Business Research Methods

Submitted To
Sir Rasheed

Submitted By
M.Zahid Iqbal
10645
Fazan Raza
10646

M.B.A 3rd (EVENING)

Acknowledgement
Thanks to the ALMIGHTY ALLAH, the merciful most
beneficial, for everything He has given us & all that has not.

First of all we are thankful to our honorable Sir Rasheed for

giving us chance to improve our skills by making research on
the topic energy crises impact on industrial sector. This will
definitely help us building our talent, skills and for better
opportunities.

We pay thanks to every person who helped us in the

research to complete the topic on energy crises impact on
industrial sector, specially our friends, and respected
teachers because with out there appreciation and help the
research on this topic cannot be completed.

Last but not the least our beloved PARENTS.

Preface

In this report we are trying to give a important Information

for our topic energy crises impact on industrial sector. We have done
our level best to make our readers aware about this topic. To make
them able to imagine what is the importance of this topic.

We have described firstly the introduction on energy

crises in Pakistan, Strategies of energy crises, define the actual
problems, impact on imports and exports of our country due to the
energy crises, economic review and variables of energy crises and in
last give the solution to solve the energy crises in Pakistan. We give
the energy crises and the industrial out puts.
Table of Contents
• Executive summery
• Introduction
• Types of energy
• Growth
• Growth performance of components
• Variable of energy crises
Growing Economy, Growing Energy Needs
• Pakistan Trade, Exports and Imports
• Pakistan Exports Commodities
• Pakistan Exports Partners
Foreign exchange
External financing
• Banking sector
• Circular debt
• Stock market
• Inflations
• Economic business sector impact
• Impact on textile industry
• Social Sector Impacts
• Poverty and unemployment
• Future and alternative sources of energy
Alternate energy technology
Pakistan's energy crisis: short and long-term solutions
• State of energy resources
• The reason behind the crisis
• Energy conservation measures
• Measures by the government
• Conclusion
• References
Executive summery
In this report our main focus is on energy crises and its impacts
on economy of Pakistan. We are making this report for study
purpose. In making this report we use secondary data.
Introduction
Energy crises is one of the most important and highly growing
problem is Pakistan. In this report our main focus is on the energy
crises and its impacts on Pakistan’s economy. Recent rise in energy
prices, shrinking existing resources, and the search for
Alternative sources of energy and energy conservation technologies
have brought into
Focus the issue of causality between energy use and economic
growth. economic growth may affect the demand for energy
Significantly.
The country may face energy crisis by the year 2007 following healthy
growth of 13 per cent in electricity demand during the last quarter,
which will erode surplus production in absence of commissioning of
any new power generation project during this financial year.
As per Pakistan Economic Survey 2003-04, electricity consumption
has increased by 8.6 per cent during first three-quarter of last fiscal
year. However, a top level WAPDA official maintained that electricity
demand surged up to 13 per cent during last quarter.
Chairman WAPDA Tariq Hamid at a Press conference early this year
warned about the possible energy crisis and stressed the need for
‘quantum jump’ in power generation. The experts say it could only be
possible through a mega project of hydropower generation; otherwise
the gap between firm supply and peak demand will remain on the rise.

Types of Energy
Electricity
Natural Gas
Oil
Hydro
Coal
Nuclear
Electricity
Pakistan produces about 19,500 MW of electric power.

There is currently load shedding of up to 700 MW a day.

Electricity demand is expected to grow by eight per cent a year during

the period 2005 — 2015.

An annual installation capacity of about 2000 MW is required for the

next 10 years.

Pakistan can overcome the energy crises by increasing the

generation of electricity from different ways.

Natural Gas
Pakistan’s gas reserves are 32.8 TCF at present.

Annual production at present is about 1.16 TCF.

A demand gap of about four per cent of the total demand, is expected
in 2010.

Gas supply would fall from 32.6 MTOE in 2010 to 20.7 MTOE in 2025.

Demand is expected to grow continuously, quadrupling in 2025.

Pakistan can overcome the energy crises by increasing the by

increasing the utilization of the Natural gas.
 Oil
All predictions now failing and the oil prices are rising and now about
to reach 100 level. Who knows that in market trading if even the
customers are buying the oil on +100 $. The reason being given for
this enormous rise is the US oil reserves are depleting and therefore
customers are ready to purchase the oil at any price available. The
future prospects also not encouraging. All trading is being made on
+90 $. OPEC promised to raise its out put but with out any IPRI Fact
file 16 significant effects. For the time being the prices were dipped
but raised again on much higher values. The winter is just arriving and
nobody knows that these prices will settle at what level. Rising tension
between US and Iran is one reason. Some sources are predicting the
attack on Iran is imminent. If the condition continues like this who is
going to benefited. Emerging economies and developing will suffer
most. Their economy is dependent on energy resources. How can
survive and how can they meet their production commitments. In
recent months oil surged from 70$ to 92$ and still rising. Those
industries which consume more energy will suffer with maximum. It
will lead to rise of inflation shutting down in efficient industries and
rising unemployment in third world countries. When come to individual
the poor will suffer most .High income group will survive and it will not
effect on their livings. But the strains coming on poor in third world
countries will transform to social unrest and hence will cause
instability in the region.

