A Comprehensive Study Report on

A Comprehensive Study Report on Energy Crisis & Energy Resources of Pakistan Session 2003(F) – 2007 This project is being submitted to Chemical Engineering Department, NFC Institute of Engineering & Fertilizer Research, Faisalabad in the partial fulfillment of

BACHELOR’S DEGREE IN CHEMICAL ENGINEERING Internal Examiner:

--------------------------------Prof. Dr. Shahid Raza Malik Head Chemical Engineering Department NFC IEFR, Faisalabad

External Examiner:

---------------------------------

DEPARTMENT OF CHEMICAL ENGINERING

NFC INSTITUTE OF ENGINEERING & FERTILIZER RESEARCH FAISALABAD

Acknowledgement All Praise for ALLAH The Almighty, The Merciful, The Beneficent Who holds an Eye on us, care for us, protect us from all harms feed us and never ever spoils our efforts, all actions are incomplete without His intention.

Holy Prophet Hazrat Muhammad (SAW), who is the greatest teacher and really a great source of knowledge for us who gave us the complete doctrine of life. I would like to say a million of thanks to Prof. Dr. Javed Rabbani

Khan, Prof. Dr. Shahid Raza Malik and Engr. Tafzeel Khaliq, who are our project supervisors and always been symbol of inspiration and encouragement for us. Their valuable comments, special attention, suggestions, and guidance streamlined our project.

Parents are always a pleasant and never ending shower of blessings, love and support for their children. Our esteemed gratitude is presented to Rana Shamshad Hussain, DIRECTOR GENERAL POST, Pakistan for his group research paper ENERGY RESPONSE STRATEGY IN PAKISTAN. At the end, we only want to pray to ALLAH that “Guide us the right path, the path of whom YOU have granted with YOUR affections and blessings and not of whom YOU got angered.” (Ameen)

EXECUTIVE SUMMARY Pakistan is at present a country deficient in energy where per capita

energy supply is only 0.30 Tons Oil Equivalent (TOE). This is low not only compared to that of neighbouring countries i.e. India (0.32 TOE/capita) and China (0.91 TOE/capita) but is much lower to the world average of

1.55 TOE/capita. Demand suppression strategy adopted in the country

has not only suppressed the economic growth in all the sectors but has also made any realistic projections of energy demand very difficult. There is urgent need to improve the sustainable availability of energy at an affordable rate for an expanding economy. Diversification in energy mix is also required not only to optimize the use of domestic resources particularly coal but also to reduce reliance on imported resources. Energy demand is assessed to grow at around 7.5 – 8% per annum to achieve the planned GDP targets (Average 7.4 % per annum in 2005-10 and 8% per annum in 2011-30) taken in MTDF. Energy requirement in 2030 is estimated at 333.0 million TOE with Annual Compound Growth Rate (ACGR) of 7.5% and 375.7 million TOE with ACGR of 8%. Projections of energy on five year basis at ACGR of 8% are given below in Table 1:Table 1 Current 2004 Total MTOE Oil Natural Gas Coal Hydro Renewable Nuclear

50.8 15.2 25.45 3.3 6.43 0 0.42

%

Short Term 2010

29.92

80.62 21.90

50.10 6.50 12.66 0.00 0.83

38.99 7.16 11.03 0.84 0.69

%

Medium Term 2015 2020 %

Long Term 2025 %

2030

27.17

118.45 30.79

174.04 25.99 42.17

255.72 24.23 58.28

% 22.79

% 375.73 81.26 21.63

48.37 8.88 13.68 1.04 0.8

52.98 14.45 16.4 1.6 2.23

44.73 77.85 12.20 24.77 13.85 21.44 1.35 3 1.88 4.81

44.73 114.84 14.23 38.28 12.32 30.5 1.72 5.58 2.76 8.24

44.91 14.97 11.93 2.18 3.22

162.58 68.65 38.93 9.2 15.11

43.27 18.27 10.36 2.45 4.02

Pace of drilling, exploration and prospecting of domestic oil and gas needs to be accelerated by extending suitable incentives to private sector. Our present on-shore drilling density is 2.28 wells per 1000 sq Km against the world average of 9.5 wells per 1000 sq Km. Off-shore

drilling density is too low at 0.059 well per 1000 sq. Km. Number of wells drilled during last five years is 258. This number needs to be increased by another 250-300 wells every five years by optimizing the use of existing rigs or by increasing the number of rigs. Part of these oil & gas

resources may be utilized to generate 56.3% of total electric generation by 2030. Our large unexploited coal deposits need to be utilized as primary source of energy. Power generation from coal needs to be increased from present 160 MW to 19900 MW by 2030 mainly from Thar and Lakhra deposits. Power generation from coal at that level will be 18% of total power. Existing hydel generation of electricity is 6460 MW. The country has the potential of hydel generation of 46015 MW. Decision needs to be taken at political level about the construction of 3-4 bigger dams by 2030 apart from smaller dams to increase the hydel generation to 32700 MW. This will increase the share of hydel power to 20% of total power generation at that time. In view of the constraints in full exploitation of hydel potential and the time involved in accomplishing such potential there is also a need that nuclear power generation may be encouraged by installing units of 600

MW to 1000 MW. Share of nuclear power by the end of 2030 be increased from present 400 MW to 8800 MW.

Alternate sources of energy have not been developed and at present we are producing only 180 MW of electricity through these resources. i.e. wind and solar. We may add another 9520 MW of electricity into the system by the end of 2030. Capacity of 2000 MW available with the sugar mills during off season also need to be utilized through some modification of boilers.

Energy wastages need to be minimized by encouraging the private sector to manufacture energy efficient appliances like heaters geysers etc. as

also avoiding gas leakages and pilferage. Line and system losses of

electricity need to be controlled and gradually reduced. Old and dilapidated electricity distribution system needs to be rehabilitated. Construction of energy efficient buildings should be encouraged. Wind energy may be provided to the villages in the coastal areas. Solar energy can be arranged for public places, parks & street lighting to reduce pressure on thermal generation and its transmission costs.

Self-generation of power by the private sector for industrial commercial

and domestic use may be encouraged. This can be done by supporting manufacture of small generators for this purpose.

Electricity generation by private sector may be encouraged by proper policy initiatives for setting up new IPPs. Joint ventures with private sector can also be established.

TABLE OF CONTENTS CHAPTER: 01

ENERGY CRISIS OF PAKISTAN Primary Energy Mix by Country 2003-04 World and Regional energy comparison 2004 Energy supply and consumption Energy security objectives Energy Mix Plan projections Energy Demand Projections by Fuel Indigenous Supply Projections Energy Supply Power Demand

04 04 05 08 09 09 10 10

CHAPTER: 02

COAL Global Coal Resources and Consumption Coal Classification Coal Reserves in Pakistan Sindh Coalfields Thar Coalfields Lakhra Coalfields Sonda-Jherruck Coalfield Balochistan Coal Fields Punjab Coalfields Analysis Key economic issues of the Thar resource Coal Utilization Major Contracts for Exploration & Power generation Environmental Concerns

11 12 12 14 14 15 16 16 17 18 19 20 21 23

Conclusion

24

CHAPTER: 03

HYDEL Hydel Projects Hydel Power Station Hydel Potential in NWFP Projects in operation Map relating project in operation Projects implemented Projects under-implementation Map relating projects implemented Hydel Potential in Punjab Projects in operation Projects under-implementation Hydel Potential in AJK Projects in operation Projects under-implementation Projects in private sector Map relating projects in operation Raw sites Map relating raw sites Hydel Potential in Northern Area Map relating projects in operation Map relating raw sites above than 50MW Map relating raw sites less than 50MW Hydel Potential in Sindh Raw sites above than 50MW Raw sites less than 50MW

27 27 28 29 30 31 31 32 33 34 34 36 37 37 37 38 39 40 41 41 42 43 44 45 45

Map of hydel potential Hydel Potential In Balochistan Map of hydel potential Restructuring of WAPDA Power Policy 2002 Hydro Power Projects PPIB Site Projects PPIB Feasibility Studies PPIB Constraints Hydro Power Projects Thermal Projects PPIB Power Policy 2005 Punjab Government Thermal Projects KESC Thermal Projects WAPDA Proposed Future Projects

46 47 48 49 50 52 53 54 55 57 59 60 60 61

CHAPTER: 04

NATURAL GAS Current Position Production of natural gas (MMCFD) Natural gas production Natural gas consumption by sector Demand-supply & gap projection Map of Major gas fields Drilling Activities The Problem The Options Enhancing Production from Our Own Resources Gas Received From Sources During 2003-2004

62 63 63 64 64 65 66 66 67 67 68

Year Wise Increase In Transmission System Segment Wise Transmission System Capacity Map of gas transmission system Year wise increase in Gas Distribution Mains Gas Distribution Capacity Import of gas from neighboring countries Recently Completed Projects Construction Activities in Progress Upcoming Construction Activities Future Projects Other Options

69 70 70 71 71 72 74 74 74 75 75

CHAPTER: 05

OIL Primary Energy Supplies By Source Use of Oil in Power Plants Environmental Reforms Crude Oil Production Refining Capacities As On 30th June Crude Oil Prices Exploration and Production (E&P) Sector Reform Concession Activities Seismic Activities Drilling Activities Production Activities Logistics Refining Korangi Port Qasim Pipeline Crude Oil and Condensate Sale Purchase Agreement

77 78 79 79 81 81 83 83 84 85 85 86 87 87 88

Pricing Present Status of Oil Sector Petroleum Future In Pakistan The trans-Karakoram oil pipeline Discoveries Challenges

88 91 92 94 97 97

CHAPTER: 06

NUCLEAR ENERGY Global status of nuclear power Nuclear Renaissance World Nuclear Power Reactors 2004-05 and Uranium Requirements Nuclear Energy Options For Pakistan International Reservation Future Of Nuclear Energy In Pakistan

98 98 101 102 104 105

CHAPTER: 07

RENEWABLE ENERGY Renewable Energy Strategy Wind Energy Benefits of Wind Energy Wind Potential Area of Sindh Gharo Wind Power Plant Total installed wind power capacity Solar energy Solar Cells or Photovoltaic Energy

108 108 110 112 112 114 114 117 118

Advantages Disadvantages Solar Applications Biomass Biogas Wave Power How it works Advantages Disadvantages Geothermal Energy Technology Advantages Disadvantages Scope in Pakistan

120 121 122 123 123 124 125 126 126 127 127 130 130 131

CHAPTER: 08

RECOMMENDATIONS General Oil and Gas Hydel Coal Nuclear Alternate energy Energy Conservation Coal Production Coal Resources Of Pakistan

132 132 133 134 134 135 135 136 136

CHAPTER: 09

Hydel Way Out Of Energy Crises

137

CHAPTER: 10

BIBLIOGRAPHY

140

Energy Crisis Of Pakistan

Energy Crisis & Energy Resources Of Pakistan

Chapter # 01 ENERGY CRISIS OF PAKISTAN Pakistan is a country deficient in energy where per capita energy supply is 0.30 Tons Oil Equivalent (TOE)/14 million British Thermal Units

(BTU), compared with 0.32 TOE for India, 0.91 TOE for China and 2.17

TOE (92 million BTU) for Malaysia. The quest for cheap energy and preservation of water resources has ultimately started taking a toll of the law and order situation across Pakistan. The government’s desire to construct the Kalabagh dam to get cheap electricity and reduce the input costs of the farming sector has provided political parties an opportunity to profit from the crisis. The frustration among the masses due to the high prices of essential commodities remains the ultimate source of strength for those who want to exploit this situation. Per capita energy consumption is a key development indicator of quality of life of the

population of any country. Demand suppression strategy adopted in Pakistan has perpetuated unavailability of energy. This has also made any

meaningful projection thereof very difficult. Unavailability of sustained and affordable energy to the industry has also suppressed economic growth and created declining tendency for industrial investment in Pakistan.

1



An energy crisis is any great shortfall (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources. The crisis often has effects on the rest of the economy, with many recessions being caused by an energy crisis in some form. In particular, the production costs of electricity rise,which raises manufacturing costs. For the consumer, the price of gasoline (petrol) and diesel for cars and other vehicles rises, leading to reduced consumer confidence and

spending, higher transportation costs and general price rising.It is essential to provide adequate energy to industrial sector to drive economic growth and create employment opportunities, and to the domestic sector for cooking and heating. At the same time efficient

utilization of energy would contribute to the prevention of continuing environmental degradation and deforestation by massive use of wood as

domestic fuel. The commercial energy availability to various sectors of the

2



economy will help in increasing job opportunities, enhancing agricultural productivity, improving standard of living and preserving environment through reducing deforestation. The Energy mix in Pakistan and various other countries for the year 2003-04 is given below in

3



Primary Energy Mix by Country 2003-04: Oil Natural Gas Coal Other (Hydel, Nuclear, etc).

Pakistan 30.0 50.0 6.5 13.5

India 35.0 7.0 55.0 3.0

Malaysia 42.0 51.0 4.0 3.0

UAE 32.0 68.0 -

UK 35.0 35.0 16.0 14.0

USA 40.0 23.0 23.0 14.0

Canada 30.0 27.0 24.0 19.0

%age China 23.8 2.6 67.0 6.6

World and Regional energy comparison 2004: Per Capital GDP US$ 1995 (PPP) Per Capital Primary Energy Supply (TO&E) Per Capita electricity Generation (kwh)

World

Pakistan

India

Bangladesh

China

Malaysia

8200

2100

2200

1900

5000

9000

1.55

0.30

0.32

0.11

0.91

2.17

2657

581

561

145

1484

3500

Source: British Petroleum = Statistical Review of the World Energy Pakistan’s economy is performing at a very high note with GDP growing at an exceptional rate, touching 8.35% in 2004-05.In its history of 58 years, there has been only a few golden years where the economy grew above 7%. This year official expectations are that GDP growth rate will be around 6.5 – 7.0%. For the coming years, the government is targeting GDP growth rate above 6%. With economy growing at such a pace, the energy requirements are likely to increase with a similar rate. For 2004-

05, Pakistan’s energy consumption touched 55.5 MTOE (Million Tons of Oil Equivalent).There is urgent need to ensure adequate energy supply to

meet the demands of an expanding economy. There is also need to diversify the energy mix with a view to reducing dependence on imported oil whose prices keep fluctuating with an upward trend. Policy is also needed to maximize indigenous resources utilization.

4



Energy supply and consumption: Source wise primary energy supply in Pakistan in 2003-04 is indicated below:Oil 30%

Gas 50%

Hydel 13%

Coal 6%

Nuclear 1%

Sector wise energy consumption, excluding fuels consumed in thermal power generation in FY 2004 is as follow:Industry

Transport

Domestic

Commercial

Agriculture

38.3%

32.0%

21.7%

3.2%

2.5%

Other Governments 2.3%

Source: Pakistan Energy Yearbook 2004.

5



It has been calculated that the hydel resources in the country are about 46,000 MW, whereas the installed capacity at present is only 6459 MW.

The energy sector has all along been heavily dependent on imports which are about 80% of national requirements. Presently 7.8 million tons of crude oil, 5.2 million tons of oil products and 2.8 million tons of coal are being imported from abroad.

The production of natural gas from the approachable proven deposits is at its peak. With an annual production of 4033 MMCFD and consumption of 3173 MMCFD natural gas contributed 50% share in Pakistan’s energy requirement in 2004-05. This share is likely to decline in coming years and by 2009-10 the production. Failure to explore possibilities of

alternate gas supply resources will enhance our dependence on oil, which will be a costly proposition and will be detrimental to our economic sovereignty and growth. There would be deficiency in gas supply if considerable contribution is not made from the new discoveries. In case

the required natural gas is not met through indigenous supply there would be dire need to import it.

6



The shortfall would have to be met by exercising the following options fully or partially:-

a. By exploration and exploitation of un-tapped gas reserves by

adopting prudent policies to create conducive environment for private sector to invest.

b. Rationalization of the consumer price of gas comparable to other energy sources to stem unnecessary wastage.

c. Import

of

gas

from

neighboring

countries

like

Iran,

Turkmenistan or Qatar. The Iran option is the most viable and

secure provided Pakistan convinces the US to cease its opposition to the project. d. Diversification of Pakistan energy resource supply line. While gas pipelines are still on the drawn board, Pakistan should begin import of Liquefied Natural Gas, as the cost of liquefaction, transportation and re-gasification have dropped considerably making it competitive with supply of gas through pipelines. Deficiency is already being felt in the electric power. Some of the thermal electricity deficiency would be met through exploitation either of the indigenous oil, gas or coal, while imported fuel would be needed to meet the additional demand of power plants. Pakistan has totally neglected the coal as a source of energy generation despite having considerable coal reserves. Coal accounts for only 1% of primary energy generation. Most of the coal reserves of the country,

estimated at 185 billion tons are located in Sindh, including 175 billion tons at Thar. The current total mine-able reserves of coal are estimated

at 2 billion tons (60% of measured reserves). At present there is no mining/coal production from Thar but recent studies have indicated considerable potential. Details may be seen in chapter 2.

7



ENERGY SECURITY OBJECTIVES: Pakistan Energy security objectives are outlined below:•

Ensure availability of sufficient energy on sustainable basis at affordable prices to achieve planned GDP growth targets

(2005/10 – average 7.4%; 2011-2030 – average 8%) as envisaged in MTDF. •

To increase the exploitation of hydropower, exploration and production activities of oil, gas and coal resources, and increase the share of coal and alternate energy in overall energy mix.

•

To optimize utilization of Pakistan’s indigenous resource base for reducing

dependence on imported fuel through an

institutionalized strategy. •

Promotion of R&D for improvement in energy efficiency, conservation and development of energy efficient appliances.

•

Improve quality of consumer services and creating competitive environment to solicit maximum private sector participation.

•

Integrated coal mining & power generation and coal gasification to increase the indigenous coal share in the energy mix i.e. up to 20% in 25 years plan and lay the foundation for future share to go up to 50%.

•

Resort to import of natural gas and LNG through multiple sources on best

possible terms if indigenous resources fall

short to maintain GDP growth. •

Facilitate establishment of refineries and petrochemical industry based on coal, gas and oil.

•

Promotion of nuclear and renewable/alternate energy sources (wind, solar) to have 10% share in energy mix in 25 years.

•

Promote human resource development to ensure availability of required manpower to achieve Plan objectives.

The source-wise information used in these tables has been obtained from Medium Term Development framework 2005-10 and Pakistan Energy Year Book 2004..

8



Energy Mix Plan projections; MTOE Current

Short Term

2004

2010

2015

2020

2025

2030

50.8

81.61

118.45

174.04

255.71

375.73

Total MTOE

Medium Term

Long term

Oil

15.20

30%

21.90

27.2%

30.79

26%

42.17

24.3%

58.28

22.7%

81.26

21.6%

Natural Gas

25.45

50%

38.99

47.8%

52.98

44.7%

77.85

44.8%

114.84

45%

162.58

43.2%

Coal

3.30

6.5%

7.16

8.8%

14.45

12.2%

24.77

14.2%

38.28

15%

68.65

18.3%

Hydro

6.43

12.7%

11.03

13.5%

16.40

13.9%

21.44

12.3%

30.50

12%

38.93

10.4%

Renewable

0.000

0.0%

0.84

1.0%

1.60

1.4%

3.00

1.7%

5.58

2.2%

9.20

2.5%

Nuclear

0.42

0.8%

0.69

0.7%

2.23

1.8%

4.81

2.7%

8.24

3.2%

15.11

4.2%

Energy Demand Projections by Fuel: 2005

2010

2015

2020

2025

MTOE 2030

OIL

16.80

21.90

30.79

42.17

58.28

81.26

GAS

27.10

38.99

52.98

77.85

114.84

162.58

COAL

3.30

7.16

14.45

24.77

38.28

68.65

HYDEL

6.43

11.03

16.40

21.44

30.50

38.93

-

0.84

1.60

3.00

5.58

9.20

NUCLEAR

0.42

0.69

2.23

4.81

8.24

15.11

TOTAL

54.05

80.61

118.45

174.04

255.72

375.73

RENEWABLE

9



INDIGENOUS SUPPLY PROJECTIONS: OIL GAS (Committed) GAS (Anticipated) COAL HYDEL RENEWABLE NUCLEAR TOTAL

2005 3.62 22.30 1.00 2.30 0.00 9.24 0.73 39.29

2010 2.20 29.93 7.85 7.40 0.84 11.03 0.69 59.94

2015 2.18 20.22 6.68 14.81 1.60 16.40 4.81 66.70

2020 2.20 11.81 13.82 24.77 3.00 21.44 4.81 81.85

2025 2.20 7.29 18.34 38.28 5.58 30.5 8.24 110.43

MTOE 2030 2.20(1.4%) 7.29(4.7%) 12.35(8.0%) 68.65(44.6%) 9.25(6.0%) 38.93(25.3%) 15.11(9.8%) 153.78(100%)

If 5% per annum increase in oil imports is not added then the shortfall will be 35.09 MTOE in 2015, 75.53 MTOE in 2020, 128.28 MOTE in 2025 and 205.28 MTOE in 2030. ENERGY SUPPLY DEMAND GAP: INDIGENOUS SUPPLIES IMPORTED OIL 5.0% IMPORTED COAL GRAND TOTAL DEMAND GAP

MTOE 2030

2005

2010

2015

2020

2025

39.38

59.94

66.70

81.85

110.43

153.79

14.66

18.80

23.88

30.48

38.49

49.64

1.00 54.04 54.05 0.00

2.00 80.74 80.61 -

2.00 92.58 118.45 25.87

2.00 114.33 174.04 59.71

2.00 151.33 255.72 104.04

2.00 205.43 375.73 170.30

10

Coal


CHAPTER # 02 COAL The importance of exploitation and exploration of alternative sources

of energy as against petroleum and petroleum products was not fully realized by the world until the 1973 oil crisis that shook the world. Pakistan apparently remained complacent because it managed to

receive petroleum at concessional rates from friendly Middle East countries including Saudi Arabia and the UAE. The planners did not visualize the long-term economic impact of increasing oil prices. Very little attention was, therefore, paid to evaluation, exploration and development of Pakistan’s rich and untapped mineral resources. It is ironical that Pakistan has the 4th largest coal reserves in the world but is importing 2.5 million tons of coal per annum for consumption in the cement industry. Pakistan’s coal reserves run into billion of metric tons but energy generating from coal account for only 1% of the total output. To cut its oil import expenses, the government has decided to enhance the share of coal in the overall energy mix from 5% to 18% by 2018.

