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WAPDA Energy Crises are

established in Pakistan since


2004 - 2005.
Submitted by
“ Red Cross Researchers ”
Abdullah Izam Page 1 of 29 Muslim College
~~ Red Cross Researchers ~~

Group fall 2009

Members:-
1. Abdullah (Group leader)
2. Farman ullah Wazir
3. Zakir ullah
4. Rashid ul haq Khattak
5. Sibtain Shakeel

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Executive Summary:

WAPDA Crises or Electricity Shortage in Pakistan becomes more severe during the
year 2005-2006 due to extensive use luxurious appliances of electricity by domestic
users. According to the report, in the fiscal year 2005-06, some 2,250MW powe r was
require d to operate some 7.7 million electric home appliances i.e. numbe r of
refrigerators in the country were 1,100,000 and power required for the m was
estimated at 110MW, the number of deep freezers were estimated at 200,000 and
require d power for them stood at 60MW, some 1,000MW powe r was required to
run 2 million air conditioners, Simply since 2005 to 2009 Established are high
demand ,illegal load and theft of electricity are increase in Pakistan. These figures
are so alarming for Pakistan because in the decade starting from 1991 these
appliances are less than a half million. The study was made on the topic WAPDA
crises or shortage of electricity in Pakistan is comparison with low demand, illegal
load electricity thefts, unskilled manageme nt, over age employees, unpatriotic
peoples, air conditione rs usage, imported and produced during 2005 to Now. In this
study the hypothesis were set as, is WAPDA Crises or Electricity shortage in
Pakistan is caused by Industrial growth or massive use of illegal load, over load, Air
conditioners by domestic users. However after finding out and analyzing the data
that the increased domestic use of illegal load, over load, air conditioners is the
cause of WAPDA Crises or electricity s hortage in Pakistan.

Acknowledgement

Thanks to the ALLAH Almighty who gave us courage and willpower to


complete the task we have been given by our former teacher Sir Adnan.

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Table of Contents:

Topic Page No.


Acknowledgement
1.Introduction 5
1.1.Introduction to the Problem 7
1.2.Objective 9
1.3.Significance of the study 9
2.Literature review 10
3.Problem Statement 14
4.Theoretical Framework 14
4.1.Inventory of Variables 14
4.2.Direction of Relation 15
4.3.Explanation of the Relation 15
4.4.Propositions 16
5.Hypothesis 16
6.Research Design 17
6.2.Data Collection Techniques 17
6.3.Population and Sample 17
6.4.Tools of Data Collection 18
7.Data Collection, Processing and Analysis 19
8.Findings 28
9.Conclusion and Recommendations 28
10.References 29
END 29

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1. Introduction:

1.1. Background of the Study:


WAPDA, the Pakistan Water and Power Development Authority, was created in 1958 as
a Semi- Autonomous Body for the purpose of coordinating and giving a unified direction
to the development of schemes in Water and Power Sectors, which were previously being
dealt with, by the respective Electricity and Irrigation Department of the Provinces.

Since October 2007, WAPDA has been bifurcated into two distinct entities i.e.
WAPDA and Pakistan Electric Power Company (PEPCO). WAPDA is
responsible for water and hydropower development whereas PEPCO is ve sted
with the responsibility of thermal power generation, transmission, distribution and
billing. There is an independent Chairman and MD (PEPCO) replacing Chairman
WAPDA and Member (Power) who was previously holding the additional
charges of these posts.
WAPDA is now fully responsible for the development of Hyde Power and Water
Sector Projects.
PEPCO has been fully empowered and is responsible for the management of all
the affairs of corporatized nine Distribution Companies (DISCOs), four
Generation Companies (GENCOs) and a National Transmission Dispatch
Company (NTDC). These companies are working under independent Board of
Directors (Chairman and some Directors are from Private Sectors).
The Companies are administratively autonomous and leading to financial
autonomy by restructuring their balance sheets by bringing their equity position to
at least 20 percent, required to meet the prudential regulations and to facilitate
financing from commercial sector (approved by ECC).
The Loan Liability Transfer Agreements (LLTA) have been signed with
Corporate Entities and execution of loan transfer is complete.
All Entities have the physical possessions of all their operational assets.
On 24th Feb. 2007 Ministry of Water & Power notified NEPRA approved Tariff
for all Distribution Companies replacing unified WAPDA Tariff.
Legal Agreements such as Business Transfer Agreements, Operation
Development Agreement, Energy Supply Agreement, Business Supplementary
Agreement and Fuel Supply Agreement etc. were executed between WAPDA and
Corporate Entities to facilitate commercial operations.
Regulatory instruments like Grid Code, Distribution Codes, Performance
Standard for Distribution Companies and Transmission Companies were drafted
and got approved from in 2007.
All major lenders gave their consent for transfer of their loan from WAPDA to
Corporate Entities, thus 326 loan assumption agreement were signed amongst
respective Companies, WAPDA and EAD (Economic Affairs Division) GOP.

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CPPA is established under the coverage of NTDC for payments from DISCOs to
IPPs, GENCOs and NTDC. Ultimately, it will function independently under
Federal Govt. and all forthcoming IPPs will be under CPPA.

The Charter of Duties of WAPDA is to investigate, plan and execute schemes for
the following fields:

a. Generation, Transmission and Distribution of Power.


b. Irrigation, Water Supply and Drainage.
c. Prevention of Water logging and Reclamation of Waterlogged and Saline Lands.
d. Flood Management.
e. Inland Navigation.

The Authority comprises of a Chairman and three (3) Members working through a
Secretary.