Pakistan economy is already under intense pressure. On one hand it

has the competitors like China and India giving cut throat fight.
Another end it has continuous problem on its western borders
draining its resources and causing political chaos.

Pakistan exports and its all economic activities are dependent of

uninterrupted energy supplies for its energy requirement maximum
share still of furnace which is imported from Middle East countries.
Rising prices will bring a wave of inflation.
Already many textile mills closed down due to higher production costs
which make it uneconomical further increase in oil prices will definitely
bring more strain on existing working units. Firstly Government
absorbs the fuel bills, now this time Govt. increase the prices which
directly affect on the poor people of Pakistan.

Today only there are news that Pakistan is going ahead 2000 MW
power plant based on furnace oil. Now we have to look for the future
and sustainable economic activity.

Development of Renewable energy resources is not moving ahead

beyond symposiums and conferences or in other crude words lip
services. Pakistan's future as economic leader in the region is at
stake if sustainable cheap energy resources are not developed on
priority. Energy Crisis in Pakistan will increase, so the solution is not
so simple for the energy crises in Pakistan. The hurdles should be
identified and removed on priority.

One area which we want to emphasize is the conservation of energy.

We have to persuade all concerned that all possible measures to be
taken to save energy so it can be used for future.

Energy efficient plants and machines are the recipe for our survival.

Oil import bill amounted to about $3.5 billion in 2004-05.

Last year’s oil import bill amounted to about $6.5 billion.

Oil prices burden expected to be even higher in future.

Pakistan can overcome the energy crises by increasing the by

increasing the utilization of the Oil of Pakistan.
Wind Energy
Pakistan is facing acute shortage of energy. with 7% increase of its
economy this short fall soon to slow down its economic growth and
will shatter its dream to become one day a developed country.

Most of its energy demand is being met with either Hydro power or
thermal units. Pakistan is spending a very large amount of foreign
exchange to purchase the furnace. The gas reserves already start
depleting and oil markets are sky rocketing. To overcome this
shortage Government take a initiative to investigate Alternate energy
resources in Pakistan developed Alternate Energy Board AEDB. The
Board is headed by Ret Air Marshal Shahid Hamid. Identified 50,000
MW energy potential from wind resource

Pakistan is blessed with a large resource of wind corridor. Although

Pakistan meteorological Department was gathering wind data for
quite long time but recently United States provided wind energy map
for Pakistan which confirms a strong wind corridor in Sind coastal
area.

AEDB issued about 80 LOI to the investors List of LOI holders to

develop 50 MW wind farms. Out of which 15 are already issued the
land and feasibility reports and financial closings are in progress.

The following is a brief road map for developing a wind form

1. Submission of proposal by sponsor

2. Review of proposal by AEDB
3. Posting of Bank Guarantee
4. Issuance of letter of intent (LOI)
5. Feasibility study
6. Generation License
7. Tariff Determination
8. Submission of Performance Guarantee
9. Tariff determination by NEPRA
10. Submission of performance guarantee
11. Issuance of Letter of support
HYDEL ENERGY
Water flowing in the rivers has kinetic energy. Once they are used to
drive the turbine and produce electricity the power generated as
Hydel Energy.
Power produced by the turbines depends on quantity of water
flowing/minute and the head of water available.
Mostly river flows by melting glaciers on high mountains. Once
the water start flowing in the valleys it changes its head very rapidly.
This energy can be converted into electrical energy.

Two methods are normally used:-

1. Dams
2. Run of River projects.

In case of Dams the water flow is restricted by making a huge

storage device and the head of water is increased, the water then is
allowed to flow by means of gates and pass through the turbines, the
head of reservoir level is maintained to provide uniform power, and
the water stored in peak season additionally is used for irrigation
purposes in dry seasons.
In run of river projects the water is diverted through the tunnels
and once it gains the head allowed to fall and pass through the
turbines and back to river. the water in these projects is continuously
flowing and not being stored.
Geographical situation is paramount importance in choosing a
suitable site for the hydro project and it evolves a very serious time
and money consuming study.
Once a site is located further detailed feasibility study is
required before proceeding any serious effort to start the work.

The feasibility study should include following field work.

1. Detailed Mapping of the area

2. Topographic study of the area
3. Seismic refraction study
4. River flow data
5. Weather data containing, Temperatures, pressures, rain
humidity
 6. Water sampling and testing
7. Environmental study
8. Social impact
9. Wild life and fish study
10. Identification of stake holders of the area
11. Coring and getting samples of the soil at 50-200 meters
depth
12. Laboratory testing of the cores samples
13. Tectonic study to evaluate earth quake dangers

COAL ENERGY
if all The oil Reserves of Saudia Arab & Iran Put Together
These Are Approximately 375 Billion Barrels, But A Single Thar Coal
Reserve Of Sindh is about 850 Trillion Cubic Feet, Which is More
Than Oil Reserves Of Saudia & Iran.

These reserves estimated at 850 trillion cubic feet (TCF) of gas, about
30 times higher than Pakistan's proven gas reserves of 28 TCF.

Dr Murtaza Mughal president of Pakistan Economy Watch in a

statement said that these reserves of coal worth USD 25 trillion can
not only cater the electricity requirements of the country for next 100
years but also save almost four billion dollars in staggering oil import
bill.

