Economical Burdens in terms of electricity from non-aboriginal Sources in

Perspective of Pakistan

Abstract

In this Research Paper the purpose of study was able to know Reasons of Increasing
Electricity rates and also energy crisis in Pakistan and define Recommendations
&Solutions of this problem. Electricity rates keeps on increasing in Pakistan all the time.
Pakistan is facing a huge energy crisis and the demand of electricity is increasing on daily
basis. The electricity shortfall has hit the record level of 7,075 MW and its not going to
be resolved in the near future. This energy crisis is basically due to the inefficient policies
of government. The rate of inflation is also increasing in country, and it has made the life
of common people very difficult. Now due to the shortage of electricity and increase
inflation the electricity rates in Pakistan also keeps on varying on the daily basis.

Introduction

Energy is considered to be life line of any economy and most vital instrument of
socioeconomic development of a country. Energy is pivotal in running machinery in
factories and industrial units, for lighting our cities and powering our vehicles etc.

there has been an enormous increase in the demand of energy as a result of industrial
development and population growth, in comparison to enhancement in energy production.
Supply of energy is, therefore, far less than the actual demand, resultantly crisis has
emerged. An energy crisis can be defined as any great bottleneck (or price rise) in the
supply of energy resources to an economy. Pakistans energy infrastructure is not well
developed, rather it is considered to be underdeveloped and poorly managed. Currently the
country is facing severe energy crisis. Despite of strong economic growth and rising energy
demand during past decade, no serious efforts have been made to install new capacity of
generation. Moreover, rapid demand growth, transmission losses due to outdated
infrastructure, power theft, and seasonal reductions in the availability of hydropower have
worsened the situation. Consequently, the demand exceeds supply and hence load-
shedding is a common phenomenon through power shutdown.

By energy crisis Electricity rates keeps on increasing in Pakistan all the time. Pakistan is
facing huge energy crisis and the demand of electricity is increasing on daily basis. The
electricity shortfall has hit the record level of 7,075 MW and its not looking to be resolved
in near future. This energy crisis is basically due to the inefficient policies of governments
rate of inflation is also increasing in country, and it has made the life of common people
much difficult. Today Pakistan is facing huge electric power crisis. By looking at current
scenario, it appears to be impossible to overcome this crisis in the upcoming future. To get
to the solution to this issue proper understanding and correct implementation is needed.
At present Pakistan is among the list of countries where per unit cost of Electricity is very
high. Electricity rates are always on the move in Pakistan, adding more to the difficulties
of the lower and middle class. The main reason is the lack of proper funding to the
electricity regulatory authorities, the increasing inflation and poor government policies.
Also the ongoing electricity shortage and increase in electricity demand effects the
electricity tariffs to a great extent.

Inefficient government policies

The Pakistani government had to renew its current policies about energy
crisis. So far government is totally failed in controlling this ongoing energy crisis, the
government had not done much to tackle this shortfall of electricity. New dams should be
built; different sources of producing electricity should be used. Electricity rates are
increasing in Pakistan on daily basis. This is mainly due poor government policies to
control electricity rates. So far government has not taken reliable steps to control electricity
rates. (Nepra Pakistan, 2009). Government prefers to use rental power plants and has done
nothing for searching alternate sources. Pakistan has large coal reserves but they have not
been used much. Only 150 MW of electricity is being produced from coal. (News, 2010).
This whole crisis is due to the insufficient government policies and planning. It would not
be fair to criticize current government only but the previous governments should also be
blamed for the current crisis. Really, the previous governments had done nothing. They not
even planed about handling the increasing electricity demand. But now it is responsibility
of current government to deal with this job. There is no use of just blaming what others
have done so far. (Sifat Shah M. L., 2009). The other reason for this ongoing energy crisis
is lack of future planning. The government has totally failed to forecast and plan for future.
With the increasing demand of electricity, government should have planned to overcome
the energy crisis in future. Previous governments have done nothing, they just talked about
building new dams but no one was able to give it practical picture. In the past, a very few
power plants were built. Also, the demand is increasing rapidly, and is going to increase
more in future. Government has done nothing for searching alternate sources for producing
electricity. Pakistan has large coal reserves but they have not been used much. So far
Government has not taken reliable steps to look for alternate sources to produce electricity.
(Sifat Shah A. R., April 2010). This directly affects the electricity rates; the government is
increasing the electricity prices on daily basis. Due to governments inability to increase
the current electricity. Production and the rapidly increasing demand, government has no
choice but to increase the electricity prices. With this increasing demand the government
is also increasing taxes on per unit cost of electricity. Government has no plans to control
these increasing electricity prices. (Chaudhry, April, 2010). The Government had to plan
for installing new energy generation plants, and find alternate energy plans for providing
electricity to common people at accessible rates.
Corruption and Lack of funding