WAPDA is one of the largest employers of human resources in Pakistan. Over the years
WAPDA has built- up a reservoir of Technical know-how and expertise which has made
it a modern and progressive organization.

In 1959, WAPDA was created to undertake the task of investigating, planning and
executing schemes for irrigation, drainage, prevention of water logging and reclamation
of saline land as an autonomous body responsible for integrated development of water
and power resources in Pakistan. The organization was also entrusted with the work of
implementing Indus Basin Settlement Plan signed between India and Pakistan in 1960 to
develop replacement works for management of river water and irrigation system. Since
then it has been engaged in building water development projects which include extensive
research and investigation to augment country's water resources.
Member (Water) controls the water Sector in the entire country divided into north,
central, south zones, generally covering the North Western Frontier Provinces (NWFP)
and the provinces of Punjab and Sindh respectively, for execution of SCARPs and
surface water development, projects. Chief Engineers and Project Directors implement
projects falling under regions within the zone. In addition, the Water Wing has a C.E
(Coordination and Monitoring) for construction and operation of dams and all other
projects under Water wing services (TS) and two separate General Managers for Ghazi
Barotha Hydropower and National Drainage Project. The Planning Division of Water
Wing, headed by a General Manager, looks after all planning activities on the water side.
The activities of water resources and hydropower development and vision-2025 are
handled by three General Managers i.e. Technical, South, North, GM (P&D) and GM
Hydro Development.

The introduction phase consists of three parts.


1. Pakistan‟s overall economy review
2. Pakistan‟s energy overview
3. And the third portion consists of introduction of load shedding problem in
Pakistan due to increase in the usage of air conditioners.

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1.1. Introduction to Problem
If we look on the daily bases so short fall electricity is increase day to day and we not but
all public of Pakistan is observe that here is a problem which is facing in our country, this
problem is Our Current Problem and here is need to solve them through research.

1. Pakistan’s overall economy review (2004-2006)

Pakistan's economy has recovered from years of sluggishness, caused primarily to


droughts, with growth experienced in the agriculture, industry and service sectors. In
fiscal year (FY) 2004/2005 (ending in June), Pakistan achieved gross domestic product
(GDP) growth of 8.4 percent and in 2005/2006 the country had GDP growth of 6.6
percent. High inflation (9.1 percent) in 2004/2005 was attributed to escalating oil prices,
higher housing rents and food item shortages. country in 2005. In an effort to decrease
inflation, the central bank of Pakistan announced that it would raise interest rates. The
strategy worked, with inflation decreasing to 7.6 percent by the end of FY 2005/2006.
The International Monetary Fund (IMF), and the World Bank, both major donor
organizations to Pakistan, have acknowledged the favorable performance and progress in
Pakistan‟s structural reforms, but have stressed even greater reform in the public
institutions and the public energy sector where progress has been slow. In 2004, the IMF
approved a fresh loan of nearly $250 million as part of its overall $1.5 billion aid package
to Pakistan. In 2005, the United States began the first installments of a $3 billion aid
package, which will continue through 2010. In 2006, the World Bank approved loans of
$185 million for various reform and infrastructure projects, in addition to the nearly $850
million loaned to the country in 2005.The devastating earthquake that stuck Pakistan in
October 2005 destroyed lives and caused considerable damage to the country‟s
infrastructure. However, the majority of the damage occurred in rural areas of the country
and had minimal impact on the economy. Furthermore, international aid inflows in the
aftermath of the earthquake have served to bolster Pakistan‟s economy. The United States
pledged $510 million for rebuilding Pakistani infrastructure, but relief coordinators
estimate that Pakistan will need billions of dollars and up to ten years to fully rebuild.
Pakistan and India decided to extend aid to one another after the earthquake. They also
agreed to continue confidence building measures, which include the notification of
missile testing, creating new bank branches and increasing the number of airline
destinations in both countries. In recent years, the combination of rising oil consumption
and flat oil production in Pakistan has led to rising oil imports from Middle East
exporters. In addition, the lack of refining capacity leaves Pakistan heavily dependent on
petroleum product imports. Natural gas accounts for the largest share of Pakistan‟s
energy use, amounting to about 50 percent of total energy cons umption. Pakistan
currently consumes all of its domestic natural gas production, but without higher
production Pakistan will need to become a natural gas importer. As a result, Pakistan is
exploring several pipeline and LNG import options to meet the expec ted growth in
natural gas demand. Pakistan‟s electricity demand is rising rapidly. According to

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Pakistani government estimates, generating capacity needs to grow by 50 percent by
2010 in order to meet expected demand.

2. Pakistan’s energy overview

In recent years, the combination of rising oil consumption and flat oil production in
Pakistan has led to rising oil imports from Middle East exporters. In addition, the lack of
refining capacity leaves Pakistan heavily dependent on petroleum product imports.
Natural gas accounts for the largest share of Pakistan‟s energy use, amounting to about
50 percent of total energy consumption. Pakistan currently consumes all of its domestic
natural gas production, but without higher production Pakistan will need to become a
natural gas importer. As a result, Pakistan is exploring several pipeline and LNG import
options to meet the expected growth in natural gas demand. Pakistan‟s electricity demand
is rising rapidly. According to Pakistani government estimates, generating capacity needs
to grow by 50 percent by 2010 in order to meet expected demand.

Table evaluating Pakistan’s Energy Supply.

Sector Energy Supply


Oil 29.40%
Natural Gas 50.30%
Hydroelectricity 15.69%
Nuclear 1.20%
Coal 7.60%
LPG 0.40%

Diagram evaluating Pakistan’s Energy Supply.

