I am pleased to know that Daily Business Recorder has planned to come up with its Sector Report on "Energy Resources and Power Generation".
Pakistan is endowed with a variety of energy producing natural resources, particularly oil, natural gas, hydro-power and coal.
The main energy resources (oil and gas) need a vision and planning for the development and economic growth of this nation.
We need to build on the present levels of production and use strong foundation laid over the last few years to sustain a high growth momentum.
Energy needs of our country are growing at a pace greater than our production. Of the total commercial energy supplies in the country (in 2003), oil accounted for 40%, gas 43%, coal 5%, hydroelectricity 11% and nuclear electricity 1%.
As per Least Cost Generation Expansion Plan (regression based medium load forecast), made by WAPDA in October, 2003, the peak demand for power will be 36,358 MW in the year 2025 compared to 13,008 MW in October, 2003.
In order to meet the electricity demand in 2025, tremendous amount of natural resources will be needed.
The production of electricity using water as a resource (hydro-power) is constrained with the availability of rain/ snowfall and development of mega hydro-power projects, which is a big task for a capital short country like Pakistan.
In case of thermal power projects, fuel costs are the largest variable component of power production costs.
Plants that can run on in-expensive fuels generally will be more valuable than those which can not.
Low operating cost units will not only be dispatched more often than units fired by expensive fuels, but they will also generate more profits.
In Pakistan, fuel cost is around 60 - 80% of the operating cost of a thermal power plant.
The cheapest source of power generation among thermal resources is natural gas/ low Btu gas. Natural gas is the most favourable fuel of choice for power generation not only because of low price compared to imported oil but also due to environment friendly nature of natural gas.
For this reason, the demand for natural gas will also increase rapidly in future.
In this regard exploration and production activities have seen a tremendous growth due to the attractive policies of the present government and especially by emphasising more on the new offshore policies and rules.
I wish a success for your sector report.