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28.

Energy Security
28.1.

Introduction

Energy is the lifeline of economic development but unfortunately Pakistan lacks integrated
National Energy Security Plan for the 21st century. While preparing the MTDF 2005-10 for
the energy sector, a long term view has been taken in the context of energy security
requirement for the next 25 years. World and regional energy comparison of some of the
salient energy indicators is given in Table 1 below.

Table 1
World and Regional Energy Comparison, 2004
World

Pakistan

India

Bangladesh

China

Malaysia

Population (Million)

6393

159

1086

141

1300

25.6

Per Capita GDP US $


1995 (PPP)

8200

2100

2200

1900

5000

9000

Per Capita Primary


Energy Supply (TOE)

1.55

0.30

0.32

0.11

0.91

2.17

Per Capita Electricity


Generation (kwh)

2657

581

561

145

1484

3500

Import Dependence

n.a.

24%

18%

21%

1%

-53%
(exporter)

Source: 1. British Petroleum Statistical Review of the World Energy


2. World Fact Book 2004
The major energy consuming sectors of the country are industrial (38.3 percent),
transport (32.0 percent) residential and commercial (25.0 percent), agriculture (2.5 percent)
and others (2.2 percent). The country historically has been subjected to energy demand
suppression due to limited supplies and lack of adequate infrastructure development for
provision of energy to the industrial sector. The lack of sustained and affordable energy to
industry has restrained economic growth and created declining tendency for industrial
investment in the country. The per capita energy consumption, which is one of the key
development indicators as well as measure of quality of life of a country, is low with only 14
million BTU, as compared to 92 million BTU for Malaysia and 34 million BTU for China. A
comparison of energy units utilized to produce 1 US $ of GDP for 2003-04 is given in
Fig-1.

47
35

31
24
13

13

WORLD

26

Pakistan

Malaysia

Indonesia

India

China

SaudiArabia

Japan

6
Iran

10

27

Bangladesh

27

UK

50
45
40
35
30
25
20
15
10
5
0

USA

MBtu

Fig 1: Energy Utilization Per Unit of $GDP, 2003-04

It is essential to provide adequate energy to industry to drive economic growth and


create employment opportunities, and to the domestic sector for cooking and heating and to
prevent the continuing environmental degradation and deforestation by massive use of
wood for domestic fuel. The commercial energy availability to various sectors of the
economy will help in increasing job opportunities, enhancing agricultural productivity,
improving standard of living and preserving environment through reducing deforestation.
Pakistan power sector has historically been dominated by public sector utilities,
WAPDA and KESC who were enjoying monopoly in the Power Sector. Over the years, these
institutions emerged as large monolithic, vertically integrated utilities with overstaffing,
declining skills, deteriorating maintenance of Infrastructure, financial and technical
inefficiencies, poor governance, excessive dependence on public sector development
resources, neglect of customers and lack of competitive spirit.
In order to mobilize private sector investment for power sector an independent
power projects (IPP) policy was launched in 1994 and subsequently reviewed in 1998 and
2002. A Private Power and Infrastructure Board (PPIB) was set up which has been providing
one window support to private sector. The government also set up National Electric Power
Regulatory Authority (NEPRA) in 1997. In 1998 the Government embarked upon a
programme of unbundling WAPDA through corporatization and commercialization.
WAPDA has now been reorganized in nine distribution companies called DISCOs, one
National Transmission and Dispatch Company (NTDC) and four thermal generation
companies called GENCOs. The hydroelectric power development and operation functions
remain with WAPDA. In order to carry out this restructuring and re-organization, a
facilitation company called Pakistan Electric Power Company (PEPCO) was also
incorporated in 1998.

28.2.

The Context

Worldwide, over the last few decades, there have been few new oil discoveries while
the oil production has been going up. The increasing energy demand and limited crude oil
availability has resulted in a shift in both exploration and production activities towards gas.
The short to medium term strategy to meet energy demand and long term strategies of
energy supplies worldwide are illustrated in the Fig 2&3.
Fig 2: Short to Medium Term Strategy

Oil production becoming more important than exploration


Inevitable shift to gasboth exploration and production

Figure 3: World Energy Supplies


(Long Term Strategies)

Source: SPE International (Society of Petroleum Engineers)

The countrys primary energy mix (2003-04) in comparison to regional and other
countries is given in Table 2 and Fig 4.
Table 2
Primary Energy Mix by Country 2003-04
Pakistan India

Malaysia

UAE

UK

USA

(%)
Canada China*

Oil

30.0

35.0

42.0

32.0

35.0

40.0

30.0

23.8

Natural Gas

50.0

7.0

51.0

68.0

35.0

23.0

27.0

2.6

Coal

6.5

55.0

4.0

16.0

23.0

24.0

67.0

Others
(Hydel,
Nuclear, etc.)

13.5

3.0

3.0

14.0

14.0

19.0

6.6

* 2002 Data
Fig 4

70
60
50
40
%
30
20
10
0

Pakistan

India

Oil

Malaysia

Gas

UAE

UK

Coal

USA

Canada

CHINA

others

* Data: 2002

The world data regarding total electric power industry and fossil fuel reserves to
production ratio is given below in Fig 5&6.

Fig 5: Total Electric Power Industry Summery Statistics, 2004 (July-Sept)


Net Generation (Million Kwh)
Total Energy Sources 3,053,969
Pet. Liq./Coke
93,841
3.1%