Just 2% usage of Thar Coal Can Produce 20,000 Mega Watts of

Electricity for next 40Years,without any single Second of Load
Shedding and if the whole reserves are utilized, then it could easily be
imagined how much energy could be generated.

The coal power generation would cost Pakistan PKR 5.67 per unit
while power generated by Independent Power Projects cost PKR
9.27/-

It Requires Just Initial 420 Billion Rupees Initial Investment,

Whereas Pakistan Receives annually 1220 Billion from Tax Only
Chinese and other companies had not only carried out surveys and
feasibilities of this project but also offered 100 percent investment in
last 7 to 8 years but the “Petroleum Gang” always discouraged them
in a very systematic way

But Petroleum lobby is very strong in Pakistan and they are against
any other means of power generation except for the imported oil. This
lobby is major beneficiary of the increasing oil bill that is estimated
above 15 billion dollar this year. Even GOV. is planning to Sell all
these reserve to a company on a very low price.
When Pervaz Musharaf was president he gave green signal to
embark upon the initiation of work on exploiting energy potential of
these coal reserves of Thar under a modern strategy.

Growth
The growth in manufacturing sector of Pakistan had been steadily
declining for the last three years, as it is fell to 8.48 percent in 2007-
08 from 8.8 percent in 2006-07 and 19 .9 percent in 2004-05 (Source:
Economic Survey of Pakistan). The falling trend in the industrial
output is mainly due to capacity constraint and shutdown of many
industrial units, because of high cost of doing business. World Bank
(February 2008) points out in the report that Pakistan suffers from the
lack of infrastructure facilities in the water, irrigation, power and
transport sectors. In the energy sector, the country will face sever
shortage of around 6000 megawatt by 2010. Similarly inefficiencies in
transport sector cost the economy between 4-5 percent of GDP each
year. The major reason of current slowdown in manufacturing output
is said to be frequent power outages due to low electricity production.
The ongoing energy shortages caused by an ageing energy
infrastructure, chronic under investment in expansion and
maintenance and unsustainable pricing regimes slow industrial
output. Apart from infrastructure and capacity constraint issues
manufacturing sector would further slow down in the days to come
because of fast depreciating value of rupee against dollar, which
would made imported raw material more costly.
Energy is the most problematic issue in the world. Demand of energy
from the emerging markets like China and India growing day by day.
Pakistan with small manufacturing market surrounded by major
emerging markets like China, India, Malaysia, Indonesia, Philippines
and Bangladesh, will be worst effected by rise in energy prices.
Pakistan with official figures of 8 percent growth rate will have a
definite rise on demand of energy for minimum 3 percent. As a rule of
thumb modern day manufacturing industries utilize at least 33 percent
production cost in terms of energy prices. Any increase in energy cost
will effect the production cost and force the manufacturers that either
to reduce the labor cost or to remain competitive in market by
improving the quality standards. Major giants like China and India will
sustain with this situation but smaller economies like Pakistan will
suffer badly.

All predictions now failing as the oil prices reached its maximum ever
at around $150 per barrel. The reason has been given for this
enormous rise is the US oil reserves are depleting and therefore
customers are ready to purchase the oil at any price available. In USA
the Gulf of Mexico is famous for oil producing and refining facilities.
The prosperity of Houston is only due to oil industry being flourished.
However the weather is not so kind in this area and hurricanes and
tornados commonly hit the southern part of USA and Caribbean.
Volatility of oil market is such, that just news of one hurricane
developing in Caribbean shoots the oil prices in the world. A few
years before oil was being trade on $20 per barrel and no body ever
thought that the weather conditions in the Gulf can effect the oil
market. The future prospects are not very encouraging. Emerging and
developing economies like Pakistan will suffer most. Those industries
which consume more energy will suffer with maximum. It will lead to
rise of inflation, shutting down industries and rising unemployment in
the third world countries.

Pakistan’s economy is already under intense pressure due to the

competitors like China and India giving cut throat flight, at the other
end it has continuous problem on its western boarders draining its
resources. Pakistan exports and all its economic activities are
dependent on uninterrupted energy supplies. For its energy
requirement, maximum share is still of furnace, which imported from
Middle East countries. Already many industrial units closed down due
to higher production costs which make it uneconomical. Further
increase in oil prices will defiantly bring more strain on existing
working units.

On famous oil embargo days a lot of research in Europe was carried

out to find the alternate source of energy. The findings are available
even in college books. However with the drop of oil prices such
alternatives were uneconomical and therefore shelved. This is the
time that Pakistan now asses very carefully that in case of rising oil
prices what actions it should take to conserve energy and to find the
alternate source of energy. A volunteer option for all energy users is
to conserve energy, to make the plants more efficient and to see that
each drop of energy is saved. If we make serious study on this
subject then we may achieve up to 20% saving in energy, hence
saving in our production cost and making our products more attractive
in international market. Of course the energy conservation programs
cost money. However the investment will be rewarding and will be
beneficial in long terms.

