Pakistan Energy Crisis: An Overview

Transcription

1 Pakistan Energy Crisis: An Overview

2 Contents Power Sector Highlights Pakistan Energy Stats Causes of Power Crisis Circular Debt Issue GoP s Initiatives for the Power Sector/Sectoral Recommendations VTT s brief Portfolio

3 The Power sector was restructured in 1998 with the creation of PEPCO (Pakistan Electric Power Company) Water & Power Development Authority s (WAPDA) has been structured into distinct corporate entities comprising of 4 GENCOs, 10 DISCOs and one TransCO (NTDC). These 10 DISCOs are responsible for distribution to the end users. KESC meets its overall demand with its own generation plus purchase from NTDC, IPPs and from Karachi Nuclear Power Plant. The Current structure of the power sector is: Energy Sources Thermal Hydro Power Brief Description Thermal power generation stands at 8,300MW but the thermal plants have low conversion efficiencies and are expensive to maintain/operate. Most of the thermal power plants installed by IPPs, use furnace oil which has become very expensive over the recent past. Only 34 % of total electricity generation is achieved thru hydro power. Currently we are producing 6555 MW against the potential of to MW NATIONAL TRANSMISSION & DESPATCH COMPANY Wind Solar Pakistan has a potential of producing wind energy ranging from MW to MW, yet power generation through wind is in initial stages in Pakistan and currently only a plant of 06 MW capacity has been installed in first phase in Jhampir by a Turkish company and 50 MW will be added shortly. Pakistan has a potential of more than 100,000 MW from solar energy. Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan. Agricultur al biomass /Biodiesel Pakistan has planned to generate 10 MW of electricity from municipal waste in Karachi followed by similar projects in twenty cities of the country Nuclear Pakistan s nuclear power generation has a capacity of 425 MW, but there are plans to increase this capacity substantially. Source: An Overview of Electricity Sector In Pakistan, Islamabad chamber of commerce & industry Key Abbreviations: GENCO ( Generation Companies DISCOs ( Distribution Companies) and IPPs(Independent Power Plants)

4 Power Generation Statistics Thermal Power Power Producer Power Station Installed Capacity WAPDA Thermal Power Station, Muzaffargarh 1350 MW WAPDA Thermal Power Station, Guddu 1655 MW WAPDA Thermal Power Station, Jamshoro 850 MW WAPDA Thermal Power Station, Larkana 150 MW WAPDA Thermal Power Station, Quetta 35 MW WAPDA Thermal Power Station, Pasni 17 MW KESC Thermal Power Station, Korangi 316 MW KESC Thermal Power Station, Bin Qasim 1260 MW IPP Hub Power Project 1292 MW IPP AES Lalpir Ltd, Mahmood Kot 362 MW Muzaffargar IPP AES Pak Gen, Mahmood Kot 365 MW Muzaffargar IPP Altern Energy Ltd, Attock 29 MW IPP Fauji Kabirwala Power Company, 157 MW Khanewal IPP Gul Ahmad Energy Ltd, Korangi 136 MW IPP Habibullah Coastal Power Limited 140 MW IPP Japan Power Generation, Lahore 120 MW IPP Kohenoor Energy Limited, Lahore 131 MW IPP Liberty Power Limited, Ghotki 232 MW IPP Rousch Power, Khanewal 412 MW IPP Saba Power Company, Sheikhupura 114 MW IPP Southern Electric Power Company 110 MW Limited, Raiwind IPP Tapal Energy Limited, Karachi 126 MW IPP Uch Power Limited, Dera Murad Jamali, 586 MW Nasirabad IPP Attock Gen Limited, Morgah Rawalpindi 165 MW IPP Atlas Power, Sheikhupura 225 MW IPP Engro Energy Limited, Karachi MW IPP Kot Addu Power Company Limited 1638 MW (Privatized) IPP Saif Power Plant Qadirabad, Sahiwal 225 MW IPP Sitara Energy 80 MW IPP Nishat Chunian Power 200 MW IPP Nishat Power Limited 200 MW Power Producer Power Station Installed Capacity WAPDA Tarbela 3478 MW WAPDA Mangla 1000 MW WAPDA Ghazi Barotha 1450 MW WAPDA Warsak 243 MW WAPDA Chashma 184 MW WAPDA Dargai 20 MW WAPDA Rasul 22 MW WAPDA Shadi-Waal 18 MW WAPDA Nandi pur 14 MW WAPDA Kurram Garhi 4 MW WAPDA Renala 1 MW WAPDA Chitral 1 MW WAPDA Jagran (AK) 30 MW WAPDA Khankhwar 72 MW WAPDA AllaiKhwar 121 MW Kalabagh 3800MW Future Bhasha 4600mw Projects Bunji 5400MW Dasu 3800MW WAPDA WAPDA WAPDA WAPDA WAPDA KESC KESC Hydro Power Gas Gas Turbine Power Station, 59 MW Shahdra Gas Turbine Power Station, 244 MW Faisalabad Gas Power Station, Multan 195 MW Gas Turbine Power Station, Kotri Gas Turbine Power Station, Panjgur Gas Turbine Power Station, Korangi Gas Turbine Power Station, SITE 174 MW 39 MW 80 MW 100 MW Power Producer Power Station Installed Capacity PAEC KANUPP 137 MW PAEC CHASNUPP 300 MW PAEC CHASNUPP 300 MW PAEC KHUSHAB 50 MW WAPDA FFC Energy Jhimpir Nuclear Power Steam Power Steam Power Station, Faisalabad Wind Power Solar Power Source: PPIB, Ministry of Water & Power, Alternate Energy development board 132 MW 6 MW Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan.