3. Introduction of load shedding problem in Pakistan due to


increase in the usage of illegal load, high demand, over
load and air conditioners:

Pakistan is facing a huge electric power crisis today. This crisis appears insurmountable
in the near or even long-term future, unless proper understanding and correct
implementation is undertaken on priority basis. At present total power production
capacity in the country is about 19,500 MW, out of which Hydel Power is only 6,500

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MW, balance of 13,000 MW is thermal either using Natural Gas or Furnace Oil. Small
capacity of 450 MW is Nuclear and only 150 MW is through coal.

The problem of massive load shedding in Pakistan was properly introduced in 2004-
2005.Because in these days the overall GDP growth was very high near about 9% per
year. In these years the business progress was very well and banks industry grows at a
vigorous speed. Banks introduces new schemes in which peoples were provided home
appliances on lease. Thus resulting an increase in production and exports of home
appliances. These home appliances not only include the necessity objects like refrigerator
but also the Luxury objects like Air conditioners. Although most of the air conditioners
were made in Pakistan but 60% of the raw material used in air conditioners was imported
from different countries of the world.

Due to these reasons Pakistan was hit badly by two basic problems such as budget deficit
and shortage of electricity.

Now a days illegal load, over load and the consumption of Air conditioners in Pakistan is
slow comparing to 2005-2006.But the Load shedding Problem becomes more severe.

1 . 3. Objectives of my research:
The main objective of my research is to find out either the consumption of high demand,
over load, illegal load, thefting of electricity in Pakistan is responsible for Load shedding
or the growth in industrial sector in Pakistan is responsible for load shedding, or no
installation of new power plants or latest equipments is responsible for the problem.

From different resources it is also confirmed that during 2002-2006 Pakistan‟s industry
sector was also at boom so without testing the hypothesis we cannot say that the Load
shedding problem is due to usage of high demand, over load, illegal load and thefting of
electricity. Here we also have to note down that the ratio of growth in consumption of
electriicty to production of electriicty.

To find out the past trends of electriicty consumption and present and future situations is
also an objective of my research.

1. 4. Significance of the study:


The research work on load shedding will help us to demonstrate the true reasons of load
shedding problem. It also helps us to find out the total energy consumption and
production of Pakistan. The province wise electriicty production and consumption and a
brief note on line losses of electriicty due to bad power supply system of Pakistan. The
study will also help us to evaluate how much growth is needed in electricity production
sector to cease the load shedding problem. In our study we will also compare Pakistan‟s
energy production consumption ratio with other countries of the world.

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2. Literature Review:
Almost two years ago the then WAPDA chairman who happens to be a caretaker minister
admitted that WAPDA cannot meet the current demand for electricity. It‟s surprising that
such a senior and experienced person took so long to find this out. On top of that the
government which talked about Pakistan‟s supposedly booming economy failed to
understand the gravity of the situation. General Musharraf (R) after becoming Chief
Executive used to talk about building dams especially Kalabagh Dam, Basha Dam. This
was one of the many promises he failed to keep. Even after that very few power plants
have been set up to meet the demand for electricity. During the second government of
Benazir some independent power plants were set up. Had they not been setup then we
would have had a much bigger crisis with life almost coming to a standstill. I come from
the software industry which has been badly hit by the present power crisis. On an average
the generator at my office is on for three hours. Our work is not much affected but overall
the company‟s operating expenses have increased. The policy makers of Pakistan have so
far failed to understand one thing. They do talk about making dams and setting up nuclear
power plants but why do they not understand the importance and benefits of alternate
energy sources such as solar, windmill energy etc. They are cheap and quick methods for
producing electricity. Pakistan is a very blessed country because solar energy is available
in most cities all year round similarly wind energy is readily available in the coastal
areas. These energy sources if tapped can be of great help in reducing the current demand
supply gap. After the founding of Pakistani State in 1947, the Government‟s economic
policy concentrated attention on developing an economic infrastructure, achieving self-
sufficiency in food, and developing export industries. However, an intrusive and over
sized public sector, an over regulated economy, excessive discretionary powers often
incompatible with the level of the official, and an absolute lack of transparency, provide
the optimal environment for opportunities of corruption restricting the economic
development in the country. Combination of these factors with weak accountability
ensures that economic backwardness get entrenched into the entire fabric of society.
Despite the pervasive pessimism that is undoubtedly felt, we have come across many who
would willingly embrace new practices if only the scourge of corruption could be lifted
from their lives. The countries that have surged ahead, on the other hand, are
characterized by high level of human capital accumulation where the educated labor force
has raised the level of output and the rate of growth over a sustained period of time.
Inefficient public expenditure process, higher cost of basic input, lack of skilled human
resources, corruption and nepotism restrict Pakistan far behind in de velopment according
to recently announced World Bank report. Pakistan is suffering from shortage of
infrastructure in the water, irrigation, power, and transport sectors. Infrastructure is
essential for sustained growth and competitiveness both in the loca l and international
markets. The gaps between demand and supply in these sectors are alarming. The plans
needs to put in place urgently, these critical shortages would continue to undermine the
efforts to improve socio-economic indicators and to reduce poverty. Without adequate
irrigation resources, power and transport infrastructure, the very sustainability of Pakistan
as an independent nation may be at stake as shortages could lead to increased social
discontent and disharmony amongst the federation and the provinces. Pakistan is on the