Pakistan’s thermal units are day by day become aging, reducing their
output power. A liberal and progressive policy with less bureaucratic
approach towards energy producing units will help and bring attractive
investment in power sector. Water conservation projects focusing on
the paving of water courses to prevent 40 percent of irrigation water
that is lost due to seepage have also become imperative. Coal-based
power generation may be one option given the country's huge coal
deposits in Southern Sindh Province. Development of renewable
energy resources is not moving ahead beyond symposiums and
conferences. Pakistan’s industrial sector is at stake if sustainable
cheap energy resources are not developed on priority. Energy
efficient plants and machines are the recipe for our survival.
Growth Performance of Components of Gross National Product

Despite severe challenges, the economy has shown resilience in the

outgoing year. Growth in Gross Domestic Product (GDP) for 2009‐10,
on an inflation‐adjusted basis, has been recorded at a provisional
4.1%. This compares with GDP growth of 1.2% (revised) in the
previous year. For the outgoing year, the Agriculture sector grew an
estimated 2%, against a target of 3.8%, and Economic Survey 2009‐
10 previous year’s growth rate of 4%. While the Crops sub‐sector
declined 0.4% over the previous year,

Livestock posted a healthy rise of 4.1%. The performance of the

Agriculture sector was boosted by the weakening of the El Nino
phenomenon, after late winter rains. Industrial output expanded by
4.9%, with Large Scale Manufacturing (LSM) posting a 4.4% rate of
growth. The Services sector grew 4.6%, as compared to 1.6% in
2008‐09. Overall, the Commodity Producing Sectors are estimated to
have expanded at a 3.6% pace, which represents a significant
turnaround from the anaemic growth rates of the previous two fiscal
years.

Variables for Energy Crises

Growing Economy, Growing Energy Needs

Pakistan’s economy is performing at a very high note with GDP
growing at an exceptional rate, touching 8.35% in 2004-05.

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%.
 Growing Economy, Growing Energy
Needs
With economy growing at such a pace, the energy requirements are
likely to increase with a similar rate.

Pakistan’s energy requirement by 2015 is likely to cross 120MTOE.

By 2030, the nation’s requirement will be 7 times the current

requirement reaching 361MTOE

Pakistan Trade, Exports and Imports

Pakistan’s international trade is suffering from huge amount of deficit
due to low demand for its exports. Domestic political instability also
accounts for trade deficit. The trade deficit stood at $9.7 billion in FY
2007 and rose to $15 billion in FY 2008. Pakistan is a member of
several international organizations such as ASEAN, ECO, SAFTA,
WIPO and WTO. Steps have been taken to liberalize the trade and
investment regimes of the country. Due to increasing current account
deficit, the trade gap range of maximum tariffs was raised from 20%-
25% to the 30%-35% on 300 luxury items by Pakistani government in
the 2008-09 budget. However, the growth rate of GDP dropped to
5.8% in 2008 and public and external debt indicators worsened.

The major export earnings come from textiles. The country has not
been able to expand its exports in other sections due to which it has
to suffered shifts in world demand. The government continues with its
efforts to diversify the country’s industrial base so as to expand its
exports. However, total exports fell from $21.09 billion in 2008 to
$17.87 billion 2009. The total imports also reduced from $38.19 billion
in 2008 to $28.31 billion in 2009.
Pakistan Exports Commodities
The major export commodities of Pakistan are:
• Textiles (garments, bed linen, cotton cloth, yarn)
• Rice
• Leather goods
• Sports goods
• Chemicals
• Manufactures
• Carpets and rugs

Pakistan Exports Partners

The following graph depicts Pakistan’s export partners with
percentage share as of 2008:
Foreign exchange
Pakistan’s exchange reserves decreases throughout 2008. The
state bank holding of foreign exchange reserve fell from $14.2 billion
at the end of October 2007 to #3.4 billion at the end of October 2008.

Exchange rate after remaining stable for more than four years,
lost significant value against US dollar and decrease by 21% during
March-December 2008. Most of the decrease of rupee against dollar
was recorded in post November 2007.

However, with the successful signing of standby arrangements

with the IMF, the rupee got back some of its lost value. With
substantial import compression and revival of external inflows from
abroad in the current fiscal year, the exchange rate will remain stable
at Rs 80-82 per dollar.

External financing
The global crisis has restricted Pakistan’s ability to tap
international debt capital markets to raise funds. An increasing cost of
borrowing internationally, coupled with deterioration in the country’s
credit rating has ruled out issuance of government paper as a
financing mechanism. Pakistan’s presence in the international capital
markets in 2008-09 was limited to the repayment of Eurobond
amounting to US$ 500 million made in February 2009 with no new
issuance at the backdrop of financial crisis engulfing the global
markets.
 Banking sector
According to Fitch ratings, “the Pakistani banking system has,
over the last decade, gradually evolved from a weak state-owned to a
slightly improved and active private sector motivated system. But as
of end 2008, data from the banking sector confirms a slow down. As
of October 2008, total deposits fell from Rs 3.77 trillion in September
to Rs 3.67 trillion. Provisions for losses over the same period went up
from Rs 173 billion in September to Rs178.9 billion in October.

Market analyst Muhammad Suhail told the Los Angeles times.

“The global crisis has really fuel to the fire. There was a time window
earlier this year to address all this, and we missed it.” The drying up of
credit internationally has hit Pakistan hard with the banking system
suffering a severe liquidity problem. Overnight call rates rises so
much and its ranging from 32 to 40 percent.

Circular debt
On 26 January 2009, Raja Pervaiz Ashraf, Minister for water
and power, told the senate that the “federal government will settle half
of the Rs 400 billion circular debt by the end of January.”