5 ROOTS OF PAKISTAN S ENERGY CRISIS Due to rising demand, power infrastructure issues, and poor governance severe electricity shortages have ensued Power outages have led to widespread rolling blackouts that have paralyzed industry and led to major civil unrest. As of June 2013, the electricity demand stood at about 11,000MW against generation of about 8,000MW. As a result, the utilities were resorting to about 10 hours of load-shedding per day across the country. This acute energy crises in Pakistan has its roots in the following causes, namely; Historic Demand and Supply situation in Pakistan Lack of Integrated Energy Planning & Demand Forecasting and absence of central & focused entity responsible for the Energy Sector Circular Debt. Imbalanced Energy Mix with heavy reliance on gas (47.5%) and Oil (30.5%) (72% imported) Non-utilization of vast indigenous resources of Thar Coal and Hydel potential Lack of effective project structuring, planning and implementation of identified and viable projects Transmission, distribution loses/theft Inadequate revenue collection by DISCOs Source: The Cause and Impacts of power sector circular debt in Pakistan Planning Commission/USAID ICCI Electricity Report A NEW ENERGY MIX FOR PAKISTAN-EMR Consult Crisis having direct impact on 48.4% decrease in FDI as compare to last year Closure of Industries resulting in Unemployment (According to the labor department sources, approx. 800,000 labors have lost their jobs ) Agriculture land irrigation Household s, schools and hospitals

6 Share of Increase in Circular Debt - FY One of the foremost reasons for Pakistan s Energy crises is the Circular Debt Issue that needs immediate remedies Primary Causes 2010 (Billion Rs.) 2011 (Billion Rs.) Reserve Debt (start of year) Non-Collection of DICSOs Receivables from: Federal Govt FATA (78.34) (Billion Rs.) Circular Debt is the amount of cash shortfall within the Central Power Purchasing Agency (CPPA) that it is unable to pay to the power supply companies. Circular Debt Primary Reasons Provincial Govts AJK Govt Tube wells (Agri) 3.46 (3.68) (3.12) Private Consumers KESC 4.04 (1.79) Total Non-collection (24.74) Tariff & Subsidy Issues Total Circular Debt Result of the difference between the actual cost of providing electricity in relation to revenues realized by the power distribution companies (DISCOs) Insufficient payments by DISCOs to CPPA due to poor revenue collection/governance Delays in tariff determination & fuel price fixation Delayed payment by the Ministry of Finance Transmission & distribution losses Stay orders granted by courts on fuel price adjustments charges Unfavorable generation mix of the GENCOs GOPs neglect in promoting demand-supply management, energy efficiency & renewable energy resources Improper payment arrears settlement and the need for enforceable authority of CPPA to collect due payments from DISCOs Source: PEPCO DISCOs Performance Stats Report 2012, Data from MoWP, USAID PDP Analysis

