Dealing with the energy mix

Frustrated citizens, protesting on the streets, have finally got some reason to be cooled down. Load shedding that had peaked sharply over the past two weeks has finally eased, although contrary to Pepcos claims even then it has not come to an end. Still, it appears that the common public perception nowadays is that 3-4 hours of load shedding qualify as a good state of affairs as far as electricity supply in the country is concerned. The recent rapid reduction in load shedding has led to many questions in the minds of the public. The opposition parties claim that the electricity crisis is an artificially created problem; asserting that a real crisis could not have been addressed so quickly, following directives issued by the PM. What the public needs to know is that the crisis is not artificial; in effect, it has all the ingredients of being more horrible than what it currently seems to be: That the situation is improved dramatically and it has nothing to do with the government treating the causes of the crisis. As they say, money is power - and in this case; billions of rupees that the government has poured into the power sector have only managed to buy it some time. Clearing the circular debt stock will give the entire energy chain and the government the breathing space of three to four months at best. However, inevitably, the situation will resurrect in some months because the real issues behind the crisis remain largely unaddressed. The energy mix is often and rightly considered the pillar of a countrys energy policy and fortunes. Pakistan has failed miserably on this front since there is still no concrete policy in place to rectify the energy mix. Thermal-power generation has had the lions share in the energy mix over the past two decades. But the balance is well struck between thermal- and hydro-power generation - as hydro-power generation back in 1995-96 used to be 45 percent of the energy mix. Criminal negligence of successive governments led to little or no development of sustainable sources of hydro-power to meet rising energy needs. Consequently, the share of hydro-power generation has now receded to 29 percent of the mix - which is tipped to dip further as demand continues to grow at a rapid pace. Whatever additions were made to the installed power generation capacity (rest assured, there were not many) are based on thermal generation. Even within the thermal generation; the share of natural gas has gone down from 45 percent a decade ago to 29 percent, at present. Lack of pricing incentives is the single biggest impediment to gas exploration along with deteriorating law-and-order situation. That has meant increased reliance on furnace oil based power generation - which starts a chain of higher blended tariffs, non-payments, circular debt that eventually lead to load shedding. Countries like China and India started to work on their energy mix 15 years ago and they now have a reliable mix that puts less constraint on the import bill. Construction of dams will remain a tough proposition due to political and financial reasons; coal-based generation also remains an elusive dream given the snail pace of progress on this front. The only possible way out in the near term is imported gas. Since the IP and Tapi gas pipeline deals face global pressures, imported LNG will have to take the drivers seat in the drive to address the countrys energy needs. And Pakistan, unfortunately, does not seem well prepared for that either as there remains a yawning pricing differential between the local and imported gas prices - without bridging which, reliance on imported gas will not bear fruits.