Circular debt arises when the Government of Pakistan owes

and is unable to pay billions of rupees to oil marketing companies
(OMC) an to independent power producers (IPPs).

Stock market
The Karachi stock market exchange (KSE) is Pakistan’s largest and
the runniest
exchange. It was the “Best performing stock market of the world for
the year 2002.”

Due to the global financial crisis stock market also disturbs very
much. As of the last day of December 2008 , Karachi stock exchange
had a total of 653 companies listed with an accumulated market
capitalization of Rs 1.85 trillion ( $23 billion). On 26 December 2007,
Karachi stock exchange, as represented by the KSE-100 index closed
at 14814 points, its highest close ever, with a market capitalization of
Rs 4.57 trillion ($58 billion). As of 23 January 2009, KSE-100 index
stood at 4929 points with a market capitalization of Rs 1.58 trillion
($20 billion), a loss of over 65 percent from its highest point ever.
Inflations
Rising food and fuel prices have been a major source of
inflationary pressure in South Asian countries especially Pakistan. In
Pakistan, food prices mad a bigger impact on inflation than fuel, and
wheat prices more than doubled, due to poor domestic production and
export restrictions. The combined effects of lower food and fuel prices
along with demand management are reducing inflationary pressure in
most South Asian countries but conditions have not been that
favorable in case of Pakistan.

In the year 2009 core inflation rose to 18% from the 14.7%
2008. In year 2009 inflation accelerated at rapid speed mainly
because of food prices which increased as a result of high prices of
widely consumable items such wheat, wheat flour , sugar and meat
etc, owing to their to their supple shortage
Economic business sector impact
Economic activity is the life blood of a nation. For a country to
survive it is important that its economy is sound and successful and
that business activity flourishes, but the global credit crisis and
liquidity problems of many global corporations have already led to net
capital outflows from rising markets, uncertain new investment
projects.

With fast depleting international reserves there is growing fear

that the country may be forced into failure to pay on its foreign
obligations. It was because of the fear that on October 6, standard
and poor’s and moody’s, two of the largest rating agencies,
downgraded Pakistani bonds. This has a created a terror and
investors have begun to fear weathers’ Pakistan will be able to pay
them back.

Impact on textile industry

Pakistan textile industry is facing an uncertain environment. Following
few factors like increase in input cost of minimum wage by 50 percent,
increasing interest rates, non-guaranteed energy supplies, lack of R
and D and reduction in cotton production, put a negative impact on
the industry’s competitiveness internationally, because of the entire
situations the companies are downsizing. Production units are being
shut down and around 5000000 of the workers lost their jobs. After
surviving load shedding now industries have face gas load shedding
this also increase their cost so that’s why our industry didn’t progress
and gets into loss. When light is gone in industry it take almost 30
minutes to start work again and that’s the big problem your time also
waste and your cost also increasing.

Social Sector Impacts

Every problem that enters the society has its social costs that
the country has to bear. Pakistan where poverty and unemployment is
much already, financial crisis increases the situation.
 Poverty and unemployment
Food prices have a large bearing on poverty rate. A review of
price trends of essential items during 2007-08 indicates that the prices
of daily life such as wheat, flour, rice, edible, oil, vegetables and
pulses. Since April 2007, the economy has witnessed over 200%
increase in the price of palm oil; and an increase of 150% in wheat
prices, while over 100% increase in the price of oil in the international
market.

The government estimates that about 25% of population live below

the poverty
line and this average increases just because of food inflation.

Economic growth has slowed down considerably during the last

three years. The industry and construction sectors have contracted
due to the domestic slowdown and energy shortage and also due to
global recession. People are being laid-off especially from foreign or
multinational companies in order to reduce costs through downsizing.
It has become even tougher for a freshman to find a suitable job than
it was five years from now. According to one estimate, Pakistan’s
unemployment rate in urban areas is nearly 40% and in rural areas
over 60%. Increase in poverty means, decrease in average standard
of living, poor health and education, and low-paying job, more
population which is again makes it difficult to maintain their needs
Future and alternative sources of energy
Some experts argue that the world is heading towards a global
energy crisis due to a decline in the availability of cheap oil and
recommend a decreasing dependency on fossil fuel. This has led
to increasing interest in alternate power/fuel research such as fuel
cell technology, hydrogen fuel, biomethanol, biodiesel, Karrick
process, solar energy, tidal energy and wind energy. To date, only
hydroelectricity and nuclear power have been significant
alternatives to fossil fuel (see Future energy development), with
big ecological problems (residues and water spending). Hydrogen
gas is currently produced at a net energy loss from natural gas,
which is also experiencing declining production in North America
and elsewhere. When not produced from natural gas, hydrogen
still needs another source of energy to create it, also at a loss
during the process. This has led to hydrogen being regarded as a
'carrier' of energy rather than a 'source'.
There have been alarming predictions by groups such as the Club
of Rome that the world would run out of oil in the late 20th century.
Although technology has made oil extraction more efficient, the
world is having to struggle to provide oil by using increasingly
costly and less productive methods such as deep sea drilling, and
developing environmentally sensitive areas such as the Arctic
National Wildlife Refuge. The world's population continues to grow
at a quarter of a million people per day, increasing the
consumption of energy. The per capita energy consumption of
China, India and other developing nations continues to increase
as the people living in these countries adopt western lifestyles. At
present a small part of the world's population consumes a large
part of its resources, with the United States and its population of
296 million people consuming more oil than China with its
population of 1.3 billion people.
Efficiency mechanisms such as Negawatt power can provide
significantly increased supply. It is a term used to describe the
trading of increased efficiency, using consumption efficiency to
increase available market supply rather than by increasing plant
generationcapacity.

