Energy mix

Ever since the abandoning the construction of big storage dams on river Indus and hydel power stations thereon, achieving the optimal energy mix has remained illusive till date. Prioritizing the most expensive thermal power generation from diesel and furnace oil by the PPP and PML-N governments resulted in higher power tariff increasing the cost of doing business and deteriorating the Ease of Doing Business Index to the 147th position in the ranking of the World Bank. But in the PTI led present government the situation is gradually improving. Despite the looming water crisis and gas shortage, power production from these two cheap sources has gone up.

Hydel power plants made the largest contribution to the total electricity production in the month of November at 2,564 gigawatt hour (GWH) which was 16 percent more than 2,212 GWH in the same month previous year, as reported by National Power Regulatory Authority (NEPRA). Its share in total power production rose to 34 percent in November this year compared to 31 percent in the corresponding month last year. Total hydel production surged by 5 percent to 7,545.6 GWH in November compared to 7170 GWH in the same month last year.

Similarly, combined production from locally produced gas and imported liquefied natural gas (LNG) rose 15 percent to 2,812 GWH compared to 2,448 GWH. Their share in the energy mix surged to 37 percent compared to 34 percent in November preceding year. Separately the contribution of locally produced gas to overall electricity production fell but it surged significantly in the case of LNG.

Hydel production increased after additional two new plants started generation during the calendar year 2018. Tarbella- 4 extension project and Neelum Jhelum hydropower power stations have added nearly 2400 megawatt this year. The relative increase in rainfall improved the water flow in dams which helped the country produce higher electricity from hydel power projects. The Khyber Pukhtunkhwa government had forwarded a number of small and medium hydropower projects with total capacity of 2100 megawatt in 2012. Out of them only one project of 84 megawatt got the approvals from CDWP, ECNEC and ECC. Had all hydropower projects, which could have been completed in few years, got the approval on time the balance would have been tilted toward hydel power in the energy mix?

The skewed priorities of the previous governments in power generation have now been changed. Federal Minister for petroleum Ghulam Sarwar Khan announced the other day that the government has given priority to producing most of the electricity from hydel sources while production from alternative energy sources including wind, solar and bagasse has been placed at second place in the energy mix. Power production from LNG has been given third priority and not environment friendly coal power generation has been ranked fourth. The previous PML-N government had given first priority to environment polluting and health hazardous coal based power generation the first priority by deciding to set up 13 such power plants. Of which two power plants have been operationalised at Shekhupura and Sahiwal. The most expensive furnace oil power generation has now put at the bottom by the present government keeping in view of the disastrous policy of second PPP government while setting up furnace oil and diesel fired IPPs, the major factor of circular debt piling.

Electricity production from furnace oil has dropped to nominal 5.79 GWH in November compared to 648.5 GWH in the same month last year but the agreements that had been made with IPPs binds the government to pay 40 percent charges for the idle capacity of private thermal power plants. Electricity production from coal fired power plants increased by 8.5 percent with a contribution of 1,045 GWH compared to 962 GWH last year. Their share in the total power production remained flat at 13 percent. But coal tariff agreed with Chinese companies is 40 percent higher than the international standard which needs a review. Production from nuclear plants rose over 29 percent to 827 GWH, contributing 11 percent to the power production. The power production from nuclear source increased from 670GWH to 827 GWH after the addition of two reactors in the recent past.

The increase in electricity production from inexpensive sources of hydel and gas should have resulted in proportionate decrease in tariff which has consistently been raised in a futile attempt to resolve the chronic problem of power sector circular debt which now stands at Rs. 1.20 trillion. The World Bank has cautioned against further jacking up of electricity tariff and advised to make the transmission and distribution system efficient and improve the revenue collection by addressing the issue of willful default of electricity bills plus its massive theft. These issues need to be dealt with as first priority.

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