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 Rs.17 per kWh.” It is estimated that the country consumes at least 25 billion units of 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.

In the second half of December last year, the situation got so bad that WAPDA & KESC (power generation entities in Pakistan) resorted to draconian levels of load shedding. The power cuts during this time amounted to 20-22 hours a day in most small cities and even cities like Karachi were seeing 18+ hours of load shedding.

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.

Way Forward: Notwithstanding the systemic issues such as the failure to build new dams and previous Government’s inability to add even a single megawatt of new power to the grid during 9 years of its rule, it seems that the present crisis is a result of bad management and the lack of foresight. The total installed capacity of WAPDA and KESC totals around 19,500 megawatts. Almost two third of this power comes from thermal power plants (fossil fuels), one third is generated by water and about 2% comes from nuclear power plants.

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 are not being implemented. Shops use excessive lights, which can be conveniently reduced. A suggestion that cities be 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 individual interests as well as of the society at large.

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. 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.

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 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 production as well as development of coal mining and new gas fields should be the top priority.  Waheed Habib