ALTERNATE ENERGY TECHNOLOGY

The Energy Minister’s statement that country will have to face the
current energy crisis for next three years shows that he is unable to
alleviate the misery of average Pakistani family and expects them to
conduct daily routine chores in extreme summer heat without eight to
sixteen hours of electricity. It brings us to : 1) Energy Minister has
failed to come up with a solution to end energy crisis including
nationalization of energy sector and adoption of alternate energy. 2)
Which law permits country’s rulers to enjoy uninterrupted supply of
electricity while the public who they serve suffers due to load
shedding for no fault of their own?

Can PM justify uninterrupted supply of electricity in VIP pockets

across the country while average Pakistanis face unending power
rationing? Similarly, will the rulers clarify for the ordinary people which
law allows backup generators for hundreds and thousands of such
VIPs nationwide whose number is growing by the hour? Shouldn’t the
country’s law lords be taking suo moto notices to end generator
culture by unveiling number of generators being used for the VIPs,
how much they cost to the national exchequer annually and which law
authorizes the procurement, maintenance and fueling. There is no
provision in country’s laws that authorize spending and regularization
of billions of tax-rupees being wasted on the procurement, running
and maintenance of these illegal generators.

It is hoped concerned including Public Accounts Committee, citizen

watch groups, legal fraternity will help country’s courts and PM to end
wastage of tax dollars amidst reports that current 522 billion fiscal
deficit will climb to 957 billion by the end of fiscal year 2007/8 and an
another impending fuel prices increase before June 30. Thereby
rendering immediate borrowing of some three billion US dollar loan to
sustain country’s (failing) economy. These figures, energy minister’s
statement of requiring three-year gestation period for permanently
ending long hours of load shedding and instead calling for adoption of
energy conservation measures mandate PMs intervention to end the
misery of an average Pakistani who has been forced to face summer
heat and humidity for no fault of his own and pay for national policy
failure and corruption.

PM to show genuine support for people’s plight and as part of

austerity drive should ordering following steps to end corruption in
electricity and gas departments: 1) Inclusion of all VIP areas across
the country including Islamabad into the current load shedding
schedule. 2) Across the board removal of generators and air-
conditioning/heating systems from govt. offices and residences to end
VIP culture and save energy consumption. 3) Withdraw
subsidized/free electricity/gas for public servants, office holders and
govt. departments because it encourages waste and negates basic
spirit of country’s IPRI Fact file law. Otherwise, also lawmakers and
govt. employees as public servants cannot have free gas and
electricity paid by tax money, which is not extended to the masses. 4)
The energy consumption of country’s domestic sector is less than
total consumption of free electricity given to govt. sector. Therefore,
PM should direct energy minister to save 500 MW by withdrawing free
electricity from VIPs instead of forcing load shedding at grassroots. In
fact the national leadership to set a personal example should share
equal hours of load shedding if not more.

Energy Minister in his statement on the floor of the house said that
50/100 MW of electricity will be generated from wind turbines. The
amount reflects PPPP’s flawed energy policy stressing on long and
midterm plans thereby failing to provide immediate relief to masses.
PM should issue immediate directions to incorporate feasible
alternate energy technology based on alternate energy mapping for
following reasons: 1) it can provide quick and sustainable solution for
domestic sector that consumes less than 13% of total generated
electricity. 2) In- step with international policy replace 20-25 percent of
fossil fuel based current energy generation with alternate energy. 3)
Cut fossil fuel imports to reduce foreign currency expenditure. 4) the
‘plug and play’ and main grid compatibility of these alternate energy
options can alleviate misery of masses suffering the heat at
grassroots due to 8/16 hour protracted load shedding schedules.