Nat. Gas
541,818
17.7%

Coal
1,487,373
48.7%

Nuclear
598,489
19.6%

Other
47,351
1.6%
Wind/Solar
11,008
0.4%

Renewable 66,455
2.2%

Hydro Electric
207,634
6.8%

Fig 6 Fossil fuel reserves-to-production (R/P) ratios at end 2003

Source: BP Statistical Review of World Energy 2004

There are considerable oil, gas, and coal reserves and hydel potential. The crude oil
reserves are estimated at 27 billion barrels including 300 million barrels proven reserves. The
level of production is presently 22.6 million barrels compared with the level of consumption
of 100 million barrels. The natural gas reserves are 8 trillion cubic meters including the
proven reserves of 0.8 trillion cubic meters. The level of production is presently 93 million
cubic meters per day compared with the level of consumption of 82 million cubic meters per
day. The coal reserves are 185 billion tonnes including the proven reserves of 3.3 billion
tonnes. The level of production is 3.3 million tonnes and the level of consumption is 6.1
million tonnes.
It has been estimated that the hydel potential in the country is 46,000 MW, while the
present installed capacity of hydel power is only 6459 MW. Out of total power generation of
83755 GWH, hydel generation is around 29853 GWH. The oil sector has all along been
heavily dependant on imports of about 85 percent of the national requirement. Annually
about 7.8 million tonnes of crude oil, 5.2 million tonnes of oil products and 2.8 million
tonnes of coal are being imported at a cost of around $ 3 billion.
The local production of oil and gas would start declining due to depletion of
resources from the year 2010. There would also be a deficit of gas unless considerable
contribution is made from new discoveries. In case the gap is not met through indigenous
supply, there will be need to import gas, and the requisite infrastructure would have to be
placed in a timely manner. Power deficit is already being felt in the power generation sector.
Some of this deficit would be met by accelerated exploitation of indigenous hydel and coal
reserves, while imported fuel would be required to meet the future demand of power plants
operating on oil and gas.
The present world fuel ethanol production is about 30 billion litres whereas the
ethanol production during 2004-05 in the country was about 350 to 500 million litres. Apart
from export of substantial quantities of molasses, production of alcohol from molasses
comprises the only major value added product manufactured in the country. At present
there are no fuel ethanol-producing units in the country and there is no blend of fuel ethanol
with petrol. It is planned to mix about five percent of fuel ethanol in petrol which will be
gradually increased in the subsequent years. Research would also be undertaken for mixing
fuel ethanol in diesel.
Most of the coal reserves of the country, estimated at 185 billion tonnes are located in
Sindh, including 176 billion tonnes at Thar. The current total mineable reserves of coal are
estimated at 2 billion tonnes (60 percent of measured reserves). At present there is no
mining/coal production from Thar but recent studies have indicated considerable potential
28.3.

Objectives

The main objectives of the energy sector development are: (i) to enhance the
exploitation of hydropower, and exploration and production activities of oil, gas and coal
resources, and increase the share of coal and alternate energy in overall energy mix, (ii) to
optimize utilization of the countrys indigenous resource base to reduce dependence on
imported fuel through an institutionalized strategy, (iii) to create an environment conducive
to the participation of the private sector, and (iv) to develop the energy scenario in the
context of regional perspective.

28.4.

Strategy

The strategic directions for development of the energy sector and sustainable supply
of energy at competitive price to all sectors of the economy include: (i) supply to be based
on an optimum energy mix; (ii) maximum utilization of the indigenous resources to meet the
increasing energy demand with a major emphasis on increasing the coal share in the total
energy mix by developing indigenous coal reserves, and setting up integrated coal mining,
power generation, petro-chemical plants and coal gasification; development of hydro for
power generation; increasing local oil and gas production by enhancing drilling activities
particularly in off-shore areas; replacement of imported oil with imported gas; and
promotion of accelerated nuclear and renewable/alternate energy sources (wind, solar) in
overall energy mix; (iii) enhancing participation in the sector, including manufacturing of
plants and equipment by strengthening regulatory frameworks and related institutions
and development of infrastructure, and (iv) development of human resources with emphasis
on technical skills and expertise. The strategy also includes extension of LPG supply to the
domestic sector, encouragement of CNG utilization in the transport sector and import of
LNG to meet short-term gas requirements, if feasible. Incentives would also be provided for
mechanized development of coal gasification technology.
The countrys energy mix and demand projections by fuel for the short, medium
and long term are outlined in Table 3 and Fig 7:

Table 3: Energy Mix Plan Projections

Total
MTOE

Current

Short Term

Medium Term

Long Term

2004

2010

2015

2020

2025

2030

50.8

79.39

120.18

177.35

255.37

361.31

Oil

15.20

30%

20.69

26%

32.51

27%

45.47 25.7%

Natural
Gas

25.45

50%

38.99

49%

52.98

44%

77.85

Coal

3.30

6.5%

7.16

9%

14.45

12%

Hydro

6.43

Renewable

0.00

0.0%

0.84

1.1%

1.60

1.3%

3.00

Nuclear

0.42

0.8%

0.69

0.9%

2.23

1.9%

4.81

44%

57.93

22.7% 66.84 18.5%

114.84

45%

162.58

45%

24.77 14.0%

38.28

15%

68.65

19%

12.7% 11.03 13.9% 16.40 13.6% 21.44 12.1%

30.50

12%

38.93 10.8%

1.7%

5.58

2.2%

9.20

2.5%

2.7%

8.24

3.2%

15.11

4.2%

Fig 7
400
H YD EL

350
C OA L

300
GA S

250
N U C LEA R

200
R EN EWA B LE

15 0
OI L

10 0
50
0
2005

2 0 10

2 0 15

2020

2025

2030

The energy demand over the next five years is expected to grow at a rate of 7.4
percent per annum. To meet future requirements with indigenous resources, domestic
exploration, if feasible, would be intensified. Simultaneously, the energy supply options
would be diversified, with import of gas and LNG. In power generation a total of 23 hydel
projects are planned to be initiated during the MTDF period, out of which 14 hydel projects
will be completed, so that hydel-thermal mix is shifted towards hydel generation.
Worldwide, pumped storage is utilized to generate about 70,000 MW hydel power. This
concept, depicted in Fig 5 would be explored to utilize hydel potential.

Fig 8
Peak Hours

Main
Reservoir

Dam

Flow Direction

Downstream
Reservoir

Unit working as
Turbine

Off-Peak Hours

Flow Direction

Main
Reservoir

Dam

Downstream
Reservoir

Unit working as
Pump*
* Using electricity from nuclear or other sources
Worldwide Installed Pumped Storage Hydro Capacity in 2000: >70,000 MW

Similarly, 900 MW capacity would be increased through coal-based projects.


Recognizing the importance of exploitation of renewable energy, projects totaling 800 MW
are also envisaged for implementation during 2005-10. The energy gap coverage strategy for
the country is outline in the Table 4 and Fig 9.