Global Coal Resources and Consumption: Coal plays an important role as a primary and an inexpensive source for power generation. Global energy demand is expected to increase

by 50 per cent by the year 2020 and a large portion of this demand will be met from Coal. Today the world gets 38% of its electricity from Coal. By comparison the share of hydro, gas and nuclear sources is

17% each. In the Asian region 45% power is generated from coal. This is expected to increase to 60% by the year 2020. Major countries

depending on power generation from coal are South Africa 90%, Australia 84%, China 80%, India 66%, Germany 51% and USA 56%.

Despite having much larger coal deposits approximately estimated at 185 billion metric tons in Pakistan, its use for energy generation is almost negative that is only 1% as compared to 45% used by other Asian countries for power generation.

11

Coal


One of the most recent lignite deposits to be discovered is in the Thar Desert of Pakistan with a resource of about 192,000 M short tons (i.e. 175,000 metric tons) lying at depths of between 430 and 830 feet

(130 and 250 meters). However, coal production in all areas of Pakistan is very limited at around 3.8 M short tons (i.e. 3.5 M metric tons) per year at present.

Coal Classification: Coal is primarily classified into four major categories, or 'ranks': lignite, sub-bituminous, bituminous and anthracite. One of the most valuable content of coal is its carbon content which supplies most of its heating value. However, various other factors as moisture content, ash content and sulphur are also important in determining the rank of a particular coal. Anthracite, is top ranked coal, with highest carbon content that ranges between 86-98 per cent and has a heat value of nearly 15,000 BTUs (British thermal units) per pound. Bituminous and sub-bituminous 'ranks' of coal are inferior to anthracite. The bituminous variety is used primarily to generate electricity and to make coke for the steel industry.

Coal Reserves in Pakistan: Pakistan has emerged as one of the leading countries – seventh in the list of top 20 countries of the world after the discovery of huge lignite coal resources in Sindh. The economic coal deposits of Pakistan are restricted to Paleocene and Eocene rock sequences. Economists say

that the energy demand over the next 5 years is expected to grow at a rate of

12

Coal


7.4% per annum. It may be noted that in India the share of coal is as high as 54.5% in the total energy mix. To meet the future requirements of the country with indigenous resources, domestic exploration would have to be intensified to increase the share of coal from 5 to 25% by 2020. 1 Coal is found in all the four provinces of Pakistan. The country has huge coal resources, about 185 billion tons, out of which 3.3 billion tons are in proven/measured category and about 11 billion are indicated reserves, the bulk of it is found in Sindh province. The current total mineable reserves of coal are estimated at 2 billion tones

(60% of the measured reserves). It is one of the world’s largest lignite deposits discovered by the Geological Survey of Pakistan (GSP) in

13

Coal


1992, spread over more than 9,000 sq.kms. Pre-feasibility study to

utilize this coal resource for 2x300 MW indigenous, mine mouth, coal fired power plants has been completed. 2 The local coal falls in the lignite and sub-bituminous categories. Coal from Lakhra and Sonda fields of Sindh has relatively higher moisture,

sulphur and ash contents. As opposed to this, Thar coal having estimated reserves of 184.6 billion tonnes is much superior in quality due to low sulphur content and higher heating value. Well-developed coal-fields are located in Punjab, Balochistan and Sindh. 3

Sindh Coalfields: The Sindh province has total coal resources of 184 billion tonnes, accounting for 99% of the total coal reserves in Pakistan. The quality of Coal is mostly lignite - B to sub-bituminous A.

Thar Coalfield: During the 90’s a large coalfield, having a resource potential of about 175 billion tonnes, was discovered at Thar in the eastern part of Sindh Province about 400 km South East of Karachi. The coalfield extends over 9,000 sq.km out of that 356 sq.km areas has been studied in detail by Geological Survey of Pakistan proving reserves of 9 billion tonnes of coal in four blocks. The main coal bed thickness ranges

from 12 to 21 meters at an average depth of 170 meters upper 50 meters being loose sand. The evaluation study of the GSP consisted of drilling 167 bore holes with a cumulative depth of over 50,000 meters

and chemical analyses of more than 2,000 coal samples. On the basis of these studies, the required coal potential of a minimum of 500 million tons in each block has been established by the GSP. The recent

studies on coal bed methane (CBM) proposed to be carried out in Thar will enhance the value of this deposit. The rank of the coal ranges 2 3

Ibid. Pakistan’s Coal Resources, Dawn – Business 20 September, 2004

14

Coal


from lignite-B to sub-bituminous-A with the moisture content ranging from 42-49%. 4 The cumulative seam thickness varies between 7.5 and

36 m, and the maximum thickness of an individual seam is 23 m.

Recent exploration has concentrated on four blocks towards the south end of the deposit where the overburden is thinnest and the seam thickness greatest. The geological Survey of Pakistan has already conducted a feasibility study on coal gasification. The gasification of coal was found feasible where the gas has to travel less in pipelines. Exploration of Thar coal will supplement the existing energy output in the country and will give boost to the economy of Sindh province.

Lakhra Coalfield: The Lakhra Coalfield in Dadu District, Sindh lies 16 km to the west of Khanot railway station on the Kotri-Dadu section of the Pakistan Railways. It covers approximately an area of about 200 sq.km. and is well connected with Karachi and Hyderabad through roads and railways. Mining in the area is done underground. Three coal seams are established in the field but generally only the middle seam known as Lailian bed possesses the necessary persistence and thickness for consideration in large-scale mining. It shows a variation in thickness from 0.75 meter to 2.5 meters. Average thickness is 1.5 meter. Coal from Lakhra has an apparent rank of lignite – A to sub-bituminous C. The coal is dull black and contains amber resin flakes and about 30

percent moisture. Although it can be extracted in large lumps, it dries to a moisture content of about 8 percent when brought to the surface. It tends to crumble on longer exposure to atmosphere and is often susceptible to spontaneous combustion.

Based essentially on the results of the initial exploratory work done by the GSP, more detailed exploration has been subsequently undertaken by PMDC, JICA, WAPDA and USAID. The total reserves of the deposit

4

World Energy Organization – Coal-Pakistan, 2004.

15

Coal


have been estimated to be 1328 million tonnes with 244 million tonnes measured, 629 indicated and 455 million tonnes inferred.

Average annual production of coal from Lakhra is over one million tonnes. Most of this production is used in the WAPDA power plant at Khanote, Sindh and in brick kiln industry. 5

Sonda-Jherruck Coalfield : Over one billion tonnes reserves of lignite quality coal have been

assessed in Sonda- Jherruck coal field. Owing to favorable location and developed infrastructure, two Chinese companies have expressed interest to conduct feasibility study for commissioning of 500 MW power generation units. The Government of Sindh has already issued LOI to a Chinese firm for conducting mining feasibility study whereas other Chinese consortium has visited the area and held negotiations with the Government of Sindh to acquire mining lease. In case the feasibility study justifies commissioning of the project, an investment of US$500 million would be made by the Chinese consortium for establishment of coal fired power project of 500 MW for which two million tonnes coal annually would be mined to cater for the requirements of power generation units. 6

Balochistan Coal Fields: The coal seams in Balochistan are found in Ghazig formation of Eocene age. The quality of the coal is sub-bituminous A to high volatile B bituminous. There are 5 known coalfields mostly around Quetta.

Sor-Range – Degari – Sinjidi: Sor-Range – Degari coalfield lies 13 to 25 Kms south east of Quetta covering an area of about 50 sq. kms. and is easily accessible through metalled road from Quetta. The 5 6

Pakistan’s Coal Resources, by Engr. Abdul Waheed Bhutto, Dawn, Business, 20 September, 2004. World Energy Organization, Coal – Pakistan, 2004.

16

Coal


thickness of the coal seam varies from 1.0 to 2.0 metres but in SorRange seam sections of upto 5.0 metres have been encountered. The

Sor-Range coal is of better quality with low ash and sulphur content. The quality of the coal is high sub-bituminous A to high volatile B bituminous. Its heat value is approximately 13,000 BTU/1b.

Chamalang Coal Deposit: These are the newly discovered coal fields which need detail exploration and development. Preliminary work done by GSP in these areas has indicated that it has a good potential. The quality of coal is also better as compared to the rest of

Balochistan. The rank of the coal ranges from high volatile C bituminous to high volatile A bituminous with a total resource of 6 million tonnes. Its heating value is +12000 BTU/lb. 7

Punjab Coalfields: The Punjab province has coalfields in the eastern, central and western Salt Range between Khushab, Dandot and Khewra while Makerwal coalfield lies in Trans Indus Range (Sarghar Range). The rank of the coal is sub bituminous A to high volatile bituminous.

Salt Range: The Salt Range coalfield covers an area of about 260 sq. kms. Between Khushab, Dandot and Khewra. The entire coal producing area is well connected with roads and railways. The top seam varies in thickness from 0.22 meter to 0.30 meter while the middle seam is up

to 0.60 meter thick. The lower seam is up to one meter thick and is relatively of better quality. It is being mined in Dandot, Choa-Saiden Shah and adjoining areas. Punjab Mineral Development Corporation and several private companies are operating the mines in the area. Reserve of the deposit is 235 million tonnes.

Makerwal/Gullakhel: Makerwal/Gullakhel coalfield is situated in Sarghar Range (Trans Indus Range). The coalfield extends from about 7

World Energy Organization, Coal – Pakistan, 2004.

17

Coal


3.2 kms west of Makerwal to about 13 kms. west of Kalabagh covering an area of about 75 sq. kms. in Mianwali district. The quality of Makerwal/Gullakhel coal is better than that of Salt Range coal. Total reserves of the deposit is 22 million tonnes. 8

Analysis: Natural gas and coal are poised to assume a leading role in the energy sector of Pakistan under the policy focused at cutting down the oil

import bill i.e. around $6 billion. The import expenditure on account of oil is feared to increase simultaneously with the increase in demand as well as price in future if appropriate steps for import substitutes are not taken well in advance. Additional power demand in Pakistan by the year 2010 is estimated at 9000 MW. In view of the expected growth in economic activity in Pakistan, the electricity demand may further increase in the days to come. In order to save the hard-earned export receipts and to strengthen the economy, we would have to develop import substitutes luckily available within the country i.e. natural gas and coal reserves. A programme for fast track development of coal in the province of Sindh is required. A Task Force has been set up for Thar coal development under direct supervision of the President of Pakistan. The purpose of the task force is to ensure smooth implementation of coal mining and coal fired power projects. A sizeable portion of future

power demand will now be met from coal based power generators. The government has also started a coal development program aimed at development of infrastructure in the coalfields. Sindh Coal Authority

is actively promoting and helping private investors to set up projects. The process of conversion from oil to coal has been started in the cement industry as well.

8

www.worldenery.org/wee.geis/downlads/edc/coal_pakistan

18

Coal


The overall use of energy in Pakistan is around 70 million tonnes of coal equivalent (Mtce) per annum, and is estimated to grow to over 90 Mtce by 2008. Current coal production is only around 3.5 Mt/y. The most appropriate large-scale application of the lignite is for power generation. In 2000 power in Pakistan came from – oil (40%); gas (32%); hydro (25%) and nuclear (3%). 9 The contribution from coal is negligible.

Lignite,

the

indigenous

coal

mostly

found

in

Pakistan

is

a

comparatively young coal geologically speaking and has the lowest carbon content of just 25-35 per cent and also the lowest heat value of only 6,000-10,000 BTUs per pound. However, lignite, which is called 'brown coal', can be used for electric power generation. Lignite found in Thar has comparatively lower sulphur content, makes it more suitable for power generation after the washing process and an appropriate plant design.

Challenges Key economic issues in relation to the development of the Thar resource will be: •

The up-front investment costs for mining;

•

Providing the necessary infrastructure (which may bring other benefits to the area);

• •

The on-going cost of extraction and storage;

Any costs associated with providing or controlling water supplies in the area;

• •

Site rehabilitation at the end of the operation; The cost of power plant units, and of transmission lines.

In addition, a primary need is to build up the knowledge base about

coal use issues in Pakistan, particularly those relating to coal combustion for power generation.

9

The Potential for Coal in Pakistan by Gordon Couch – Profile, IEA – Clean Coal Centre, May 2004.

19

Coal


Possible uses for Thar coal in addition to power generation can be: •

As fuel in the processing industry, including cement, sugar and fertilizers;

•

Making smokeless briquettes, replacing kerosene oil for domestic use and providing an alternative heat source for high altitude areas. Briquettes might also have export potential;

•

Gasifying the coal in-situ to supplement natural gas resources;

•

Extracting and using coal bed methane; and,

•

Producing substitute natural gas on the surface 10 .

Much of the coal currently produced in Pakistan is used in brick manufacture. Using the Thar lignite directly in the cement, fertilizer or sugar industries would involve either transporting the fuel to existing and remote industrial sites, or building new factories and infrastructure near the mine.

Coal Utilization: The local production of coal is estimated at 3.21 million tons out of which presently over 80 per cent is being utilized by bricks makers, while the rest is being consumed by the cement industry to blend it with the imported coal to reduce the production cost, and only one per cent by the coal-based power stations. Around 85 per cent of the

cement industry has shifted on low-priced coal from relatively more expensive natural gas and furnace oil. The conversion has small impact on the local coal production because cement units are using

high rank imported coal as the indigenous coal is of low quality. Indigenous coal is blended with imported coal in small proportion,

which is necessary for smooth operation of the plant. During 2002, the cement industry utilized one million tons of imported coal from South Africa, Austria and Indonesia. Imported coal cost Rs3150 to Rs3510 per ton while local coal cost Rs1300 to Rs2500 per ton. 10

Ministry of Petroleum and Natural Resources.

20

Coal


Use of coal as fuel in sugar industry can save around 9 million tonnes biogases,

which

can

be

utilized

to

produce

medium

density

fiberboard, excellent replacement of furniture-making wood and consequently saving our fast depleting forests. Coal is also an important raw material for the production of several chemicals.

Refined coal tar can be used in the manufacture of a range of

chemicals including pitch, creosote oil, naphthalene, phenol, pyridine, benzene, toluene, xylem, ethylene, propylene, polyesters, plastics, synthesis gas, acetic acid, acetic anhydride. 11 Numerous chemicals and fuels can be manufactured from the gasification

of

Iskandarabad,

coal.

In

Daudkhel

late was

1950's, based

on

Pak-American gasification

Fertilizers, technology

supplied by Lurgi (Germany) to produce ammonia and ammonium sulfate fertilizer. SASOL of South Africa has developed the processes for production of petrochemicals from coal, with high ash content by gasification. Coal under pressure and high temperature, in the presence of steam and oxygen is converted to raw gas. Condensation and subsequent cooling of gas, yields co-products such as tar and oil. Nitrogenous compounds (ammonia), sulfur and phenolic compound are also recovered. The purified synthesis gas after cooling is made available for conversion to synthetic fuels and or chemical production. SASOL or similar technology can be adopted for our coal reserves.

Major Contracts for Exploration & Power generation: A number of major contracts have been signed by the Sindh Coal Development Authority for Coal exploration and power generation in the last couple of years: •

China is coming up with huge investment in three coal-based

power projects. Shenhua Group Corporation of China has selected a block in Thar Coal Field to set up a 3000 MW Power Complex in

11

www.dawn.com/2004/09/20/ebr10.htm.

21

Coal

Energy Crisis & Energy Resources Of Pakistan phases. Investment involved in this huge power complex is estimated at $3 billion.

•

Another 250 MW Power Project at Sonda-Jherruck is being

negotiated with Jiangsu Mining and Engineering Corporation of China.

The

China

National

Machinery

Import

and

Export

Corporation have also offered to set up a 100 MW Power Plant at Sonda-Jherruck. •

Smith Associates Power and Mining Company of the USA is conducting a feasibility for a 450 MW Coal fired power plant at

Lakhra on right of first refusal basis in which direct foreign investment is estimated at $400 million. •

An MOU was signed in April 2005 with Ukraine’s Ukrinterenergo for coal – fired 300 MW power generation plant in the Thar area. The project, expected to cost $600 million, will be undertaken the Ukrainian Company through its local partner M/S Fateh Group on Build, Own, Operate, Transfer (BOOT) basis. The group is interested to invest and develop coal mines and Lakhra coal field, power plant at Dadu and coal mining at Sonda–Jherruk. Under the MOU, the Science, Research and Development Institute of Ukraine would update and complete feasibility study for the project within six months. Subsequently an agreement has been signed for setting up a coal washing plant also. 12

•

The Sindh Mines and Minerals Development Minister announced in June 2005 that bankable feasibility study on Thar coal has been successfully

completed

by

German

Company

Rheinbraun

Engineering and the documents have been purchased by the US

Company AES Oasis Ltd for mining and setting up of an integrated coal – fired power project of up to 1,000 MW. 13

12 13

www.Pakistantimes.net/2005/04/21/business1.htm. - Pakistan-Ukraine sign MOU for That Power generation. Feasibility Study on Thar Coal Completed. Dawn, 2 June, 2005.

22

Coal


Environmental Concerns : Utilization of low rank coals in particular has been subjected over the

last two decades to increasing challenges arising from greenhouse gas emissions and pollution controls, sustainable development and efficiency

issues.

Several

technology

developments

have

been

explored to produce cleaner coals, value-added coal products and

processes. Novel and innovative developments, which are taking place, for example, in Asia, Oceania, Central, Eastern and Western Europe and North America include MTE (Mechanical Thermal Expression), hot-

water drying, coal liquefaction, co-pyrolysis, briquetting/palletizing, IDGCC (Integrated Drying Gasification Combined Cycle) processing for power generation, and UCG (Underground Coal Gasification) amongst others. Successful utilization of low rank coal with innovative and advanced technologies will be required not only to meet the increasing energy demands in different parts of the world but also to minimize environmental impacts. Clean coal technologies are making coal more attractive. The United States New Energy Policy includes major funding for development of clean coal technology. The latest technologies being used for making clean coal have made coal no longer a dirty fuel. In view of large reserves the world over; coal will always remain the single largest source of energy for mankind.

23

Coal


Conclusion: The development of domestic coal resources and the setting-up of indigenous coal fired power plants has a top priority, as it will

substitute for imported oil, develop Pakistan's mining industry, increase local production of mining based equipment and

machinery and create employment opportunities in relatively less developed areas of Pakistan. Pakistan's total coal reserves,

estimated to be around 185 billion tonnes, could be effectively utilized

for

power

generation

and

in

other

coal-based

industries. In addition to the newly discovered estimated 175 billion tonnes in Tharparkar area in Sindh, significant coal deposits suitable for power generation are available at Sonda and Lakhra areas in Sindh, in the Salt Range area of Punjab and at several sites in Balochistan. Domestic coal, if exploited properly, could also be exported. The newly discovered Thar coal deposit is so large that even if half of it is extracted it can provide fuel for the generation of 100,000 MW for 30 years. Opportunities are now open for the development of integrated coal mining and power generation complexes. These opportunities offer a potential rate of return ranging between 25-30% on investment. The Fiscal and tax incentives available to power generation projects, also apply to coal mining projects. A number of local and foreign investors have expressed interest in setting-up coal based thermal power plants.

It is time to explore coal and develop coal-fired power plants to not only lessen dependence on imported fuel but also to cut the

cost of power production for the benefit of the industries, trade and individual consumers.

24

Hydel


CHAPTER # 03 HYDEL The Northern part of Pakistan is rich with hydro power resources. Other than 12 big (capacity greater than 1MW) hydro power plants, there are a

large number of sites in the high terrain, where natural and manageable waterfalls are abundantly available. The population in these areas is isolated in thin clusters and is located far from physical infrastructure. Such remote population can greatly benefit from such energy sources.