Therefore, it is need of the hour to permanently shift country’s

domestic and agriculture sectors to alternate energy to permanently
end load shedding, reduce electricity bills and cut costs on import of
ever increasing fuel prices. In this regard, state of the art affordable
wind turbines, solar panels, photovoltaic panels can play an important
role to help realize the objectives: 1) The ‘plug and play’ and ‘grid
ready’ alternate energy technology can bring immediate relief at
grassroots and end three year waiting period. 2) These alternate
energy solutions are cheaper because: (a) Due to their proximity to
consumers it reduces line losses, which in turn reduces energy cost.
For example, the alternate energy helps cut line losses internationally
accepted standards of 5-7% against Pakistan’s reported line losses
exceeding 45 percent of total production, (independent observers put
at 65%), which in turn forces per unit electricity prices increase to
recover cost of lines losses and thefts.(b) It will allow energy
generation at districts, tehsils and individual level, which in turn will
help end corruption at all levels and cut over head costs. 3). Cheaper
energy will promote small/medium industrial and manufacturing
setups with multiple advantages including generation/sustenance of
millions of jobs. 4) Cheaper sustainable alternate energy solutions will
support and sustain country’s agri-sector offering critical advantages
including produce increase and increasing employment opportunities.
5) Reduce energy related disputes between federation and provinces.
The fact of the matter is alternate energy as highlighted in my article
‘time for nationalized energy sector’,
http://pakobserver.net/200804/17/Articles03.asp is a cheaper and with
50,000 MW growth potential is the sustainable way forward to end
load shedding, provide relief at grassroots and meet international
standards of ‘greener earth’ as part of cleaner global environment.
However, it is the mindset than actual challenges in energy field that
needs to be addressed as highlighted in my article ‘energy crisis and
corruption nexus’ dated 7 Jan.
http://www.pakobserver.net/200801/07/Articles04.asp. PM need to
help end corruption and stakes blocking adoption of alternate energy
to provide relief to masses, uplift agri-sector and facilitate country’s
economic progress. In this regard Nawaz Sharif can play an important
role by promoting adoption of alternate energy in Punjab. The model
in turn can be copied by the rest of the country to provide relief to
masses, sustain and generate growth and jobs in country’s agri-
sector. In short 4200 MW can be generated by 1600 wind turbines
with each generating of 3 MWs. The shift to alternate energy can help
Pakistan save 300 billion rupees (4.6 billion dollars) being paid in
annual subsidies to energy companies at the rate of 25 billion rupees
per month. The purchase of 1600 wind turbines should cost around
0.192 billion dollars (1600 x $1,20,000 per piece) which is not only
fraction of 4.6 billion dollars being currently paid under subsidy head
but will also cut expenditure on import of costly furnace oil and ease
pressure on foreign reserves etc. Logically, the adoption of alternate
energy technology should reduce per unit cost with every passing
year. All this makes sense in wake of growing oil prices.

Finally, it is need of the hour to provide relief at grassroots by

incorporating available alternate energy technologies in national
energy policy. It will help agri-sector and the industrial sector can be
facilitated to adopt alternate energy technology. It will help reduce
expenditure on fuel imports and foreign reserve.

The nationalization of energy sector and adoption of alternation

energy technology can go hand in hand with already approved long
and medium term policies and projects based on traditional resources
of energy generation.

Pakistan's energy crisis: short and long-

term solutions
Pakistan is in the grip of a serious energy crisis that is affecting all
sectors of the economy and the various segments of the society. As
the situation stands to-day, there are hardly any immediate solutions
to resolve the issue. A change of attitude and a change of life style is
needed at the national level which should be triggered by the ruling
elite and followed by all segments of the society that have access to
electricity. At best there could be some short and long-term solutions
to the crisis but they need immediate planning and execution with an
enormous investment. None of the previous rulers of the country
solved the issue due to which the energy crisis kept on increasing
regularly.

State of energy resources

Pakistan has a deficit of fossils or hydrocarbons sources of energy
and to cover up the deficit, it depends upon importing crude oil at an
enormous cost from its meager forex reserves. The need of crude oil
is on an increase because of an improved life style which has
necessitated the use of vehicles and cars for transportation. Import of
oil at around $110 per barrel, increases the trade deficit and the
current account deficit. It makes fiscal management a difficult task
which affects the government as well as the people.
Contrary to the deficit of fossils or hydrocarbon resources, Pakistan is
rich in hydro resources of energy. According to an estimate the
country has enough resources to generate approximately 40000 mw
of hydro-electricity. However, presently it only generates 8000 mw of
electricity against an installed capacity of 11327 mw. In addition the
country can generate electricity with the help of wind and solar energy
which has not yet been exploited to meet the energy deficit. Nuclear
energy is yet another source of energy and at present PAEC
produces 472 mw. It is far less than what PAEC should have been
producing to meet the energy deficit.

Three major electricity generation agencies presently operate in the

country. They have a total installed capacity of around 19522 mw.
Their installed capacities are as follows: WAPADA: 11327 mw; KESC:
1756 mw and Independent Power Producers (IPPs), 5977 mw. PAEC
produces 472 mw as stated earlier. Thermal power accounts for 64
per cent of the total installed capacity, hydro-electricity accounts for
33 per cent and nuclear power plants account for 3 per cent. Thermal
power is mostly produced by burning either natural gas or imported
oil. The country is yet to switch over to coal from the indigenous
source of energy that is estimated to be the third largest in the world
with a reserve of 33.0 trillion tons.

The Energy market has been changing according to the demands of

power consumption. The Prices of energy raw materials also kept
changing. According to an analysis, in the fiscal year 1990-91
hydropower accounted for 45 per cent of all electricity produced in the
country but it was reduced to 26 per cent with a 10-year period. The
share of thermally generated electricity increased from 54 per cent to
71 per cent during the same period. Needs of most of the
commercially used oil are met by imports whose prices have
skyrocketed during past five years and as such the cost of power
generation through oil has increased.

Power consumption because of increasing needs of industry,

agriculture and households has been on the rise. According to an
estimate, between the period of 1990 and 2003 the total consumption
increased by 84 per cent, from 31twh to 57twh. Presently, an annual
average increase of 7 per cent has been postulated. The energy
sector, in which the government has a greater role to play, will have to
work hard to make up for the existing deficit and to meet the growing
demand.

