1. Pakistan Energy Crisis: An Overview

2. Contents Power Sector Highlights Pakistan Energy Stats
Causes of Power Crisis
Circular Debt Issue
GoP’s Initiatives for the Power Sector/Sectoral Recommendations
VTT’s brief Portfolio

3. The Power sector was restructured in 1998 with the creation of PEPCO (Pakistan Electric Power Company)…
Water & Power Development Authority’s (WAPDA) has been structured into distinct corporate entities comprising of 4 GENCOs, 10 DISCOs and one TransCO (NTDC).
These 10 DISCOs are responsible for distribution to the end users.
KESC meets its overall demand with its own generation plus purchase from NTDC, IPPs and from Karachi Nuclear Power Plant. The Current structure of the power sector is:
Energy Sources
Brief Description
Thermal
Thermal power generation stands at 8,300MW but the thermal plants have low conversion efficiencies and are expensive to maintain/operate. Most of the thermal power plants installed by IPPs, use furnace oil which has become very expensive over the recent past.
Hydro Power
Only 34 % of total electricity generation is achieved thru hydro power. Currently we are producing 6555 MW against the potential of to MW
Wind
Pakistan has a potential of producing wind energy ranging from MW to MW, yet power generation through wind is in initial stages in Pakistan and currently only a plant of 06 MW capacity has been installed in first phase in Jhampir by a Turkish company and 50 MW will be added shortly.
Solar
Pakistan has a potential of more than 100,000 MW from solar energy. Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan.
Agricultural biomass /Biodiesel
Pakistan has planned to generate 10 MW of electricity from municipal waste in Karachi followed by similar projects in twenty cities of the country
Nuclear
Pakistan’s nuclear power generation has a capacity of 425 MW, but there are plans to increase this capacity substantially.
NATIONAL TRANSMISSION & DESPATCH COMPANY
Source: An Overview of Electricity Sector In Pakistan, Islamabad chamber of commerce & industry
Key Abbreviations: GENCO ( Generation Companies DISCOs ( Distribution Companies) and IPPs(Independent Power Plants)

4. Power Generation Statistics…
Thermal Power
Hydro Power
Nuclear Power
Power Producer
Power Station
Installed Capacity
WAPDA
Thermal Power Station, Muzaffargarh
1350 MW
Thermal Power Station, Guddu
1655 MW
Thermal Power Station, Jamshoro
850 MW
Thermal Power Station, Larkana
150 MW
Thermal Power Station, Quetta
35 MW
Thermal Power Station, Pasni
17 MW
KESC
Thermal Power Station, Korangi
316 MW
Thermal Power Station, Bin Qasim
1260 MW
IPP
Hub Power Project
1292 MW
AES Lalpir Ltd, Mahmood Kot Muzaffargar
362 MW
AES Pak Gen, Mahmood Kot Muzaffargar
365 MW
Altern Energy Ltd, Attock
29 MW
Fauji Kabirwala Power Company, Khanewal
157 MW
Gul Ahmad Energy Ltd, Korangi
136 MW
Habibullah Coastal Power Limited
140 MW
Japan Power Generation, Lahore
120 MW
Kohenoor Energy Limited, Lahore
131 MW
Liberty Power Limited, Ghotki
232 MW
Rousch Power, Khanewal
412 MW
Saba Power Company, Sheikhupura
114 MW
Southern Electric Power Company Limited, Raiwind
110 MW
Tapal Energy Limited, Karachi
126 MW
Uch Power Limited, Dera Murad Jamali, Nasirabad
586 MW
Attock Gen Limited, Morgah Rawalpindi
165 MW
Atlas Power, Sheikhupura
225 MW
Engro Energy Limited, Karachi —– MW
Kot Addu Power Company Limited (Privatized)
1638 MW
Saif Power Plant Qadirabad, Sahiwal
Sitara Energy
80 MW
Nishat Chunian Power
200 MW
Nishat Power Limited
Power Producer
Power Station
Installed Capacity
WAPDA
Tarbela
3478 MW
Mangla
1000 MW
Ghazi – Barotha
1450 MW
Warsak
243 MW
Chashma
184 MW
Dargai
20 MW
Rasul
22 MW
Shadi-Waal
18 MW
Nandi pur
14 MW
Kurram Garhi
4 MW
Renala
1 MW
Chitral
Jagran (AK)
30 MW
Khankhwar
72 MW
AllaiKhwar
121 MW
Future Projects
Kalabagh
3800MW
Bhasha
4600mw
Bunji
5400MW
Dasu
Power Producer
Power Station
Installed Capacity
PAEC
KANUPP
137 MW
CHASNUPP
300 MW
KHUSHAB
50 MW
Steam Power
WAPDA
Steam Power Station, Faisalabad
132 MW
Wind Power
FFC Energy
Jhimpir
6 MW
Solar Power
Gas
Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan.
WAPDA
Gas Turbine Power Station, Shahdra
59 MW
Gas Turbine Power Station, Faisalabad
244 MW
Gas Power Station, Multan
195 MW
Gas Turbine Power Station, Kotri
174 MW
Gas Turbine Power Station, Panjgur
39 MW
KESC
Gas Turbine Power Station, Korangi
80 MW
Gas Turbine Power Station, SITE
100 MW
Source: PPIB, Ministry of Water & Power, Alternate Energy development board

