PAKISTAN ENERGY CRISIS

By: Amna Mushtaq Khan 14446

The Power sector was restructured in 1998 with the creation of PEPCO
(Pakistan Electric Power Company). Water & Power Development Authoritys
(WAPDA) has been structured into distinct corporate entities comprising of 4
GENCOS, 10 DISCOS and one TransCO. These 10 DISCOs are responsible for
distribution to the end users.
KESC meets its overall demand with its own generation plus purchase from
NTDC, IPPs and from Karachi Nuclear Power Plant.

Major Energy Sources:

Thermal: Thermal power generation stands at 8300MW but the

thermal plants have low conversion efficiencies and are expensive to

maintain/operate.
Hydro Power: Only 34% of total electricity generation is achieved
through hydro power.
Wind: Pakistan has the potential of producing wind energy 10000MW
to 50000MW yet power generation through wind is at initial stages in
Pakistan.
Solar: Pakistan also has the potential to generate 100,000MW from
solar energy.
Nuclear: Pakistans nuclear power generation has a capacity of
425MW.
Bio-Diesel: Pakistan has planned to generate 10MW of electricity
from municipal waste in Karachi.
Due to rising demand, power infrastructure issues, and poor governance
severe electricity shortages have ensued. Power outages have led to Historic
Demand and Supply situation in Pakistan widespread rolling blackouts that
have paralyzed industry and led to major civil unrest.
The electricity demand was more than it was generated. As a result, the
utilities were resorting to load shedding across the country. This crises had a
direct impact on households, schools, and hospitals, agriculture and
irrigation, closing of industries which led to unemployment.

One of the foremost reasons for Pakistans Energy crises is the Circular Debt
Issue that needs immediate remedies. Circular Debt is the amount of cash
shortfall within the Central Power Purchasing Agency (CPPA) that it is unable
to pay to the power supply companies.

Reasons for Circular Debt:

1. Result of the difference between the actual costs of providing
electricity in relation to revenues realized by the power distribution
companies.
2. Delays in tariff determination and fuel price fixation
3. Transmission and distribution losses.
4. Stay orders granted by court on fuel price adjustment charges
5. Delayed payments by Ministry of Finance

Distribution companies are facing line losses due to multiple reasons, but
electricity theft non-payments by the consumers are burning issues. Pakistan
is one of the emerging economies of South Asia, where the government has
declared the Power Sector as its top priority of investment. The Government
of Pakistan is taking all the necessary measures to build a more conducive
environment, to resolve issues as quickly as possible. Long term planning
and goals must be focused towards streamlining the foreign policy according
to the countrys economic and energy needs. Improving and increasing ties
with future energy rich countries must not be neglected.

Energy Crises Recommendation for Improvement

Promote hydro power and other domestic alternate energy sources like solar,
wind, coal etc.
Energy conservation and demand management programs should be initiated
Curb electricity thefts with stringent penalties
Resolve tariff and subsidies disputes
Relocate gas towards power production
Power sector reforms to be initiated and existing power plants be overhauled
to achieve maximum efficiency.

Fuel allocation policies be introduced

Remove the current overhang of circular debt and prevent recurrence.

New Government has summarized some key problems in the current system
and has proposed short, medium and long term solutions to resolve the
energy crisis.

Creation of a Ministry of Energy and Natural Resources.

Permanent elimination of Circular Debt
Reforms of Distribution (DISCOs) and Generating companies (GENCOs)
Reforms of Oil and Gas Regulatory Authority (OGRA)
High priority to import gas through pipelines
Setting up national energy efficiency standards
Decentralizing and creating a wholesale market for electricity
Introducing solar-thermal water heaters for domestic and industrial use
Expeditious setting up of coal and LNG import terminals and coal
transportation facilities.
Developing alternative renewable energy sources