One of the main hurdles that government has to face is corruption, the
government authorities must work sincerely and purely. There must be some check and
balance to these regulating authorities. The government has taken few quick steps
regarding electricity shortage, but instead of helping the common peoples they are adding
more to their difficulties. Imran Khan the leader of Tehreke-insaf Pakistan says in one of
his recent interviews on his Forum (www.insaf.pk/Forum.);

We the simple people of Pakistan expect that our dumb and uneducated politicians are
capable of solving our Electricity problem. To be very honest, our dumb politicians are
coming out with all the wrong and totally absurd, laughable solutions like having two
holidays and shutting down shops at 8 oclock.

Due to this corrupt electricity regulating authorities the short fall of electricity had not been
overcome, causing the demand of electricity to increase. Due to this increase in demand,
the rates of electricity have been affected consistently. There should be proper check and
balance on these authorities by government to avoid misuses of electricity. (Sifat Shah M.
L., 2009)

Dependence on oil:

Pakistan is producing about 60 % of its electricity from oil and gas, by thermal
power plants and from oil furnaces. This greatly affects the electricity per unit cost.
Electricity produced through oil is more expensive as compared to other sources.

Use of oil furnaces

 Pakistan is producing most of its electricity by oil. Due to this dependence
on oil furnaces Pakistan is producing expensive electricity. Out of 19,000 MW installed
capacity of electricity generation in Pakistan 12,000 MW is produced through oil and gas.
So due to this excessive use of oil furnaces, the electricity produced is more expensive.

As oil prices in the international market keeps on changing so the cost of electricity
production increases, this is directly related to the electricity rates in Pakistan. Pakistan is
not a natural producer of oil so Pakistan has to import oil from abroad which is expensive.
So electricity produced with this imported oil is also much more expensive. (Pesnani,
2010)

Varying oil prices

Oil prices keep on varying in international market. These varying oil

prices have strong impact on economic stability of country. Being an importer of oil
Pakistan had to suffer from the ups and downs of international market. The prices of oil
also affect the electricity rates, and it will become more and more expensive as time passes.

Pakistan is highly dependent on oil, which means that any variation will
have a definite impact on its economy, and specially electricity. If we see today oil prices
are increasing in international market, it directly affects the electricity rates in Pakistan.
(News, 2010)
Following is the rate of increase of oil prices in international market.

(Chaudhry, April, 2010)

Lack of usage of alternate sources

 Another point to look at is lack of usage of alternate sources. Pakistan is mostly
dependent on oil and water for electricity production. As discussed above electricity
produced by oil is more expensive. So, one reason of producing expensive electricity is
lack of alternate sources.

Pakistan is a blessed country; Pakistan has large coal reserves but

unfortunately so far very little of electricity is produced by coal. Pakistan also had great
potential for solar and wind for electricity generation, but like other sources they are also
not used as much. (Chaudhry, April, 2010)

Lack of latest technology:

Technology is growing very fast in the world now days. So in

order to catch up with the world, the country must have to keep pace with this growing
technology. In Pakistan the technology is growing but it is still not to the advanced level.
One reason of increasing electricity rates is use of aged technology and lack of new
technology. (Bug, 2007)

Line losses

A considerable amount of energy is lost due to line losses in transmission system.