2005

Table 4
Energy Gap Coverage
2010
2015
2020

Supply

54.04

76.19

98.66

Demand

54.05

79.40

0.0

Gas Import-1

2025

2030

127.11

168.16

220.37

120.17

177.34

255.37

361.31

(3.21)

(21.51)

(50.23)

87.21)

(140.94)

5.0

15.6

15.6

15.6

15.6

Gas Import-2

5.0

27.0

27.0

27.0

Gas Import-3

5.0

27.0

27.0

Gas Import-4

15.0

27.0

Gap

MTOE

Fig 9

400
350
300
250
200
150
100
50
0
2005
Demand

28.5.

and
Dem

rt-4
Impo
Impo
r t-2
Impo

rt-3

Imported oil

Import-1

2010
Import-4

2015
Import-3

Import-2

2020
Import-1

2025
Imported oil

2030
Supply

Long Term Financing Needs (2005-2030)

In order to meet additional power generation requirement of 143,310 MW during


2005-2030, an investment of $ 150 billion would be required. The average Government
investment per year is planned at $ 2.0 billion, with balance requirement of $ 4 billion per
year met through private sector including BOT and private-public partnership modes. The
proposed long term financing needs for 2005-2030 will be required for meeting the
additional power generation requirement of 143,310 MW during this period.

28.6.

Power Sector

During the last four years (2001-05), several public sector projects including Allai
Khwar (121MW), Khan Khwar (72MW), Dubair Khwar(130MW), Golan Gol (106MW),
Malakand-III (81MW), Keyal Khwar (130MW) and Jinnah low head (96MW) are at different
stages of implementation. In addition hydel projects namely Malakand-III (81MW) in
NWFP, Battar (4.8MW) in AJK and Naltar (18MW) in Northern Areas under the provincial
programme were also approved for implementation.
With the addition of a capacity of 1450 MW during 2001-05 through the Ghazi Brotha
hydropower project, the installed capacity of the system has increased from 17710 MW to
20289 MW, resulting in change in the hydel/thermal mix from 28:72 in 2001 to 33:67 in 2005.
Over the same period, the total electricity generation increased from 67500 Gwh in 2000-01
to 87992 Gwh in 2004-05. ( an ACGR of 3.2 percent), and 1.7 million new consumers were
added in the WAPDA and KESC systems. In financial terms, an amount of Rs.73.4 billion
was utilized for the power sector during 2001-05 (including budgetary corporations).
28.7.

Issues
Major issues in the sector include the following:
Shortcomings in Implementation

The outlined plans by the utilities (WAPDA and KESC) remained far beyond their
financial or implementation capabilities.
Slow Development of Indigenous Resources
The slow development rate of indigenous resources, including hydel, coal, oil, gas and
renewable, has aggravated the overall supply position. The lingering deadlock over major
reservoir dam/power projects has virtually held hostage the development of huge hydro
resources. The non-availability of feasibility studies of potential sites has further added to the
delays in utilization of hydel resources. Similarly, limited capability of Public Sector agencies
such as PMDC and SCA, has contributed to slow development of vast coal reserves. In
addition, relatively limited infrastructure has hindered the development of oil and gas in the
country.
Privatization and Institutional Aspects
The unbundling of WAPDA into NTDC, GENCO, DISCO and creation of NEPRA is
taking time to yield the desired benefits of privatization programme, which is moving at a slow
pace. Government policies and plans are yet to be synchronized for the creation of an efficient,
cost effective and reliable power sector. The power sector is also suffering from weak
coordination between the Government agencies and other power sector stakeholders. There
has been an adhoc approach in the management of balancing work like load forecast, project
identification, tariff regime and future investment requirement. The resulting poor
coordination and rivalry amongst different stake holders and institutions has also impacted
negatively on the competitive development of power sector.

Generation Mix
Over the years the generation mix, which was earlier in favour of cheap hydel power
has tilted towards imported thermal, thereby increasing import bills and delaying development
of indigenous resources. Though the declining hydro power trend has lately been checked but
it will take considerable time to correct the situation as the gestation period for hydro based
generation is relatively long.
Tariff Structure
A tariff structure, which subsidizes some consumers at the expense of others is
impacting negatively in the development of competitive power system. Commercial and
industrial consumers are subsidizing agriculture and domestic consumers to a large extent.
While there is some justification for subsidy for small domestic users, the current tariff regime
induces misuse of electricity besides serving as a smokescreen for theft and pilferage.
High Transmission and Distribution Losses
A huge revenue is lost annually due to high transmission, distribution, auxiliary losses
and pilferage. Over the years the distribution network is suffering from overloaded conductors,
feeders and transformers. The lack of computerized information on actual loading position and
shortage of funds to revamp the distribution network favours corruption as workers cannot be
held accountable in this environment. In addition, lack of transmission infrastructure and low
capacity utilization of IPPs has resulted in higher overall energy cost.
Lack of Participation of Local Electrical Engineering Industries
Local electrical engineering industries are not being fully encouraged in the
development of power sector, though practically most items required for transmission and
distribution are locally manufactured and are available at international standard on
competitive prices.
Inefficiencies and lack of conservation strategy
Considerable energy losses and wastages due to poor and old equipment design and
make (e.g electric steel-making in Pakistan consuming 700-800 kwh per ton versus 300-350 kwh
in advanced countries) is resulting in at least 20 percent wastage of total energy consumption.
There has also not been a focus on energy conservation.
28.8.

Objectives
The objectives for the development of the power sector include:
i)

conversion of existing integrated state owned utilities into professionally


managed, competitive, financially viable, and efficient electric power system of
generation, transmission and distribution in the private sector;

ii)

enhancing access to electricity and quality of services at affordable prices; and

iii)

maximizing new generation capacity requirement from indigenous resources


(i.e. hydel, coal, local gas, nuclear and renewable) and tilting hydel-thermal mix
towards hydel and local coal.

28.9.

Policy
The policy for power sector envisages:
i)

utilization of indigenous resources for power generation and tilting the hydrothermal generation mix towards hydel by implementing maximum possible
hydro based power projects;

ii)

maximizing generation through indigenous coal to increase its share to at least


18 percent (20,000 MW) by 2030;

iii)

increasing emphasis on nuclear power resources to increase generation from


current 400 MW to 8800 MW by 2030. PAEC would enhance indigenization
capability to maximize local content to reduce capital cost. Capacity of units
would be increased from 300 MW to 600 MW and thereafter to 1000 MW;

iv)

facilitating captive power for old and new industries capacity available in sugar
mills during off crushing season to be made available on national grid;

v)

enhancing participation of private sector in power generation, transmission and


distribution;

vi)

exploring the possibility for linking and developing the regional power grid for
efficient and reliable use of power with emphasis on import of power from
Tajikistan and Kyrgyzistan on 765 kv transmission line through silk route;

vii)

strengthening regulatory bodies and making them truly autonomous, effective,


transparent and credible;

viii)

promoting local engineering industry for power sector; and

ix)

encouraging the utilization of renewable energy (such as solar, wind, and


biomass) especially for remote areas.

