Energy crisis in Pakistan

Transcription

1 Energy crisis in Pakistan

2 he Diagnosis ey reasons behind current and previous energy rises: 1. Lack of long term integrated planning and implementation for last 40 years 2. Ignored indigenous resources 3. Dependence on imported furnace oil 4. Lack of political will to reform / deregulate 2

3 Lack of long term integrated planning 1994 Power Policy a late response to chronic shortages 1994 Policy added 6,000 MW of mostly imported thermal between Thermal share increased from 30% to 70% Led to expensive surplus capacity by early 2000s Surplus bred complacency; Political witch hunt in late 90s drove away investors Electricity demand jumped to 10% p.a. between As a late, knee jerk response, a new wave of IPPs approved between

4 Lack of long term integrated planning (cont d) 3,700 MW new capacity came online in Again, based on furnace oil Or gas that was not available Rental Power Plants fiasco due to short term measures 100 MW being produced vs. 2,000+ MW planned One of the few RPPs online charging Rs. 43 / kwh As a result, in the last five years Tariff has almost doubled Rs. 1 trillion spent on subsidies And there is still no solution in sight 4

5 Ignored indigenous resources Stalled Oil and gas exploration after major discoveries in Sindh in the 90s Complacency and lack of focus on resolving simmering Balochistan issue Major international companies driven away by unattractive policy incentives (2001 Petroleum Policy) Hydel largely ignored after 1970s, sidetracked by politics Only 6,600 MW of total 50,000 MW potential developed Thar Coal still a pipedream No long term Thar development plan Ongoing projects held up by federal / provincial issues 5

6 Circular Debt choking the cash flows of energy supply chain

7 Circular debt understanding the complexity of the problem

8 wer deficit may rise to over 11,000 MW in next five ars with business as usual Peak Demand Peak Generation 32,000 28,000 Projected peak demand at 6% p.a. growth (11,400 MW) 24,000 20,000 16,000 12,000 (5,700 MW) (6,400 MW) About 2,500 MW of ongoing, funded projects should come online between FY11-15 (8,600 MW) Few sizable projects due to circular debt Neelum Jhelum likely to be delayed further Source: NTDC National Power System Expansion Plan 2011, NEPRA State of Industry Report 2011, PPIB, WAPDA public documents 8

9 e Gas Crisis 8,000 7,000 Projected gas demand 6,000 5,000 4,000 (1.6 bcfd) (3.5 bcfd) (5.2 bcfd 3,000 2,000 Projected gas supply from domestic sources 1, Source: Petroleum Institute of Pakistan projections updated for actuals 9

10 DP growth has declined to 3.1% FY08-13; from 5.7% previous 5y 10 Real GDP growth % y/y FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 F -4 Agriculture Industry Serv ices Real GDP

11 Investment spending has collapsed lowest in history Investment & saving as % of GDP

12 nsustainable fiscal deficits lead to macroeconomic instability Source: SBP Annual Report 2012

13 Fiscal deficit widens to record 8.6% of GDP in FY12 (SBP)

14 rge external debt payments USD 6bn payment in FY14 Repayments to IMF USD million

15 P FX reserves fall below USD 6bn (1.8 months of import) June 2013

16 ecommendations - Energy Mix

17 E & P - Recommendations Petroleum Policies announced in 2001, 2007 and 2009 failed to attract investment in the E&P sector. It is therefore recommended that the well head gas pricing should be based on 70% of a basket of imported crude price. This is in line with the 1997 Petroleum Policy price which gave great impetus to investment in oil and gas exploration. The pricing of this policy was later rescinded by later Governments. The GOP should engage a world class consultant to evaluate the unconventional gas reserves in Pakistan and make the study available to potential investors To have a formula of making the local population as shareholders

18 & P The Unconventional Gas Potential in Pakistan The demand supply gap has changed dramatically with the addition of unconventional gas potential in Pakistan. Source: Pakistan Petroleum Limited The decline in conventional natural gas predicted is reversed somewhat through commencement of Tight Gas production in Shale Gas production is expected to commence production from Deficit in supply of natural gas will still need to be met through transnational pipelines, LNG imports and through fuel substitution Pakistan Current Natura Gas Conventional Reserves 2 TCF Daily Supply 4.2 BCF Unconventional: -Tight Gas 50 TCF - Shale Gas 50 TCF

19 Implications of business as usual Unless there is a political will and resolve to implement an integrated energy plan the country will face growing crisis on the energy front 2022 Energy Mix Outlook Business As Usual With nominal GDP growth projections of 2.5 4% the energy consumption by the year 2025 would be 142 mmtoe which translates to a Power Requirement of 38,000 MW. Oil Requirement will be 40 MMTOE, Gas Requirement 67 MMTOE Gas Local 10% Gas Import 37% 2025 Oil 28% Hydel 13% Coal 8% LPG 2% The total energy import bill in 2025 at US$ 100/ bbl will be Renewable 1% Nuclea 1% US$ 90 billion 19