, another factor of increasing cost of power production is that the IPPs, and WAPDA owned thermal plants are averaging about 50 percent plant factor, as they are not being used to their potential level. It is estimated that 70 to 80 percent plant factor is quite feasible and require only better maintenance of such plants. Moreover, a higher plant factor on these power stations can provide 20 to 30 percent more energy, which could evade the current shortage to a certain extent. Improving the plant factor of the existing plants is far more economical than setting up new plants, although new plants will still be needed.
The current power crisis is grossly due to high dependency on precious fossil fuels, since the government is busy only to counter terrorism the country has to prepare itself at least for the next several years to cope with power crisis, as no immediate cheaper alternate solutions are available. The only residual way for the government to decrease both fiscal and WAPDA deficit is to increase the power tariff.
Moreover, prominent Hydel Projects have not been undertaken, neither the indigenous coal mining has started, investments in the existing as well as new gas field have been lacking. The policy orientation needs a drastic modification and indigenous resource like hydel energy production as well as development of coal mining and new gas fields should be the top priority.
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