28.10. Strategy
The main elements of the strategy include:
i)

Additional capacity requirement in power generation would be made mainly


from indigenous resources. Accelerated programme would be undertaken to
increase hydel power generation capacity from 6460 MW to 32,660 MW by 2030
through construction of a series of hydro power projects on all rivers
particularly Indus.

ii)

WAPDA would undertake a study for maximizing hydel power generation


from all rivers, particularly Indus, to identify strategy and projects for increasing
the hydel power share. A combined study with PAEC would be undertaken to
maximize hydel power at peak hours using pumped storage.

iii)

Provinces would undertake Public- Private Partnership or BOT projects for


power generation on canals and other mini/micro hydel, with indigenous
manufacturing of plant and equipment (about 700 MW on about 800 sites).

iv)

Extensive private sector participation is envisaged in building additional power


generation capacity of 7100 MW by 2010 based on the existing comprehensive
power generation policy including a package of incentives.

v)

The power prices would be rationalized keeping intact life-line tariff for low
consumption domestic consumers.

vi)

WAPDA and KESC would undertake an energy loss reduction, load


management and distribution rehabilitation programme to bring down the
losses from 26.5 percent in 2005 to 21.5percent by 2010.

vii)

An energy conservation programme would be undertaken including enactment


of necessary laws by Ministry of Science and Technology/ENERCON, for
energy efficient building designs, use and manufacturing of energy efficient
appliances. Co-generation technologies to conserve energy would be promoted.
ENERCON would develop a mechanism to monitor strict compliance of energy
conservation laws.

viii)

The strategic plan developed for privatization of power sector would be


implemented on fast track basis. Under the privatization strategy, government is
unbundling and corporatizing various functions of WAPDA for ultimate
privatization. Privatization of at least one generation company (Jamshoro), and
one distribution company (Faisalabad Electricity Supply Company) would be
completed during the MTDF period. Privatization programme would be
implemented with the mandate to ensure capacity building of power sector
entities.

ix)

Regional linkages would be established and possibilities explored for importing


power from Central Asian Countries through EHV lines and expansion of
current linkage with Iran for importing more power, especially for remote areas
of Balochistan.

x)

NEPRA would be strengthened to enhance its effectiveness in regulating the


power sector. The Government would provide a conducive environment for the
purpose, which in turn will ensure the efficient and competitive functioning of
the power sector and protection of consumer/entrepreneur interests in future.

xi)

The capacity of Pakistan Nuclear Regulatory Authority (PNRA) will be


strengthened so that it can effectively manage the safety aspects related to
design and operations of the many nuclear power plants, which are planned as
part of the strategy for energy security and diversity.

xii)

A variety of measures would be considered to boost local production/utilization


of electrical engineering industry, including joint ventures with foreign
companies, in order to develop power projects with a cumulative capacity of at
least 2000 MW by the year 2015.

xiii)

The Alternative Energy Development Board, created to implement projects


based on renewable resources, would be strengthened. Small size, isolated
solar/wind units would be installed in remote areas of the country unlikely to
get electricity through the national grid.

xiv)

Transmission lines would be installed on need basis. The secondary


transmission and grid system would be upgraded continuously, enabling full
capacity utilization and ensuring uninterrupted energy needs to the end users.

xv)

The distribution system would be expanded and augmented. As the distribution


system is expected to be privatized, investment in this sector would be made by
the private sector on commercial basis.

xvi)

Efforts would be made to stagger load profiles and reduce consumption at peak
hours and increase load factors.

28.11. Operational Programme


Generation
The power demand is projected to grow with an ACGR of 7.9% during the MTDF
2005-10 and increase from 15500 MW in 2005 to 21500 MW in 2010. Sector-wise/total power
demand is given below in table 5.
Table 5
Total Power Demand
Year

Domestic

Commercial

Agriculture

Industrial

Others

(MW)
Total

2005-06

7,199

1,216

1,763

5,891

1,035

15,500

2006-07

7,585

1,251

1,820

6,481

1,086

16,600

2007-08

8,127

1,312

1,893

7,252

1,159

17,900

2008-09

8,783

1,354

1,979

8,181

1,243

19,600

2009-10

9,531

1,408

2,079

9,267

1,341

21,500

WAPDA and KESC will continue their expansion programme for primary
transmission, secondary transmission and grids and distribution programme to expand the
power network. Energy generation is planned to increase at an average annual compound
rate of 7.9 percent to reach 128670 Gwh by the terminal year of MTDF. The energy sale is
expected to increase at an ACGR of 9.4 percent from 66100 Gwh in 2005 to 103500 Gwh in
2010. Details are at Annex 1.
In order to meet the future load requirement during 2005-10 and to improve the
generation mix towards hydel, an additional 7,100 MW of power would be installed by the
commissioning of the core projects listed in table 6 below.

Table 6
Core Projects to be commissioned during 2005-10
S.No

Name of Project

Type

Capacity
(MW)

1.
2.

Public Sector:
Allai Khawar
Khan Khawar

Hydel
Hydel

121
72

3.

Dubair Khawar

Hydel

130

4.

Keyal Khawar

Hydel

130

5.

Jinnah Low Head

Hydel

96

6.

Golan Gol

Hydel

106

7.

Malakand Hydro

Hydel

81

8.

Pehur

Hydel

19

1.
2.

Private Sector:
New Bong Escape
Rajdhani

Hydel
Hydel

79
132

3.

Gulpur

Hydel

60

Small/Low head

Hydel

50

Matiltan

Hydel

84

Kotli

Hydel

97

Lakhra

Coal

450

Thar Coal Chines

Coal

300

Dadabhoi

Coal

150

10

Faisalabd

C.C Gas

450

11

Balloki

C.C Gas

400

12

Oil Based Power plant

Oil

160

13

Gas Based Power plant

Gas

3100

14

Renewable (Wind)

800

Total

7100

Power generation plan for the MTDF period and beyond is given in Table 7 below.

