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ISLAMABAD: The country’s installed capacity of electricity has posted a growth 3.6 percent to 37,261 MW till April 2021, as compared to 35, 972 MW during the same period in 2019-20, but no significant change is witnessed in its consumption pattern.

According to the Economic Survey 2020-21, Pakistan is dependent on energy imports because there is a lack of investment in indigenous resources of hydro, natural gas and lignite. The government has decided to stop building new coal-fired power plants because of environmental issues. Due to significant increase in electricity demand, both state-owned companies and IPPs are actively engaged in producing electricity. However, fiscal sustainability has become a challenge due to increase in energy payments. This energy deficiency began from a fuel mix transformation which was initiated two decades ago, when power generation used to rely more on imported furnace oil than hydropower.

Till April, FY2021, installed capacity of electricity reached 37,261 MW, as compared to 35, 972 MW during the same period of 2019-20, posting a growth of 3.6 percent. The hydro share in total electricity generation has declined in FY2021 as compared to its share in FY2020. Currently, thermal has the largest share in electricity generation. Moreover, its percentage share in FY2021 has increased as compared to FY2020. Significant growth of RLNG usage in energy mix has helped improve supply to various power plants. RLNG is also supplied to fertilizer plants.

There is little change in the consumption pattern of electricity. During July- April FY2021, the share of agriculture in electricity consumption remained constant. However, the share of industry in electricity consumption has increased which shows revival of economic activities.

Commenting on history of energy crisis, the Economic Survey says that current energy crisis began to manifest itself by late 2007. The problem has evolved over the years from one of chronic power supply deficit to one where there is excess installed capacity but not enough cash flow in the system to run it. The latter created ‘circular debt’ issue. Specifically, the ‘circular debt’ in Pakistan’s energy supply chain refers to the cash flow shortfall incurred in the power sector from the delayed/non-payment of obligations by consumers, Discos and the government. It has continued to grow in size over the years, rising from 1.6 percent of GDP (Rs161billion) in 2008, to 5.2 percent of GDP (Rs 2,150 billion) in June 2020. The present government has given prime importance to resolve this issue and is working on various options to reduce circular debt.

In terms of energy-mix, Pakistan’s reliance on thermal which includes imported coal, local coal, RLNG and natural gas has been decreasing over the last few years. Pakistan’s dependence on natural gas in the overall energy mix is on the decline and the reduction of its share in the energy mix is due to declining natural gas reserves and introduction of LNG. The share of renewable energy has steadily increased over the years. The government is also taking measures to increase the shares of hydel and nuclear in energy-mix.

In Pakistan, special measures have been taken to use these innovations for domestic usage of energy, such as Electrical Vehicle Policy 2020-25.

The hydro share in total electricity generation has declined in FY2021 as compared to its share in FY2020. Currently, thermal has the largest share in electricity generation. Moreover, its percentage share in FY2021 has increased as compared to FY2020. Significant growth of RLNG usage in energy mix has helped improve supply to various power plants. RLNG is also supplied to fertilizer plants, industrial and transport sectors.

There are six nuclear power plants operating on two sites in the country, two units namely Karachi Nuclear Power Plant (KANUPP) at Karachi and four units of Chashma Nuclear Power Plants (C-1, C-2, C-3 & C-4) at Chashma (Mianwali District of Punjab Province). The gross capacity of these five nuclear power plants is 2,530 MW that supplied about 7,076 million units of electricity to the national grid during 1st July 2020 to 31st March 2021.

PAEC has intensified its activities to meet the nuclear electricity generation target of 8,800 MW by the year 2030 set through government‘s Energy Security Plan formulated in 2005. Completion of K-2/K-3 project will be a big step that will bring PAEC 2,200 MW closer to achieving this target. PAEC is planning to develop additional sites to house more nuclear power plants in the future and sites identified throughout the country. These sites are investigated and acquired for future development. Ample technical and engineering infrastructure is already in place to support both the existing and the under construction nuclear power plant.

The development of large-scale grid connected on ARE based power generation projects are being pursued through private investors. Under the vision of the current Government to exploit clean energy resources and increase the share of ARE in the energy mix, the Cabinet Committee on Energy (CCOE) had allowed implementation of projects that had already achieved significant milestones of project development by placing them into following three categories:

Category-1: 19 projects of 531 MW that have already been issued Letter of Support (LOS) subject to revision of tariff in case tariff determination has been done since more than one year or if the tariff validity period has lapsed.

Category-II: 24 projects of 1339.3 MW that have acquired tariff and generation license subject to revision of tariff in case tariff determination has been done since more than one year or if the tariff. Category-III: 110 projects of 6707 MW cumulative capacity holding LOIs to be allowed to proceed ahead after becoming successful in a competitive bidding to be undertaken as per demand communicated by NTDC validity period has lapsed.

AEDB has actively been facilitating the said projects as per the criterion set by the CCOE. Four solar PV projects, listed under Category-II have been facilitated to achieve Financial Closing in February, 2021. The projects will be completed by December 2021.

Pakistan’s energy sector is confronted with some issues which need to be filled up along with improvement in energy-mix for its supply at lower cost as well as fixation of other energy related issues which are a strain to the national exchequer. Besides ongoing mega hydro power projects, present government is also pursuing renewable energy sources which are cost saving to improve the existing energy mix in the country.

Copyright Business Recorder, 2021

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