Pakistan’s over-reliance on thermal power plants

Out of $44.76b, $7.60b worth of oil spent on meeting growing demand for power generation

KARACHI: Pakistan, which has been a power deficit country for decades, is currently making serious efforts in overcoming the shortfall.

The efforts, however, remain questionable since the government has given approval to run the newly set up power plants to also run on imported fuel, which will require huge foreign exchange and cause the current account deficit to further widen.



The country had the other option to address the chronic power crisis by focusing instead on hydro-power projects, which run on water from dams and carry zero-fuel charges for power production.

According to a National Electric Power Regulatory Authority’s (Nepra) State of Industry Report 2015, “Pakistan has potential of around 40,000 megawatts (MW) hydropower.”

Despite that, the installed capacity to generate hydel-power in the country stands at 7,116MW in the fiscal year 2014-15.

The ratio of hydel to thermal installed generation capacity in the country was about 67% to 33% in 1985. With the passage of time, due to various reasons, there was an increase in thermal generation and thereby reduction in the share of hydel generation.

At present, this hydel to thermal installed generation capacity ratio is about 30% to 65%.

As on June 30, 2015, the total installed capacity of the country was 24,823 MW; of which the share of thermal power plants was 16,814 MW (67.74%) followed by hydel power plants 7,116 MW (28.67%), nuclear power plants 787 MW (3.17%) and wind power plant 106 MW (0.43%).



“It is a drawback of the country that its power production is dominated by thermal power plants running on oil and gas. Pakistan is a country which is heavily dependent on import of oil for its domestic energy requirement,” NEPRA said. During 2014-15, the total energy generated in the country was 109,059 GWh of which the share of thermal electricity generation was 69,988 GWh (64.17%), hydel power plants were 32,979 GWh (30.24%), nuclear power plants were 5,349 GWh (4.90%) and wind power plant was 300 GWh (0.27%).

“The increasing share of thermal electricity generation increased the utilities financial burden particularly in foreign exchange. It is a strong need of the hour to increase hydel generation by adding new hydropower plants,” the regulator said.



Most of the installed hydel power capacity of the country is owned by the public sector (Water and Power Development Authority) and only 214-megawatts installed hydel power capacity is in private sector.

Moreover, unfortunately, rain water worth billions of dollars is wasted every year in Pakistan into the sea because of lack of water reservoirs and dams.

The incumbent government, though in power for the past three years, has failed to develop a consensus for the construction of new dams. Production from hydel power may decline in the time to come with fall in the water storage capacity of dams which are accumulating silt.



Pakistan Metrological Department has reported recently that the storage capacity has dropped by 35% due to the silting element and absence of any new dams.

The per capita water availability has already dropped to scarcity benchmark level of 1,000 cubic metres from 5,300 cubic metres in 1950s, it has been reported.

Fuel import bill, circular debt

The Pakistan Bureau of Statistics reported that the country imported fuel worth of $7.60 billion in the fiscal year ended June 30, 2016. This was 17% of the total import bills of $44.76 billion in the year.

Most of the oil imports were made to meet the growing demand for power generation.

The share of fuel import in the total import bill stood at 25% ($11.79 billion) in the previous fiscal year 2015. The decline in fuel import bills was the result of decreased oil prices in the world markets.

The writer is a staff correspondent

Published in The Express Tribune, August 15^th, 2016.

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