5. Due to rising demand, power infrastructure issues, and poor governance severe electricity shortages have ensued …
Power outages have led to widespread rolling blackouts that have paralyzed industry and led to major civil unrest.
As of June 2013, the electricity demand stood at about 11,000MW against generation of about 8,000MW. As a result, the utilities were resorting to about 10 hours of load-shedding per day across the country.
This acute energy crises in Pakistan has its roots in the following causes, namely;
Historic Demand and Supply situation in Pakistan
Lack of Integrated Energy Planning & Demand Forecasting and absence of central & focused entity responsible for the Energy Sector
Circular Debt.
Imbalanced Energy Mix with heavy reliance on gas (47.5%) and Oil (30.5%) (72% imported)
Non-utilization of vast indigenous resources of Thar Coal and Hydel potential
Lack of effective project structuring, planning and implementation of identified and viable projects
Transmission, distribution loses/theft
Inadequate revenue collection by DISCOs
Crisis having direct impact on
48.4% decrease in FDI as compare to last year
Closure of Industries resulting in Unemployment (According to the labor department sources, approx. 800,000 labors have lost their jobs )
Agriculture land irrigation
Household s, schools and hospitals
ROOTS OF PAKISTAN’S ENERGY CRISIS
Source:
The Cause and Impacts of power sector circular debt in Pakistan – Planning Commission/USAID
ICCI Electricity Report
A NEW ENERGY MIX FOR PAKISTAN-EMR Consult

6. Circular Debt Primary Reasons
One of the foremost reasons for Pakistan’s Energy crises is the Circular Debt Issue that needs immediate remedies…
Primary Causes
2010 (Billion Rs.)
2011 (Billion Rs.)
2012 (Billion Rs.)
Reserve Debt (start of year)
235.65
365.66
537.53
Non-Collection of DICSOs Receivables from:
Federal Govt.
1.79
1.57
0.19
FATA
(78.34)
4.30
13.42
Provincial Govts.
16.72
36.07
15.84
AJK Govt.
2.00
5.50
6.05
Tube wells (Agri)
3.46
(3.68)
(3.12)
Private Consumers
25.59
39.29
54.55
KESC
4.04
(1.79)
13.78
Total Non-collection
(24.74)
81.26
100.69
Tariff & Subsidy Issues
154.75
90.62
234.18
Total Circular Debt
872.41
Circular Debt is the amount of cash shortfall within the Central Power Purchasing Agency (CPPA) that it is unable to pay to the power supply companies.
Circular Debt Primary Reasons
Result of the difference between the actual cost of providing electricity in relation to revenues realized by the power distribution companies (DISCOs)
Insufficient payments by DISCOs to CPPA due to poor revenue collection/governance
Delays in tariff determination & fuel price fixation
Delayed payment by the Ministry of Finance
Transmission & distribution losses
Stay orders granted by courts on fuel price adjustments charges
Unfavorable generation mix of the GENCOs
GOPs neglect in promoting demand-supply management, energy efficiency & renewable energy resources
Improper payment arrears settlement and the need for enforceable authority of CPPA to collect due payments from DISCOs
Share of Increase in Circular Debt - FY
Source: PEPCO DISCOs Performance Stats Report 2012, Data from MoWP , USAID PDP Analysis