At the time of its creation, WAPDA inherited the system involving only 119 megawatt power generation capability, both hydel and thermal. It had an average production less than 800 million units of energy annually, yielding about 14 units per capita consumption by 278,279 customers. KESC at the time of independence was generating less than 50MW electricity and was consumed by 98056 customers. On the other hand in 1947 India inherited 1362 MW capacity electricity. Today, the generation capacity of Wapda’s own hydel and thermal sources stands at around 11,300 megawatt (6,459 MW hydel and 4,865 MW thermal) and KESC at 2073 MW This is supported by nuclear energy in public sector and that of private power producing companies to the tune of 6,070 MW. The energy generation in WAPDA system now stands at 64 billion units annually and KESC at 697.5 million units annually. Cash flow from sale of power has gone up to Rs.240 billion per annum. Through this network, electricity is reaching the doorsteps of around 14.5million customers, including households, agriculture and industry. Over 90,000 villages and hutments have been electrified, contributing to uplift of agricultural sector. This has brought the rural areas and masses

in mainstream of national life with improvement in their living and socio economic stands.

Currently the emphasis is on more connections for

agriculture tube-wells to stimulate agricultural sector for food and fiber self-sufficiency. In recent years various packages including simplification of procedure for new connections, reduction in cost exemption of transformer cost for small industrial connections up to 10kilowatt

incentives for large as well as cotton and ginning industries have been

25

Hydel


offered. Customer services and facility of one window operation to provide prompt services to the customers have also been strengthened. 1

1

Ibid

26

Hydel


27

Hydel


Hydel Potential in NWFP: The River Swat is one of the oldest rivers mentioned in the chronicles of the Indo-Pakistan subcontinent and is a very valuable asset of NWFP. It is

a snow-fed stream, with a catchments area of 13,491 square kilometers.

The Upper Swat Canal System was completed in 1918. It emanates from River Swat at Amandara Head Works and irrigates 121,400 hectares of

land of the Peshawar valley. A 6 km long canal carries water from Amandara to the foot of Malakand hills where the 3.5 km long Benton Tunnel pierces the Malakand hills and passes water into the Dargai Nullah. Two cascade type power plants, Jabban and Dargai, each of 20 MW capacity, were set up in 1937 and 1953 respectively, and are located between the outlet portal of Benton Tunnel and the trifurcate at Dargai. In 1986, the Government of NWFP established a corporate body Sarhad Hydel

Development

Organization

(SHYDO)

for

carrying

out

the

hydropower prospects, hydropower development and to act as a utility company for the isolated rural communities. With the assistance of WAPDA and GTZ, SHYDO prepared a Master Plan for the development of hydropower

potential

in

NWFP.

Accordingly,

the

Regional

Power

Development Plan was completed with pertinent technical and financial data of different hydel sites in NWFP. About 150 potential sites with a total capacity of 18698 MW were identified with high, medium and small head. Out of these, 17 projects are in operation, 6 sites are under implementation in the public sector, one site has been offered to the private sector.

Table 3.1 indicates the details of the projects in operation with the total capacity of 3767 MW while the Figure-3.1 shows the location of these projects. Tables-3.2 & 3.3 lists the details of the projects which are under implementation in public sector and private sector with the total capacity of 635 MW and 84 MW respectively; while Figure-3.2 depicts the location of these projects.

28

Hydel


29

Hydel


\

30

Hydel


31

Hydel


32

Hydel


Hydel Potential in Punjab: Punjab is Pakistan’s province of the five rivers namely, Sutluj, Ravi, Chenab, Jhelum and Indus. The first four join the mighty Indus at Mithan

Kot which ultimately falls into the Arabian Sea. Punjab has the distinction of having the slope of gravity flow not only in Pakistan, but also in the world. Its irrigation system contributes 25 % of Pakistan’s GDP and also engages 54 % of its labor force. After the Indus Water Treaty in 1960, large inter-basin link canals and storages were constructed. In 1994, national consensus was developed to generate hydel power projects on canal sites in Punjab and, in pursuance thereof; the Punjab Power Development Board was created in the Irrigation Department in 1995 for the promotion of hydel power generation. Recently, WAPDA has launched the 1450 MW Ghazi Barotha hydel project as a run-of-river project. At different canals and barrages, about 324 potential sites with a total capacity of 5895 MW were identified with medium and small head. Out of these, 7 projects are in operation, one site is under implementation in the public sector.

Tables indicate the details of the projects in operation and under implementation in the public sector with the total capacity of 1698 MW and 96 MW respectively. Table illustrates the details of raw sites projects below 50 MW with the total capacity of 350 MW.

33

Hydel


34

Hydel


35

Hydel


Hydel Potential in AJK: Azad State of Jammu & Kashmir (AJK), due to its topography has been

endowed with abundant hydel potential. In the late eighties, WAPDA and GTZ conducted comprehensive hydel potential reports on the three main rivers of AJK, namely, the River Jhelum, River Poonch and River Neelum.

The preliminary reports consist of the investigations and details of the identified potential sites, together along with recommendations for

further detailed studies. Various sites with an estimated total capacity of about 4635 MW of hydel potential have been identified in AJK. In order to exploit the plentiful hydel resources of AJK, the Government of AJK (GOAJK) established the AJK Hydro Electric Board in 1989. Public sector projects are implemented by the AJK HEB. The AJK HEB successfully completed the 1.6 MW Kathai, 2 MW Kundel Shahi, 2 MW Leepa and 30.4 MW Jagran hydel power projects. Subsequently, with the intention of providing a one-window facility and to encourage the development of hydel potential in the private sector, the GOAJK created the AJK Private Power Cell in 1995. About 53 potential sites with a total capacity of 4635 MW were identified with high, medium and small head. Out of these, 8 projects are in operation, 2 sites are under implementation in the public sector and 7 sites has been offered to the private sector. Mainly, these sites are run-of-river sites, with some as daily storage projects.Table-5.1 indicates the list of the projects in operation with the total capacity of 1036 MW, while Figure-5.1 shows the location of these projects. Tables-

5.2 & 5.3 lists the details of the projects which are under implementation in public sector and private sector with the total capacity of 974MW and

829 MW respectively.Table-5.4 illustrates the details of raw sites projects

above 50 MW with the total capacity of 1152 MW, while Figure-5.3 shows the location of these projects.

36

Hydel


37

Hydel


38

Hydel


39

Hydel


40

Hydel


Hydel Potential in Northern Area:

41

Hydel


42

Hydel


43

Hydel


Hydel Potential in Sindh: Sindh is bounded in the north by the Punjab, in the east by the Indian Province of Rajsthan, in the south by the Runn of Kutch and the Arabian

Sea, and in the West by Lasbela and Kalat districts of the province of Balochistan. In terms of population, it is the second largest province of

the country. The lower Indus basin forms the province of Sindh and lies between 23 to 35 Degree and 28-30, north latitude and 66-42 and 71-

1-degree east longitude. It is about 579 kms in length from north to south and nearly 442 kms in its extreme breadth (281 kms average). It covers approximately 140,915 square kms. It is basically an agrarian province. The Indus is by far the most important river of the Sindh. Within the last 45 years, three irrigation barrages have been constructed across the Indus. The command areas of the three barrages are: Sukkur Barrage 3.12 million hectares, Kotri Barrage 1.12 million hectares, and Guddu Barrage 1.172 million hectares. The Irrigation & Power Department, Govt. of Sindh is responsible for conducting hydropower activities in the Province, and for facilitating and liasing with the respective agencies. The hydropower projects identified in the Province are Nai Gaj Fall, Sukkur (Indus /Nara Canal, Rohri and Guddu Barrage Projects). These projects have an estimated 178 MW capacity. Feasibility studies of the Rohri and Guddu Barrage Projects have been completed, and it is expected that implementation work will be started in the near future. Presently, no hydel projects are in operation or under implementation

either in the public and private sectors. Six potential sites of an estimated total capacity of 178 MW, with medium and low head at different canals have been identified. Presently, no hydel projects are in operation or under implementation in the public sector, and no projects are being

processed/undertaken by the private sector. Table- 7.1 illustrates the details of raw sits projects above & below 50 MW with the total capacity of 80 MW and 48 MW respectively, while Table-7.2 shows the list of the projects of solicited sites of above & below 50 MW with the total capacity

of 49 MW respectively. Figure-7.1 shows the identified hydel potential in the Province.

44

Hydel


45

Hydel


46

Hydel


HYDEL POTENTIAL IN BALOCHISTAN: Balochistan is richly endowed with mineral resources and major occupations are in iron and coal mining and oil and gas exploration. The

country's largest natural gas reservoir is located here at Sui, which, when discovered in 1952, was the largest in Asia. There are several irrigation

control and water supply projects in the Province. However, due to non-

availability of reasonable head, electricity cannot be generated from these canals. The total identified hydel potential in the province is 0.50 MW. Although there are a number of proposed dams in Balochistan, such as the Mirani Dam, Naulung Dam, Magi Dam, Talli Tangi Dam and Hingol Multipurpose Dam, none of them is viable for generating electricity as a by-product except the Mirani Dam and Hingol Dam Multipurpose Project. The Mirani Dam is located on the River Dasht about 48 Km west of Turbat in the Mekran Division of Balochistan. The main objective of the Project is to provide water for irrigation; however, about 0.2 MW power can also be generated. The Hingol Dam site is located near Aghor on the River Hingol, at a distance of 145 miles northwest of Karachi and about 5 miles north of Kund Malir. The feasibility study of the proposed dam was completed in 1992 and about 0.3 MW electricity can be generated by it. The National Water Resources Development Programme for Balochistan included 8 irrigation projects, but none of them have the required head to generate electricity. Presently, no hydel projects are in operation or under implementation in the public sector, and no projects are being processed/undertaken by the private sector. Figure-19 shows the total hydel potential identified in the Province.

47

Hydel


48

Hydel


Restructuring of WAPDA: 1.

In order to restore WAPDA’s chartered role of a development

organization, the power wing has been restructured.

Thirteen power

generation, transmission and dispatch and distribution companies have been set up to enhance the efficiency of the utility and prompt redressal of consumer’s grievances. Already a Rs. 34 billion five year distribution

augmentation plan 2002-07 is being implemented to further reduce the power system losses. 2 2.

The solution suggested by the World Bank was to corporatize,

commercialize and lastly to sell WAPDA’s generation and distribution assets.

It was planned to be done through vertical unbundling of

WAPDA’s power wing.

The Terms of Reference (TOR) for this

restructuring /unbundling is the executive order dated October 24, 1998. A two page document in this connection was issued to break up a national institution that took more than forty years to make. 3 3.

What then is the answer to the problems: There are different levels

of tariffs for various distribution companies. It is also a fact that price for consumers i.e. less would vary in near and accessible areas and more in far flung areas.

All permutations and combinations lead only to one

conclusion - that a singular uniform tariff is a must for the country and anything other would be basically wrong on many accounts, particularly higher tariff for less developed areas of the country. 4.

The varying tariff for Karachi through KESC is a different case as

the utility was incorporated eighty years ago and has been the city’s way of life. The KESC was much more efficient up to 1996. This issue alone

is enough to come up with something other than the eventual

privatization. The UNDP, on the other hand, is urging national policy makers to realize that there are many other options including

2

Engr. S. Tanzeem Hussain Naqvi. Revisiting WAPDA’s Corporatization . Dawn, July 31, 2005. 3 Ibid

49

Hydel


restructuring of the public sector enterprises (PSE) and the Public-Private partnership. 5.

Except for the Ghazi Brotha Hydro Power Project, no worthwhile

power project was started by Wapda. This led to public perception that the utility was unable to cater for their needs. It was also somehow

ingrained in the minds of the people and even experts that WAPDA was over-staffed and simply unable to set tariff rates that took account of the

actual costs incurred. All this too was inherently incorrect 4 because out of total staff of 0.154 million over 0.140 million relates to generation , transmission and distribution throughout the country and tariff rates are decided by National Electric Power Regulatory Authority

(NEPRA) and

notified by the Federal Government. 6.

On the other hand, the WB has also found the corporate companies

of Wapda, particularly its distribution companies, to be in a rudderless situation, which are practically neither independent nor managed under a vertically integrated system. The bank was specially perturbed over non implementation of power purchase tariff for distribution companies and subsequently non notification of separate consumer tariffs for the last 18 months since first asked for by them to be implemented w.e.f. January 2004. Setting a deadline of September 30, 2005, the WB said: “The determination of tariffs for the DISCOS - and thus, determination of end user tariffs is the single most important outstanding action in the sector”. 7.

In the absence of company specific tariffs the DISCOS, although

legally separate companies, have not been able to act as such. It is then

not at all surprising that Wapda, has continued to manage the sector in the traditional way. In the WB’s view, “Such a situation is confusing and unsustainable”. Power Policy 2002 12.

Wapda and KESC with the normal growth rate will face shortage of

55 MW in the year 2005-06 and further to 5,529 MW by the year 2010. 4

Ibid

50

Hydel


To fill the upcoming shortfall, the GOP announced a policy for power generation projects in 2002 to attract private investors. The main thrust

of the policy is on indigenous resource exploitation. Its salient features are: 1. 2.

Applicable to projects in private sector, public sector and through public-private partnership;

Hydel projects to be implemented on BOOT and thermal projects on BOO or BOOT basis;

3.

GOP will guarantee terms of the executed agreements

4.

Availability of standardized security agreements;

5.

including payment terms;

Exemption from income tax including turnover tax and withholding tax on imports; (no exemption from these taxes will be available in case of oil-fired power projects); and

6.

Maximum indigenization shall be promoted in accordance with GOP policy.

8.

It has been said that the investors’ response to the policy has been

encouraging. Twelve companies have already shown interest in setting up power plants, having cumulative generating capacity of 1,915 MW promising investment in the country for more than $ 2 billion. PPIB Projects 9.

Since its inception in 1994, the PPIB (Private Power Infra-structure

Board) has successfully implemented more than 15 private sector power

projects with a cumulative capacity of 5577 MW, transforming the erstwhile government monopolized power sector into a vibrant private

sector-led activity through introducing the independent power producers (IPP). Incidentally, all these projects are thermal oil-based and gas-based power plants and not a single hydropower project has been executed so far. 5

5

Engr. Hussain Ahmad Siddiqui and Engr Jawaid Iqbal Mufti. Risks and constraints in Hydro Power Projects. Dawn, August 08, 2005.

51

Hydel


Hydro – Power Projects – PPIB 10.

In all, proposals for setting up 39 hydro projects - varying from 10

MW to 960 MW capacities - have been entertained by the PPIB, at different times, from private sector on BOOT basis.

Major projects

include New Bong Escape hydropower project (97 MW capacity), to be

located about 7-1/2 km downstream of Mangla Dam, Kohala project of 600/740 MW and Abbasian project of 245 MW capacity, both proposed

on the Jhelum river, Taunsa Barrage project of 120 MW on Indus river and Matiltan project to be located in district Swat having a capacity of 84 MW. 11.

The Bong Escape Hydropower is the most promising project as the

first hydropower IPP in the country.

It is a run-of-the river, low head

project, now scheduled to achieve financial close shortly. Its sponsors, Laraib Energy Ltd., have experienced tremendous difficulties in taking their project finally to this stage since 1996. It was only sometime in 2002 that a revised bankable feasibility report was prepared and approved. 12.

The Power Purchase Agreement (PPA), though initialed in March

2003, was signed with the WAPDA’s NTDC (National Transmission and Dispatch Company) in April 2004, along with Implementation Agreement (IA) and Water Use Agreement (WUA) that had been initialed in December 2003.

The

project

is

expected

to go into commercial operations

within 36-42 months after the financial close, that is, earliest by December 2008, whereas it was to be commissioned by December 2005. 6 13.

One may imagine the colossal loss, the nation suffered on account

of inordinate delay in implementing only this project - concurrent loss of

net 425 million of electricity per year, and that too, relatively inexpensive electricity compared to thermal power generation. regard to other projects is not different either. 6

The position with

Ibid.

52

Hydel 14.

Energy Crisis & Energy Resources Of Pakistan Balloki Sulemanki Link (Tail) Canal hydropower project of 10 MW

capacity is proposed to be located near Basirpur, district Okara. 7 This project was scheduled to achieve financial close by September 1998.

There is still no sign although negotiations for power purchase were initiated seven years ago.

Likewise, the 84-MW Matiltan Project,

proposed to be located on Ushu River, district Swat, was expected to be on stream by December 2005, but physical work has not yet been undertaken. 8 15.

Power Policy -02 had envisaged commissioning of a total of nine

hydroelectric power projects, in private as well as in public sector, with a cumulative capacity of 792 MW, during the five year short term plan. New Bong Escape, Malakand-III (81MW) and Jinnah (on Indus River) of 96 MW capacity were scheduled for commissioning by December 2005. However, construction on one scheme, only Malakand-III project in the NWFP, has been undertaken by Sarhad Hydel Development Organization (SHYDO). It is not possible to commission the plant by December this year, which would be delayed by about a year. Another project of SHYDO, Pehur High Level Canal Project etc. of 12 MW capacity was to be commissioned by December 2004. There is no physical progress on the

project,

as

the government of the NWFP has not

yet taken a

decision to select engineering, procurement and construction (EPC) contractor. 9 Hydro – Power Projects – WAPDA 16.

Likewise, Wapda’s five projects namely Allai Khwar (121 MW),

Duber Khwar (130 MW), Khan Khwar (72 MW), Jinnah (96 MW) and Golan

Gol were to be commissioned by June 2006. While engineering, design and preliminary site work has commenced by the contractors / Wapda on

the three Khwar projects, these are not expected to be completed on schedule. Likewise, the financial close of Jinnah project is awaited since 7

Ibid. 8 9

Ibid. Ibid.

53

Hydel


long, while the fate of Golan Gol project is still uncertain.

And there is

no news about status of Mithankot (Punjab) project of 100 MW capacities that was to be commissioned by June 2007. 10 Feasibility Studies - PPIB 17.

Currently, detailed feasibility studies are in advance stage for many

power projects, under the supervision of the PPIB, that are covered under

the medium and long term plans as mentioned in the Power Policy 2002 document.

These reports have been completed, in May 2005, for two

hydel power projects in the AJK, Rajdhani project of 132 MW capacity at

Mangla and Kotli project of 97 MW at Kotli, which were approved earlier as per Hydro Policy 1995. 11 18.

Sponsors

of

the

Kotli

project

are

negotiations for power purchase this year. studies is in progress

for

Munda

Dam

expected

to

commence

Preparation of feasibility

Project

of

740 MW power

generation capacity, Gabral Kalam of 101 MW, both proposed to be located in Swat. All the four projects are now scheduled to go on stream in the year 2009. However, the sponsors of Gulpur (Poonch, AJK) project of 60 MW capacities are to finalize project feasibility report by April 2007. Raw Site Projects - PPIB 19.

The response to recently advertised expression of interest (EOI) by

the PPIB for implementation of seven hydroelectric power projects has been overwhelming. 12 These raw site projects, mainly large scale, are to be implemented

on

international

competitive bidding (ICB) basis, are

located in the NWFP and Azad Jammu and Kashmir (AJK). As many as 29

prospective investors have submitted detailed proposals. These include national companies and a host of investors from the USA, UK, Canada, UAE and China. The proposals received from prospective investors have

being evaluated by the PPIB for prequalification. Letters of interest (LOI) have been issued as follows. 10

Ibid. Ibid. 12 Ibid 11

54

Hydel

20.


A 53 MW Harighel Hydropower Project in Bagh, Azad Kashmir has

been awarded to Descon Engineering, 115 MW Sharmai Hydropower in Dir district of NWFP to Global Resources of the US, 130 MW Patrind

Hydropower Project in Mansehra district of NWFP to Emirates Trading Agency (A1-Ghurair, UAE), 148 MW Madian Hydropower in Swat district of NWFP to Cherat Cement and Shirazi Group. 21.

Similarly, 245 MW Mahl Hydropower Project in Bagh district of AJK

has been given to China International Water and Power Corporation of

China, 458 MW Karrang Hydropower in Kohistan district of NWFP to Micro Middle East of the UAE and 655 MW Suki Kinari Hydropower Project in Mansehra district of NWFP to SK Hydro (Faysal Bank & Dongfong China). 13

Constraints – Hydro – Power Projects 22.

It is intriguing to observe that even WAPDA, with all its financial,

technical and human resources, is unable to achieve major progress and adhere to completion schedules that are covered under its over publicized Vision 2025. As a natural course, the gas-based and oilbased power plants would need to be installed instead to meet the growing power demand. And that is exactly what is being done, much to the concern of all that are required to pay ever-increasing electricity tariff. 23.

Delays have occurred due to failure to realize that a hydro power

scheme posed to the investor and developer. In Pakistan, major hydro

resources / sites are mainly located in the north, in the NWFP and Azad Jammu and Kashmir, primarily high head, run-of river sites, with some as peak storage projects, whereas potential for small projects exists in the

Northern Areas. These are far-flung and isolated areas, in high altitude

13

Dawn, September 21, 2005.

55

Hydel


mountains, lacking basic infrastructural facilities required to develop such projects. 24.

Road conditions are poor, as mostly non-metal and jeep-able

roads exist unsuited to transport machinery and equipment. The sites are not easily accessible. There are other communication and logistic problems and limitations too, such as non-availability of labor, housing and open land for project as well as construction. Extreme weather

conditions prevail in these areas. All these factors impede construction activities for the project, resulting in high capital cost and long construction time. 25.

But the most important factor is that of the project feasibility.

