Deciphering the energy crisis – II
As we talk of the energy crisis and the possible solutions to it, we need to understand the policies that govern the energy currently being used in Pakistan. The energy mix of Pakistan is no enigma. Primarily based on oil and gas to generate electricity, we simply do not utilise coal or focus on any other form of energy for power generation; and so, we have an alarming situation. There is over 40 per cent dependence on gas, while 30 per cent of all our power is acquired through oil. Majority of which, over 72 per cent is imported oil. This forces Pakistan to import over 300,000 bbl/day of oil.
Muhammad Saleem Sethi, Additional Secretary, Ministry of Finance, explaining the dependence on oil to the students of Public Policy at National Defence University, said that, “When oil prices peaked in at $147 a barrel, Pakistan’s finance ministry had kept funds for imports of oil in accordance with $80 a barrel. As a result, not only it had to re-allocate budget, but pay an increased price to keep the power plants running.”
In 2005, an energy plan was devised by the Government of Pakistan, which showed a heavy reliance on gas, an outcome of which is the Iran-Pakistan gas pipeline agreement. Due to increased dependence on gas and imported oil, the debt in the energy sector increased to $3.6 billion dollars in the period of 2005-2008, and no new power generation plant was initiated.
Furthermore, the energy mix in of Pakistan shows only 9 per cent utilisation of coal out of which only 0.1 per cent is used for power generation. In a comparison with other countries, Pakistan lags behind to a considerable degree. It is seen that coal is responsible for 72 per cent of China’s power needs, 56 per cent of Indian needs, where as the US utilises more than 50 percent of coal in its power generation.
Globally, the share of coal in power generation is 38 per cent, compared to 0.1 per cent in Pakistan. Although, developed nations discourage power generation through coal, it should be noted that no developed nation which has this resource, had abandoned it as yet. In the past, industrialisation was started in England due to its coal reserves, and a number of English statesmen have termed it the ‘lifeline’ of the United Kingdom. Pakistan has been blessed by huge lignite coal reserves, and it is of imminent importance that the same be included in the energy mix of Pakistan. However, such an inclusion faces severe criticism from the eco-friendly post-Kyoto protocol world.
If we only take the cumulative savings into account, due to devaluation of the Pakistani currency and fluctuations in oil prices, the fuel replacement from oil to coal will save Pakistan $87 billion from one block of the Thar Coal fields alone till 2070. Cambridge Energy Research Associates estimates the Net Present Value of savings at Rs. 3.2 trillion over a period of 60 years. With these savings in view, the trade-off between environment and economy seems to be a viable option.
Pakistan is not among the great polluters of the world nor is it utilising its given resource that can easily make its energy secure in the long run. The trade-off is clearly feasible and in our favour. With newer methods of gasification of coal under-ground, even the said pollution can be lowered drastically, and the benefits of these huge reserves reaped for present and future security of our country. A chemical analysis of the given coal reserves shows that not only it is a moderate-good quality lignite coal deposit, but has a lot of moisture in it, further benefiting the gasification process. Being a non-renewable energy reserve, we also have to consider the amount of coal present in these deposits. Studies show that the deposits are enough to meet the energy requirements of Pakistan for at least the next 200 years.
Whether or not we will start the extraction in 200 years is a different debate altogether. Until and unless our policymakers realise the importance of stability, the suffering of the poor, and the merits of austerity, new projects will perhaps never see the light of day. Thar Coal reserves have been left untouched until recently, when a presidential order was given to start yet another committee on it – a committee, which too has not yielded any significant result due to the raging deluge that came down on our nation, drowning everything in its path.
Ajaz Ali Khan, Secretary to Sindh government, briefing about the amount of coal present in Pakistan said, “Total reserve is equivalent to 50 billion tones of oil (more than Iran and Saudi Arabia combined oil reserves) or over 2000 TCF of Gas (42 times greater than total gas reserves discovered in Pakistan so far).”
The outcomes and advantages of Thar Coal project are sustainable, is a relatively less expensive fuel, massive benefit to the economy, savings on foreign exchange, and employment generation. In May, 2007 the Asian Development Bank released a report which said; “Thar lignite once mined, is a useable fuel or carbon resource.”
On February 8, 2008, the President of Pakistan gave a green signal to once again study and initiate the Thar Coal Project for power generation. For the said purpose, Thar Coal Mining Company was initiated to provide coal for the Independent Power Plants (IPPs). This positive step has received a green signal a number of times in the past, now only if we can take the first step.
According to the research conducted by EMR in collaboration with he Petroleum Institute of Pakistan, the contribution to GDP in plants, products, services, employment, etc. would be in the range of $200 – $300 billion, which clearly exceeds the total GDP of Pakistan. Not only that but in July 2009, the World Bank team comprising Ekaterina N. Mikhaylova, Senior Project Officer Oil, Gas, Mining and Chemicals Department, Robert Murphy, a consultant of Oil, Gas, Mining Policy Division visited Thar Coal fields, it was estimated by further studies conducted that the coal deposits of the area have a very large content of water, around 40 per cent, as a result of which it will also help the local population.
Thar coal project will generate positive externalities such as creating hundreds of jobs, along with cumulative net savings, savings on valuable foreign exchange, and most importantly, energy generation and a balance in the future energy mix of Pakistan.
Policy level issues that are directly related to this project also include displacement and community issues of the local people, because there is no clear community welfare policy. Local government and people of Thar region would like to be in charge of this project and have a say in the final decision making so they not feel left out. Concerns of local people should be kept in mind; a detailed description of the project which outlines the benefits to the local community and people by creating infrastructure and jobs will help gather support for the project, and it can as a result be successfully initiated without much opposition.
Finally, one has to figure out that whether Thar coal reserves offer a positive long term solution for the energy crisis that has crippled the economy of Pakistan, or if other alternatives pose a better solution. There are a number of alternatives available to meet the increasing energy requirements of Pakistan. Besides the indigenous fuel of Thar coal, there are somewhat promising capabilities of Hydel, Wind and Solar Energy. Although, Pakistan has a considerable portion devoted to Hydel Power Generation, Wind and Solar Energy is almost entirely neglected.
It is not difficult to comprehend however, that developing Thar coal fields offer not only higher feasibility and political acceptance than many alternatives available, but it offers far higher and beneficial outcomes, advantages, and positive externalities. Through this project, the imbalance in the energy mix of Pakistan can be addressed, and so can the issue of energy security for the future, and a self-reliant economy that we so impatiently dream about.
Perhaps the crises that Pakistan is encircled in today will not allow any ground work to start in the near future, but there is a serious requirement for consideration of developing the neglected Thar coal fields. Today, all the great nations that stand tall have foundations that were once set on coal. It is about time that Pakistan realises its potential and builds for itself the same foundations, so that tomorrow it too can be a great nation through the gifts of its own land, rather than the crutches of international aid.