7. Distribution companies are facing line losses due to multiple reasons, but electricity theft and non-payments by the consumers are burning issues…
Pakistan lost Rs. 90 billion during the last five years in electricity theft and line losses
DISCOS (Losses/Theft)
Billion (PKR)
FESCO
0.6
GEPCO
0.360
LESCO
2.35
MEPCO
0.280
SEPCO
3.6
HESCO
7.47
PEPCO
16.17
KESCO 59
Pak-UK Chamber of Commerce & Industry President has urged upon the authorities to reduce 44 per cent losses and thefts in the electricity being produced in the country. 
Rs 360bn receivables strategy is required by PEPCO:
More than Rs 360 billion became overdue towards public holding offices of central and provincial governments along with local power consumers, which created hurdles in minimizing the circular debt volume of the power sector.
Source:
ICCI Electricity Report
The News, Daily times, Nation

8. Pakistan is one of the emerging economies of South Asia, where the government has declared the Power Sector as its top priority of investment…
The Government of Pakistan is taking all the necessary measures to build a more conducive environment, to resolve issues as quickly as possible. Long term planning and goals must be focused towards streamlining the foreign policy according to the country’s economic and energy needs. Improving and increasing ties with future energy rich countries must not be neglected.
Electricity Agreements / Prospects with Other Countries
Brief details
China
Ongoing projects include Karot, Taunsa, Kohala and Bunji hydro-power Projects China has offered help in the construction of 50 MW wind power project in Jhampir (Sindh) that is to be completed in 2012 Moreover, China has planned to invest in 300 MW solar power projects in Pakistan.
India
India has offered to provide Pakistan with 5, megawatt electricity to fulfill its energy requirements on an urgent basis regularly which could be transmitted through Punjab.
Iran
100 MW import project have been finalized and are ready for groundbreaking. Pakistan and Iran would move forward on import of 1,000 MW power project from Iran.
Tajikistan
Central Asia South Asia (CASA-1000) is one of the biggest regional projects through which Tajikistan would export up to 1000 MW of electricity to Pakistan.
Germany
AZUR energy group of Germany planned to setup 50MWAtt solar project in Pakistan, for which a feasibility report and site surveys of Multan and Bahawalpur were conducted.
Qatar
Pakistan is also interested in importing million cubic feet per day of LNG from Qatar that produces 77 million tones per annum of LNG. The imported LNG will be initially provided to the power houses in the country to generate 2,500 mega watt of electricity.
Norway
Norwegian company NBT has expressed interest in establishing a 500-megawatt wind power project in Pakistan, by investing about $1 billion in alternative energy
Kuwait
Kuwait has extended $40 million to Pakistan for the construction of the de-sander, a vital part of the strategic $ billion Neelum-Jhelum hydropower project. Upon its completion it will generate approximately 1,000 MW of electricity.

9. Pakistan is a suitable country for the installation of solar, wind power, coal fired plants, and can become an Asian leader in renewable energy due to its strategic endowments…
Pakistan falls under the list of countries with ‘Excellent’ category wind speed of 7.7 m/s.
As per a USAID Report, Pakistan can potentially produce 132,000 MWh of wind energy. The wind corridor, in Sindh province, alone has the ability to generate 40,000 MWh of wind electricity.
The ratio of Debt to Equity is 80:20, with a guaranteed return on equity, by the government, in the form of partial paybacks of fuel costs, operations and maintenance cost, and taxes/duty.
Pakistan has potential of more than 100,000 MW from solar energy. Building of solar power plants is underway in Kashmir, Punjab, Sindh and Balochistan.
Alternative Energy Development Board (AEDB) is working for 20,000 solar water heaters in Gilgit Baltistan.
Pakistan has estimated as the world's third-largest known coal reserves of 33.0 trillion tons in the south-eastern part of the country i.e. Thar
The electricity production from coal is also cheaper than thermal generation as 2 percent usage of Thar coal could produce 20,000 Megawatts electricity.
Pakistan’s coal reserve has ‘ZERO’ contribution in it’s energy mix. Hence, there is a substantial room for investment considering , Abundant coal reserves, and a guaranteed 17% USD based return.
Source: The Cause and Impacts of power sector circular debt in Pakistan – Planning Commission/USAID
ICCI Electricity Report
USAID