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list of the most water stressed countries in the world, and forecasts indicate that available
resources are depleting rapidly, possibly leading to a state of water scarcity in the next
two decades. Much of the water infrastructure is in poor repair and Pakistan has to invest
almost Rs 60 billion per year in new large dams and related infrastructure over the next
five year. In the energy sector, Pakistan will face severe power shortages of
approximately 6,000 megawatts by the year 2010 (equivalent to about three Tarbela
dams) and 30,700 MW by the year 2020.The per capita energy consumption in Pakistan
is amongst the lowest in the world and a lack of adequate energy resources precludes
industrial growth affecting all sectors of the economy. Similarly, the transport sector
inefficiencies are costing the economy between 4 to 5 percent of GDP each year
indicating the need for massive investment in roads, rail, air and ports as indicated in the
World Bank report. There were large gaps have been observed between the actual and
allocated funds for infrastructure development projects. Public agencies were taking too
much time and delivery was too little. Majority of the developmental projects were based
on political priorities. The infrastructure projects in Pakistan cost twice as much and take
three times longer than planned time there are few number of known firms in Pakistan
and majority of big projects were given to them. There are implementation, monitoring
and feedback missing in the projects and the average cost of every project increases more
than double due to several gaps. Given the paucity of human resources and materials, the
poor planning and management skills, and the inability to timely attract „substitute‟
external implementation resources, it appears difficult that the large infrastructure
projects can be implemented on-time and within budget unless some drastic reforms are
undertaken. Out of the four broad thematic areas of business environment, human
resources (HR), plant and equipment and construction materials, HR and business
environment were identified as having the maximum number of constraints. Delays in
project implementation reflect poor planning, programming and weak implementation
capacity. Public agencies take on too many projects in their development programs and
end up delivering little, and what they do deliver is often determined by political
priorities. The delays in payment, imbalanced contracts, inefficiencies and corruption in
the system force contractors to incur additional financial and economic costs resulting in
squeezing the already poor margins in the industry. The contractors and consultants are
not being paid the right cost for products and services. Costs of materials and equipment
inputs in Pakistan were found to be about 200 percent higher as compared to other
countries in the region, while contractors‟ rates in Pakistan were more or less the same as
those prevailing in the region. Local rates despite appearing to be “competitive” in a
regional context are in fact unworkable - most contractors also contend that rates are low,
precluding adequate profit margins and allowing better salaries to professionals and
workers. Given the current disparity between market rates and actual product costs,
demand-supply gaps will widen when the Medium Term Development Framework
(MTDF) program is implemented, unless rates are increased. Pakistan should lesson from
international case studies on the development of the construction industry and the
literature reviews clearly show that a holistic long-term planning and a detailed strategy
must be evolved with a clear vision and commitment towards developing the industry,
and this process may take as long as a decade or more of sustained effort. The
Government needs to make serious efforts to strengthen revenue mobilization, contain its
unproductive expenditure, and utilize scarce external assistance more efficiently. The

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country is facing a huge electric power crisis today. This crisis appears insurmountable in
the near or even long-term future, unless proper understanding and correct
implementation is undertaken on priority basis. At present total power production
capacity in the country is about 19,500 MW, out of which Hydel Power is only 6,500
MW, balance of 13,000 MW is thermal either using Natural Gas or Furnace Oil. Small
capacity of 450 MW is Nuclear and only 150 MW is through coal. Although gas is to be
provided for 5800 MW to various thermal plants, but in actual fact much less gas is being
made available, the deficiency is being filled through furnace oil. It can be inferred that in
the recent past, only furnace oil was used as fuel for about 9000 MW generation. It is
very important to understand the consequence of the prevailing situation. Current price of
furnace oil is about Rs 49,000 per ton, which amount upto Rs 49/- per kg. On an average
one kg of furnace oil produces 3.8 kWh of electricity. Thus, the cost of furnace oil for
generating one unit of electricity is about Rs 13. On top of this the fixed cost of a thermal
plant works out to be about Rs 3 per unit. 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. As we all know that WAPDA
tariff charged from the consumers is about Rs 5 per unit (kWh).The production cost of
furnace oil electricity is Rs 16 per unit, add to it the transmission, distribution cost
(including loses), “the total cost of such electricity works out to approximately Rs 22 per
kWh. The difference between WAPDA tariff and the furnace oil electricity is Rs17 per
kWh.” It is estimated that the country consumes at least 25 billion units o f electricity
produced annually through furnace oil, which amounts to the total deficit of Rs 425
Billion. If WAPDA has to balance its books it would require a subsidy of Rs 425 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. Obviously, a deficit of Rs 300-350 Billion cannot be
sustained, the government does not have resources to pay such a huge subsidy, and it is
also not feasible to increase the power tariff very much. Therefore the power crisis is far
greater than what is being perceived. In the absence of extremely heavy subsidy,
WAPDA is delaying payments to IPPs and also to the oil companies. The result is that
IPPs are now producing much less electricity than their capacity. To any planner, it
should be obvious that the country cannot afford electricity produced through oil.
Indigenous fuels like coal, gas, atomic will have to be developed and developed quickly.
The final solution however lies in depending on the hydroelectric renewable energy, but
unfortunately the narrow minded bickering on construction of dams has persuaded the
planners to find an easy solution, which we cannot afford any more. Since the shortage or
high price of electricity has severe detrimental effect on all sectors of economy, the
situation calls for concerted short-term, medium-term and long-term actions to overcome
the problem of energy shortage. Way Forward: In the short-term, the shortages have to be
somehow met. The foremost immediate action which can give some relief is the
conservation of energy. The government has already announced certain measures like
shutting down power on billboards, hoardings and neon signs. Recently in Lahore super
size televisions have been installed on important traffic points. In order to keep the
temperature down air conditioners are installed behind these sets. In spite of government
directions, the energy saving measures is not being implemented. Shops use excessive

