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Dr. Gulfaraz Ahmed

The writer holds a PhD degree from Stanford University, California USA. He is a former Federal Secretary and has been CEO/Chairman of OGDCL and Chairman NEPRA. E-mail: [email protected]

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Hilal English

Empowering Pakistan: Navigating the Path to Sustainable Energy Autarky

May 2024

Securing energy self-sufficiency is pivotal for Pakistan's future prospects. Endowed with a strategic location and abundant resources, Pakistan holds the potential to become a regional powerhouse. Yet, attaining energy autonomy remains a crucial factor in actualizing this vision.



The buoyant economy of any country is built around the dynamics of sustainable energy autarky. It is not possible to generate the required economic output without a reliable energy economy. It might be useful to briefly trace the advent of various sources of commercial energy that characterize the modern age. Coal appeared as the first commercial source of energy around the middle of the 18th Century, replacing firewood. A hundred years later, oil made its debut in the middle of the 19th Century. Natural gas and nuclear energy became commercially available around the middle of the 20th Century, 1950.
The periodicity of one hundred years is a curious coincidence. The year 1950 was a very special period when the world stood divided among the haves of energy like the CECD, and the developing world that had abysmally low levels of energy consumption or economic generation. Seventy years on till the present time, widespread energy availability has become a major challenge for nations with developing economies and lower gross domestic product (GDP). It has become a catch-twenty-two challenge: You cannot import the required amount of energy without the support of a buoyant economy, and you cannot have a buoyant economy without an adequate supply of energy.
Besides the factor of energy availability, there is the important matter of energy efficiency, which helps generate more wealth with less energy. For example, Japan has very high energy efficiency, while Pakistan ranks in the bottom half of the world. Japan generates more wealth using less energy. To support a buoyant economy, we need both access to the required level of energy and optimal efficiency in the use of energy.
Pakistan has had a checkered history in both access to and efficiency in the use of energy. It has remained grossly deficient in oil, although the first oil exploration well was drilled in District Mianwali in 1859. The first discovery of oil occurred in Punjab fifty years later in 1915. Although small discoveries kept occurring, the country remained dependent on importing oil in increasing quantities. However, Pakistan struck good luck with the discovery of large deposits of natural gas at Sui in Balochistan and Marri in Sindh in the 1950s. The government of the time moved swiftly to extend the pipeline infrastructure to Karachi and began fuelling the new industrial complex at SITE by 1954. Indigenous production of natural gas continued to grow, and the country remained in surplus in gas until 2005. However, no major gas discovery occurred and gas shortages set in 2011.
Importing natural gas became crucial after 2011, yet issues have hindered the materialization of regional interstate gas pipelines, such as the Turkmenistan-Afghanistan-Pakistan-India Natural Gas Pipeline (TAPI) for importing landlocked gas from Turkmenistan, and the Iran-Pakistan gas pipeline for importing from Iran.


A very positive development in the case of the hydel power, which has now reached over 15,000 MW and a few major projects including Ghazi Barotha with 4500 MW generation capacity are under construction. 