Though additional hydro potential is identified at 41,723 MW, there are hardly any detailed feasibility studies. Generally, even pre-feasibility studies, which are based on reconnaissance data only for river flow. Detailed studies of topography, hydrology, site geology and engineering geological conditions are the basic ingredients to determine feasibility, or otherwise, of any hydroelectric power scheme. 26.

The raw-site projects thus mean that the respective feasibility

studies have not been conducted. Unfortunately, availability of reliable historical data, which include daily discharge, flood discharge over a period of years, volume of sediment carried by the river, etc., remains questionable in most of the cases. 27.

Compliance of environmental requirements and resettlement are

also of prime importance. Every hydel project is tailor-made, sometimes involving complex construction. For example, Karrang project (458 MW) entails an underground powerhouse and Neelum Jhelum Project

(969 MW) requires a 35 km tunnel underwater. The design, engineering and construction of the project thus require special technology and expertise.

56

Hydel 28.

Energy Crisis & Energy Resources Of Pakistan Undertaking detailed site investigations and preparing a bankable

feasibility report of international standard require placing substantial

capital and other resources at risk. This investment is made without any guarantee that the project, if implemented, would meet commercial

viability. Developing infrastructure and arranging for land lease could be expensive, time consuming and involve risks, giving nightmares at times to the investors. Wapda has faced difficulties in obtaining land lease for the on-going Khwar series projects located in Kohistan and Mansehra districts, resulting in delays in the construction of basic amenities for the contractors. These factors ultimately result in delays and cost overrun, besides the generation, and thus revenue, losses. 29.

From the viewpoint of the investor, it is therefore vitally important

that the related issues are addressed taking him into confidence, and the risks involved, are properly assessed and shared among various parties / Stakeholders proportionately. For instance, the government may conduct detailed investigations and prepare feasibility studies for large size hydro projects. Thermal Projects - PPIB 30.

On the thermal generation side the PPIB board has approved a 200

MW Green Power Project in Sindh with an investment of $ 150 million. During a recent visit to Germany, the Prime Minister had invited Siemens to invest in power sector but the company had reservations owing to its bad experience in the development of Rousch Project a few years back. However, the company was assured that it would be provided about 40

MMCFD of low-btu gas for the 200 MW project on a full year basis from BHP’s Zamzama gas field. The Siemens would be in joint venture with

Seconding of Singapore and a local group would now install the project, subject to successful tariff finalization under the aegis of National Electric Power Regulatory Authority (Nepra). 31.

The board also approved 200 MW dual-fired power project by

Brazilian Energy with an investment of $ 150 million. The company was invited by President General Pervez Musharraf during his visit to Brazil.

57

Hydel


The company had originally proposed to set up a diesel – based project

but asked to go for dual fired project because of the expected high cost of diesel. 32.

The PPIB also approved in principle a 225 MW power project at

Sundar Industrial Estate in Punjab with an investment of $ 170 million. The board also approved issuance of LOI for 225 MW power project at

Bhikki by Halmore Power Generation of UK with an investment of $ 170 million. 14 33.

The federal government has approved setting up of about 3,000

MW of thermal power projects in the private sector with an estimated total investment of more than $ 2 billion, in October, 2005. 34.

A decision to this effect was taken by board of directors of Private

Power and Infrastructure Board (PPIB). The board also decided to process the project proposals on a fast track basis to avoid power shortfalls in the next couple of years. 35.

The board decided to issue letters of support (LoS) to 200 MW

Orient Power Project to be located at Balloki near Lahore and 123-MW Star Power Project at Daharki in Sindh. The construction work on these two projects would start in a couple of months. 36.

The PPIB has also approved in principle the issuance of letters of

interest (LoIs) to five independent power producers (IPPs), which are

already operating in the country, to set up additional plants of 1,125MW.The board noted that the existing IPPs were best placed to provide additional power in the minimum time and at competitive tariff and hence their specific project proposals would be processed on a fast track basis.

From amongst these IPPs, Kot Addu Power Company has proposed to add 400-MW, AES Corporation 225-MW, Southern Electric Power Company 100-MW, Gul Ahmad Energy 200-MW and Tapal Power 200-MW. 14

Dawn, September 21, 2005.

58

Hydel

37.


Four proposals with a total capacity of 1,450-MW have come from

Nishat Group, Atlas Group, Ibrahim Group and Gulistan Group were also approved in principle for further processing by the PPIB. 38.

Another proposal of Engro Group for setting up of 150-MW project

at Daharki based on 75-mmcfd (million cubic feet per day) of permeate gas was also approved by the PPIB. To encourage utilization of indigenous coal resources, the board also approved issuance of LoI for

200-450 MW of power generation projects based on Lakhra coal mines in Sindh Province. 15 Power Policy 2005 – Punjab Government 39.

On the other hand, Punjab Government released the draft of its

power policy 2005 for setting up in the private sector small hydel stations at canals with a total potential of generation 600 megawatts of Power. 16 Punjab Power Minister has appealed to the private investors to come forward and invest in setting up the power stations. The government of Punjab would extend all possible cooperation, facilities and incentives to the private sector in this connection. 40.

Wapda has assessed hydel power generation potential of 600 MW

at 316 locations on the canals and run-of rivers. “To exploit the potential, the Punjab Power Policy, 2005 has been framed. The PPDB (Punjab Power Development Board) would maintain liaison with PPIB of

the Federal Government on the related matters and NEPRA on the power regulation, NTDC and DISCOs in the province for sale and purchase of power.

15 16

Khaleeq, Kiani. PPIB Okays thermal projects of $ 264. Dawn, October 28, 2005. Punjab Projects 600 MW Potential. Dawn September 11, 2005.

59

Hydel


Thermal Projects – KESC 41.

The total generating capacity available to KESC from all sources is

1,500 megawatts whereas the demand in KESC licensed area reached to

2,197 megawatts as of June 2005. The shortage of power in KESC system is met by import from WAPDA / NTDC up to a maximum of 500 MW, due to limitation of transmission lines. Thus the remaining shortfall is met by

load shedding. In order to overcome the power shortage GOP has already allocated 240 megawatts plant from UAE for KESC, which will be shifted

and installed by UAE at KTPS and BQPS in the year 2007. Work on Hubco – KESC link already started by Siemens to ensure 1,000 MW to KESC will be completed by April 2006. KESC has prepared PC-I for one unit of 360 megawatts (Gross) combined cycle gas turbine unit along with 9.3 kilometers double circuit, 220 transmission lines from KTPS to Korangi Creek Grid Station. Besides, KESC has negotiated a 30 years tariff for purchase of electricity with Defence Co-generation Limited (DCL). The plant, to be completed by 2007, will provide 80 MW to the KESC’s Power Strapped System. Two private sector projects (Western Electric & Fauji Korangi Project) having a capacity of about 150 MW each, have been issued Letters of Interest (LOI). They are at the preliminary stages and yet to sign the Power Purchase Agreement, Implementation Agreement and Gas supply agreement. After implementation of all the above arrangements, the generation capacity of KESC will be doubled than the existing capacity. 17 Thermal – Projects WAPDA 42.

According to Wapda, the demand was increasing at the rate of

about 1000 to 1100 MW per year, which called for increasing the power generation to meet the power increasing demand. The government had

estimated there would be a shortage of about 500 MW during the coming winter months. The Federal Government decided to set up two thermal

power plants of 900MW in the Wapda system and provide additional 300

17

KESC: 93rd Annual Report (2004-05)

60

Hydel


MW power supply to the Karachi Electric Supply Cooperation by 2007 to overcome power shortages. 43.

The Wapda has been asked to choose two locations out of three

already identified by it, including Nandipur, Lahore and Faisalabad. The two projects would have a power generation capacity of 450 MW each having a total cost of about Rs.35 billion and would be completed by 2007.

Proposed Future Projects 44.

The growth rate was going high in power sector which is to be

tackled intelligently through adopting measures of installing more power plants for producing sufficient energy to avoid load-shedding in the future.In this connection decision for construction of mega hydroprojects such as Kalabagh Dam (3600 MW) and Bhasha Dam (4500 MW) in the best national interest with consensus need to be taken forthwith. The extension project of Tarbela Power House (960 MW) and processing for the construction of Akhori Dam (600 MW) need to be taken. Similarly, construction of Bunji hydro-power project (5400 MW) and Dasu hydropower project(3700 MW) also need attention of the planners in the long run. 45.

The production of electricity by using nuclear technology,

renewable resources and coal resources is essential to fill in the gap of shortage. Additional production by thermal means preferring gas over oil also would be required in the long run to satisfy the growing demand of electricity.

61

Natural Gas


CHAPTER # 04 NATURAL GAS Natural gas, known as Sui Gas, has been and remains the most common indigenous source of energy in Pakistan. With constant rise in prices of oil, growth in population, urbanization, industrialization, depletion in other sources like wood and also because of convenient usage, the demand for natural gas is on the increase. Currently 50% of

the

energy

requirements of the country are being met from natural gas. This percentage can very conveniently be increased provided sufficient investments are made in the drilling/development and supply system. In the following paragraphs Pakistan’s current and future requirements of natural gas, current availability and prospects of future exploration potential are discussed. Possibilities of import of gas from neighboring countries will also be explored. Internal and external constraints, political power game which can put obstacles in this regard shall also be discussed and possible options to overcome these difficulties are identified.

Current Position: Early this year the balance recoverable natural gas reserves in Pakistan have been estimated at 30.130 trillion cubic feet. The average production and consumption of natural gas during the year 1987-88 was 1,195 MMCFD which has been enhanced twice by 2000-01 i.e. reached to 2,399

MMCFD. This figure jumped to almost three times by March 2004-05 and became 3,681 million cubic feet per day (MMCFD).

The Table below

shows the production of natural gas during July-March 2004-05 and its percentage change over the same period previous year.

62

Natural Gas


PRODUCTION OF NATURAL GAS (MMCFD) Company July-March July March % change 2003-04 2004-05 2005-06 ________________________________________________________________________ BHP 250 265 6.0 ENI 339 396 16.8 MGCL 440 446 1.4 OGDCL 662 841 27.1 OMV 389 556 42.9 OPI 16 64 300.0 POL 42 39 -7.1 PPL 818 788 -3.7 TULLOW 10 10 -33.3 PEL 17 16 -5.9 BP (PAK.) 222 229 3.1 MOL 00 31 Total 3,210 3,681 14.7 * Source – Ministry of Petroleum and Natural Resources: Courtesy –Pakistan Economic Survey 2004-05.

63

Natural Gas


DEMAND – SUPPLY & GAP PROJECTIONS UPTO THE YEAR 2030 (MMCFD) ____________________________________________________________________ S. No. Description 2004-05 2009-10 2019-20 2029-30 ______________________________________________________________________ 1.

Demand

3173

4560

9114

19035

2.

Supply

4033

4424

3001

2299

3. Gap 860 - 141 -6113 -16735 ______________________________________________________________________ *Source: Courtesy Medium Term Development Framework 2005-10.

The table shows that the production pattern is not encouraging and the capacity for expansion in use is not possible unless this pattern is changed.

The above table, presents a very alarming situation. There is an

enormous increase in demand both in short term and medium and long term scenario. While because of depletion after the year 2009-10 we may

64

Natural Gas


not be able to continue the existing supply level. We have only another 45 years to plan ways and means to meet the demand increase which is

quite a short period for finding alternatives, except to shift the enhanced

demand on import of oil which will be very expensive option and our economy may not be able to sustain it.

65

Natural Gas


Drilling Activities:

The production pattern shown as well as consumption pattern predicted in above table does not match with the drilling activities. During JulyMarch 2004-05 a total of 34 wells were drilled (13 in the Public and 21 in the Private Sector) as against 35 in the same period previous year (9 in public sector 26 in the private sector). This trend raises new concerns regarding interest of the private sector due to reduced share from 26 to

21 wells. Now when the government is vigorously pursuing the policy of privatization an increase in the public sector investment is unrealistic. Decline in the private sector investment suggests that some thing is wrong in the sector.

The Problem

The overall reserve position vis-à-vis consumption pattern is alarming. Even if we don’t consider the expansion in demand, the incremental increase in consumption level will result that our resources will lost for another 25-30 years. But that is not the space available to us. 1 The depletion of sources in any particular area will require additional investments for altering the supply/transmission systems. Besides, maintaining supplies through normal transmission system, the demand of Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) is also on increase. For example, the current production of LPG is going to be enhanced to 1500 MT against the production of 1000 MT during the year 2003-04. Similarly, the number of vehicles converted on CNG by the end of March 2005 was 700,000 comparing 450,000 vehicles a year earlier.

1

Pakistan Economic Survey 2004-05.

66

Natural Gas


The Options

There are three possible options available to us. Each one of these has its own merits and limitations and has been discussed in detail: a)

Enhance the pace of gas exploration / exploitation within the country (both offshore and on shore).

b) c)

Import Gas from neighboring countries.

Reduce dependence on gas and try to explore other options.

Enhancing Production from Our Own Resources

Generally, the gas reserves have been discovered in the very backward areas of Balochistan, Sind and Punjab. Over the period of time the people of these areas have developed a feeling that the gas which has revolutionized the living patterns and Industrial Growth has brought no change in the life of the people of the areas which produce this precious natural wealth. The subsidized gas supplies benefit mainly to the urban population. Subsidized gas rates for cement and other industries again benefit the urban population. Subsidized gas supplies to fertilizer factories keep the rates of fertilizer low hence benefits the landlords of the canal irrigated areas of mainly Punjab and Sind. The Gas companies and Ministry of Petroleum and Natural Resources have started manipulating the production and royalty figures to the Provinces, consequently, efforts for exploration and extraction are not being encouraged by the locals of the areas as well as the provincial governments. Lately, some acts of sabotage against gas installations took place. Again because of the above reasons such activities failed to get proper condemnation from the people and the popular political circles of those provinces. Pakistan’s largest gas producing area has been and is

Sui, which was initially meeting 100% later on 50 % and currently 28 % of country’s gas requirements. Sui is getting well head charges at around Rs.50/- while a number of other wells in other parts of the country are

getting as high as Rs.190. The poverty stricken Balochistan has been demanding equal rates for years but failed.

67

Natural Gas

Energy Crisis & Energy Resources Of Pakistan Gas Received From Sources During 2003-2004 TOTAL (MMCF)

AVGDAY(MMCF)

Sui (SML)

168,266

460

Sui (SUL)

14,327

39

PIRKOH+LOTI

31,074

85

TOTAL

213,667

584

DHODAK

13,777

38

MEYAL

1,349

4

DHURNAL

330

1

DAKHNI

5,377

15

ADHI

6,402

17

BHANGALI

196

1

MISSA KESWAL

368

1

SADKAL

1,895

5

RATNA

774

2

PARIWALI

2,728

7

PINDORI+TURKWAL+FIMKASSAR

8,153

22

DHULLIAN

483

1

PINDORI+TURKWAL+FIMKASSAR

6,201

17

DHULLIAN

1,270

4

TOTAL

41,831

135

HASSAN (*)

5824

16

ZAMZAMA(*)

55,912

153

(*) NET GAS TRANSFERRED

0

0

PROVISIONAL GAS LOSS DURING RUPTURE OF 20" IRBP SSGCL LINE

0

0

GAS CARRIED OUT FOR SSGCL

0

0

SAWAN

62,050

170

QADIRPUR

104,155

285

QADIRPUR (RAW GAS)

12,613

34

TOTAL

540,553

657

GRAND TOTAL

796,051

1,376

Description BALOCHISTAN

PUNJAB

SINDH

68

Natural Gas


Year Wise Increase In Transmission System

EAR Kms.

% Age Increase Over Previous Year

% Age Increase from 1993

1993 3,311 1994 3,614 9.15%

9%

1995 3,865 6.95%

17%

1996 4,243 9.78%

28%

1997 4,687 10.46%

42%

1998 4,920 4.97%

49%

1999 5,112 3.90%

54%

2000 5,217 2.05%

58%

2001 5,122 -1.82%

54%

2002 5,405 5.53%

63%

2003 5,759 6.55%

74%

2004 5,776 0.30%

74%

2005 6,121 5.97%

85%

This shortsighted approach of the authorities has virtually hampered the activities of bringing more area in the net of oil and gas exploration. For a meaningful attempt to bring this national treasure in forefront to national development, it is mandatory to restore the confidence of the people of those areas by transmitting the fruits of development to them,

providing quality social service institutions/activities for the people of the area, preferring them in the non-skilled jobs, training them for the skilled positions etc, by ensuring their participation in the management and

transferring the committed amounts of royalty and profit sharing to the concerned quarters in an equitable and transparent manner. At the same time it may also be assured that the subsidies given for certain activities should not be at the cost of resources.

the people who have interest in these

69

Natural Gas

Energy Crisis & Energy Resources Of Pakistan Segment Wise Transmission System Capacity PIPELINE SEGMENTS SUI - BHONG SAWAN - QADIRPUR QADIRPUR - BHONG BHONG - AC4 AC4 - AV22 AV22 - MULTAN MULTAN - AV29 AV29 - SAHIWAL - LAHORE AV29 - FAISALABAD FAISALABAD - LAHORE FAISALABAD - GALI JAGIR WAH - PESHAWAR WAH - MANSEHRA

EXISTING CAPACITIES (MMCFD) As on 15.03.2005 790 370 850 1630 1590 1430 1222 280 940 400 350 110 70

70

Natural Gas


Year wise increase in Gas Distribution Mains % Age % Age Increase Increase Over from 1993 Previous Year

Year

Kms.

1993

15,501

1994

18,375

18.54%

19%

1995

21,782

18.54%

41%

1996

24,226

11.22%

56%

1997

26,848

10.82%

73%

1998

28,661

6.75%

85%

1999

29,954

4.51%

93%

2000

31,477

5.08%

103%

2001

32,825

4.28%

112%

2002

34,093

3.86%

120%

2003

35,814

5.05%

131%

2004

38,284

6.90%

147%

2005

42,192

10.21%

172%

Gas Distribution Capacity The Capacity information of Distribution Department as on 30th June 2006 is as follow. Region

Total Capacity (MMCFD)

Contracted capacity Available capacity (MMCFD) (MMCFD)

Peshawar

160

115

45

Abbotabad

99

80

19

Islamabad

310

280

30

Gujranwala

225

160

65

Lahore

615

550

65

Faisalabad

400

315

85

Multan

490

412

78

Bahawalpur

170

110

60

Total

2469

2022

447

71

Natural Gas


IMPORT OF GAS FROM NEIGHBORING COUNTRIES:

Proven Natural Gas Reserves in the region. (TCF) Table: Iran Qatar Turkmenistan Pakistan India 971 910 102 28 33 Source: BP Statistical Review 2005. Courtesy: Presentation by Mr. Mukhtar Ahmad Advisor to the PM on energy. Currently the proposal for laying of pipelines for gas for Pakistan and India is being examined from three different countries i.e. Iran, Turkmenistan and Qatar. All the three have their own pros and cons. a) Geographically Iran-Pakistan-India gas pipeline is the closest of all the three countries. Iran’s gas reserves are proven and Iran, Pakistan and India are in an advance stage of negotiations after years of Indian hesitance due to its apprehension about security of supply through Pakistan territory. The United States, because of its differences with Iran on the

nuclear issue, is opposing the project. The 1843 km long land

route gas pipeline and other infrastructure has been estimated at 2.00 billion US dollars which none of the countries can afford by itself. The World Bank has threatened that they will neither fund this project nor will allow any other financial institution to fund it. Very recently the UAE Government has hinted to finance this project. Russia and Norway have also expressed interest in technical assistance for the pipeline. If it goes through it will be viable option for us. b) TURKEMINISTAN. There are two proposed routes (i.e. TurkmenistanLahore

and

Turkmenistan-

Quettta-Multan

route

1680

KM).

The

estimated cost of this project is 3.20 billion US dollars. The world

community has no objection on this project. However, the unstable

political conditions and serious law and order situation in Afghanistan continues to hamper any chance of implementation of the project. Besides, the exact quantity of gas in the Daulatabad field is yet to be

confirmed. Moreover, the Government of Turkmenistan is said to have 72

Natural Gas


already committed these reserves to Russia. The future of this pipeline, therefore remains uncertain. c)

QATAR. The total length of this route through land is 1950 KM

while through sea upto Gwadar is 1650 KM. The estimated cost of this

project is 3.20 billion US dollars. The Qatar reserves also have two problems; first, these are jointly owned by Qatar and Iran and that, in this case too the world community may have the same objection as a part of

the profit will go to Iran and that the pipe line has to pass through Iran.