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lights, which can be conveniently reduced. A suggestion that cities are divided in zones,
and the market on these zones be closed on different days, can also save peak time energy
usage. In order to implement conservation measures, the nazims, naib nazims should visit
the areas and try to convince and negotiate with the people, shopkeepers etc requesting
them to cooperate in the overall interests. At present the IPPs, and WAPDA owned
thermal plants are averaging about 50 percent plant factor, which means that they are not
being used to their potential level, 70 to 80 percent plant factor is quite feasible; this
would require better maintenance of such plants. A higher plant factor on these power
stations can provide 20 to 30 percent more energy, which will circumvent the present
shortages to a certain extent. Improving the plant factor of the existing plants is far more
economical then setting up new plants, although new plants will still be needed. One of
the reasons for low plant factor is that the funds are not made available for the purchase
of oil; solution for this factor will help in short term increase in energy production. The
government has announced that immediately 1200 MW of additional plants will be set-
up. If these plants will operate on furnace oil, the deficit will further increase. At present
the country has about 28 Trillion cft of recoverable gas available, the yearly consumption
is about 1.2 Trillion cft, which means that even if gas consumption is increased, the
existing recoverable gas will be sufficient for the next 15 years. Therefore the additional
thermal generation should be based on gas, but in order to make additional gas available,
the gas pressure and its transmission system will have to be enhanced. The money saved
by using gas instead of furnace oil, should be invested in developing new gas fields
which have already been discovered. Mid and Long Term: The oil prices are not going to
come down drastically; therefore all efforts are needed to stay away from oil. For thermal
plants only Coal and Natural Gas should be used. Vast deposits of coal exist at Thar, but
it is inconceivable why the mining of this coal has not yet started. There is a number of
new gas fields discovered; but their development has been put on the back burner, again
for some unknown reasons. The gas purchase agreement with Iran be finalised
immediately, even without India. A large power station using this gas can be installed at
Gwadar, 500 KV transmission lines can bring the power to load centres. In addition
agreement with Kazakistan is persued diligently for the import of gas. Currently the
country loses 29 billion units of electricity annually due to heavy losses in the system. All
efforts must be genuinely applied to reduce the losses. If losses are reduced by even 5
percent, the saving will be over 7 Billion rupees. For hydroelectric projects, the large
ones can only be built on the Indus River, where not only hydroelectricity can be
produced, but highly needed water storage can also be a by-product. Some legitimate
objections on the environment and social impacts of large dams are there, but solutions
for such objections can be satisfactorily found. The will of the government leaders is
needed, with the present coalition partnership in the centre, matters can be resolved.
Experts from various provinces can get together and put forward a solution for mitigating
the objections. It was due to the clear vision of the leadership that the Tarbela Dam was
constructed, without which where would we have been today. Similar visionary approach
is needed and needed now. There are a number of other attractive runs of the river hydel
projects which are being offered to the Private Sector. None of these projects have yet
started, because the tariff is still not finalised. With the huge losses being accumulated in
thermal plants, again it is strange that the hydel projects in the private sector are not being
encouraged. Under the present circumstances, a rational and market oriented policy has to

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be adopted, hopefully the present government will immediately look into this. It is good
to know that the work on Neelum Jhelum Hydro Project (900MW) has started by
WAPDA.The current power crisis is grossly due to very high oil prices, and the country
has to prepare itself at least for the next several years to somehow cope with it, since no
immediate cheaper alternate solutions are available. It has been a big set back that new
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.

3. Problem Statement:
“Do the High Demand, illegal load, over load, electricity
thefting and production of Air conditioners in Pakistan is
responsible for severe load shedding in Pakistan or other
factors like growth in industry and no installation of electricity
capacities or latest equipments were responsible for that.”

4. Theoretical Framework:
After analyzing the Pakistan‟s energy shortages and their different reasons for these
shortages the following variables were identified.

4.1. Inventory of Variables:


Dependent Variable:

 Electricity

Independent variables

 High Demand
 Over load and illegal load
 New electricity capacities installed
 Industrial growth
 Air conditioners

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4.2. Direction of Relations:
 In above relations usage of high demand, over load, illegal load, electricity
thefting and air conditioners negatively affects electriicty supply.
 No installation of new electriicty capacities negatively influences the e lectricity
supply.
 And in last industrial growth positively influence the electriicty supply.

4.3. Explanation of established relationships among


variables.
The High demand, over loads, illegal load, thefting electricity and usage of air
conditioners in homes will ultimately affects the electriicty supply in the country because
it is very difficult to control production process in the country. If the income levels in the
country are high then people will ultimately use luxury items. on the other hand heavy
industry also needs much electriicty to generate production in this scenario we can say
that if during 2005-2006 new industries open then this will also create shortage however
this could be decided in the findings portion of the report that either industrial growth or
no installation of electriicty capacities or massive usage of electriicty appliances is
responsible for this problem.

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4.4. Inventory of propositions in a sequential order:

 Massive domestic usage of air conditioners, over loads and thefting electricity
due to high income level negatively affects electriicty supply.
 No installation of new electriicty capacities or latest equipment negatively
influences the electriicty supply.
 The industrial growth during 2005-2006 positively influences the electriicty
supply.

5. Hypothesis:

1. Null Hypothesis:
H0 : Massive usage of air conditioners, over loads, illegal loading and high demand in
the country is responsible for the electriicty shortage in the country.