7 Distribution companies are facing line losses due to multiple reasons, but electricity theft and non-payments by the consumers are burning issues DISCOS (Losses/Theft) Pakistan lost Rs. 90 billion during the last five years in electricity theft and line losses FESCO 0.6 GEPCO LESCO 2.35 MEPCO SEPCO 3.6 HESCO 7.47 PEPCO KESCO 59 Billion (PKR) Pak-UK Chamber of Commerce & Industry President has urged upon the authorities to reduce 44 per cent losses and thefts in the electricity being produced in the country. Rs 360bn receivables strategy is required by PEPCO: More than Rs 360 billion became overdue towards public holding offices of central and provincial governments along with local power consumers, which created hurdles in minimizing the circular debt volume of the power sector. Source: ICCI Electricity Report The News, Daily times, Nation

8 Pakistan is one of the emerging economies of South Asia, where the government has declared the Power Sector as its top priority of investment The Government of Pakistan is taking all the necessary measures to build a more conducive environment, to resolve issues as quickly as possible. Long term planning and goals must be focused towards streamlining the foreign policy according to the country s economic and energy needs. Improving and increasing ties with future energy rich countries must not be neglected. Electricity Agreements / Prospects with Other Countries Brief details China Ongoing projects include Karot, Taunsa, Kohala and Bunji hydro-power Projects China has offered help in the construction of 50 MW wind power project in Jhampir (Sindh) that is to be completed in 2012 Moreover, China has planned to invest in 300 MW solar power projects in Pakistan. India India has offered to provide Pakistan with 5,000 megawatt electricity to fulfill its energy requirements on an urgent basis regularly which could be transmitted through Punjab. Iran 100 MW import project have been finalized and are ready for groundbreaking. Pakistan and Iran would move forward on import of 1,000 MW power project from Iran. Tajikistan Germany Central Asia South Asia (CASA-1000) is one of the biggest regional projects through which Tajikistan would export up to 1000 MW of electricity to Pakistan. AZUR energy group of Germany planned to setup 50MWAtt solar project in Pakistan, for which a feasibility report and site surveys of Multan and Bahawalpur were conducted. Qatar Pakistan is also interested in importing 500 million cubic feet per day of LNG from Qatar that produces 77 million tones per annum of LNG. The imported LNG will be initially provided to the power houses in the country to generate 2,500 mega watt of electricity. Norway Kuwait Norwegian company NBT has expressed interest in establishing a 500-megawatt wind power project in Pakistan, by investing about $1 billion in alternative energy Kuwait has extended $40 million to Pakistan for the construction of the de-sander, a vital part of the strategic $333.3 billion Neelum-Jhelum hydropower project. Upon its completion it will generate approximately 1,000 MW of electricity.

9 Pakistan is a suitable country for the installation of solar, wind power, coal fired plants, and can become an Asian leader in renewable energy due to its strategic endowments Pakistan falls under the list of countries with Excellent category wind speed of 7.7 m/s. As per a USAID Report, Pakistan can potentially produce 132,000 MWh of wind energy. The wind corridor, in Sindh province, alone has the ability to generate 40,000 MWh of wind electricity. The ratio of Debt to Equity is 80:20, with a guaranteed return on equity, by the government, in the form of partial paybacks of fuel costs, operations and maintenance cost, and taxes/duty. Pakistan has potential of more than 100,000 MW from solar energy. Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan. Alternative Energy Development Board (AEDB) is working for 20,000 solar water heaters in Gilgit Baltistan. Pakistan has estimated as the world's third-largest known coal reserves of 33.0 trillion tons in the south-eastern part of the country i.e. Thar The electricity production from coal is also cheaper than thermal generation as 2 percent usage of Thar coal could produce 20,000 Megawatts electricity. Pakistan s coal reserve has ZERO contribution in it s energy mix. Hence, there is a substantial room for investment considering, Abundant coal reserves, and a guaranteed 17% USD based return. Source: The Cause and Impacts of power sector circular debt in Pakistan Planning Commission/USAID ICCI Electricity Report USAID

