Economic corridor: Hydroelectric power projects come last in priority list
Instead of cheaper option, government opts to complete thermal plants first.
The two countries have agreed that thermal, wind and solar power plants will come into operation in 2017-18 while hydroelectric power plants will start running in 2020. PHOTO: REUTERS
ISLAMABAD:
In a show of waning interest in improving the country’s energy mix, the government has thrown cheaper hydroelectric power production to the last category of a priority list of projects to be completed with Beijing’s assistance under the China-Pakistan Economic Corridor.
Thermal power projects, which produce at a sharply higher cost, have been placed in the top category while the responsibility of constructing the hydroelectric power projects will rest on the new elected government in 2018, depriving consumers of a reduction in electricity tariffs.
The disclosure was made in a cabinet meeting on February 23, which accorded ex-post facto approval to an agreement between China and Pakistan on energy cooperation.
The two countries have agreed that thermal, wind and solar power plants will come into operation in 2017-18 while hydroelectric power plants will start running in 2020 – the projects with a total capacity of 10,400 megawatts.
Chinese financial institutions will offer finances based on market principles to the energy projects. The agreement was signed during Prime Minister Nawaz Sharif’s visit to China on November 8 last year.
The government has so far failed to improve the efficiency of energy companies and for the first time consumers in Punjab faced an acute petrol shortage because of inability of power companies to pay bills of Pakistan State Oil (PSO) for oil supply.
The government has decided to task the National Accountability Bureau (NAB) with recovering Rs100 billion from chronic defaulters among power consumers in an effort to bail out PSO, which has been badly hurt by the inefficiency and poor governance in electricity distribution companies.
Rather than taking action against the people responsible for the petrol crisis, the government’s axe fell on officials of the petroleum ministry and the PSO managing director, who were suspended for face-saving.
Owing to PSO’s inability to make payments, international banks had blocked letters of credit opened by the company for oil imports worth Rs110 billion.
According to sources, the distribution companies are continuously providing electricity to the influential defaulters, who owe Rs375 billion.
Officials of the Ministry of Water and Power pointed out that the amount was outstanding against consumers in the private sector, of which Rs137.144 billion had been due for the last one to three years or before.
Gas supply to power companies has also shrunk after the diversion of gas to the powerful lobby of textile industries, forcing many power plants to shut down.
New gas connections, apparently for political gains, have squeezed supplies to the power plants, which received only 47% of the earmarked volume in the last fiscal year.
According to an official assessment, the gap between demand and supply of gas is widening and production is expected to drop to about half of existing levels by 2020 if new reserves are not tapped or output is not increased from existing fields.
Gas production would drop from the current 4.47 billion cubic feet per day (bcfd) to 2.53 bcfd in 2019-20 if additional supplies were not injected into the system, they said.
Power plants were allocated 1.525 bcfd of gas in the last fiscal year, but got only 718 mmcfd, constituting 47.1% of the allocation because of pressure on supplies, particularly in winter.
Of the two gas utilities in the country, Sui Northern Gas Pipelines provided 30.8% of the total allocation to power plants while Sui Southern Gas Company provided 24.4%.
However, the power plants received 84.1% of the allocated volume from some gas fields – the reason being direct supply from these fields without routing through the gas distribution companies.
In this scenario, hydroelectric power projects are the best option but it has yet to attract the attention of authorities in the power corridors.
Published in The Express Tribune, March 12th, 2015.
In a show of waning interest in improving the country’s energy mix, the government has thrown cheaper hydroelectric power production to the last category of a priority list of projects to be completed with Beijing’s assistance under the China-Pakistan Economic Corridor.
Thermal power projects, which produce at a sharply higher cost, have been placed in the top category while the responsibility of constructing the hydroelectric power projects will rest on the new elected government in 2018, depriving consumers of a reduction in electricity tariffs.
The disclosure was made in a cabinet meeting on February 23, which accorded ex-post facto approval to an agreement between China and Pakistan on energy cooperation.
The two countries have agreed that thermal, wind and solar power plants will come into operation in 2017-18 while hydroelectric power plants will start running in 2020 – the projects with a total capacity of 10,400 megawatts.
Chinese financial institutions will offer finances based on market principles to the energy projects. The agreement was signed during Prime Minister Nawaz Sharif’s visit to China on November 8 last year.
The government has so far failed to improve the efficiency of energy companies and for the first time consumers in Punjab faced an acute petrol shortage because of inability of power companies to pay bills of Pakistan State Oil (PSO) for oil supply.
The government has decided to task the National Accountability Bureau (NAB) with recovering Rs100 billion from chronic defaulters among power consumers in an effort to bail out PSO, which has been badly hurt by the inefficiency and poor governance in electricity distribution companies.
Rather than taking action against the people responsible for the petrol crisis, the government’s axe fell on officials of the petroleum ministry and the PSO managing director, who were suspended for face-saving.
Owing to PSO’s inability to make payments, international banks had blocked letters of credit opened by the company for oil imports worth Rs110 billion.
According to sources, the distribution companies are continuously providing electricity to the influential defaulters, who owe Rs375 billion.
Officials of the Ministry of Water and Power pointed out that the amount was outstanding against consumers in the private sector, of which Rs137.144 billion had been due for the last one to three years or before.
Gas supply to power companies has also shrunk after the diversion of gas to the powerful lobby of textile industries, forcing many power plants to shut down.
New gas connections, apparently for political gains, have squeezed supplies to the power plants, which received only 47% of the earmarked volume in the last fiscal year.
According to an official assessment, the gap between demand and supply of gas is widening and production is expected to drop to about half of existing levels by 2020 if new reserves are not tapped or output is not increased from existing fields.
Gas production would drop from the current 4.47 billion cubic feet per day (bcfd) to 2.53 bcfd in 2019-20 if additional supplies were not injected into the system, they said.
Power plants were allocated 1.525 bcfd of gas in the last fiscal year, but got only 718 mmcfd, constituting 47.1% of the allocation because of pressure on supplies, particularly in winter.
Of the two gas utilities in the country, Sui Northern Gas Pipelines provided 30.8% of the total allocation to power plants while Sui Southern Gas Company provided 24.4%.
However, the power plants received 84.1% of the allocated volume from some gas fields – the reason being direct supply from these fields without routing through the gas distribution companies.
In this scenario, hydroelectric power projects are the best option but it has yet to attract the attention of authorities in the power corridors.
Published in The Express Tribune, March 12th, 2015.