Even if the pipe line is passed through the sea route it will have to pass through the Iranian territorial waters. Besides, cost of lying under water pipes and their subsequent maintenance is very high. d)

DOLPHIN PROJECT Another natural gas import possibility is an eventual link with the

Dolphin Project, a scheme to supply gas from Qatar’s North Dome gas field to the United Arab Emirates and Oman, via a sub-sea pipeline from Oman. Even though Pakistan has signed a preliminary agreement to eventually purchase natural gas from Qatar, it remains to be seen how the initial stages of the pipeline project go before 2 a route to Pakistan can be conclusively negotiated. In such circumstances the First option of getting gas from Iran seems to be more viable provided we convince the world community that the option is crucial for Pakistan’s economic and commercial well being. e)

LNG

In a bid to enhance security of energy it is necessary to diversify

the sources. A proposal for import and storage of 2.5 million tons per

year (equivalent to 300 MMSCFD) of LNG together with its re-gasification arrangements is under consideration of the government. The rationale behind this proposal is primarily the diversification policy but at the same

time the costs of liquefying, transporting, and re-gasification of LNG

2

Pakistan – opportunities for foreign direct investment in energy sector

73

Natural Gas


have fallen significantly in the recent years making it more competitive with the pipe line gas. Recently Completed Projects

Sr. No

ACTIVITY

1 2

D.G Cement Line (Dera Ghazi Khan) Shakardara- Lachi Line

DIA

Length

Commissioned

(INCH) 8 8 TOTAL:-

(KM) 26.00 25.50 51.50

On 03.01.2006 06.08.2005

Budgeted Cost (Million Rs.)

314.00

Construction Activities in Progress

Sr. No

DIA

Length

Commissioned

(INCH) 12 16

(KM) 58.00 35.00

On 77% 23%

10

23.00

98%

10

9.00

-

8

20.50

99%

ACTIVITY

1 2 3

Rawat – Murree Line Sukho – Rawat Line Choa – Bestway Cement- D.G Cement –Chakwal Cement Line 4 Makori Line for M/s MOL Pakistan 5 Badar Gas Field – Qadirpur Gas Field Line for M/s Pakistan Explorations Ltd. TOTAL:Budgeted Cost (Million Rs)

145.50 1125.00

Upcoming Construction Activities

Sr. No

ACTIVITY

1

Hattar – Abbottabad Line

2 Mian Channun – Hasilpur Line 3 Hasilpur – Chistaian Mandi Line 4 Lachi – Manjuwala Line 5 Hangu Line 6 Manjuwala – End Point Line TOTAL:Budgeted Cost (Million Rs)

DIA

Length

Commissioned

(INCH) 16

(KM) 62.50

12 8 12 8 8

90.00 35.00 85.00 35.00 195.00 502.05

On Procurement of Material / Acquisition of Land and Preparation of Design Drawings in progress As above As above As above As above As above 4200.00

74

Natural Gas


Future Projects

The conceptual study of Project-IX is underway to carry maximum gas

beyond Multan , to facilitate gas consumers from all walks of life in central Punjab and Northern areas of the country. The basic intent of Project-IX is the elimination of bottle necks in SNGPL’s existing transmission network and to transport gas to independent Power Plants in Punjab province, through system up-gradation with loop lines and system compression enhancement, beside construction of pipelines to absorb additional gas available from gas sources of Potohar region and newly discovered Gurguri-Makori field in Karak District of NWFP province.

Other Options

Having in view the constant increase in the demand and meager resources, those too depleting fastly, the handy and assured option will be to shift back to oil. The enormous increase in the oil prices makes this option too expensive and detrimental to our economic growth. There can be the possibilities of using coal for generation of electricity and alternate sources of energy like solar and wind energy but the production pattern of energy through these sources is so meager that our huge requirements cannot be met in near future and we cannot wait for years and years to develop the network of these sources. These can be used to augment the existing sources but can not be used to substitute the same.

75

Oil


CHAPTER # 05 OIL Oil is the biggest primary source of energy in Pakistan. In 1999-

2000, oil provided 43.4% of energy supplies, followed by gas at 40.5%. With the production of more gas in the country, and as a result of a deliberate policy decision to convert major industrial concerns to gas, the share of oil as primary source of energy reduced to 29.9% and share of

gas went up to 49.7%.in the year 2003-04. Source wise supply of primary energy since 1998-99 is given in the following table: PRIMARY ENERGY SUPPLIES BY SOURCE Unit:

Source Oil1/ Gas LPG2/ Coal Hydro Electricity3/ Nuclear Electricity3/ Total

TOE % Share 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 17,838,485 18,740,803 19,268,132 18,388,309 18,016,214 15,206,347 42.7% 43.4% 43.4% 40.8% 38.3% 29.9% 16,139,237 17,487,761 18,402,249 19,253,476 20,587,907 25,256,127 38.7% 40.5% 41.4% 42.7% 43.8% 49.7% 180,559 208,489 143,514 172,122 181,661 205,526 0.4% 0.5% 0.3% 0.4% 0.4% 0.4% 2,147,108 2,046,690 2,009,552 2,199,880 2,519,881 3,300,491 5.1% 4.7% 4.5% 4.9% 5.4% 6.5% 5,358,258 4,603,795 4,104,123 4,520,952 5,335,041 6,431,312 12.8% 10.7% 9.2% 10.0% 11.3% 12.7% 67,869 95,287 476,714 546,725 415,242 420,135 0.2% 0.2% 1.1% 1.2% 0.9% 0.8% 41,731,517 43,182,826 44,404,284 45,081,462 47,055,946 50,819,938 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 3.93% 3.48% 2.83% 1.53% 4.38% 8.00%

ACGR -3.1% 9.4% 2.6% 9.0% 3.7% 44.0% 4.0%

Annual Growth Rate 1/ Excluding petroleum products exports and bunkering. 2/ Include imports and production from field plants. 3/ Converted @10,000 Btu/kWh to represent primary energy equivalent of hydro and nuclear electricity as if this was generated by using fossil fuels.” 1

1

Pakistan Energy Year Book 2004

77

Oil


Use of Oil in Power Plants: In the years 1998-99 to 2002-03, 30 to 33% of total oil products

were used by the power plants. In the year 2003-04, the usage of oil

products by the power plants reduced to 17% of total oil because of supply of more gas to these plants. During 1998-99 to 2003-04,

the

annual compound growth in the usage of oil by the power plants has

been -13.1%. Usage of gas by the power plants has during this period increased at annual compound growth of 18.8%. Domestic: Usage of oil products in domestic sector during 1998-992003-04 also declined at an annual compound growth rate of 14.0%, while the usage of gas by this sector during the same period increased at an annual compound growth of 3.3%. Electricity consumption by this sector during the period increased at an annual compound growth rate of 5.9%. Overall consumption of energy by this sector in this period increased at an ACGR of 3.3%. Industry: Industrial Sector also reduced the consumption of oil during 1998-99 to 2003-04 at an annual compound growth rate of 6.7% while its usage of gas increased at on ACGR of 7.4%. Usage of electricity by this sector during the same period increased at an ACGR of 7.6%, while that of coal increased at an ACGR of 14.7%. Overall consumption of energy by this sector in this period increased at an ACGR of 6.0%. Agriculture: Consumption of oil by the agriculture sector, during 1998-

99 to 2003-04 also declined at an ACGR of -5.9%, while that of electricity increased at an ACGR of 3.5%. Total energy consumption by this sector increased nominally at ACGR of 0.5%. Transport: Usage of various oil products by the transport sector also declined during the period 1998-99 to 2003-04 at varying rates but the usage of gas by this sector in this period, increased at an exponential ACGR of 48.7%.

78

Oil


Sector wise consumption of energy, excluding fuels consumed in thermal power generation, in the year 2003-04, was follows:Sector

Industrial

Transport

Domestic

Commercial

Agriculture

Percentage

38.3

32.0

21.7

3.2

2.5

Other Governments 2.3

100.0

Despite reduction in usage of oil as primary source of energy, Pakistan had to import 74% of its oil requirements in 2003-04 from abroad, as domestic production of oil provided only 26% of its requirements.

Total recoverable oil reserves of Pakistan are 801.023 million barrels or 107.46 million TOE from its 107 oil fields. Cumulative production till 2003-04 was 511.346 million barrels or 68.60 million TOE. Balance recoverable reserves as at end of financial year 2003-04 were 289.677 million barrels or 38.86 million TOE. Crude oil production from out of 107 fields, since 1992-93 to 200304 has been as follows:

ENVIRONMENTAL REFORMS: Lead-free gasoline has been introduced w.e.f. 1-7-2001 to improve the air quality well in advance of the date set by environmental and donor agencies. Attock Refinery has started producing unleaded gasoline w.e.f. 1-7-2002. CRUDE OIL PRODUCTION

Barrel per day

92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 59,987 56,642 54,406 57,549 58,276 56,284 54,756 55,723 57,762 63,547 64,269 61,817 Source: Pakistan Energy year book 2004. Refining capacity of the refineries in Pakistan as on 30th June each year from 1999-2000 to 2003-04 is given in the table below:

79

Oil


80

Oil


REFINING CAPACITIES AS ON 30TH JUNE Refinery Attock Refinery Bosicor Refinery Dhodak Refinery National Refinery Pak-Arab Refinery Pakistan Refinery Total Source: DG (Oil)

1999 1.55

2000 1.55

2001 1.66

0.12 2.80

0.12 2.80

2.20 6.67

2.20 6.67

0.12 2.80 4.50 2.20 11.28

Unit: Million Tonnes/Year 2002 2003 2004 ACGR 1.66 1.66 1.66 -1.50 -0.12 0.12 0.12 -2.90 2.80 2.80 -4.50 4.50 4.50 -2.10 2.25 2.15 -11.28 11.33 12.73 13.8%

Compared with the above refining capacity, the quantity of crude oil processed by these refineries is at table as given below: Million Tonnes/Year 1998-99 99-00 00-01 01-02 02-03 03-04 ACGR Total 6.52 6.74 8.99 9.58 9.76 10.47 11.2% Local 2.12 2.23 2.29 2.55 2.64 2.69 4.8% Imported 4.40 4.51 6.70 7.03 7.12 7.78 12.1% Crude oil prices from 1995 to 2004 given below indicate that these have not only been fluctuating but generally have upward trend. The price of oil is most likely to continue going up in the longer run even though there may be short periods of decline CRUDE OIL PRICES Table-14: Year

US$/Barrel Range Minimum Maximum 1995 15.5 18.2 1996 17.33 23.38 1997 16.31 23.52 1998 8.64 14.56 1999 9.30 23.30 2000 22.99 30.88 2001 16.21 23.77 2002 16.65 25.38 2003 23.61 32.13 2004 30.87 48.71 Source: Illinois Oil & Gas Association.

%age increase over 1995 Base 28.46 29.23 -20.00 28.02 69.67 30.60 39.45 76.54 167.64

81

Oil

Energy Crisis & Energy Resources Of Pakistan Oil discoveries in the world reached their peak in 1962. World crude

oil production may reach its peak in 2020 where after resort may have to be made to other energy resources like gas, coal, solar and wind.

It is proposed to undertake basin study for carrying out regional

integrated geological and geophysical studies to access sedimentary basins and identify potential hydrocarbon reserves. Its scope extends to 2D seismic for 182000 Km onshore and 79000 Km offshore, 3D

seismic for 13000 square km onshore and 5000 square km offshore and assessment and upgrading of data for 620 exploratory and 800 development wells.

Mission Statement of Ministry of Petroleum and Natural Resources is “To ensure availability and security of sustainable supply of oil and gas for economic development and strategic requirements of the country and to coordinate development of natural resources of energy and minerals, in order to cater for energy needs of the people of Pakistan”. Their strategy to achieve this mission is as follows:•

To adopt an integrated approach for promoting exploration and fast track development of oil, gas and mineral resources.

•

To deregulate, liberalize and privatize oil, gas and mineral sectors through structural reforms.

•

To

attract

private

investment

and

to

establish

credible

institutions for facilitating the development of petroleum and mineral sectors. •

To develop technical and professional human resource.

•

To optimize existing energy delivery infrastructure (oil/gas pipelines).

•

To substitute imported fuel oil with indigenous gas by optimally balancing the gas availability and supplies from local and imported sources.

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Oil


Exploration and Production (E&P) Sector Reform: •

Onshore and offshore policies were announced in May, 2001 and

an

incentive

package

was

given

investment in the upstream sector.

to

attract

foreign

The seismic surveys in

offshore areas indicate tremendous potential of oil and gas. As

a result, many multi national companies have shown interest in exploration in the offshore areas. •

OGCDL has for the first time in Pakistan’s history made an oil discovery in the NWFP. MOL, a Hungarian Exploration company, has also made a major discovery at Gurgry district Kohat NWFP.

•

Due to pragmatic policies of the present government, since issued

in

October,

1999

there

have

been

investment

commitments of around US$1 billion.

Concession Activities: a)

Exploration Licenses

During the year 2003-2004 a total of fifty (50) applications for grant of Exploration Licenses were processed as compared to forty eight (48) applications last year, which included twenty five (25) new applications. Twelve (12) bidding rounds were held in which thirteen (13) blocks were offered.

As a result ten (10) Exploration Licenses covering an area of

14,185.98 sq. kms were granted.

Petroleum explorations were confined to fifty seven (57) Exploration

Licenses at the close of fiscal year ending June 30, 2004 covering an area of 143,653.8 sq.kms. During the period, around 11824.45 sq.kms area

of three (3) Exploration Licenses remained under Force Majeure. While an area of 12,184.84 sq.kms. Covering eight (08) Exploration Licenses were surrendered/relinquished

by

different

operators.

In

all,

twenty

Companies remained active in Pakistan as operator of Exploration

83

Oil


Licenses, Mining/D&P Leases.

Thirty two (32) applications over twenty

five (25) blocks were pending at the end of the fiscal year 2003-2004.

In Sindh Province 48,450.01 Sq. Kms in Punjab 12,231.99 Sq. Kms in

Balochistan 45,164.56 Sq. Kms in NWFP 7,085.11 Sq. Kms, in Indus Offshore 22,166.32 Sq. Kms and in Makran Offshore 8,555.9 Sq. Kms area in under exploration. b)

Mining/Development & Production Leases Five Development and Production Leases were granted during the year

2003-2004. A total of hundred & ten (110) leases covering an area of 11,173.45 sq. kms. were valid by the end of the year.

In Sindh

Province 7948.68 Sq. Kms in Punjab 1,963.20 Sq. Kms, in Balochistan 1,176.57 Sq. Kms and in NWFP 85 Sq. Kms are under Mining/D&P Leases. Seismic Activities A total of 4370.55 L.kms. of 2-D seismic data was acquired during the year 2003-04 out of which 4306.55 L.Kms was in on-shore area using vibroseis and dynamite sources, 64.0 L.kms. was acquired in Indus offshore area through air gun. In addition, a total of 3126.76 sq. kms. 3-D seismic was acquired out of which 1581.67 sq.kms was in onshore and 1545.08 sq.kms was in offshore area. A total of thirteen

(13) seismic crews from different service companies namely BGP, CGG, Geofizyka Krakow, OGDCL and WesternGeco remained active in different blocks of Pakistan. Province-wise seismic coverage was 2,306 L.Kms and 1,033 Sq.Kms in Sindh, 1,020 L.Kms in Punjab, 157 L.Kms in Balochistan and 823 L.Kms and 549 Sq.Kms in NWFP province. In addition 64 L.kms and 1545 Sq.kms was acquired in Indus Offshore area of Pakistan. OGCDL acquired 2,072 L.Kms and 423 Sq.Kms, Eni Pakistan acquired 57 L.Kms, PPL acquired 319 L.Kms, Petronas acquired 272 L.Kms, 84

Oil

Energy Crisis & Energy Resources Of Pakistan Tullow acquired 150 L.Kms, and 274 Sq.Kms, OMV acquired 457

L.Kms and 253 Sq.Kms, OPI acquired 255 L.Kms, and 82 Sq.Kms, MGCL acquired 62 L.kms, MOL acquired 540 L.kms 549 Sq.Kms, Hycarbex acquired 123 L.Kms and Shell acquired 64 L.Kms. and 1545 Sq.Kms during the year 2003-2004. Drilling Activities In 2003-04 sixty eight (68) wells were planned including twenty six

(26) exploratory wells and forty two (42) appraisal/development wells. Against the target of 68 wells, total fifty three (53) wells were spuded i.e.

twenty

nine

(29)

exploratory

appraisal/development wells.

and

twenty

four

(24)

In the Public Sector, OGCDL spuded

eight (8) exploratory and nine (9) appraisal/development wells. Whereas in Private Sector, thirty six (36) wells were drilled which included

twenty

(21)

appraisal/development wells.

exploratory

and

fifteen

(15)

In the fiscal year 2002-03, 77 wells

were drilled, 32 exploratory and 45 App./Development. Average 245 meters in exploratory well and 139 meters in App./Development wells drilled during the fiscal year (2003-04).

Production Activities: In 2004-2005 oil production in the country remained on average basis 66,079 BOPD and gas production was 3,685 MMCFD

OGDCL was the highest oil producing company with a production of

11.443 million barrels at an average rate of 31,350 BOPD which was 47% of the yearly oil production of the country, followed by BP producing

6.049 million barrels at an average of 16,572 BOPD, as a 25% of the total oil production.

POL produced 3.766 million barrels, PPL 1.329 million

barrels, OPI 0.687 million barrels, BHP 0.625 million barrels, Eni Pakistan 0.120 million barrels, OMV 0.036 million barrels, MOL 0.055 million barrels and Petronas 0.008 million barrels.

In the current fiscal year 2004-05 the LPG production was 1,068 85

Oil


metric tones per day while in the fiscal

year 2003-04 was

only 961

metric tons per day. In companies OGDCL was the major LPG producer with an average of 264 metric tons per day, and in refineries PARCO produced 408 metric ton LPG per day. The total remaining recoverable oil reserves at the end of the fiscal year

2004-05 has been estimated as 308.375 million barrels and the remaining gas reserves (including non-pipeline quality gas) as 34 Trillion Cubic Feet.

Logistics: i. White Oil Pipeline Project (WOPP) has been completed by Pak-Arab Refinery Limited (PARCO),at an estimated cost of US $ 480 million on build, own and operate basis.

The PARCO has completed the WOPP

through Pak-Arab Pipeline Company Limited (PAPCO) a joint venture of PARCO, Shell Pakistan Limited, Pakistan State Oil Company Limited and Caltex Oil (Pakistan) Limited. The main objective of the project is to develop most efficient, cost effective, convenient safe and environment Friendly mode of transportation of white oil (i.e. High Speed Diesel) in the country. The PARCO White Oil Pipeline has connected Port Qasim, Karachi to Mahmood Kot in district Muzaffargarh.

The total length of

pipeline is 817 Kms with 26. dia high pressure pipeline. The WOPP has a

capacity to handle 12 million tons of oil per annum and storage capacity of 440,000 MT. The White Oil Pipeline has started its operation from 19th November, 2004 by delivering first parcel of 2,500 MT to OMCs at Mahmood Kot and its commercial operation commenced with effect from 1st. March 2005.

ii. The Socio-economic benefits of the Project are as under: a. A freight pool saving of Rs.2.1 billion in the first year and Rs.17.6 billion in the 25th year of operation giving an average saving of Rs.8.0

86

Oil


billion/annum. This will translate into a per liter reduction in freight of Rs.0.4/liter in the first year and Rs.0.95/liter in the 25th year

averaging amount Rs.0.7/litreover 25 years period. b. A reduction of HSD consumption by the Transport sector on account of 4000-5000 tank

lorries not moving between Karachi and Mahmood Kot.This reduction is estimated exchange

as 100,000 MT/annum or Rs.2.7 billion/annum

in foreign

Refining: i.

New Refinery Projects: Various private parties

had shown their

interest to avail incentive under investment friendly policies of the GOP for setting up of new Refinery Project which inter alia include no restriction on setting up of new Refinery import pricing formula linked to Singapore mean and provision for setting up own Marketing network etc. ii.

A

proposal/incentive

package

on

incentive

and

locational

advantage for setting up of Refineries has been developed to attract foreign Investment in the downstream oil sector, and forwarded to BOI for further processing as advised by the ECC of the Cabinet.

Korangi Port Qasim Pipeline: i.

The strategic need for linking oil handling and storage facilities at

KPT, Korangi and Port Qasim is well established and is at the top agenda of Ministry of Petroleum and Natural Resources.The proposed project of linking KPT with PQA will provide flexibility in operations for receiving crude oil/products at any of the two

ports at Karachi and its transportation up-country through cross country white oil pipeline operating since March 2005. ii.

In order to achieve the above objective Ministry of Petroleum and

Natural Resources has facilitated PARCO to construct about 25 km pipeline from Korangi to PQA because their Korangi system is already 87

Oil


connected with KPT. PARCO has established a Joint Venture company namely Pak-Arab Pipeline Company (PAPCO) work

on

the

linkage

and

it

is

who has already initiated

expected

to

be completed by

December 2005.

Crude Oil and Condensate Sale Purchase Agreement: i.

Directorate General (Oil) execute Ccrude Oil and Condensate

Sale/Purchase Agreement (COSA) with the producers of crude oil and condensate as per provisions of relevant Concession Agreement. Model COSA was developed in consultation with all the Stakeholders with the concurrence of Law and Justice Division. All the producers have been advised to submit draft COSA accordingly. ii.

M/s BHP is producing condensate from Zamzama field in Sind. M/S

BHP had approached Ministry for execution of COSA required for pricing of the product Condensate Sale and Purchase Agreement was examined in consultation with all concerned and executed.

Pricing: i.

The prices of petroleum products had increased tremendously in the

International market during the past year. The domestic sale prices of petroleum products, being linked with International Market product prices, were required to be increased accordingly. But the Government

decided to protect the consumer from the burden of high prices in International Market

and capped the domestic sale prices during the

period May-December 2004 and April-June 2005. ii.