This is due to the poor quality of transmission lines and their poor maintenance. In this
present energy crisis the importance of wastage of electricity through these losses cannot
be ignored. One of the most basic problems that WAPDA is facing is unnecessary loss of
energy due to its poor power system. According to a recent survey about 30.2 % of energy
is lost due to technical and non technical losses. (Bug, 2007) (Pakistan, 2009)

A considerable amount of energy is lost due to the aged and

poor transmission line. Apart from the gap between demand and supply the poor
maintenance and line losses are also the factors affecting the current crisis. According to a
survey one percent line loses cost Rs 1 billion to the national exchequer. Due to this
wastage of electricity in form of line losses the gap between demand and supply is
increasing which affects the electricity rates. (WAPDA, 2011)

WAPDAs losses are also added by the low quality of equipment

used by consumers. Use of cheap quality of motors and other equipments are also reasons
of losses.

Province-wise losses transmission losses (percentage)

 Province 2006-07 2007-08 2008-09
Balochistan 21.4% 0.8% 20.1%
N.W.F.P 13.2% 34.5% 35.3%
Punjab 13.6% 13.2% 13.1%
Sindh 36.9% 35.9% 34.7%

Lack of technology

Pakistan is a blessed country, Pakistan has large coal reserves, water reserves, has potential
for solar and wind power generation. But lacks in technology, Pakistan does not have latest
technology to completely exploit the potential in the country. This causes Pakistan to stick
to the expensive ways of producing electricity and lack of usage of alternate sources. So
Pakistan has to relay on water and oil mainly for electricity production. Production through
oil is much more expensive, which results in expensive electricity.

Another factor which comes in lack of technology to reduce

or overcome the energy losses. This includes technical losses during production and
transmission of electricity. Due to this inability to reduce losses, a considerable amount of
energy is lost, resulting in shortage of electricity supply. (Bug, 2007) (Pakistan, 2009)

Electricity Theft

There is no proper mechanism to control electricity theft. A considerable

amount of electricity is lost due to electricity theft. Electricity theft is basically due to lack
of responsibility from the part of customers. Peoples often steel electricity from main
transmission lines; Government has done nothing to control electricity theft so far and is
just dependent on the part of customers. (Pakistan, 2009)

During this present energy crisis energy lost in this manner cannot be accepted.
On the other hand poor Peoples have no choice, but to steel electricity to fulfill their needs.
According to a recent survey the percentage of electricity theft is greater in poor provinces
as compared to Punjab the percentage is higher in other provinces. The main reason of this
high percentage is expensive electricity. Peoples have not been able to afford electricity at
such high rates. (Bug, 2007)

Data analysis and statics:

Pakistans Energy Sector:
Electricity produced in Pakistan is from three main sources.
1).Hydro
2).Thermal (Gas/Steam/Furnace Oil)
3).Nuclear

There are four major power producers in country which include Water & Power
Development Authority (WAPDA), Karachi Electric Supply Corporation (KESC),
Independent Power Producers (IPPs) and Pakistan Atomic Energy Commission (PAEC).

Below is the break-up of the installed capacity of each of these power producers
(As of June-2008).

WAPDA's Total Hydro+ Thermal capacity is 11272 MW

Karachi Electric Supply Company Total (KESC) 01756MW
Independent Power Producers Total (IPPs) 06365 MW
Pakistan Atomic Energy Commission Total (Nuclear) 00462 MW
Total Power Generation Capacity of Pakistan (including all sources) 19855 MW

Hydro Electricity generated by WAPDA varies between two extremities i.e. between
minimum of 2414 MW and maximum of 6761 MW depending upon the river flow
through the whole year.

Total Power Generation Capacity of Pakistan (including all sources) is 19855 MW and
the electricity demand (as of today 20-04-2010) is 14500 MW and PEPCO is merely
generating 10000 MW.

8000 7200
7000 6500
5800
6000
5000
4000 Power in MW
3000
2000
1000 450 150
0
Power from Oil Power from Power from gas Power from Power from
water Nuclear Energy Coal

So it is obvious that these 15-20 hrs power shutdowns in most parts of the country are not
because of the lack of generation capacity but only because of IMF / World Bank policies
imposed on our nation by Govt. The Power Generation companies are not buying
Furnace Oil from PSO by saying they dont have money to do that but we are all paying
for Electricity that is generated from Furnace Oil. This is the reason that top refineries
like PRL are operating at 40% capacities. IMF / World bank has imposed to reduce
budget deficit by importing less crude oil. But due to this fact all our industries are under
severe crisis. None of our political party who are in Assembly is ready to speak on it
because everyone is blessed by US / IMF / World Bank.
(http://alaiwah.wordpress.com/2010/06/23/pakistan-total-power-generation-capacity-
19855-demand-14500-mw-why-the-load-shedding-then/)

Result of Questionnaire about Increasing Electricity Rates in Pakistan:

1 2 3 4
Sr.No Satisfaction: Strongly Agree Disagree Strongly
Agree Disagree

1. Should the rates of Electricity be 2 7 9 12

according to IMF?
2. Can we produce electricity from 19 9 1 1
coal at low cast?