10 Prioritized Items for Improvement of Pakistan Energy Crises The current energy crises in Pakistan warrants immediate measures for resolution, some recommendations for improvement are Promote hydro power and other domestic alternate sources of energy including solar, wind, coal and agriculture biomass/biodiesel New Government Plans Energy conservation and demand management programs be initiated GOP to remove the current overhang of circular debt and prevent its recurrence Power sector reforms to be initiated and existing power plants be overhauled to achieve maximum efficiency Undertake policies/programs to improve governance/performance of energy sector entities Decrease costs and Increase cash flows Ensure operational/financial integrity of the sector "The government has planned to gradually retire the power sector's huge circular debt to streamline the electricity generation chain that would bring the load-shedding under control. Implement international best practices including smart metering / automated meter reading (AMR) systems and Time of Use (TOU) tariff Resolve Tariff and subsidy disputes between provincial governments and CPPA/DISCOs Curb electricity thefts with stringent penalties Political appointment culture needs to be replaced with professionalism/merit Fuel allocation policies be introduced Relocate gas towards power production as its cheaper than imported furnace oil "The malfunctioning hardware as well as the incompetent operators at different power plants will be replaced, adding lists of all those who had so far been found sleeping on their jobs are already on the concerned authorities tables" Source: An Overview of Pakistan Energy Sector Report by Islamabad Chamber of Commerce & Industry (ICCI), The News

11 New Government has summarized some key problems in the current system and has proposed short, medium and long term solutions to resolve the energy crisis and they are highlighted in the 16 points... i. Creation of a Ministry of Energy and Natural Resources through the merger of Ministries of Water and Power and Petroleum and Natural Resources ii. Reforms of National Electric Power Regulatory Authority (NEPRA) iii. Reforms of Distribution Companies (DISCOS) iv. Reforms of Generating Companies (GENCOs) v. Permanent elimination of circular debt vi. Rationalization of energy tariffs in line with international prices across all fuels. vii. Reforms of Oil and Gas Regulatory Authority (OGRA) viii. Aggressive wellhead pricing for Oil and Gas exploration companies in order to substantially increase production of oil and gas ix. High priority to import gas through pipelines x. Expeditious setting up of coal and LNG import terminals, and coal transportation facilities xi. Development of Thar coal fields and setting up of at least 5,000 MW of new coal fired power plants under the lpp mode in Sindh. This will both create employment in rural Sindh and help solve our energy crisis. The plants to be designed on lignite quality coal and at first to be run on imported coal and when Thar coal is available, the plants to be switched to domestic coal xii. Developing consensus among the various stakeholders to facilitate setting up hydropower projects by the Federal and Provincial Governments. This will augment and conserve our water resources and also generate less expensive and clean electricity xiii. Developing alternative renewable energy sources, such as solar, wind, bagasse, biogas, and biomass projects, especially for off-grid and micro-grid applications. xiv. Setting up national energy efficiency standards. xv. Introducing solar-thermal water heaters for domestic and industrial use. xvi. Decentralizing and creating a wholesale market for electricity. These measures will not only solve Pakistan s lingering energy crisis but also shift the focus of the energy sector from high cost imported fuels to indigenous energy resources and reduce the total energy import bill and add at least 3.5% to the annual GDP. At the same time investment of about US$ 20 billion to generate 10,000 MW of electricity in the next 5 years will stimulate overall growth of the economy. Source:

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