The import of Liquefied Natural Gas (LNG) began in 2015. The economics of LNG importation continued to present challenges for our struggling economy. Following the start of the war in Ukraine, the global energy supply experienced international upheaval due to severe economic sanctions on the export of oil and gas from Russia to its dependent markets in Europe. Gas constituted the major source of power generation in Pakistan, accounting for 46 percent in 2019. However, in 2022, Pakistan refrained from bidding on ten LNG cargoes due to the high price of LNG. At one point, the price of LNG, which typically sold for under 10 dollars, exceeded 50 dollars per million BTU, severely limiting our ability to import the required volumes and further denting our economy.
Pakistan underwent an interesting history in the hydel power sector until 1995, as we generated over 50 percent of electricity from hydel plants like Mangla and Tarbela, which were constructed as part of the Indus Waters Treaty (IWT) in the 1960s and 1970s. However, a serious drought in 1993 reduced hydel generation to around 35 percent, resulting in blackouts and brownouts and putting pressure on the limited capacity of thermal energy. Two further accidents, involving the knocking down of a functional thermal turbine at Guddu and the accidental supply of bad oil to a major power plant at Kot Addu, accentuated the power situation. This prompted the newly elected government to introduce a new energy policy, aimed at inducting private thermal power at an exaggerated tariff of 6.5 cents per kilowatt-hour, excluding the cost of fuel, which was to be passed through.
The power was so expensive that approximately 3500 MW remained underutilized for a long time, resulting in the burden of paying capacity charges without utilizing the surplus electricity. The reality contradicted the contention of the reigning government that it was costing the economy twelve cents per unit not supplied. The intended benefit of boosting the economy through the introduction of surplus and expensive private power remained elusive, and an unsustainable benchmark of expensive power had been set to haunt our economy in the future.
About 20 years later, there occurred another phase of induction of private power of various categories of plants including hydel, coal, thermal using gas and some oil under the programme of the China-Pakistan Economic Corridor (CPEC) around 2015. Unfortunately, the required homework was not fine-tuned and the selection of the power plants and as well the schedule of completion was not meticulously synchronised with other related matters of grid capacity and the ensuing power demand. There was a crucial need to expedite the work on Economic Zones to generate productive power demand to take maximum benefit of the new installed capacity. Consequently, as some power plants became functional and the capacity payments became due, deficiencies were discovered in the evacuation of power capacity while it was hurting the economy through the heavy burden of the capacity price of the surplus new power. The glaring mismatch of relegating the Economic Zones that were supposed to utilise the new surplus power created an unsustainable situation.
There has, however, been a very positive development in the case of the hydel power, which has now reached over 15,000 MW and a few major projects including Ghazi Barotha with 4500 MW generation capacity are under construction.  Hydel generation is somewhat seasonal in nature depending on the rainfall in the catchment areas and the melting of the ice. Hydel power requires optimal synchronisation for drawing full benefits of saving of expensive power. I want to re-emphasise that it was crucial to prioritise the activation of the Economic Zones to utilise the newly installed surplus power as it is now unaffordable to pay hefty capacity price for the power not being utilised. There is a need to seek special understanding of the Chinese authorities to delay the capacity payments till our economy becomes stronger. 
The global power sector has made new strides towards renewable energy in view of the environmental threats of greenhouses gases. This includes solar power, wind power, and tidal power, etc. Solar and wind power are now nearly cost competitive with the thermal power. China has established itself as the global leader in exporting solar and wind generation, surpassing the rest of the world by almost twice the capacity. However, Pakistan faces challenges in harnessing solar energy effectively. While a mega-sized solar power plant has been installed in Cholistan, nearly half of the generated power is lost in the grid due to inefficiencies, defeating the purpose of solar energy utilization. Additionally, the dusty desert environment affects the efficiency of power generation.
To overcome these challenges, Pakistan can explore the Rooftop Solar Revolution, which has revolutionary potential. This approach would reduce grid losses and inefficiencies while providing relative autonomy to solar-powered households. It requires a priority program from authorities to offer consulting, advisory services, and financing options to facilitate widespread adoption.


The global power sector has made new strides towards renewable energy in view of the environmental threats of greenhouses gases. This includes solar power, wind power, and tidal power, etc.