Table 7: Power Generation Plan


M.W
Nuclear

Hydel

Coal

Renewable

Oil

Gas

Total

Existing
(2005)

400

6460

160

180

6400

5940

19540

Addition

2010

1260

900

700

160

4860

7880

27420

2015

900

7570

3000

800

300

7550

20120

47540

2020

1500

4700

4200

1470

300

12560

24730

72270

2000

5600

5400

2700

300

22490

38490

110760

2030

4000

7070

6250

3850

300

30360

51830

162590

Total:

8800

2025

32660 19910

9700

7760 83760

Cum ulative

162590

Note: KAN NUP to be retired in 2019

Several major projects including hydel, coal, nuclear and renewable would be initiated
during the MTDF. Feasibility and detailed engineering work on major hydropower projects is
already underway and their construction would be initiated during the MTDF. The feasibility
studies for additional hydro power potential would also be pursued in public/private sector.
An ongoing project for rehabilitation of KESC system will also restore 140 MW capacity.
Similarly additional energy from Mangla dam after its raising would also become available.
Primary Transmission
The National Transmission and Dispatch Company (NTDC) is responsible for
transmission lines and grid stations of 220 kv and above. The existing infrastructure of
transmission and grid stations is overloaded. Power transmission from South to North and
from North to South and for interconnection of new generation project to national grid will be
undertaken. Four primary transmission lines and six 500/220 kv grid stations projects already
approved, would be implemented during the MTDF.
Secondary Transmission
Secondary Transmission and Grid Station programme would be continued to improve
the quality and stability of supply system and to increase the overall access to electricity.
Distribution
To address the problems of heavy overloaded grid stations, high distribution losses,
transmission line constraints, poor quality of service and various other problems, the
distribution network of WAPDAs distribution companies (DISCOs) and KESC would be
extended to increase the service area and to ensure reliable and sustainable electricity supply.
The utilities would also augment their distribution networks to minimize their distribution
losses to the extent possible. About 3 million new consumers are expected to be added to the
distribution network during the MTDF period.

Power Losses Reduction


The power losses would be decreased from 26.5 percent in 2004-05 to 21.5 percent in
2009-10, through energy loss reduction, load management and distribution rehabilitation
programme. The loss reduction programme would be implemented by distribution
companies, operating in a competitive environment and providing efficient and affordable
service to the consumers. Besides, the ongoing work on system improvement of KESC
network and reduction of transmission and distribution loss would be completed.
Subsidy/free units to WPADA employees would be rationalized.
Efficiency Improvement
An efficiency improvement programme will be undertaken with the aim of sustaining
and improving the current activities in various sectors of the economy, with a primary focus on
identification, demonstration, data gathering and systematic implementation of low and
medium cost measures to achieve conservation. Efforts would be made to reduce peak loads by
shifting usages from peak to off-peak times and thereby defer construction of new facilities.
This would be achieved through use of time of day or seasonal tariffs. Low power rate to
agriculture tube wells during off-peak hours through special meters would also be offered.
28.12. Captive power and capacity available in sugar mills
Captive power for existing and new industrial estates own use would be facilitated.
Surplus capacity of about 2000 MW available in sugar mills during off-crushing season
would be made available on national grid by undertaking some modification of sugar
industrys boilers.
28.13. Renewable Energy
The Alternative Energy Development Board (AEDB) would facilitate
alternative/renewable energy projects and would also develop and implement off-grid
electrification programme of rural areas. Intensive efforts would be made to ensure the
installation of 100 MW wind power by December, 2005 at Kati Bander and Gharo Sindh and
700 MW by 2010. At least 5 percent of total national power generation capacity would be
met through these resources by 2030 (i.e. 9700 MW). In addition, under the remote village
electrification programme, 54000 homes would be lit by solar/wind/micro hydro power
during the MTDF. AEDB would also undertake a comprehensive plan for the development
of solar products like, solar lights, solar fans, solar cookers and solar geysers through the
participation of private sector.
28.14. Environment
The power sector is one of the major contributors of emission of Green House Gases
accounting for over 80 percent of total CO2 emission. The main source of these emissions is
due to heavy use of fuel oil in the power generation. During the MTDF period, conversion of
existing thermal power stations from fuel oil to natural gas would substantially reduce the
CO2 and particulate emission.

28.15. National Integrated Coal Mining & Power Generating Authority.


A new national integrated coal mining and power generation authority, which
could be a joint venture among the Federal Government, Government of Sindh and
local/foreign private sector, would be created to harness the huge coal reserves for power
generation in the country.
28.16. Institutional Reforms in the Energy Sector
It is essential that the power sector utilities be reorganized and managed on commercial
lines to tackle the issues of efficiency, customer satisfaction, affordability, overhead costs,
losses, and pilferage/theft. The strategic plan for restructuring and corporatization of
WAPDA, including commercialization, professional management and improvement in
system to bring about reforms, is underway and would be implemented during the MTDF.
All assets of WAPDA, except the national Grid Company, for which a decision will be made
later, will be privatized as soon as feasible. The corporatized/privatized units would be
managed like commercial utilities driven by corporate efficiency, profitability, and
consumer satisfaction. A policy committee has been set-up to monitor and implement the
above programme.
The strategic plan developed in 1992 for restructuring and privatization of power sector
would be revisited in the light of current realities and for serving as a guide for the MTDF
period. Models successfully implemented in other countries would be used to draw lessons
suited to local environment.
The success of the privatization programme in power sector requires a clear cut policy
for fixing power tariff with NEPRA fully empowered to fix tariff rates on the basis of cost of
service in accordance with policy laid down by the Government.
The interests of the utility employees would be protected by developing and
implementing a comprehensive human resources transition plan and a portion of the benefits
accruing from efficiency improvement and reduction in losses as a result of better management
will be shared with the utility employees. After a transition period, the existing monopoly of
power sector utilities will be replaced by a number of financially viable electricity companies,
operating in a competitive environment and providing efficient and affordable service to the
consumers.
28.17. Provincial programme
The provinces will manage investments for power projects up to 50 MW. For projects
above 50 MW, the provinces would be the main drivers and catalysts for marketing and
coordinating projects with the Private Power and Infrastructure Board (PPIB).
28.18. Village Electrification Programme
The village electrification programme would be funded by provincial and district
governments. In line with the devolution of power, future village electrification programme
would be duly verified by district governments and they would be actively engaged in
chalking out and implementation of the programme. During the MTDF period, 12585
villages/Abadies would be electrified.