3. Should we require modern 21 8 0 1

technology for the production
of electricity at low price?
4. Should we depend on oil for the 2 5 13 10
production of electricity?

1) In this 40% of people strongly disagree the rates of electricity should be according to
IMF.

2) In this 63.33% of people strongly agree electricity produce from coal at low cast.

3) In this 70% of people strongly agree production of electricity at low price using
modern technology.

4) In this 43.33% of people disagree depend on oil for the production of electricity.
 Result of Questionnaire
80.00%
70.00%
60.00%
50.00%
40.00%
%

30.00%
20.00%
10.00%
0.00%
Q#1 Q#2 Q#3 Q#4
Strongly Agree 6.66% 63.33% 70% 6.66%
Agree 23.33% 30% 26.66% 16.66%
Disagree 30% 3.33% 0% 43%
strongly disagree 40% 3.33% 1% 33%

Conclusion:

To sum all reasons for increasing electricity rates are mainly inefficient
government policies, lack of governments attention to this issue and lack of future
planning. Pakistan has vast coal reserves but a very less percentage of electricity is
produced by coal. Pakistan also has potential for wind and solar energy, which can be
used to overcome this energy crisis. New dams must be built and government now has to
shift to alternate sources for electricity production and also has to minimize the use of oil
and has to overcome the technical and line losses to control the increasing electricity
prices in country. The transmission system needs to be upgraded after every 5-10 years to
minimize the line losses. The transmission system in Pakistan is over aged, but still it is
in use. Government should have to reorganize its policies and has to plan for the
upcoming future to overcome this energy crisis in future.

Coal and hydro is best to solve the energy crisis in Pakistan. The quick solution of
energy crisis is wind energy because its initial cost is very low. But we cannot finish the
energy crisis completely but can only reduce the gap of energy crisis. If we plan for long
term we should go to coal energy and hydro. Because Pakistan has the lot of coal
reserves. So government should take steps to refine the coal and produce electricity with
coal. If government constructs the new dams (large dam, run of river) and focus on
hydro project which was schedule to complete in 2008 but yet not completed. The cost
of per unit electricity with the hydro power plant is less than 1 rupee. Pakistan is the 5th
largest coal reservoir all the world. Pakistan has enough coal that Pakistan can produce
about 100000 MW of electricity which is 5 times more than todays electricity
production.
Its better to be afraid of the dark now, then to be afraid for your whole life . . . save
electricity. . .

Recommendations/Solutions of Energy Crisis:

Energy crisis can be curtailed by:
i). Reducing unnecessary energy use:
o Usage of electricity saving devices
o Awareness campaign for energy saving
o Reduction in unnecessary transportations by developing good public transport systems
and strengthening Pakistan railways
o Reduction in industrial uses with installation of effective equipment/ energy efficient
and with increasing efficiency of workforce (cost effective)
o Decreasing reliance on rental power projects, because instead of doing any good, they
are increasing prices of electricity.
o Decreasing line losses by using efficient power transmission cables
ii). Developing new energy resources :
o Tapping indigenous resources (Thar coal)
o Using renewable resources (water) by constructing new dams and hydro power plants
o Import of natural gas by IPI (Iran Pakistan India) and TAPI (Turkmenistan,
Afghanistan, Pakistan and India) pipelines
o Import of electricity from Tajikistan -through Pak Afghan Tajikistan transmission- and
Iran (approximately 1000 MW from each of them) pipelines
o Utilizing alternative energy resources :
Wind power
Biodiesel /Biomass
Solar
Tidal
o Enhancing civilian nuclear capacity

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Reference Websites:
www.pepco.gov.pk
www.wapda.gov.pk
www.lesco.gov.pk
www.nepra.gov.pk