10. Prioritized Items for Improvement of Pakistan Energy Crises
The current energy crises in Pakistan warrants immediate measures for resolution, some recommendations for improvement are…
Promote hydro power and other domestic alternate sources of energy including solar, wind, coal and agriculture biomass/biodiesel
Energy conservation and demand management programs be initiated
GOP to remove the current overhang of circular debt and prevent its recurrence
Power sector reforms to be initiated and existing power plants be overhauled to achieve maximum efficiency
Undertake policies/programs to improve governance/performance of energy sector entities
Decrease costs and Increase cash flows
Ensure operational/financial integrity of the sector
Implement international best practices including smart metering / automated meter reading (AMR) systems and Time of Use (TOU) tariff
Resolve Tariff and subsidy disputes between provincial governments and CPPA/DISCOs
Curb electricity thefts with stringent penalties
Political appointment culture needs to be replaced with professionalism/merit
Fuel allocation policies be introduced
Relocate gas towards power production as its cheaper than imported furnace oil
New Government Plans
"The government has planned to gradually retire the power sector's huge circular debt to streamline the electricity generation chain that would bring the load-shedding under control.”
Prioritized Items for Improvement of Pakistan Energy Crises
"The malfunctioning hardware as well as the incompetent operators at different power plants will be replaced, adding lists of all those who had so far been found sleeping on their jobs are already on the concerned authorities tables"
Source: An Overview of Pakistan Energy Sector Report by Islamabad Chamber of Commerce & Industry (ICCI), The News

11. New Government has summarized some key problems in the current system and has proposed short, medium and long term solutions to resolve the energy crisis and they are highlighted in the 16 points...
Creation of a Ministry of Energy and Natural Resources through the merger of Ministries of Water and Power and Petroleum and Natural Resources
Reforms of National Electric Power Regulatory Authority (NEPRA)
Reforms of Distribution Companies (DISCOS)
Reforms of Generating Companies (GENCOs)
Permanent elimination of circular debt
Rationalization of energy tariffs in line with international prices across all fuels.
Reforms of Oil and Gas Regulatory Authority (OGRA)
Aggressive wellhead pricing for Oil and Gas exploration companies in order to substantially increase production of oil and gas
High priority to import gas through pipelines
Expeditious setting up of coal and LNG import terminals, and coal transportation facilities
Development of Thar coal fields and setting up of at least 5,000 MW of new coal fired power plants under the lPP mode in Sindh. This will both create employment in rural Sindh and help solve our energy crisis. The plants to be designed on lignite quality coal and at first to be run on imported coal and when Thar coal is available, the plants to be switched to domestic coal
Developing consensus among the various stakeholders to facilitate setting up hydropower projects by the Federal and Provincial Governments. This will augment and conserve our water resources and also generate less expensive and clean electricity
Developing alternative renewable energy sources, such as solar, wind, bagasse, biogas, and biomass projects, especially for off-grid and micro-grid applications.
Setting up national energy efficiency standards.
Introducing solar-thermal water heaters for domestic and industrial use.
Decentralizing and creating a wholesale market for electricity.
These measures will not only solve Pakistan’s lingering energy crisis but also shift the focus of the energy sector from high cost imported fuels to indigenous energy resources and reduce the total energy import bill and add at least 3.5% to the annual GDP. At the same time investment of about US$ 20 billion to generate 10,000 MW of electricity in the next 5 years will stimulate overall growth of the economy.
Source:

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