28.19. Resource Requirements


The total investment for the power sector during the MTDF is estimated at Rs. 1102
billion, including Rs. 445 billion in the private sector. Overall investment level will be kept
under constant review and in case of shortfall in mobilizing financing from private sector, a
contingency strategy would be evolved, including provision of enhanced sovereign
guarantees, to solicit increased private sector participation. Project-wise/Year-wise
allocation for power sector is given at Annex 2.
Power sector organizations would be strengthened by undertaking capacity building
programmes. Increased linkages between different power sector institutions would be
encouraged. While implementing HRD programme, an equitable and gender sensitive
approach would be applied.
28.20. Risk Analysis
As per historical experience there is considerable uncertainty regarding new capacity
schedule and some of the projects in private sector may not materialize, as the success ratio
amongst the applicants/bidders in private sector is usually a fraction of the total number of
applicants/bidders. While some new IPPs may find place in the list of candidate projects,
their contribution to the power system can only be expected after the MTDF period of 5
years. In the past, surplus capacity at high cost was created on the basis of liberal high
economic growth assumptions. To minimize the risks, demand growth would be kept under
annual review so that mid-course corrections could be made and large surpluses or deficits
avoided. The power balance shows that in the first two years of the MTDF, power shortage
is imminent and additional new plants cannot be commissioned in this period except those,
which are already included in the schedule. It is therefore imperative that both
WAPDA/KESC revitalize their derated capacities, improve efficiencies and reduce forced
outages and down times.
28.21. Fuel Sector
During 2001-05, there have been increases in production of crude oil, gas, LPG and coal.
These include (i) an increase of 16% in crude oil production from 63548 BPD to 73917 BPD, (ii)
an increase of 59 percent in gas production from 2531 MMCFD to 4033 MMCFD, with the
number of gas consumer increasing from 3.6 million to 4.2 million, (iii) an increase of 52 percent
in LPG production from 954 tonnes per day to 1450 tonnes per day and (iv) an increase of 18
percent in the production of coal from 3.3 million tonnes per annum to 3.9 million tonnes.
The Oil and Gas Regulatory Authority (OGRA) has been set up to regulate the
petroleum, oil and gas activities and look after the interests of the consumers. Government
Holdings (Pvt.) Limited has also became operational. The Governments participation in
petroleum exploration joint ventures has been handled through this Holding Company. The
prices of POL products were deregulated and are determined by Oil Companies Advisory
Committee (OCAC) on fortnightly basis. The offshore Petroleum Policy was revised and
production-sharing formula introduced to attract private investment in high-risk offshore
petroleum exploration. A study for unbundling of transmission and distribution system of both
the gas utilities has also been completed.

The Gas Infrastructure Development Project to augment the transmission system of gas
utilities has been completed. About 1 billion cubic feet of gas per day was injected into the
system for supply to both power sector and industry. Moreover work on the 817 km crosscountry White Oil Pipeline was also completed.
For the development of Thar coal deposits on fast track basis, a Task Force has been
constituted. A Chinese company undertook a feasibility study to develop a block in Thar coal
for power generation of 600 MW in phases. Simultaneously, a German Company has also
completed a bankable feasibility study on Thar coal mining for 1000 MW power generation
project.
Utilization of Compressed Natural Gas (CNG) was encouraged in transport sector to
improve urban air quality and reduce carbon emissions. About 650,000 vehicles would be
converted on CNG. The Government issued directives to promote CNG in the transport sector
as an alternate fuel. About 700 CNG stations would be established in different parts of the
country. Gas from dormant fields will be utilized as CNG for supply to far flung areas.
28.22. Issues
The following are the main issues:
(i)

Low pace of exploration and drilling activities in oil and gas sector.

(ii)

Coal development has remained neglected due to lack of capability and


proper institutional set up.

(iii)

There is need to strengthen the oil and gas regulated activities and expedite
the privatization process especially in the gas sector.

(iv)

Indigenous gas will be in short supply by 2010 if domestic potential is not


fully exploited. Gas imports through pipeline and/or LNG would be
inevitable, with need for incentives for the private sector in gas infrastructure
development.

(v)

There has been lack of indigenous design engineering, technology and


manufacturing inputs.

(vi)

There is need to introduce regulation for promotion of the concept of common


carrier, common operator or third party access regime.

(vii)

Refining capacity is short of demand for HSD and some of the other
petroleum products.

(viii)

Several gas fields have remained dormant in the past.

28.23. Objectives
The main objectives of the Fuel Sector are: (i) to enhance the exploration and
production activities of oil, gas and coal resources, (ii) to encourage the utilization of the
countrys indigenous resource base and reduce dependence on imported fuel, (iii) to create
an environment conducive to the participation of the private sector, and (iv) to develop the
local energy scenario in the context of regional perspective.

28.24. Policy
The following policy measures are envisaged:
i)

The existing policy will be reviewed to encourage oil and gas exploration in
the country especially in offshore areas and impediments in the way of
private sector will be removed. Necessary policy incentives will also be
evolved to enhance private investment in gas pipeline system.

ii)

The production of ethanol from molasses will be increased for mixing with
the motor spirit.

iii)

Reliance on import of oil will be reduced and the share of coal and alternate
energy increased. Incentives will be provided for expediting exploration and
exploitation of huge coal reserves of the country, and alternate technologies
like coal gasification promoted for expanding the utilization of coal.

iv)

Gas imports are envisaged by 2010 to fill in the supply/demand gap


consistent with the envisaged economic growth of the country. A decision on
the preferred option amongst the three options for the import of gas from
Turkmenistan, Qatar and Iran would be finalized as a matter of priority.

v)

To make the refinery operations competitive and to provide a level playing


field for the public and private sector, government permission will not be
required for setting up new refineries or expanding the existing ones.

vi)

The existing policy to encourage the use of CNG in vehicles will be continued
and the existing price differential between CNG and motor gasoline will be
maintained as an incentive for CNG use.

vii)

Plans for Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG)
imports would be developed.

viii)

A Plan to increase the strategic oil reserves to 45 days would be developed.

ix)

Public Sector companies /corporations such as Sui Northern Gas Pipelines


Ltd (SNGPL), Sui Southern Gas Company Ltd (SSGCL), and Oil and Gas
Development Corporation (OGDC) and other energy sector entities will be
disinvested/privatized.

x)

The capacity in fuel sector for policy analysis, research and human resource
development would be enhanced.