Models like the one in the USA, which provides subsidies and encourages solar power usage during daylight hours, could be considered. While replicating such a model might pose economic challenges, incentivizing markets, offices, and schools to adopt rooftop solar generation could be beneficial. Moreover, identifying suitable sites for large-scale solar plants in areas with less dust and higher generation efficiency, akin to Chinese models, could be explored.
Regarding wind power, Pakistan has limited areas with harvestable wind. The government should focus on promoting wind power in these areas while controlling transmission costs. There may also be opportunities to deploy small turbines for individual household power needs where feasible. Ultimately, while the world explores advanced technologies like space-based solar plants, Pakistan can leverage its rooftops for solar energy generation.
Modernizing the national power grid stands as a long-delayed national priority, essential for economic viability and long-term cost-effectiveness. Addressing the transmission losses and gas leakage in infrastructure remains paramount, requiring investment in advanced technologies despite initial costs. While countries like Australia maintain low gas leakage rates, Pakistan faces challenges with over twice the leakage. Additionally, combating power and gas theft demands effective enforcement by energy agencies, supported by provincial governments.
Proposals to transfer distribution companies to provinces pose risks, favoring privatization if management can be improved to attract private investment. Enhancing energy sector management necessitates specialized professionals with expertise, qualifications, and experience. Regular brainstorming sessions with seasoned professionals are vital for sharing experiences and refining strategies in this competitive field. Efforts in these directions are crucial for ensuring the efficiency and sustainability of Pakistan's energy sector.


Energy self-sufficiency is vital for Pakistan's future. With its strategic location, deep coastline, and the region's deepest port, Pakistan has the potential to counterbalance the influence of other powers and emerge as a regional leader. However, achieving this status hinges on energy independence.


Presently, the country produces approximately 70,000 barrels of oil daily, meeting only about 17 percent of the national requirement. The remainder is imported, posing a significant burden on already strained foreign exchange resources. In terms of natural gas, production historically increased at about 5 percent until 2011, but has since declined by 9 percent. This decline has had an unprecedented impact on our energy security and struggling economy. Currently, we produce around 3100 MMCFD gas, covering about 76 percent of our annual consumption of approximately 4100 MMCFD, with the remainder being imported as expensive LNG. It presents a formidable challenge for our national ingenuity to efficiently utilize LNG in key sectors of the economy to ensure economic viability.
Regarding liquefied petroleum gas (LPG), our local production of approximately 2000 tons per day meets only about 45 percent of our requirement, with the remainder being imported. LPG serves as a vital household fuel source, especially in hilly areas and regions not connected to the national gas grid. Household fuel accessibility remains a significant challenge for Pakistan, particularly with less than 5 percent forest cover. Providing appropriate fuel, such as LPG, is crucial to meet the needs of the population.
It is crucial to reassess the use of natural gas as compressed natural gas (CNG) in vehicles. At one point, in 2010, Pakistan led the world in CNG vehicle usage. Before its introduction, leaded fuels created a highly corrosive environment in Karachi, with lead concentrations affecting infant brain development. Following the switch to CNG, air quality in Karachi improved despite a surge in vehicle numbers, and CNG usage reduced gasoline imports. CNG remains environmentally beneficial and economically viable, provided it is managed and priced effectively. The extensive gas pipeline network across the country facilitated widespread CNG adoption. Investing in CNG sales could further reduce gasoline or crude oil imports, offering potential economic benefits.
Energy prices in the country are highly sensitive to the cost of living index, but the IMF prioritizes safeguarding fiduciary risks to their loans, often leading to increased taxes that further burden the population and exacerbate poverty. It is imperative for the government to prioritize addressing the rising cost of living and implement policies to support vulnerable segments of the society.
Expanding the use of solar-powered tubewells could revolutionize agriculture and related industries, creating employment opportunities and alleviating poverty.
Energy self-sufficiency is vital for Pakistan's future. With its strategic location, deep coastline, and the region's deepest port, Pakistan has the potential to counterbalance the influence of other powers and emerge as a regional leader. However, achieving this status hinges on energy independence.


The author, holding a PhD from Stanford University, has served as the Chairman/CEO of OGDCL, NEPRA, and OGRA, and as the Federal Secretary of the Ministry of Petroleum and Natural Resources. Additionally, he has worked as the COO of Pakistan Petroleum and as an Advisor/Consultant for Mari Petroleum Company Limited.
E-mail: [email protected]

 

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Dr. Gulfaraz Ahmed

The writer holds a PhD degree from Stanford University, California USA. He is a former Federal Secretary and has been CEO/Chairman of OGDCL and Chairman NEPRA. E-mail: [email protected]

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