In doing so the Government had taken the hit on its revenue

resources to the tune of around Rs.58.5 billion by June 2005. In other

words the consumer had been benefited through this capping in particular and Government had been able to control the inflation in the country.

Had the prices not capped, the price of petroleum products

88

Oil


would have sky rocketed.

iii.

As against the increase in International Market in the range of

40% to 79%, the domestic sale prices have been increased in the Range of 23% to 32%.

89

Oil


90

Oil


Present Status of Oil Sector: The consumption of petroleum products in the country during 20032004 was 14.3 million tones. The drop in consumption compared to

previous year is mainly due to lower demand of Furnace Oil because of conversion of thermal power plants on gas and availability of additional Hydel power. The demand is expected to increase around 17 million tones per annum by the year 2010-11. Thereafter, it is expected to further increase to around 19 million tones by the year 2017-18. The production of refined products by the local refineries during the year 2003-04 was 10.27 million tons. The deficit products import were 5 million tons in 2003-04 while it will remain around 5-6 million tons per annum up to year 2010-11. Thereafter, it is expected to increase to a level of around 8.0 million tons per annum by the year 2017-18. The long term petroleum products demand/supply scenario is indicated in the following table:( in million tones ) 2003-2004

2004-05

2010-11

2017-18

Demand of Petroleum Products

14.3

15.0

17.0

19.0

Production from Local Refineries

10.3

12.0

11.3

11.8

Surplus Naphtha / Motor gasoline available for exports

1.3

1.3

0.8

0.8

Deficit of HSD and FO

5.0

5.0

6.5

8.2

In order to bridge up the above demand and supply gap and to improve

the POL supply infrastructure, following incentives have been given under the Petroleum Policy / Investment Policy 1997 to attract local and foreign

91

Oil


investments: •

No Prior permission of GOP is required for setting up of new refinery project.

•

Import parity price formula linked to Singapore Mean FOB spot price for the new oil refineries.

•

Import of crude oil from any source subject to Price Economic after lifting local crude allocated if any.

•

Concessionaire rate of duties / taxes for the equipment not manufactured locally.

•

Refineries are free to sell their product to any marketing company or they can set up their own marketing companies.

•

Continuation of the Policy of de-regulation in the lube industry.

•

Retail outlet development by the Oil Marketing Companies to ensure healthy market competition, improve quality and better customer services.

PETROLEUM FUTURE IN PAKISTAN: Pakistan plans four new crude palm oil refineries KARACHI: Encouraged by low tax rates on the import of crude palm oil (CPO), Pakistan’s leading edible oil buyers are planning to establish four new refineries with a 2,200 tonnes per day capacity, officials in the industry said on Saturday. Most of the refineries will be operational by the end of 2007 and they will double Pakistan’s CPO refining capacity of 2,025 tonnes per day. “The tax advantage on the import of palm oil is the driving force behind the

establishment of the refineries,” said Waheed Sheikh, chief executive of the Waheed Hafeez Group, a trading venture with Singapore’s Wilmar TradingPte.

Pakistan charges a fixed amount of Rs 9,550 per tonne as regulatory and Customs duty on CPO imports in addition to 15 percent sales tax, but

92

Oil


refineries are allowed to import CPO for Rs 9,000 per tonne. “CPO is also

much cheaper than olein and the price difference is $25 to $30 per tonne,” Waheed said, adding, “So making a one-time investment in refineries is a good business proposition, which we have already seen in many countries.

Waheed Hafeez Group’s venture with Wilmar Trading Pte will end by June 2006 and it has planned to establish a plant with a European firm. Waheed said that the initial cost had been estimated at Rs 400 million rupees

and

construction

would

start

later

tin

the

year.

Currently, five refineries are operational in Pakistan and while the country’s leading refinery in terms of capacity (1,000 tonnes per day), West Bury Pvt. Ltd. will be operational in April. The Habib Oil Mills (Pvt) Ltd and Hamza Vegetable Oil and Ghee Mills have also planned to set up plants. “Our requirement of palm oil is around 4,300 tonnes per day and with the establishment of the new refineries, we will see an increase in CPO imports over the next two or three years,” said Akbar Puri, chief executive of the Karachi based Agro Commodities. Pakistan is the world’s fourth largest consumer of vegetable oils with a domestic demand of 2.5 million tonnes, 90 percent of which is covered by imports mostly of Malaysian RBD palm-oil and olien. According to the government’s data, Pakistan spent $ 421 million on the import of 965,478 tonnes of vegetable oil in the first seven months of the fiscal 2005-06, whereas the country bought 844,627 tonnes for $ 417 million in the same period last year. Officials estimated annual imports of 1.6 million tonnes of palmoil from Malaysia, majority of which will be refined palm olein.

93

Oil


They said they expected the imports of edible oil to increase by seven percent annually because of population growth, rapid urbanisation and rising per capita income in Pakistan. “Afghanistan’s demand is also supporting our imports and around 10 percent of our purchases go there,” said Ahkter Ashraf, a trader in the northwestern city of Peshawar.

The Trans-Karakoram Oil Pipeline : 'Karakoram' is a Turkish word meaning 'black gravel', probably for the blackish rubble that covers the glaciers in the range. But the explorers who coined the term might never have thought that one day black crude oil will gush across beneath the craggy mountains linking the world's oil depots to the world's most populous and the fastest growing economies. China and Pakistan have agreed in principle to build a trans-Karakoram oil pipeline along the Karakoram Highway to connect the Middle East with the north-western China through Gwadar. The pipeline once in place can set the stage for another rewarding oil bridge from the landlocked Central Asia to the world market. On the pattern of the trans-Alaska pipeline, it would be possible to build an oil grid starting from Turkmenistan or Kazakhstan travelling through Tajikistan and the uninhabited Wakhan corridor and the peaceful Ashkoman valley of the Northern Areas to converge with the trans-Karakoram pipeline at around Gilgit for onward transportation to Gwadar.

No, this is certainly not a pipedream! In fact, such cross regional oil pipelines

already

aforementioned

exist,

and

countries.

A

are

doing

decent

960-km-long

business

pipeline

in

the

connecting

Kazakhstan with China has began pumping oil in December 2005. The

94

Oil


$700-million project was completed by the China National Petroleum Corp and KazMunaiGaz Company of Kazakhstan in a record period of just

one year. It holds an initial annual capacity of 10 million tons and full capacity of 20 million tons. If that fails to fire your imagination, check out the 1,176-km-long BakuTbilisi-Ceyhan (BTC) pipeline which has started transporting oil from the Caspian Sea in Azerbaijan to the south eastern Mediterranean port of

Ceyhan in Turkey through Georgia. For the first time, oil was pumped from Baku on May 10 of this year which arrived at Ceyhan's export terminal on May 28. The pipeline having up to a million barrel a day injection capacity has been a collaborative effort and was built by a consortium led by British Petroleum. The trans-Karakoram oil-gas pipeline has brighter prospects because of the relatively secure environment along the proposed route. The Northern Areas as we know is a unique pivot which brings China, Tajikistan, Afghanistan, Pakistan and India within the radius of 250 kilometres of each other. It will enable Caspian oil to reach the world oil market, particularly the rapidly growing economies in Asia, bypassing conflictprone and politically problematic countries like Afghanistan, Iran, Russia, Armenia, Chechnya and even Georgia. The proposed route also bypasses the comparatively troubled spots within Pakistan like the Tribal Areas and the restive Balochistan province. Chinese willing, there is an option to pull the line straight from Gilgit up to Karachi through Punjab instead of Gwadar. As for recent history of violence in Gilgit, the issues there are of

a very local nature mainly stemming from administrative inadequacies which can be addressed once the economic stakes are appropriately acknowledged.

The Caspian region in Central Asia houses phenomenal energy reserves. Here, the proven natural gas reserves are estimated at more than 236 trillion cubic feet, and estimated oil reserves range up to 243 billion

barrels. But since almost all the oil infrastructures in the region were developed during the Soviet era, they are designed and directed to the

95

Oil


advantage of Moscow, in which Russia maintained a tight control over oil exports

from

its

former

Soviet

colonies

to

the

outside

world.

The BTC pipeline was the first serious effort to wean Central Asia away from the Russian clutches. According to an assessment by US Department of Energy, Azerbaijan and Kazakhstan alone sit on more than 130 billion

barrel oil, three times more than the United State's own reserves. Being a country where four per cent of the world's population consumes about one-fourth of global energy output, it is but natural for the US to keep a good calculation of the world's oil wells. Besides, given the fast rate of

resource depletion, and the chronic political uncertainties the Middle East continues to suffer, it is only prudent for the world to look for oil in remote places like the Caspian. In the 1990s the Unocal-led consortium had brought Pakistan and a number of Central Asian republics around to an idea of building a 1,040mile-long oil pipeline from the Caspian region to an export terminal at Karachi through Afghanistan. The pipeline would have a capacity of one million barrels of oil per day. Later on Unocal and a Turkish firm also came up with a plan to construct a gas pipeline linking Turkmenistan's rich gas fields with markets in Pakistan and India. The proposed 790mile pipeline would have travelled through Afghanistan to Multan, and also onward to an Indian pipeline. However, continued instability and chaos in Afghanistan made it difficult for the financers to go ahead with the projects. Though the situation in Afghanistan remains murky, the recent progress made by China and

Pakistan concerning up-gradation of the 1300-km Karakoram Highway with a parallel initiative of an oil pipeline, a fibre optic line and with a

proposal to lay railway tracks is poised to transform the dynamics of oil business in the region in many ways. Needless to say, there will be

potential political and environmental spillovers which will deserve dedicated discussions later on. At the moment both China and South Asia are experiencing a sharp rise in the demand for energy, which is likely to be doubled by the coming 96

Oil


decade. Political turmoil in the Middle East and Afghanistan makes it all the more urgent for these countries to seek alternate and reliable energy

routes. The trans-Karakoram oil pipeline may not solve their energy problems for good but it will certainly give these countries enough time to do something for the future.

Currently China's 80 per cent oil imports passes through the narrow and piracy-prone Malacca straits. The trans-Karakorum pipeline will allow it

to import oil in a more secure and sustainable mode. For Pakistan, and the rest of the world it opens more exciting opportunities to unlock the true business potential of the landlocked Caspian oil.

Discoveries: During fiscal year 2003-04 there were eleven (11) oil and gas discoveries in the country namely Siraj South-1, Kausar-1, Dars-1, Shah Dino-1, Zaur South-1, Mehar-1, Usman-1, Umar-1, Lala Jamali-1, Ali Zaur-1 and Fateh Shah-1.

Challenges: If the energy mix is not changed from the one with heavy reliance on oil, Pakistan may be moving to a very difficult position. It may not be able even to finance its oil import bill, if the price of oil moves exceptionally upward in the international market. It is thus high time that Pakistan takes some difficult decisions invent more in other sources of energy and reduce the economy’s reliance on oil.

97

Nuclear Energy


CHAPTER # 06 NUCLEAR ENERGY Nuclear Renaissance: Nuclear power is on the rise after decades of dormancy, driven by the need for a cleaner environment and steady, secure sources of power.

In the United States, plans are being developed to build as many as six new power plants – the first since 1973 – while many more are under consideration in China, India, Russia and other countries.

Nuclear power generation suffered a setback in the aftermath of Chernobyl accident but the nuclear power industry is now bouncing back.

A new generation of power plants, some with automatic

methods of shutting down in emergencies, promises to be safer than before. But analysts say that in light of lingering worries caused by the Three Mile Island crisis in the U.S. and the Chernobyl disaster in Ukraine, the industry will have to continue giving priority to ensuring public safety if it is to succeed, especially in Western countries. Patrick Moore, a Greenpeace co-founder who gained fame in the 1960s leading opposition to nuclear testing, now says nuclear power is a better choice than coal, oil or natural gas for meeting the world’s power needs. 1

Global status of nuclear power: Presently there are 438 nuclear power plants, with a total capacity of 351 GW, connected to the grid of 31 countries. Nuclear power is providing 16% of the world’s electricity, almost 24% in OECD countries

and 35% in the EU. 2 Nuclear Power Plants are under construction in Eastern Europe, Russian Federation, China, South Asia, South America and Far East. Fifty-eight new nuclear power plants were built during 1 2

World Energy Needs and Nuclear Power, Nuclear Issues Briefing Paper, World energy Outlook, 2004 World Energy Needs and Nuclear Power, Nuclear Issues Briefing Paper, World energy Outlook, 2004.

98

Nuclear Energy


the 1990s. There has been 29% increase in global electricity generation over the last 10 years. This increase was 37% in the USA,

63% in Japan, and 117% in South Korea. 3 The world would need greatly, increased energy supply in the next 20 years, especially cleanly

generated

electricity.

Nuclear

power

is

the

most

environmentally benign way of producing electricity on a large scale. Without it most of the world would have to rely almost entirely on

fossil fuels for base-load electricity production. Nuclear power generation is an established part of the world’s electricity mix providing 16% of global electricity (coal 40%, oil 10%, natural gas 15% and hydro & other 19%) 4 . The IAEA envisages that Far East and South Asia are the main regions of the world where the use of nuclear power is expected to grow in the short term. The growing power needs of rapidly developing countries such as China, India and Russia also have acted as a catalyst for change. Asian nations have been the most aggressive in their pursuit of nuclear power over the past decade and have become the center of growth for the global nuclear industry. Most of the 47 nuclear plants that have come on line since 2000 are under construction in Asia. China’s electricity demands have doubled during the past decade, and although it has become the second-largest power producer after the U.S., China suffers chronic power shortages. Few other power sources can deliver the large loads of electricity the country’s 1.3 billion potential customer’s need without causing widespread ecological damage. China the emerging Asian giant is laying plans to build as many as 100 nuclear power plants in the next 20 years, and has

started construction on two of them, in what is by for the most ambitious nuclear program in the world, nuclear industry officials say.

India, too, has come to see nuclear power as essential to satisfy growing power needs. It is building eight nuclear plants. In July 2005, India secured an agreement to get technical assistance from the USA in what officials say could be a breakthrough on the diplomatic front. 3 4

A sustainable energy option – II by Dr. Ishfaq Ahmad, The Nation, 25 March, 2001. World Energy Needs and Nuclear Power, Nuclear Issues Briefing Paper, World energy Outlook, 2004.

99

Nuclear Energy


France, which alone among European countries relies on nuclear plants to meet most of its power needs, began laying plans two years

ago to build a reactor, that officials say will be able to deliver power to Italy and Germany. In the U.S., which has 104 nuclear plants completed in the 1970s, plans for new reactors are moving forward.

Worries about storage of radioactive wastes that can pose a hazard for thousands of years continue to be the principal public worry

surrounding nuclear power. The Environmental Protection Agency is upgrading its plan stipulating the protective measures required for such long-term disposal. The new plants are being designed, among other things, to shut down automatically in an emergency, with the goal of dispelling lingering fears of a nuclear meltdown. Natural gas is nuclear’s chief rival, as it fuels about 90 percent of the new power plants coming on line in the U.S. The cost of building a nuclear power plant is large compared with that of gas-fired plants, but once a nuclear plant is built it can steadily churn out enormous amounts of power without being subject to volatile market prices that have plagued gas customers in recent years. In another advantage over gas, analysts say nuclear power and coal are the only fuels that can produce the large amounts of “base load” power needed to satisfy day-to-day electricity demands. Industry officials think the recent technical assistance agreement between the U.S. and India represents a possible breakthrough in lowering obstacles raised by proliferation fears. The United States previously had led efforts to punish India and Pakistan for not signing the nuclear Non-Proliferation Treaty. But the

agreement with India shows the White House now is willing to take a more pragmatic approach that recognizes nuclear technology is already in widespread use after a half-century. 5

Although nuclear power has a great potential in developing countries, particularly energy resource poor countries, prospects of nuclear 5

Power-hungry world embraces nuclear energy by Patrice Hill, Washington Times, 15 August, 2005.

100

Nuclear Energy


power development remain uncertain owing to their external debts,

unavailability of adequate qualified manpower, small grid size and international concerns about security and safety of the nuclear power plants. World Nuclear Power Reactors 2004-05 and Uranium Requirement Nuclear

Reactors

Reactors

Reactors

Reactors

Uranium

Generation

July 2005

Construction

2005

2005

2005

Electricity 2004

Operable

e

55

7

5728

0

0

0

0

0

0

55

85.3

15

17

12080

1

515

4

2570

0

0

1796

47.8

2.2

9

6587

2

1900

8

8000

19

15000

1352

426.8

78

59

63473

0

0

0

0

1

1600

10431

158.4

32

17

20303

0

0

0

0

0

0

3708

15.0

2.8

15

2993

8

3638

0

0

24

13160

351

0

0

0

0

1

950

1

950

3

2850

125

273.8

29

55

47700

1

866

12

14782

0

0

8184

124.0

38

20

16840

0

0

8

9200

0

0

3011

3.6

3.8

1

452

0

0

0

0

0

0

112

1.92.4

2

425

0

0

1

300

0

0

57

133.0

16

31

21743

4

3600

1

925

8

9375

3409

South

14.3

6.6

2

1842

0

0

0

0

1

125

356

Spain

60.9

23

9

7584

0

0

0

0

0

0

1622

75.0

52

10

8857

0

0

0

0

0

0

1536

25.4

40

5

3220

0

0

0

0

0

0

595

73.7

19

23

11852

0

0

0

0

0

0

2409

88.6

20

103

9838

1

1065

0

0

0

0

22397

China France Germany India Iran Japan Korea RO (South) Holland Pakistan Russia Africa Sweden Switzerland UK USA

MWe

No

MWe

No.

MWe

Required

Kwh Canada

No

Proposed July

%ag

44.9

MWe

July 2005

Planned July

Billion Belgium

No

under

Tonnes U

Source: World Nuclear Association, 1 August, 2005 101

Nuclear Energy


Nuclear Energy Options For Pakistan: In spite of very rapid and consistent increase in electricity supply during

the last three decades, the level of per capita electricity consumption in Pakistan is very low. It is only 1/5th of that in the world as a whole and 1/20th of that in the developed countries. Still 30 per cent of the population is waiting for access to electricity. Until now Pakistan has been

relying on hydro and fossil fuel source for electricity generation. The demand for electricity is expected to increase exponentially in the near future. Nuclear power is one of the possible options that could meet the electricity needs of the country. Nuclear energy represents only 0.9% of the electricity produced in Pakistan. 6 Increased use of nuclear power would accelerate socio-economic development of the country through supplying electricity round the clock and throughout the year in a costeffective manner. Pakistan is one of the ten developing countries, which have nuclear power stations. A beginning to nuclear power was made when a research reactor became operational at Pakistan Institute of Nuclear Science and

Technology (PINSTECH) in 1965. 7 This research reactor developed confidence of Pakistan scientists and engineers in the area of nuclear power. The first major step towards nuclear electricity generation was the commissioning of a 137 MW, Karachi Nuclear Power Plant (KANUPP) in 1971. It was then the first and the only nuclear power plant in the Muslim world. The Pakistan Atomic Energy Commission (PAEC) efforts to expand

nuclear power programme came to a halt when the Indian nuclear explosion in 1974 brought a ban on the supply of fuel, spare parts and

technical services for KANUPP. However, within two years, PAEC’s

engineers and scientists were successful in manufacturing nuclear fuel for KANUPP and the plant has since been kept operational. KANUPP has to date generated nearly 10 billion kilo-watt-hours of electricity. Pakistan is currently in the process of carrying out modifications and replacement 6

Pakistan Energy Future” Is the Nuclear Energy the Answer?, Pervez Tahir, Chief Economist, Planning Commission. 7 A sustainable energy option – II by Dr. Ishfaq Ahmad, The Nation, 25 March, 2001.