28.25. Strategy
The main features of the strategy
as follows:
i)

for the development oil, gas and coal sector are

The process of privatization of pubic sector entities in the Fuel Sector will be
strengthened.

ii)

Drilling activities would be enhanced by removing impediments in the policy.


The pace of exploration and development wells will be increased to drill 100
wells per year during the MTDF period, with further increases to 150/200
wells per year from 2010 to 2030. More concession areas would be awarded to
companies for oil and gas exploration having good track record.

iii)

Based on a fast track action plan, exploitation of dormant gas fields, Sui deep
reserves, and Tal Block in Kohat will be undertaken.

iv)

Transmission and distribution infrastructure for gas supply will be expanded


through private sector investment.

v)

For gas market development, gas pricing and taxation would be reviewed
and gas conversion work accelerated through links between gas
manufacturers and gas distribution companies and defining and promoting
rules and safety standards for gas conversion of electricity based equipment.

vi)

Large-scale utilization of indigenous coal in various industries including


power generation by the private sector will be encouraged. Research and
development of coal utilization technologies will be undertaken such as
gasification of coal, coal bed methane, coal liquefaction and coal briquetting.
Coal gasification will be projects expedited and establishment of washeries by
private sector encouraged for improving quality of local coal.

vii)

Strategic storages will be increased from 20 days to 45 days to meet the


contingency demand of the country, with incentives given to private sector
keeping in view the strategic and economic trade-offs.

viii)

The existing policy to ensure availability of domestic and imported LPG at


competitive and viable prices in far-flung areas, where supply of natural gas
through pipelines is not economically feasible, would be continued.

ix)

A field/part of a field in the north will be allocated specifically for


petrochemical industry especially for establishing naphtha cracker as a matter
of priority.

x)

The use of CNG as transport fuel would be encouraged and in metropolitan


cities public transport would also be converted to CNG to reduce dependence
on imported oil.

28.26. Rational Programme


Exploration and Development of Oil and Gas
A significant increase is envisaged in the number of oil and gas wells to be drilled
from 228 wells during 2001-2005 to 500 wells during the MTDF period. Details of the
programme for 2005-2030 are given in Table 8.

Table 8
No of wells to be drilled
2004-05
2005-10

Description

2010-20

(Nos)
2020-30

Total Wells
(Public+Private)
Exploratory

22

300

1080

1800

Appraisal/Development

32

200

720

1200

Total

54

500

1800

3000

Exploratory

175

480

800

Appraisal/Development

10

100

300

500

Sub Total

18

275

780

1300

Exploratory

14

125

600

1000

Appraisal/Development

22

100

420

700

Sub Total

36

225

1020

1700

OGDCL

Private

During the MTDF, Oil and Gas Development Company Ltd (OGDCL) would drill
275 exploratory and development wells. The OGDCL plans to undertake 8050 L. km 2D
Seismic Survey and 1765 sq. km 3D Seismic Surveys. The number of rigs would be increased
from 25 to at least 50 and optimal utilization ensured.
Oil Transportation
To satisfy the needs for the white oil supplies to the Peshawar region and to reduce
the potential environmental hazards due to the transportation of petroleum products
through tank wagons, a white oil pipeline would be undertaken in the private sector.
Storages
The existing storage capacity of POL products excluding crude oil provides a cover of
about 20 days. This cover will be increased to 45 days.

Refining Operations
During MTDF, the existing refining capacity of 12.73 million tonnes per annum
would be increased to 18.73 million tonnes per annum by installing an additional refining
capacity of 6 million tonnes per annum as a coastal refinery in the private sector. The Attock
Refinery Limited (ARL) plans to install such a refinery on the coastal region of the country
based on the latest process technologies.
Gas Operations
During the MTDF, it is planned to add about 0.2 million consumers per annum to
the current 4.2 million gas consumers in the country. In addition, due priority will be given
to schemes for supply of gas to towns/villages/localities to improve environment and for
poverty reduction. Moreover, the needs of the industrial sector will be given priority. The
gas requirement of the new Fatima Fertilizer plant is envisaged to be 110 MMCFD besides 78
MMCFD of gas for Balancing, Modernization and Revamping (BMR) of the existing fertilizer
plants during the MTDF period. To promote the petrochemical industry in the country and
to reduce dependence on the import of petroleum products, Attock Refinery Limited (ARL)
would undertake a petrochemical complex in the private sector. It is planned to dedicate
certain gas fields like Gurguri in North Western Frontier Province (NWFP) for petrochemical industry specially establishment of naphtha cracker.
During the MTDF period, the pipeline transmission networks will be increased from
8606 km to 9700 km and distribution network from 62623 km to 94000 km. It will be ensured
that the transmission and distribution losses for the gas companies namely SNGPL and
SSGCL, presently 6% and 6.5% respectively, do not increase during the MTDF.
Compressed Natural Gas (CNG)
The use of CNG would be expanded as about 100,000 cars and 10,000 buses would be
added every year to the existing stock of the country. A programme of dedicated CNG citybuses would be undertaken, initially in federal and provincial capitals. Subsequently, the
programme will be extended to other urban centres based on transport pollution
considerations. The programme will also include infrastructure development and
manufacturing of dedicated CNG buses.
During the MTDF, the CNG use in transport sector is expected to increase from
21000 million cubic feet per annum to 33900 million cubic feet per annum.
Liquefied Petroleum Gas (LPG)
The supply of LPG would be increased form 1600 tonnes/day to 1800 tonnes/day
during the MTDF period.
Liquefied Natural Gas (LNG)
To meet the shortages of gas in Karachi and other parts of the country, the
private sector would be encouraged to import LNG if it is economically a viable option;
there will be no contribution/guarantee from the Government except for
providing/facilitating necessary infrastructure e.g. berth handling facilities at Port Qasim.