The reason behind the crisis

An important question in the midst of ongoing power shortage crisis,
being raised is that why the energy crisis looms on our head after an
interval of around 10-15 years despite the fact that statistics about
energy resources, demand and consumption are well articulated.
They are also readily available to planning commission and other
federal and provincial governments. The answer is simple; poor
management, lopsided priorities and lack of accountability on part of
those who stay at the helm of affairs.

In the early 90s, the power crisis had started emerging and the
political government that was mandated to govern the country was
faced with the issue of power crisis. The government had to resolve
the crisis by engaging almost 19 Independent Power Producers (IPP).
19 IPP projects were initiated with an installed capacity of 3158 mw
and investment of $4.0 billion and by March 2003 the installed
capacity was at 2728 mw that has reached to 5977 mw through
expansion. Till 2005, supply of electricity produced through different
power generating units was surplus to demand by around 450 mw but
since then demand has been outstripping supply because there was
practically no additional power generation.

The government did not anticipate that there would be an increase in

demand of electricity and it was its responsibility to arrange the supply
according to the demand. Consequently, during summer, 2007,
supply of electricity ran short of 2500 mw. It is being anticipated that
this year the deficit between supply and demand could be as high as
3000 mw. By the end of year 2010, the deficit could be as large as
5500 mw. There are no immediate solutions to generating additional
power through any source because a unit takes at least 2-3years to
establish properly. More than 5 years is required to construct a
hydroelectric dam and the investment is enormous. This crisis has
literally paralysed the construction industry, badly affected agriculture
and made life hell for the citizens. In view of existing ground realities
and constraints to address power crisis by generating electricity within
a short span of a few months, the need to make the best use of
existing power generation by taking conservation measures at
individual, community and national level are essential. These
measures if implemented with commitment and honesty of purpose
can help a lot of people to over come negative implications of power
crisis.

Energy conservation measures

Energy conservation or efficient use of electricity is what is needed at
this crucial time. There are three major users of electricity and they
need to be educated and motivated to play their role in energy
conservation. The three stakeholders are: industrial sector, transport
sector and domestic/household sector. Each sector needs to be dealt
separately to high light the efficacy of conserving energy.

The Industrial sector is consuming the largest amount of energy in the

country. It consumes around 45 per cent of the total commercial
energy. Most of them are concentrated in a few industrial areas close
to or within large cities such as Karachi, Lahore and other
comparatively smaller cities. Industrial units are not energy efficient
and management practices also need improvement to make efficient
use of electricity. A study carried out by the ENERCON reveals that
efficient use of electricity by the industrial sector could save up to 23
per cent of electricity. The focus on energy conservation is on the
improvement of steam distribution systems, air conditioning,
refrigeration and modernising and revamping energy efficient
combustion processes and controls.

The transport sector is the second largest consumer of energy.

According to an ENERCON study, this sector consumes 28 per cent
of total national consumption of energy. This could be reduced by 10
per cent if car owners alone were to economise on consumption of
fuel and kept their car engines fully tuned up. The sector has the
potential to be 20 per cent energy-efficient if railways, shipping and
aviation are included. One of the visible constraints that keeps the
industrial and transport sector away from being energy-efficient is the
lack of observing energy conservation rules and regulations which are
already laid down by the government. Their focus is perhaps on short-
term gains that run contrary to national interest.
The third largest consumer of electricity is domestic/household sector
that consumes around 21 per cent of electricity produced in the
country. According to a study this sector could be efficient by 30 per
cent by avoiding wasteful habits of consuming energy such as
keeping markets fully lit etc. A positive development that has so far
taken place in this sector is gradual shifting over to use of energy
savers. Similarly energy could be saved by minimum use of air
conditioners. The entire household should be well-aware of energy
consumption.

To achieve meaningful results about conservation of energy the

charity should start from home, that is, the ruling elite should take the
initiative and set example to conserve energy as a national imperative
for emulation by other segments of the society. If conservation
measures stated above were to be implemented partially, it would go
a long way in addressing the energy crisis immediately without any
additional cost.

Measures by the government

The outgoing government had belatedly addressed the power crisis
by hyping up the construction of mega hydro-electric dams including
politically controversial Kalabagh dam without going into details about
their feasibility and sources of investment. The new government has a
real big challenge of addressing the energy crisis at hand. Its first
priority should be to implement immediate measures that might bring
some relief to the public. It should also immediately embark upon the
programmme of expansion of generating capacities that has been laid
down by the previous government under “Vision 2025” programme.

It envisions increasing existing power generating capacity by 10000

mw by 2010 and around 35000 mw by 2025 at an enormous cost of
$35 billion to be shared by the government and private sector. The
share of different sources of energy is stipulated to be as follows:
hydro-electricity: 22563 mw, new gas fired plants: 4680 mw, coal fired
plants: 4350 mw, nuclear plants: 1800 mw and finally 1500 mw from
renewable energy resources. It is certainly an ambitious plan that
needs to be implemented on priority basis with changes that the new
government might like to make within its national policy framework.
Conclusion
It hardly needs to be emphasised that electricity is the lifeline of
national economy and the people at large. The Economy and public
life practically come to a halt because of the load shedding. The
existing crisis can be addressed by the government by taking prompt
measures. There is hardly any room for neglect or delay.

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