1. Alternative Hypothesis:

H1 : Massive usage of air conditioners, over loads, illegal loading and high demand in
the country is not responsible for electriicty shortage in the country.

2. Null Hypothesis:
H0 : Growth in industrial sector is responsible for shortage of electriicty in Pakistan.

2. Alternative Hypothesis:
H1 : Growth in industrial sector is not responsible for the shortage of electriicty in
Pakistan.

3. Null Hypothesis:
H0 : No installation of ne w electricity capacities or latest equipments is responsible
for electriicty shortage in Pakistan.

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3. Alternative Hypothesis:
H1 : No installation of ne w electricity capacities or latest equiqments is not
responsible for electricity shortage in Pakistan.

6. Research Design:

6.1. Classification of research:


In my research the purpose of study would be descriptive and also quantitative because
substantial information is known about situation and hand on how this particular issue
have been solved in past.

6.2. Data Collection Techniques:


As my research is based on historic data. Such as data regarding shortage of electriicty or
WAPDA Crises in pakistan during 2005-2006.So the process of data collection involves
two steps first step was to collect data from two historic sources such as different
government sources, internet and the second source we collect data from WAPDA House
Peshawar through structured and unstructured interviews, newspapers and the second
step was to send questionnaire to different energy suppliars of the country these resources
are contacted through PEPCO and WAPDA to provide necessary information. For the
purpose of data collection a request was sent to PEPCO and WAPDA house Peshawar to
provide data regarding Electriicty.
The research was of quantitative nature and the quantitative data was collected through
various sources.

6.3. Population and Sample:


As my research is totally based on historic data so for data collection the population is all
power supply companies of Pakistan.These all companies are headed by
PEPCO.(Pakistan Electric Power Company. ) These companies are responsible for
electric supply in pakistan. A list of these companies is given below.

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No. Electricity Supply
Companies.
1. LESCO.
2. GEPCO.
3. FESCO.
4. IESCO.
5. MEPCO.
6. PESCO.
7. HESCO.
8. QESCO.
9. TESCO.
10. NTDC.
11. GENSCO.
12. KESC.
13. GENCO I.
14. GENCO II.

To collect data these companies are contacted through PEPCO for better
cooperation.Thus the data collected from these sources is divded into two froms one is
domestic consumption of electricity and the other one is commercial consumption of
electriicty during 2005-2006. The staff of PEPCO also forwards me a report made by
Engineer Tahir basharat cheema the chairman of PEPCO. which was presented to the
Prime minister.

6.4. Tools of Data Collection:


The data collection tools were Filling up a questionnaire in which the details for
electriicty consumption and production were asked from the staff members of thse
companies. The analysis data was also collect from different news papers, websites and
other sources. The responsible members of different electric supply companies are
contacted through e-mails and Telephones. The e- mail id,s and phone numbers are given
in references.

6.5. Forms of data collected:


Thus data collected from different sources are of two types one type is completely filled
questionnaire and the other type is different reports on Electriicty supply and
shortage.The data thus collected is and managed so that results ca n be identified and also
the trends of electriicty consumption during different seasons in Pakistan. There are two
objectives of data one is based on past situation and one is based on present and future
situations.

Abdullah Izam Page 18 of 29 Muslim College


7. Data Collection,Data Processing
and analysis

The Primary and secondary data collected from different sources thus managed. Primary
data was collected in the form of filled questionnaire and the secondary data was
collected in the form of reports of different journalists and other government o fficials.
The data collected in the form of filled questionnaire is of primary nature thus it is
directly analyzed by using different statistical tools such as coefficient of variation and
other measures of location and measures of dispersion. Then the data was arranged and
presented in a graphical form so that any one can analyze the situation of electriicty
shortage in Pakistan.

Here is the picture of Forecast of Pakistan’s Energy Consumption and


production. (Source: World Energy Data.)

As it is clearly evident from the figure that consumption of electricity was increasing day
by day.

Now looking at the data which was collected from different electriicty supply companies
of Pakistan.

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B e f o re g o ing t o de t a ile d s t udie s he re a re s o me Co nc e pt s a nd
De f init io ns

CON CE PTS AN D D EFI N I TI ON S :

WATT: Watt is a unit of power. A watt is defined as the rate of doing one joule (J)
of work in one second. Common units of power are multiple of the watt.
These are as under:

One Watt (W) = 01 J/S


One kilowatt (KW) = 103 J/S
One Megawatt (MW) = 106 J/S
One Gigawatt (GW) = 109 J/S

KILOWATT HOUR: Kilowatt hour is a precise measure of energy and work. It is the
work equivalent to 1000 watts (Joules per second) over one hour
time.

Work = Power x Time


One Kilowatt hour (Kwh) = 3.6x103 Joules
One Million watt hour (Mwh) = 3.6x106 Joules
One Giga watt hour (Gwh) = 3.6x109 Joules

Domestic Supply

It includes power supply to residences, places of worships, approved charitable


institutions, Government approved educational institutions, hospitals etc.

Commercial Supply

It includes power supply to offices and establishments such as shops, hotels,


restaurants, petrol pumps, private hospitals, cinemas, offices of associations and
consultants etc.

Industrial Supply

It means power supply for bona fide industrial purposes in factories including the supply
required for the offices and for normal working of the industry and also for water pumps
and tube wells other than those meant for irrigation or reclamation of agriculture land.