102

Nuclear Energy


under a well planned, IAEA assisted, re-lifting program. 8 The PAEC has been operating the power plant with its own manpower and technical

resources and manufacturing nuclear fuel since 1974. KANUPP has been renovated to extend its life by another 25 years. It will retire in 2016. Despite the keen interest of Pakistan to build additional nuclear power plants, it took almost two decades to start construction of its second nuclear power plant mainly due to unfavorable international environment

alongwith lack of indigenous technological and industrial capabilities. The construction of Pakistan’s second nuclear power plant CHASNUPP started in 1992 with the help of China National Nuclear Corporation. The plant was connected to the national grid on June 13, 2000. CHASNUPP is the second nuclear power plant in the entire Muslim world. 9 The power

plant, which is running at 95% of its capacity, is being operated entirely by Pakistan’s own engineers. 10 These two nuclear power plants are now providing 3% of electricity needs of Pakistan. After success of CHASNUPP-I, the second unit CHASNUPP-II with 340 MW capacity has been inaugurated at the same site. The PAEC Chairman has declared that this is only the beginning and that nuclear power is planned to become the mainstay of energy production in Pakistan. To realize its plans, Pakistan plans to install 10-12 more nuclear power plant with the aim to produce 8800 MW of nuclear electricity in the coming 25 years. Pakistan’s nuclear power plants are under IAEA safeguards. Pakistan maintains a close liaison with IAEA, World Association of Nuclear Operators (WANO), Candu Operators Group (COG) and the Pakistan Nuclear Regulatory Authority (PNRA). Nuclear energy has environmental

advantages compared to conventional thermal power plant because of the absence of toxic emissions of the carbon dioxide and sulphur oxide. However, the investment cost is extremely high and the construction time extensively long. 11 8

Pakistan supports exploiting nuclear technology for peace and prosperity: Pervez Butt, Chairman PAEC at the 49th IAEA General Conference in Vienna, 30 September 2005. 9 A sustainable energy option – II by Dr Ishfaq Ahmad, The Nation, 25 March, 2001. 10 Pakistan supports exploiting nuclear technology for peace and prosperity: Pervez Butt, Chairman PAEC at the 49th IAEA General Conference in Vienna, 30 September 2005. 11 Pakistan’s Energy Future: Is Nuclear energy the Answer?, Pervez Tahir, Chief Economists, Planning Commission

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Nuclear Energy


Pakistan will soon start formal negotiations with the United States for acquiring nuclear power reactors to meet its energy needs for the next 25

years. The nuclear regulatory authorities of the two countries have already held exploratory talks on civilian nuclear cooperation. Although

the anti-proliferation lobby in the United States is opposed to selling nuclear reactors to non-recognized nuclear weapons states, the July 2005

agreement between New Delhi and Washington on the sale of nuclear technology for India’s civilian nuclear facilities, has opened the door for other countries to seek the same cooperation with US, European Nuclear States, Russia and China. Pakistan has already informed the US

Administration that its nuclear generation program is moving in the right direction. The Prime Minster of Pakistan has indicated that after China, Pakistan would seek assistance from US and Western countries to build nuclear power plants on the basis of “build and own” at least 13 nuclear power plants. 12

International Reservation: The question before the leadership of Pakistan, however, is the acceptability or otherwise of the proposition to enhance percentage of nuclear power generation by the international community. The government of Pakistan would have to consider what concessions would the international community, particularly the US and EU demand of Pakistan in return for nuclear technology transfer/cooperation for peaceful uses. Some analysts are of the view that International

Community may not agree to nuclear technology cooperation unless Pakistan signs the CTBT. Other hold the view that Pakistan being a nuclear power, the status as such should be recognized. However, the US Ambassador Mr. Crocker and the French Ambassador Mr. De Belenet to Pakistan, during their discourse with the participants of the 83rd NMC

expressed their reservations on the subject. While Mr. Crocker remarked that Pakistan should first assess its energy requirement to be met through nuclear power generation and that Pakistan had not broached

12

Nuclear Reactors to be sought from US, by Ihtasham-ul-Haque, Dawn, 15 September, 2005.

104

Nuclear Energy


the subject with US, the French Ambassador skirted the subject saying it was a question for the future only.

Moreover, given international reservations about Pakistan’s record on nuclear non-proliferation, not withstanding our efforts at home and abroad to set in place. Monclad measures and legislation on nonproliferation, our objective to enhance nuclear power generation in the next 10 years may face resistance. Pakistan would have to mount a

concerted diplomatic campaign to convince the West and US of the acute requirement for power generation and our commitment to nuclear nonproliferation.

Future of Nuclear energy in Pakistan: In a major development, the authorities concerned have selected six sites in the first phase to install more nuclear power plants to materialise the plan to increase the country’s capacity to generate 8,800MW nuclear power by 2030. China has offered Pakistan further assistance in nuclear power generation and proposed 5 to 10 year medium- and long-term development programs to promote trade, investment and bilateral economic ties.

105

Renewable Energy


CHAPTER # 07 RENEWABLE ENERGY In a country like Pakistan, there are more than just technological,

barriers to overcome when talking about commercialization of renewable energy potential. The local mindsets, which are more familiar with conventional means

of energy generation, have to be

familiarized and made to accept renewable energy as an economically

viable and environmentally sustainable option.

As a result of intensive global research the cost of generation of electrical power through renewable sources of energy is becoming an attractive option. The generation of electricity through renewable sources is not only becoming competitive with electricity produced through power stations using fossil fuels, it is also reducing pollution and contributing towards reduction in global warming. By utilizing these modern technologies, Pakistan can harness the freely available renewable sources of energy like the wind, sun, biomass and oceans and reduce its dependence on imported oil. Pakistan has a large resource base for employing renewable for meeting

its

technologically

energy viable

needs. and

Renewable have

resources

prospects

to

be

that

are

exploited

commercially in Pakistan include wind energy, solar energy, microhydel, bio-energy, and emerging technologies like fuel cell. Pakistan

can benefit from these resources and can supplement existing energy resources as well as can use as primary energy source when no other option is available. Abundantly available and unexploited renewable energy resources can play an important role not only in bridging the deficit but more

importantly, in taking electric power to remote rural areas where electricity through grid can not be transmitted. Renewable resources that are technologically viable and have the prospects to be exploited 106

Renewable Energy


commercially can be a solution to present energy crisis and cope up these problems to minimize the impacts. Renewable fuels, once

developed, are essentially free, and their use reduces dependence upon imported fuels. In fact, the construction of a renewable energy

project provides future generations a low cost, energy facility that produces power with minimal environmental degradation and added benefits of fuel diversity.

Technological developments in recent years have made renewable energy sources more affordable. With abundance of renewable

resources available in Pakistan, we need to make a thrust on this sector. The international financial community has significant capital available for investment in energy projects. To be competitive, Pakistan will require demonstrating a favorable legal, political and commercial environment that reduces risk and provides investors with good reason to believe they will receive a fair and reasonable rate of return on their debt or equity investment. Pakistan Alternate Energy Board : Government of Pakistan has created Alternate Energy Development Board(AEDB)in 2003 to act as the central body on the subject of Renewable Energy. The Board will very shortly be provided a clear legal mandate through an Act of Parliament. The draft has been sent to Parliament for approval. The main objective of the Board is to facilitate, promote and encourage development of the RE in Pakistan with a mission

to introduce Alternative/Renewable energy at an accelerated rate to achieve 10 % share of the RE in the energy mix of the country. One of the

mandates of the Board is also to play a pivotal role in establishing international linkages and engaging in the transfer of state of the art

107

Renewable Energy


know-how on RE technologies to the local research institutions and industries in Pakistan. 1 Renewable Energy: The Alternative Energy Development Board (AEDB) would facilitate

alternative/renewable energy projects and would also develop and implement off-grid electrification programme of rural areas. At least 5 percent of total national power generation capacity would be met through these resources by 2030 (i.e. 9700 MW). In addition, under the remote

village electrification programme, 54000 homes would be lit by solar/wind/micro hydro power during the MTDF. AEDB would also undertake a comprehensive plan for the development of solar products like, solar lights, solar fans, solar cookers and solar geysers through the participation of private sector. 2 Strategy 1. The Alternative Energy Development Board, created to implement projects based on renewable resources, would be strengthened. Small size, isolated solar/wind units would be installed in remote areas of the country unlikely to get electricity through the national grid. 2. The Chairman AEDB in a press conference said that Pakistan will have 9700 MW of electricity by 2030 through renewable energy projects based on wind,

solar ,micro-hydel, fuel cell, tidal and bio gas. He

said, solar products such as solar lights, fans, cookers, and geysers would be developed by the private sector. The Board had issued letter

of intent to 22 national and international companies for generating 1100 MW through wind energy, adding that the AEDB was planning to produce the towers and blades for windmill in Pakistan. The windmill

farms will provide electricity to the National Transmission and Dispatch Company (NTDC) at a cost of almost seven cents; per Kwh 1

www.aedb.org

2

MTDF 2005-10 PAGE 419

108

Renewable Energy


NTDC will sell it to power distribution companies. This would be carried out under the power purchase agreement with NTDC. 3

3. The AEDB has prepared short, medium and long term plans with ambitious but not unrealistic targets in wind, solar and solar thermal and is devising implementation strategies for these plans. The Board has launched 100 MW Wind Energy Project Karachi which will be completed in June 2006. It has also initiated 100 solar homes

demonstration projects in Islamabad and in all the provinces to take a

step for achieving these plans and targets. The Board is negotiating with renowned international companies and has signed MOUs and contracts with them for accomplishment of plans of AEDB. The Board is pursuing following steps for successful completion of targets: •

Formulate long term strategies to include, progressively, the renewable energy technologies in the national energy policy;

•

Provide adequate funds for R&D and for transforming laboratory products into commercial products;

•

Motivate entrepreneurs through policy initiatives such as tax holidays, reduction/exemption from duties and taxes;

• •

Provide soft loans/subsidies to the end users; Motivate through mass media, exhibition, field demonstration, education and training;

•

Encourage installation of solar lights and other appliances on public buildings, parks, streets etc;

•

Provide funds for renewable energy demonstration community project. 4

3

[Air Marshal[r] Shahid Hamid , Alternate Energy Board Daily Times Sep 19,2005.]

4

Pakistan Energy Year Book of HDIP (pg.73-74)

109

Renewable Energy


Wind Energy Pakistan Meteorological Department has conducted a detailed Wind Power Potential Survey of Coastal Areas of Pakistan and Ministry of Science and

Technology has provided the required funding for this purpose. This study has enabled us to identify the potential areas where economically

feasible wind farm can be established. One interesting aspect of this study is that contrary to the general impression, Sindh coastal areas have

greater wind power potential than Balochistan coastal areas. Potential areas cover 9700 sq.km in Sindh. The gross wind power potential of this area is 43000 MW and keeping in view the area utilization constrains etc. the exploitable electric power generation potential of this area is estimated to be about 11000MW. Feasibility study for the installation of 18 MW Model wind power project is prepared. Total cost of the project is estimated to be about Rs. 850 million and the pay back period would be 7-8 years. The levelised cost of power generation is estimated as Rs. 2.9/kwh. Recently conducted survey of Wind Power Potential along coastal areas of the country by Pakistan Meteorological Department (PMD), indicates that a potential exists for harvesting wind energy using currently available technologies, especially along Sindh coast. Gharo, one of the sites in Sindh where the wind data have been recorded

and studied by PMD, has been selected for this feasibility study. The wind measurements at Gharo have been carried out during 24 months period. The annual mean wind speed is estimated to be 6.86m/s at 50 meter

above ground level. The annual power density of area is 408.6 W/m2, which bring the site into good category of power potential, which means this area is suitable for large economically viable wind farm. The total investment will be Rs: 850 million and pay back period will be 7-8 years. The capital cost of wind power projects ranges Rs 4 to5 crore

per MW. This gives a levelised cost of wind energy generation in the

110

Renewable Energy


range of Rs: 2.50 to 3.00 per kWh, taking into consideration the fiscal benefits extended by the government.

A typical wind farm of 30 turbines might extend over an area of 1 square

kilometer but only 1 % of the land area would be taken in use, the remainder can be used for purposes such as farming. In this study one square kilometer area is used and 30 wind turbines are proposed to install in the area as shown in the map-1.

Map-1: Schematic Wind Farm Spanned over 1 Km2 Area

1000 m

150m 200m

1000 m Legends; Met. Mast Wind Turbine Access Roads Outer Fence

111

Renewable Energy


Benefits of Wind Energy: Wind energy is an ideal renewable energy because: 1. it is a pollution-free, infinitely sustainable form of energy 2. it doesn’t require fuel 3. it doesn’t create greenhouse gasses

4. it doesn’t produce toxic or radioactive waste. • Wind energy is quiet and does not present any significant hazard to birds or other wildlife.

• When large arrays of wind turbines are installed on farmland, only about 2% of the land area is required for the wind turbines. The rest is available for farming, livestock, and other uses. • Landowners often receive payment for the use of their land, which enhances their income and increases the value of the land. • Ownership of wind turbine generators by individuals and the community allows people to participate directly in the preservation of our environment. Each megawatt-hour of electricity that is generated by wind energy helps to reduce 0.8 to 0.9 tones of greenhouse gas emissions that are produced by coal or diesel fuel generation each year. Wind Potential Area of Sindh: Total Area of Sindh suitable for wind farms = 9749 km2 Average Capacity Factor of this area in Sindh = 25% Wind power potential of 18MW Wind Farm on 1 km2 area when Capacity Factor is 25% =18x0.25=4.5 MW

Gross Potential of the area corrosponding to 25%Capacity Factor=9749x4.5=43871 MW

112

Renewable Energy


113

Renewable Energy


Gharo Wind Power Plant: Gharo Wind Power Plant is planned to be built at Gharo, Sindh, Pakistan. This will be one of the first wind power project in Pakistan.

The Fuhralander of Germany and Access Energy Inc of United States have signed an agreement with Alternative Energy Development Board (AEDB) of Pakistan, to manufacture wind turbines in Pakistan to help establish

wind power projects. US-based Access Energy who would set up a 50 MW wind power plant along the general wind corridor in Gharo, would finance the project, whereas the German Company, Fuhrlander, would transfer the technology to Pakistan for manufacturing of wind turbines along with its accessories to set up a minimum of 1000 MW power plants. Total installed wind power (end of year & latest estimates)

capacity

Capacity (MW) Rank Nation

Latest

2005

2004

1

Germany

19,267 18,428 16,629

2

Spain

10,941 10,027 8,263

3

USA

10,492 9,149 6,725

4

India

5,340

5

Denmark

3,128 3,124

6

Italy

1,717 1,265

7

United Kingdom 1,953

1,353 888

8

China

1,260 764

9

Netherlands

1,219 1,078

4,430 3,000

114

Renewable Energy


10

Japan

11

Portugal

12

Austria

13

France

14

Canada

15

Greece

16

Australia

17

1,040 896 1188

1,022 522 819

606

1,500

757

386

1,341

683

444

573

473

572

379

Sweden

510

452

18

Ireland

496

339

19

Norway

270

270

20

New Zealand

168

168

21

Belgium

167

95

22

Egypt

145

145

23

South Korea

119

23

24

Taiwan

103

13

25

Finland

86

82

82

26

Poland

107

73

63

27

Ukraine

73

69

28

Costa Rica

70

70

29

Morocco

64

54

817

115

Renewable Energy


30

Luxembourg

35

35

31

Iran

32

25

32

Estonia

30

3

33

Philippines

29

29

34

Brazil

29

24

35

Czech Republic

28

17

36

Turkey

50

20

?

37

Lithuania

80

?

?

World total

~65,000 58,982 47,671

79

116

Renewable Energy


Solar energy Solar energy is the energy produced directly by the sun. The Sun creates its energy through a thermonuclear process that converts about 6.5

billion tonnes of hydrogen to helium every second. The process creates heat and electromagnetic radiation. The heat remains in the sun and is instrumental

in

maintaining

the

thermonuclear

reaction.

The

electromagnetic radiation (including visible light, infra-red light, and ultra-violet radiation) streams out into space in all directions.

117

Renewable Energy


Solar Cells or Photovoltaic Energy: Solar cells are also called photovoltaic cells - or PV cells for short - and can be found on many small appliances, like calculators, and even on spacecraft. They were first developed in the 1950s for use on U.S. space satellites. They are made of silicon, a special type of melted sand.

Photovoltaic devices convert the energy contained in the sunlight directly

into electricity. PV power generation is mature technology for small power applications. PV systems are currently cost-effective in some consumer products. Costs are expected to continue to decline in the future allowing PV device to compete with large scale conventional power generation. Studies conducted by World Bank and some national agencies in Pakistan suggest that PV power systems become competitive with conventional energy sources for small power applications such as telecommunication in remote areas. For lighting applications it becomes comparable for areas where the grid is at least 30 km away and the number of consumers is small(less than 30). 5 In the book, Energy Resources and Utilization in Pakistan, Pakistan’s solar resource has been calculated as 800 million MW. Clearly, even if academically true, it is far from what can be called the potential that could be harvested, at least in the foreseeable future. 6

During last fifteen years Pakistan has shown quite encouraging developments in photovoltaic (PV). The National Institute of Silicon Technology (NIST) under the Ministry of Science and Technology has developed the know-how and technology to fabricate solar cells, modules, and systems.

5

6

Pakistan Energy Year book 2003 of HDIP page72 Pakistan energy yearbook 2003 of Hydrocarbon development Institute Of Pakistan page. 69

118

Renewable Energy


Photovoltaic technology (PV) is particularly suitable for small power requirements and remote area applications. In early 1980s eighteen PV

stations in different parts of the country were set up for village electrification. Because of lack of technical know-how and follow up,

these systems have not performed as required. Now NIST has developed the know-how and technologies and basic infrastructure in the field. Currently solar technology is being used, in Pakistan, for stand alone rural telephone exchanges, repeater stations, highway emergency telephones, refrigeration for vaccine and medicines in the hospitals etc.

The Public Health Department has installed about 20 solar water pumps for drinking purposes in different parts of Balochistan.

7

Both the private and public sectors are playing their roles in the popularization and up-grading of photovoltaic activities in the country. A number of companies are not only involved in trading photovoltaic products and appliances but also manufacturing different components of PV systems. They are selling PV modules, batteries, regulators, invertors, as well as practical low power gadgets for load shedding such as photovoltaic lamps, battery chargers, garden lights etc. In remote area houses are mostly ‘Kacha hut type’. Light is the only requirement for these houses. Most of the houses consist of one room only. The electric requirement for each house varies from 50 watt to 100 watt

maximum.

Extension

of

grid

lines

for

such

small

power

requirements is very uneconomical. Local power generation is a possible solution. In case diesel generators are used, transportation of fuel to such remote areas and maintenance is again a costly proposition. Solar energy is the only and best solution for these areas. With the determination and

hard work of AEDB 100 solar homes demonstration project is going on in Ali Pur Farash (Servant Colony) with the help of donors. 100 solar homes demonstration project in each province has been started. These demonstration projects would become the basis for the remote village

electrification. The plan is to electrify villages through solar energy with a project life of 25 ~ 30 years. There is negligible maintenance expenditure 7

Pakistan Energy Year Book 2003, of HDIP (pg.76)

119

Renewable Energy


of the system. A leasing system has to be evolved and people will pay the installments of the equipment like monthly bills.

Advantages: The 122 PW of sunlight reaching the earth's surface is plentiful compared to the 13 TW of total energy consumed by humans. •

Solar power is pollution free during use. Production end wastes

and emissions are manageable using existing pollution controls. Decommisioning

end

recycling

technologies

are

under

development •

Facilities can operate with little maintenance or intervention

after initial setup. •

Solar electric generation is economically competitive where grid

connection or fuel transport is difficult, costly or impossible. Examples include satellites, island communities, remote locations and ocean vessels. •

When grid connected, solar electric generation can displace the

highest cost electricity during times of peak demand (in most climatic regions), can reduce grid loading, and can eliminate the need for local battery power for use in times of darkness and high

local demand; such application is encouraged by net metering. Time-of-use net metering can be highly favorable to small photovoltaic systems. •

Grid connected solar electricity can be used locally thus

minimizing transmission/distribution losses (approximately 7.2%).

120

Renewable Energy


Disadvantages: Limited areal power density: For electrical generation with photovoltaics, the average irradiation power density is approximately 1 kW/m2 usable by 8-15% efficient solar panels. Intermittency: It is not available at night and is reduced when there is cloud cover, decreasing the reliability of peak output performance or

requiring a means of energy storage. For power grids to stay functional at all times, the addition of substantial amounts of solar generated electricity would require one or more of the following; •

Energy storage facilities, such as Pumped-storage hydroelectric

facilities, are needed to 'gapfill' low points in solar generation •

Other renewable energy sources (i.e., wind, geothermal, tidal,

wave, ocean power, etc) would need to be active, or •

Backup conventional power plants would be needed. There is an

energy cost to keep coal-burning power plants 'hot', which includes the burning of coal to keep boilers at temperature. Natural gas power plants can quickly come up to full load without requiring significant standby idling. Without changes in the energy supply and control system (such as a shift to using current hydropower as night time backup across wider regions or the incorporation of more renewable power), few coal power plants could be displaced, according to critics. •

Locations at high latitudes or with frequent substantial cloud

•

It can only realistically be used to power transport vehicles by

cover offer reduced potential for solar power use.

converting light energy into another form of energy (e.g. battery

stored electricity or by electrolyzing water to produce hydrogen)

suitable for transport, incurring an energy penalty' similar to coal or nuclear electricity generation. While the burning of gasoline in 121

Renewable Energy


an internal combustion engine is only about 20%-25% efficient,

depending on driving mode, the use of battery electric technology can match or exceed that efficiency when various external factors are included, such as the loss of energy in the production of gasoline and the energy cost of battery manufacture and recycling. •

Solar cells produce DC which must be converted to AC when

used in currently existing distribution grids. This incurs an energy penalty of 4-12%.

Solar Applications: There are a large number of applications in which solar energy can be utilized directly by exploiting its heat characteristics. Such technologies are comparatively simple, relatively low cost and can easily be adopted. The applications include cooking, heating and cooling of buildings, generation of high temperature steam, heating water for domestic and industrial applications, and drying agricultural products under controlled temperature.

122

Renewable Energy


Biomass Biomass is an economical and friendly way of disposing of the municipal waste that is collected in large

quantities

every

day

in

cities.