Coal
The programme for utilization of indigenous coal includes:
i)

Increase share of coal in overall energy mix to 9% by 2010 and 19% by 2030 by
developing Thar, Sonda-Jherrick coal deposits, and by increasing the
productivity of present operational mines.

ii)

Consider major utilization option for coal in power generation, gasification,


fuel and chemical extraction.

iii)

Acquire
latest
efficient, cost effective and environmentally sound
technologies for co-production of power, fuel and chemicals from coal.

iv)

Adopt measures to develop human resource for large-scale mining operations


at Thar and Lakhra coalfields. Provincial governments will augment the
presently available facilities and establish new ones based on latest
technologies.

v)

Facilitate establishment of coal briquette plants on coal.

Cement manufacturing industry as well as boilers of textile and sugar industries are
potential candidates for shifting from furnace oil/gas to coal for the reasons of high prices of
oil in international market and availability of coal as a cheaper source of indigenous energy.
During the MTDF period all the cement plants would be converted to coal, resulting in
increase of coal demand to 2.5 million tonnes. Installing indigenous coal based power
plants will also increase the coal share in power sector. Furthermore, a study for
determining the viability of Thar and Bhakkar coal for gasification is underway. Based on
the findings, the work programme including mining operations and allied works of the
projects will be formulated.
The utilization of lignite (brown coal) in Sindh would be made in power generation,
gasification, fuel and chemicals extraction, briquetting and through quality improvements in
processing industry besides exploration for coal bed methane. The utilization of hard coal of
Punjab, Balochistan and NWFP will be enhanced in brick kiln, cement industries and in
town gasification by enhancing coal production from mines through improvements in
mining techniques. Efforts will be made to mechanize the operational coalmines.
To enhance the exploration and evaluation activities, during the MTDF period the
Geological Survey of Pakistan (GSP) will complete evaluation and appraisal of coal in
various coalfields in Balochistan, NWFP, and Azad Jammu and Kashmir .
Energy Conservation
It is estimated by National Energy Conservation Centre (ENERCON) that energy
conversion and implementation of low cost and medium cost measures at the national scale
can bring about a saving of around 250,000 tonnes of oil equivalent i.e. an estimated saving
of about Rs. 4 billion each year. The cost of retrofit measures would only be a fraction of the
cost of these savings. The programme initiatives during the MTDF period will have primary
focus on identification, demonstration, data gathering and construction of information
systems, creating awareness and education and system implementation of low-cost and
medium cost measures to achieve energy conservation.

The Alternative Energy Development Board has introduced solar heaters (geysers),
solar cookers and solar fans that would be marketed by the private sector on a massive large
scale. The Pakistan Council of Renewable Energy Technologies (PCRET) has also designed
five types of efficient cooking stoves suitable for rural areas. These cooking stoves, which
provide fuel saving against traditional stoves in the range of 25 to 45%, would also be
marketed .
Privatization
With high priority to privatization in the fuel sector, the Government has decided to
privatize fuel sector entities viz. SNGPL, SSGCL, OGDCL, Pakistan Petroleum Limited
(PPL), National Refinery Limited (NRL) and Pakistan State Oil (PSO). These entities are
expected to be privatized during the MTDF period.
Research and Human Resource Development
Research and development activities will be carried out to enhance sector
competitiveness and efficiency. For mechanized coalmines, training of staff and workers on
scientific basis means will be carried out.
Regional Cooperation and Energy Trade
It is planned to undertake the import of natural gas from the neighboring countries
to supplement the local supplies and replacement of imported oil with imported gas. Three
options namely (i) Iran-Pakistan-India Gas Pipeline, (ii) Turkmenistan-Pakistan Gas
Pipeline, and (iii) Qatar-Pakistan Gas Pipeline, are being explored. A decision would be
made during 2005, based on economic evaluation and strategic considerations. A total of 4
pipelines with a capacity of 96.6 MTOEs are projected for 2030. The first pipeline to import
gas to cover deficit of 5.0 MTOE would be made operational by 2010.
Demand and Supply Projections
The demand and supply projections are given in Tables 9 and 10. Details are at
Annex 3. The mixing of 5% of ethanol from molasses will reduce the import requirements
accordingly.

S.No
1

Description

POL Products Demand


(million tonnes)
Gas (MMCFD)

Coal (million tones)

Table 9
Demand Projections
2004-05
2009-10

2019-20

2029-30

16.8

20.69

45.47

66.84

3173

4565

9114

19035

7.4

16

55.36

153

Table 10
Supply Projection
S.No Description
1

Locally Refined POL Products

2004-05

2009-10

2019-20

2029-30

12

12

18

18

4033

4424

3001

2299

3.9

13.0

55.36

153

(million tonnes)
2

Local Gas Supply (MMCFD)

Coal (million tonnes)

Demand Supply Gap


The demand/supply gap is given in the Table 11, which shows that there will be a
gas and petroleum products deficit throughout the MTDF period and beyond which will be
met through imports. The current coal deficit of about 3 million tonnes per annum
(including 1 million tonnes for Pakistan Steel Mills) will remain to be met through imports
during the MTDF period as local coal cannot be used due to its quality constraints.
Table 11
Demand Supply Gap
S.No
1

Description
Imported POL Products

2004-05

2009-10

2019-20

2029-30

-4.8

-8.69

-27.47

-48.84

(million tonnes)
2

Deficit Gas (MMCFD)

860

-141

-6113

-16735

Imported Coal (million


tonnes)

-3.5

-3.0

-0

-0

Resource Requirements
A total investment of Rs. 393.8 billion is proposed for Fuel Sector during the MTDF
period, including a public sector investment of Rs. 219.3 billion. Details are in Annex 4 and
Annex 5.

Risk Analysis
If there is any slippage in the drilling activities, the projections for local supply will
have to be revised. It would be imperative to undertake capacity building on timely basis.
The demand and supply assumptions will be reviewed every year to ensure that the
investments remain cost effective.
Conclusion
With the finalization of the long-term energy security plan, decisions for
development of the sector are now firmly in place. During MTDF, the main thrust will be
laid to meet the demand fully, with an emphasis on exploitation of indigenous resources
including hydel, coal, domestic gas and renewable and importing gas in a timely manner.
Sector efficiencies will be improved, institutions strengthened and private sector
involvement enhanced.

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