Abdullah Izam Page 20 of 29 Muslim College


Agricultural Supply

“Agricultural Supply” means a supply for lift Irrigation Pumps and/or Tube wells
intended solely for irrigation or reclamation of agricultural land or forests, and includes
supply for lighting of tube well chamber.

Maximum Demand

“Maximum Demand” means the highest demand obtained in any month measured over
successive periods each of 30 minutes duration.

Public Lighting

Public Lighting means illuminating public lamps.

Bulk Supply

“Bulk Supply” for the purpose of this tariff means a supply given in a bulk at one
point to consumers having their own distribution facilities, i.e. own grid station etc.

Beside that Electricity consumed in auxiliaries and system losses are referred as other
Consumption.

Statistics of Numbe r of Cons umers of Electricity by Branch in Pakistan

All Nos. are in (000)


Branch 1998-99 1999-00 2003-04 2004-05 2005-06
1 2 3 4 5 6 7
Nos. % Nos. % Nos. % Nos. % Nos. %
Total 12,248 100.0 13,192 100.0 15,841 100.0 16,718 100.0 17,795 100.0

Do mestic 10,005 81.7 10,783 81.7 13,086 82.6 13,888 83.1 14,838 83.4

Co mmercial 1,840 15.0 2,001 15.2 2,313 14.6 2,379 14.2 2,476 13.9

Industrial 220 1.8 224 1.7 230 1.5 234 1.4 245 1.4

Agriculture 174 1.4 175 1.3 201 1.3 204 1.2 223 1.2

Others 09 0.1 09 0.1 11 0.1 13 0.1 13 0.1

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FIG.7.1

Partition of consumers of electriicty by branch

Industrial
Agriculture Others
1%
1% 0%

Domestic
Commercial Commercial
14% Industrial
Agriculture
Others

Domestic
84%

Statistics of Electricity Consumption in MKH by Branch

Branch 1998-99 1999-00 2003-04 2004-05 2005-06


Units % Units % Units % Units % Units %
1 2 4 5 6 7 8 9 10 11
Total 45,756 100.0 46,358 100.0 59,316 100.0 63,298 100.0 70,241 100.0

Do mestic 19,268 42.1 21,485 46.4 25,394 42.8 27,601 43.6 30,720 43.7

Co mmercial 2,381 5.2 2,544 5.5 3,586 6.0 4,080 6.4 4,730 6.7

Industrial 12,924 28.3 13,972 30.1 19,738 33.3 20,561 32.5 22,441 32.0

Agriculture 5,620 12.3 4,542 9.8 6,669 11.2 6,988 11.1 7,949 11.3

Public 225 0.5 239 0.5 271 0.5 306 0.5 353 0.5
Lighting

Bulk Supply 5,338 11.6 3,576 7.7 3,658 6.2 3,762 5.9 4,048 5.8
& others

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FIG.7.2
Electricity consumption in MKH by branch
Bulk Supply & others
Lighting 6% 0%
0%
Domestic
Public
Commercial
1%
Industrial
Agriculture Domestic Agriculture
11% 43%
Public
Lighting
Industrial Bulk Supply
32% & others
Commercial
7%

Electricity Consumption by Province and Branch (2005-06)

All nos are in (000)


Branch Pakistan Punjab Sindh NWFP Balochistan
1 2 3 4 5 6
Total 70,241 43,618 14,448 8,256 3,919

Do mestic 30,720 18,884 5,873 5,562 401

Co mmercial 4,730 2,953 1,276 411 90

Industrial 22,441 15,599 5,252 1,383 207

Agricultural 7,949 3,668 698 451 3,132

Public lighting 353 170 162 18 3

Bulk supply and 4,048 2,344 1,187 431 86


Others

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Year-wise Electricity Consumption by Province

Year Pakistan Punjab Sindh NWFP Balochistan


1 2 3 4 5 6
1996-97 43,486 25,121 10,062 6,638 1,665
1997-98 45,112 25,638 10,976 6,794 1,704
1998-99 45,756 25,245 12,581 6,243 1,687
1999-00 46,358 27,033 10,975 6,528 1,822
2003-04 59,316 36,246 12,573 7,230 3,267
2004-05 63,298 38,591 13,480 7,645 3,582
2005-06 70,241 43,618 14,448 8,256 3,919

Year-wise Electricity Consumption by Branch

MKH

Year Total Domestic Commerci al Industrial Agriculture Public Bulk Suppl y


Lighting & Others
1 2 3 4 5 6 7 8
1990-91 32,128 10,400 2,066 11,690 5,619 262 2,091
1991-92 34,962 11,458 2,144 12,824 5,848 310 2,378
1992-93 37,180 13,205 1,726 13,658 5,620 287 2,684
1993-94 38,246 14,134 1,786 13,392 5,772 298 2,864
1994-95 40,385 15,583 1,941 13,306 6,252 325 2,978
1995-96 42,479 17,116 2,174 12,885 6,696 378 3,230
1996-97 43,486 17,684 2,241 12,754 7,086 390 3,331
1997-98 45,112 18,670 2,334 13,042 6,937 387 3,742
1998-99 45,756 19,268 2,381 12,924 5,620 225 5,338
1999-00 46,358 21,485 2,544 13,972 4,542 239 3,576
2003-04 59,316 25,394 3,586 19,738 6,669 271 3,658
2004-05 63,298 27,601 4,080 20,561 6,988 306 3,762
2005-06 70,241 30,720 4,730 22,441 7,949 353 4,048

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Graph Showing Electricity Consumption by Branch during 2004-2005
FIG.7.3

2004-05

30,000
25,000
20,000
15,000
10,000
5,000
2004-05
0
Domestic

Commercial

Industrial

2004-05
Agriculture

Public

Bulk Supply

Graph Showing Electricity Consumption by Branch during 2005-2006


FIG.7.4

2005-06

35,000
30,000
25,000
20,000
15,000
10,000
5,000
0 2005-06
Total

2005-06
Domestic

Commercial

Industrial

Agriculture

Public Lit.