Unfortunately no efforts have yet been made in this direction in Pakistan. 8 Biogas: Pakistan, being agriculture based, breeds sufficient live stock to produce enough animal waste for the production of biogas. Currently all such animal waste is burned in dry form as a domestic source of energy, although it could be used for producing biogas on a community basis. There is good potential for using biogas as rural energy throughout the country through a network of community biogas plants. The Government of Pakistan started a comprehensive biogas scheme in 1974 and commissioned 4,137 biogas units by 1987 throughout the country. The units were designed to provide 3,000 and 5,000 cubic feet of biogas per day for cooking and lighting purposes. This program was developed in three phases. During the first phase, 100 demonstration units were installed under grant by the Government. During the second phase, the cost of the biogas was shared between the beneficiaries and the Government. Later

on for third phase, the government withdrew the financial support, although technical support continued to be provided free of cost. Unfortunately, after the withdrawal of the government financial support, the project did not progress any further till 1990. After that nearly 1700

biogas plants have been installed in remote areas through out Pakistan. These

plants

are

successfully

running

and

completing

cooking

requirements of poor villagers. 9

Hazardous gases and minerals may come up from underground, and can be

difficult to safely dispose of. 8

Pakistan Energy Year Book 2004, (pg.79)

123

Renewable Energy


Wave Power Harnessing power from ocean surface wave motion is a possibility which might yield much more energy than tides. The feasibility of this has

been investigated, particularly in the UK. Generators either coupled to floating devices or turned by air displaced by waves in a hollow concrete structure would produce electricity for delivery to shore. Numerous practical problems have frustrated progress.

A prototype shore based wave power generator is being constructed at Port Kembla in Australia and is expected to generate up to 500 MWh per annum. The Wave Energy Converter has been constructed (as of July 2005) and initial test results have exceeded expectations in terms of energy production during times of low wave energy. The energy of waves crashing against the shore is absorbed by an air driven generator and converted to electricity. For countries with large coastlines and rough sea conditions the energy density of breaking waves offers the possibility of generating electricity in utility volumes. Excess power in periods of rough sea could be used to generate renewable hydrogen. The problem is that it's not easy to harness this energy and convert it into electricity in large amounts. Thus, wave power stations are rare.

124

Renewable Energy


How it works: There are several methods of getting energy from waves, but one of the most effective works like a swimming pool wave machine in reverse.

At a swimming pool, air is blown in and out of a chamber beside the pool,

which makes the water outside bob up and down, causing waves. At a wave power station, the waves arriving cause the water in the chamber to rise and fall, which means that air is forced in and out of the hole in the top of the chamber. Once you've built it, the energy is free, needs no fuel and produces no waste or pollution. One big problem is that of building and anchoring something that can withstand the roughest conditions at

sea,

yet

can

generate

a

reasonable amount of power from small waves.

It's not much use if it only works during storms!

A company called Wavegen now operate a commercial wave power station

called

"Limpet"

on

the

Scottish island of Islay,

125

Renewable Energy


A company called Ocean Power Delivery are developing a method of offshore wave energy collection, using a floating tube called "Pelamis". This long, hinged tube (about the size of 5 railway carriages) bobs up and down in the waves, as the hinges bend they pump hydraulic fluid which drives generators.

Advantages •

The energy is free - no fuel needed, no waste produced.

•

Not expensive to operate and maintain.

•

Can produce a great deal of energy.

Disadvantages •

Depends on the waves - sometimes you'll get loads of energy, sometimes nothing.

•

Needs a suitable site, where waves are consistently strong.

•

Some designs are noisy.

Mu

126

Renewable Energy


Geothermal Energy

Geothermal energy is the natural heat of the earth. Enormous

amounts of thermal energy are continuously generated by the decay of

radioactive isotopes of underground rocks and stored in our globe's interior. This heat is as inexhaustible and renewable as solar energy. The temperature in the core of the earth is in the order of 4 000oC, while

active volcanoes erupt lava at about 1 200oC and thermal springs, numerous on land and present on the oceanic floor, can reach 350oC. Presently geothermal energy is exploited by producing the underground water stored in permeable rocks from which it has absorbed available heat (hydro-thermal systems) or, in certain types of geothermal heat pumps, extracting heat directly from the ground.

Technology To

generate

electricity,

fluids

above

150oC

are

extracted

from

underground reservoirs (consisting of porous or fractured rocks at depths between a few hundred and 3 000 metres) and brought to the surface

127

Renewable Energy


through production wells. Some reservoirs yield steam directly, while the majority produce water from which steam is separated and fed to a turbine engine connected to a generator. Some steam plants include an additional flashing stage. The used steam is cooled and condensed back

into water, which is added to the water from the separator for reinjection (Figure). The size of steam plant units ranges from 0.1 to 150 MWe.

Fig Flash Steam Power Plant

(Source: Geothermal Energy, 1998, University of Utah)

If the geothermal resource has a temperature between 100o and 150oC, electricity can still be generated using binary plant technology. The produced fluid heats, through a heat exchanger, a secondary working fluid (isobutane, isopentane or ammonia), which vaporises at a lower

temperature than water. The working fluid vapour turns the turbine and is condensed before being reheated by the geothermal water, allowing it to be vaporised and used again in a closed-loop circuit (Fig). 128

Renewable Energy


The size of binary units range from 0.1 to 40 MWe. Commercially, however, small sizes (up to 3 MWe) prevail, often used modularly, reaching a total of several tens of MWe installed in a single location. The

spent geothermal fluid of all types of power plants is generally injected back into the edge of the reservoir for disposal and to help maintain pressure. In the case of direct heat utilisation, the geothermal water produced from wells (which generally do not exceed 2 000 metres) is fed

to a heat exchanger before being reinjected into the ground by wells, or discharged at the surface. Water heated in the heat exchanger is then circulated within insulated pipes that reach the end-users. The network

can be quite sizeable in district heating systems. For other uses (greenhouses, fish farming, product drying, industrial applications) the producing wells are next to the plants serviced.

Fig Binary Cycle Power Plant


129

Renewable Energy


Fig: World High Temperature Geothermal Provinces


Advantages •

Geothermal energy does not produce any pollution, and does not contribute to the greenhouse effect.

•

The power stations do not take up much room, so there is not much impact on the environment.

•

No fuel is needed.

•

Once you've built a geothermal power station, the energy is almost free. It may need a little energy to run a pump, but this can be taken from the energy being generated.

Disadvantages •

The big problem is that there are not many places where you can build a geothermal power station. You need hot rocks of a suitable

type, at a depth where we can drill down to them. The type of rock 130

Renewable Energy


above is also important, it must be of a type that we can easily drill through. •

Sometimes a geothermal site may "run out of steam", perhaps for decades.

Scope in Pakistan Pakistan has yet to undertake in-depth assessment of its geothermal resources. The studies done so far have been geological and geochemical

surveys (Bakht, 2000).Utilization potentials are in the area of binary power production and direct use applications such as greenhouse and space heating as well as fish farming (Mughal,1998). Four (4) Fellows availed of courses on geology,geochemistry, borehole logging and reservoir engineering, but the follow-up has been limited.

131

Recommendations


CHAPTER # 08 RECOMMENDATIONS General: •

The government should ensure improvement in law and order situation (Balochistan) to ensure recovery of gas from gas resources.

•

Fair compensation may be ensured to local population to encourage them to facilitate exploration and discoveries.

•

Indigenous capacity may be established to firmly estimate the underground potential and reserves of oil and gas

•

Mass awareness publicity campaign to sensitize the people on energy conservation and hazards of pollution

Oil and Gas: •

Incentives for exploration activities may be enhanced. Number of exploratory and development wells needs to be increased substantially from existing 268 wells by another 250 – 300 wells every 5 years. By the year 2030 number of wells should reach 1650.

•

The number of drilling rigs be increased significantly and their optimal utilization must be ensured (Existing 25 – OGDC 13, Private Sector 12). New petroleum concessions may be given to the companies with good track record.

•

Petroleum policy for on-shore and offshore exploration may be pursued used

with incentives to attract foreign

investment. •

Expedite development of deeper reserves of Sui which may have the potential to meet rising demand for gas. Tal field

also needs to be developed as it can meet the demand of gas in northern Pakistan. •

New oil and gas discoveries may be developed on fast track basis along with other new oil and gas recoveries.

132

Recommendations •


Production and use of ethanol from molasses for mixing it with petrol may be encouraged to meet some of the energy requirement from this source as well.

•

Negotiations should continue for the best and most

economical of the alternatives for gas import (Iran, Qatar and Turkmenistan). The Pakistan–Iran-India gas pipeline project is the most economical project. Priority should be

given to the implementation of the IPI gas pipeline to make imported gas available by 2015. •

Gas utilities be allowed and facilitated to import LNG through private sector on BOO, BOT basis to meet the gap up to 2010 and continue to fill the gap thereafter.

•

Naphtha cracker plant and acquisition of Hydrogen Fuel cell technology may be developed/acquired.

•

Pakistan has done well using CNG for cars. We need to fast track the introduction of CNG for the entire public transport to reduce our dependence on imported oil.

•

The establishment of economic size refineries in the coastal area to refine imported crude and Kohat to refine crude from Tal field may be facilitated through appropriate policy support.

Hydel •

Decision regarding Kalabagh dam (3600 MW) may be taken immediately after developing consensus at the political level.

•

Construction for Bhasha Dam (4500 MW) should be initiated on priority basis.

•

Extension of Tarbella Power House (960 MW) should be undertaken immediately.

•

Construction of Neelum – Jhelum Hydel Project (969 MW) should be undertaken.

•

Construction of Dasu, Bunji and Akhori Dams would have to be undertaken in the longer run.

133

Recommendations •


Feasibility Study for Skardu / Katzara dam needs to be initiated immediately.

•

Wapda should undertake feasibility studies for maximizing

Hydel power generation from all rivers particularly Indus in order to identify strategy and projects for increasing the Hydel power share. •

Thermal generation by private sector through augmentation of existing capacity or installation of additional capacity may be encouraged.

•

Encourage Public-Private partnership or BOT for power generation on canals and other mini / micro hydel projects.

•

Sugar Mills have 2000 MW of available capacity during offcrushing season. This capacity with some modification of boilers can be made available on national grid.

•

Transmission and distribution system should be properly planned

for

full

capacity

utilization

and

uninterrupted electricity supply to the end users.

ensuring

Coal •

Share of Coal in energy production may be increased to at least 15% by 2030 and 50% by 2050 in the energy mix.

•

An authority like Wapda may be established for mining and power generation through coal.

•

Technology transfer for Coal gasification is essential.

•

Gasification of Coal tar for expedited

•

commercial use may be

Good quality coal import to be encouraged only for short term

for

mixing

with

local

coal

to

increase

coal

consumption. Simultaneously establishment of washeries

by private sector be encouraged for improving quality of local coal. Nuclear •

In view of scarce hydel potential in the long run greater emphasis is required for installation of nuclear power

134

Recommendations


plants. Nuclear capacity may be gradually increased from existing 400 MW to 9200 MW by the year 2030. •

PAEC may enhance indigenous capability to maximize local

content to reduce capital cost. Capacity of each units may be increased from 300 MW to 600 MW and then to 1000 MW, which should be standardized for future as well. Alternate energy •

Sources of wind and solar energy may be developed so that

this sector can generate at least 5% of total national power generation capacity by 2030 i.e. 9700 MW. Alternate Energy Development Board is however chasing the target of supplying 10% of total energy requirements by the 2015. •

Development and use of solar products like, solar cookers, solar geysers etc.

Energy Conservation •

Demand side needs proper management for optimal utilization of the installed capacity.

•

Lower power rates may be enforced for agriculture tube wells during off peak hours through special meters.

•

Energy wastages need to be minimized. Necessary laws may be enacted for energy conservation. Such laws may require construction of energy efficient buildings along with manufacturing and use of energy efficient appliances.

•

Laws and taxes may be designed to encourage self-energy generation by domestic sector.

•

Use of solar heating, solar geysers and solar street lighting may be encouraged for sparing valuable natural gas for industrial growth.

•

Use of efficient cooking stoves may be promoted in the villages to conserve fuel wood.

135

Recommendations


Coal Production (Thousand Tonnes) Year

Pakistan

Punjab

Sindh

NWFP

Balochistan

2002-03

3609.3

502.3

1049.1

266.2

1791.7

2001-02

3511.8

515.2

993.0

237.4

1766.1

2001-02

3285.7

401.3

1005.6

191.3

1687.5

1999-00

3164.3

454.5

981.9

46.3

1681.5

1998-99

3377.9

479.1

1233.1

53.2

1612.5

1997-98

3144.5

365.6

1178.3

59.1

1541.5

1996-97

3496.4

425.3

1093.0

55.7

1922.0

1995-96

3465.1

514.9

1088.1

43.6

1818.5

1994-95

3009.6

416.0

1046.2

55.7

1491.5

1993-94

3214.4

465.4

1093.8

67.0

1588.1

COAL RESOURCES OF PAKISTAN Province/ Coal Field

Coal Resources (million tones) Measured Indicated Inferred

SINDH Lakhra 244 629 Sonda-Thatta 60 511 Jherruck 106 310 Others 82 303 Thar 3,407 10,323 Sub-Total 3,899 12,076 BALOCHISTAN Khost-Sharig13 -Harnai Sor-Range/Degari 15 -Duki 14 11 Mach-Abegum 9 -Pir Ismail Ziarat 2 2 Chamalong 1 -Sub-Total 54 13 PUNJAB Eastern Salt Range 21 16 Central Salt Range 29 -Makerwal 5 8 Sub-Total 55 24 GRAND TOTAL 4,008 12,113 Source: World Energy Organization – 2004

Hypothetical

Total

455 2,197 907 1,881 81,725 87,165

-932 --80,051 80,983

1,328 3,700 1,323 2,266 175,506 184,123

63

--

76

19 25 14 8 5 134

16 ----16

50 50 23 12 6 217

145

235

81,144

184,575

2 -9 11 87,189

(Source: Pakistan’s Coal Reserves by Engr. Abdul Waheed Bhutto – Dawn, Business, 20 September, 2004

136

Hydel way out of Energy Crisis


CHAPTER # 09 Hydropower: way out of energy crisis The single renewable energy resource that Pakistan possesses in abundance is hydropower, the most environmental friendly, cheapest source of energy. It has a potential of more than 41,722MW. Despite this, Pakistan now is faced with a most serious energy shortfall. The acute shortage of electricity has resulted in loadshedding during the current summer season, costing the economy millions of rupees. The installed power generation capacity at the end of 2005 was19,560MW, of which 65 per cent was thermal, 33 per cent was hydroelectric and 2.4 per cent was nuclear. The 33 per cent share of hydroelectric power amounts to only 6,595MW. We should not forget the fact that the projected lifetime of the existing natural gas and oil is just over 15 and nine years respectively. Domestic coal reserves may be exploited only at great financial and environmental costs. Seventy per cent of Pakistan's oil needs are met through imports. The average cost of hydel energy generation in Pakistan was Rs0.50 per kilowatt hour in 2000-01. The annual per capita electricity consumption in Pakistan is around 320kwh, and this only caters for 60 per cent of the population. Forty per cent of Pakistanis still have no access to electricity. In view of these facts, the best solution to Pakistan's energy/electricity crisis is hydropower. An abundant, cheap, environmental friendly and renewable source of energy has remained untapped. To meet Pakistan's power requirement, WAPDA and the Ministry of Water and Power developed a strategy called the Hydropower Development Vision-2025 in the year 2001. The strategy was based on an average annual demand increase of 3.7 per cent. Recently though the demand for electricity rose sharply, in excess of eight per cent per annum during the last two years. In Vision-2025 a short-term plan was developed and the commissioning date of eight hydel projects with a total generation capacity of 716MW was fixed on June 2006. These projects were proposed and designed as 'run-of-river' plants, meaning one with little or no storage capacity, such as Ghazi Barotha hydropower project, in which no big reservoir is to be constructed. But unfortunately none of these projects could be completed. The root-cause of the failure to provide the needed energy is lack of strategy for implementation. The strategy prepared by the ministry fails to take into account the ground realties and the project management capabilities of executing agencies. The World Bank rightly proposed institutional reform in WAPDA for decentralisation in order to increase efficiency in management. While preparing the future strategy the Ministry of Water and Power should keep in view the completed hydropower projects, such as Ghazi Barotha, and the lessons learnt from them. The Ghazi Barotha project's feasibility survey was carried out in 1987 and the project finally commissioned on 19 August 2003. This means that 16 years are required for WAPDA to complete a run-of-the-river project. 137



Another cause of the present energy crisis is that the federal government has not taken small hydropower projects (SHPs) in its own hands. Such projects are very viable as they do not require building of large dams and do not pose problems of deforestation, submergence or rehabilitation. Comparatively small capital investment and short gestation periods are required to complete these projects and they cause minimal transmission losses occur compared to WAPDA's current line losses, which are more the 25 per cent. In Pakistan all small hydropower projects up to 50MW are the responsibility of the provincial governments which cannot construct small hydropower projects due to financial constrains, among other reasons. In India, developing small hydro projects at a fast pace is one of the components of their energy policy. The central government there has completed 90 small hydro projects with 270MW capacity in the past five years. The state of affairs in Pakistan should change. Punjab has enough financial resources but it has made no real progress on small hydropower plants even though WAPDA has not only identified various locations having a potential of 350MW but also completed the necessary design works. In Azad Jammu and Kashmir, which is endowed with abundant hydel potential, the AJK Hydroelectric Board has only completed hydro projects having a capacity of 36MW against an identified potential of 5,329MW. This hydrogenation cannot even meet the electric demand of AJK itself, which is 250MW; while the anticipated power demand by 2007 will be 350MW. The AJK Hydroelectric Board is facing serious financial problem in starting the projects as funding is not available. International donor agencies are reluctant. In the Indian-held Kashmir, recently twenty small hydro projects were commissioned at various selected sites by the UNDP. Baglihar and Kishan Ganga hydropower projects are in the stage of completion. The biggest problem is faced by our Northern Areas where the electricity demand is more then 100MW but total power generation from hydel power stations is a mere 46MW. To bridge the gap between demand and supply a diesel power plant with a total generation of 5MW has been commissioned by the government. Instead of tapping ingenious hydropower potential, the Ministry of Water and Power has decided to construct a 765-kv transmission line that is 794-km-long, to import 1000MW from Tajikistan via Afghanistan at a much higher rate. For self-reliance in energy and for eradicating poverty, hydropower is recognised as a renewable source which is economical, non-polluting and environmentally benign. In order to maintain a balance between hydropower and thermal power, the ministry should announce a policy to accelerate hydropower generation in the country. Development of small hydro projects at an accelerated pace should be one of the tasks set by the policy to meet the present power crisis. This is the only costeffective solution to meet the increasing electricity demand.

138



Success here is possible only if public-sector funding is made available by the government. The financing of such projects remains a problem for funds from international donors for such projects are difficult to get, considering their commitment to facilitate investments in private thermal-based power plants. Instead of trying to imitate and compete with India in nuclear energy, we should consider the way countries like Laos, Thailand and China have developed small hydropower projects for development and economic prosperity.

139

Bibliography


Chapter # 10 BIBLIOGRAPHY 1) Rana Shamshad Hussain, *(director general post,Pakistan) ,group research paper energy response strategy in Pakistan presented in Pakistan Administrative Staff College. 2) Kiani, Khaleeq. Power Sector Cause of Concern: WB. Dawn, September 08, 2005. 3) Ghausi Sabihuddin. KESC sell-off CCoP Okays Hasan Associates Offer, Dawn, September 3,2005. 4) Naqvi, S. Tanzeem Hussain. Revisiting WAPDA’s Corporatization. Dawn, July 25, 2005. 5) Haque, Ihtasham-Ul. Nuclear reactors to be sought from US. Dawn, September 15, 2005. 6) Hydel Stations at Canals; Punjab Projects 600 MW Potential. Dawn, September 11, 2005. 7) Siddiqui, Hussain Ahmad. Mufti, Jawaid Iqbal. Risks and Constraints in Hydro Power Projects. Dawn, August 8, 2005. 8) Cheema, Tahir Basharat. WAPDA and the National Economy. Dawn, July 11, 2005. 9) Chaudhry, Muhammad Bashir. Power Sector restructuring and the new electricity Tariff. 10) Pakistan and gulf Economist, March 10, 2003. 11) Abdullah. WAPDA’s Financial Health. Business Recorder, June 14, 2005. 12) Omer Kaleem. Rising demand could lead to serious power shortage by 2007. The News, July 5, 2004. 13) Syed, Naeem Haider. Water and Power Resources Development. WAPDA’s March Forward. The News, March 12, 2005. 14) Chauhdry, Muhammad Bashir. Growth of Power Generation Capacity. Dawn, October 27, 2003. 15) Chaudhry, Muhammad Bashir. Task Force for cut in Power tariff. Dawn, June 9, 2003. 16) Tarar, Col. Muhammad Safir, WAPDA’s Performance in Power Sector. Dawn, August 26, 2002. 17) Bashar, Amanullah. The Power crisis. Pakistan and Gulf Economist, April 30, 2001. 18) Bahar, Amanullah. KESC - Problems all-round. Pakistan and Gulf Economist, October 2, 2000. 19) Policy for Framework and Package of Incentives for Private Sector Hydel Power Generation Projects in Pakistan. May 1995. Government of Pakistan. 140

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