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Graph Showing Electricity Consumption by Branch during 1999-2000

FIG.7.5
1999-00

25,000
20,000
15,000
10,000
5,000
1999-00
0
Total

Domestic

Commercial

1999-00
Industrial

Agriculture

Public

The above tables and graphs show some facts of Pakistan‟s power energy data. Now we
will look at the electricity generation graph of Pakistan.

System Losses
Year Units Generated
Units Losses %
MKW
1 2 3 4
1996-97 59,894 14,172 24.6
1997-98 62,915 15,453 25.5
1998-99 65,402 17,179 27.3
1999-00 66,562 17,664 27.6
2003-04 83,607 21,117 25.3
2004-05 88,379 21,603 25.4
2005-06 96,478 22,521 24.3

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Graph of System Losses

FIG.7.6

2005-06

System
Losses
19%

Units Generated
System Losses

Units
Generated
81%

We can clearly see the difference between consumption of electricity during 2004-2005
and 2005-2006 and 1999-2000. FIG.7.1 to 7.6 illustrates the story. That how electricity
consumption increases from 46,358 MKW to almost 60,000 MKW. Here is a point to
note that during year 2005-2006 system losses or line losses are about 20% which is
alarming. i.e. 20% of energy made by Pakistan is lost in lines during delivery of
electricity to destinations. In developed countries the line losses percentage is only 3%.

Analysis:

According to The Director General (Energy Management & Conservation) PEPCO.

It was found that half a million ACs mainly of the split version was sold and added to the
power system during fiscal 2005-06. Thereafter, another 750,000 pieces of such
equipment was installed in Pakistan during the next financial year. 2005-06.
Importers and manufacturers of air conditioners had planned to sell upwards of a million
ACs during 2006-06, but due to the on-going power crises they could only purvey
750,000 such appliances. A market survey revealed that people wanting to add three ACs
during 2008 would now buy two and spend the rest of the mone y on procurement of a
generator. The sale figures for the three years viz. 2005-08 add to a phenomenal two
million pieces or an addition of 4000 MW of load or at least a usage effect equaling 800
MW at 20 per cent diversely factor. It was estimated that four million ACs of both the
window and the split versions (in addition to package and centrally air conditioned
buildings) were added between 2000-08 or a load of 1600 MW (with due diversity) to the
system. One can safely assume that a large number of such contraptions would be hooked

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up to the system in addition to the equipment bought during 2000-2008. And if we
quantify such use, we safely come up with the figure of about 4000 MW as specifically
AC load on the system. This 4000 MW of AC load simply vanished from the system
demand after the mercury dropped by 7-8°C on late September 5. The system remained
so till September 08 where-after it has slowly built up at a rate of 800-900 MW a day.
Energy labelling is unheard of and Pakistan remains a dumping ground for gas guzzling
and inefficient electrical equipment. The present requirement of cooling is being
managed by double the required load viz. only 2000 MW. As such, besides being unduly
loaded by a non-productive AC load of 4000 MW, the power system has also to arrange
for expensive peaking generation without many returns. Pakistan cannot afford such
extravagant usage of ACs and that all such usages have to necessarily result in great
increase in utility revenues. We must use ACs most frugally, and these have to be energy
labeled with only efficient models allowed to be imported and manufactured locally.

8. Findings
From above analysis it is found that shortage of electricity in Pakistan is caused by high
demand, illegal loads, electricity thefting, shortage of dams, over loads and frequent use
of Air Conditioners in by domestic consumers only. As it is evident from graphs that
domestic consumption of electricity is raised about 30% during 2005-2006.

The other variables of our research such as industrial growth and consumption of
electricity in industry has almost no impact on shortage. Because industrial growth is
only 7% during 2005-2006 raised from 3.5% from previous year. But Domestic
consumption is increased from 5% per year to 30% which is alarming.

So we accept the first null hypothesis that Massive usage of air conditioners, over
loads, illegal loading and high de mand in the country is responsible for the
electriicty shortage in the country, And we re ject all other hypothesis.

9. Conclusion & Recommendations


 The problem of energy shortage can be solved by imposing more duties on
luxurious goods such as Air Conditioners.
 Invest in the Kala Baag Dam and Basha Dam Making.
 Installation of low cost new energy generation plants is very necessary. (Low cost
plant includes solar energy and wind energy systems theses systems are expensive
at purchasing but after installation these are the free sources of energy).

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 Line losses should be decreased to 3% currently it is 20%

 Line loses in shape of theft of electricity should also be decreased by making new
and harder laws.

 A strong media campaign should also be introduced on TV. Channels to create


awareness in the society to decrease energy consumption.

 Electricity saver appliances should be introduced in the country.

 Home users use less energy so that industrial can benefit from it.

10. References:
World Energy Data: www.eia.doe.gov

Daily Times

Daily News

WAPDA house Peshawar ( Mr. Shad Muhammad Khan Manage Cm & O )

WAPDA house Peshawar ( Mr. Fazal islam Director of Technology )

Statistical bureau of Pakistan

PEPCO (Pakistan Electric Power Company)

www.worldbank.org

www.google.com.pk

www.scribdupload.com

—The End—
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