Pakistan: Energy crisis and the industrial sector

Oct 30, 2007 01:00 AM

by Dr Muhammad Asif

In the wake of the looming energy crisis in Pakistan, the supply end has to be substantially increased on a war footing in order to avoid any severe consequences that such a massive shortage of energy as experienced in the recent months could damage the socio-economics and the sovereignty of the country.
The multi-dimensional ongoing energy crisis has been having a knock on the life of every Pakistani and has shaped up into a matter of national concern. In the present age, without sufficient energy the wheel can't run on roads, industry and agriculture can't sustain, hospitals and operation theatres can't function, schools and laboratories can't work and public and private sector businesses can't operate. This is indeed the situation we are facing in Pakistan. The shortage of sufficient and affordable energy has not left any of the above-mentioned institutions operate smoothly.

This summer, the country faced an electricity deficit of over 2,500 MW. The pace at which energy demand is growing, by next summer the electricity deficit is likely to cross 4,000 MW. The energy supply end is almost in a state of stagnancy in the country and according to some careful estimates, it is feared that by 2010 the gap between demand and supply could reach up to 8,000 MW.
The situation demands a collective effort on the part of all stakeholders of society, including policy and decision makers, scientists and academia, industrialists and entrepreneurs and ordinary citizens. The industrial sector accounting for nearly 32 % of the total national primary energy consumption can play a critical role in this regard. There are three main things that can be recommended to industrialists.

Firstly, they should reduce energy consumption through applying energy conservation and management measures. Energy conservation is a process of decreasing the quantity of energy used while achieving a similar level of output primarily for financial gains. It is worth noting that energy conservation is the most economical solution to energy shortages.
In Pakistan, the industrial sector in general incorporates considerable energy losses thus lowering the level of overall operational productivity. For example, plants and equipment lack proper calibration and maintenance, and production and assembly lines run low on productivity. The industrial sector, like all others in the country, is not aware of the financial losses being incurred as a result of these inefficient practices. Even the most modern of the industries in Pakistan do not have an internal energy auditing and monitoring policy in place which is a key to energy conservation and management.

Secondly, the industrial sector should come forward and start producing its own electricity in an attempt to reduce dependency on the unreliable and inadequate national grid. The national grid is in a chaos -- on top of planned load shedding, lengthy and frequent electricity breakdowns have also become a norm. The situation is thus disturbing enough to shake the confidence of industrialists in its day-to-day operation.
The haunting situation with load shedding and power breakdowns is leaving our industry with a thin margin to stay competitive in local and international markets. There are even examples of export deadlines being missed and companies getting black-listed, thanks to the national grid.

Electricity generation by industrialists themselves is not only going to be in the very interest of the industry, it will also provide a massive relief for the national grid. Large-scale textile mills and a number of other industries are already producing their own electricity and thus they are not only self-sufficient but also in a position to sell surplus electricity. The trend needs to be copied throughout the industrial sector.
Another aspect of the matter is the ever-increasing energy prices -- gas and electricity prices are going up drastically. Every quarter, energy bills hit new heights due to jumps in gas and furnace oil prices.

Having in mind thecrucial status of energy prices in the overall operational cost of a production/manufacturing facility, frequent and extensive increments in fuel prices is leaving devastating impacts on the industrial sector. Statistics indicate that over the last decade, gas and furnace oil prices in the country have seen a 100 % and 500 % rise, respectively.
It should be remembered that the said increments in fuel prices to a certain extent are linked with the international markets. Pakistan therefore has to respond to global price trends in the energy market although the degree of profits government earns on them remains to be a debatable issue. With in-house electricity generation, the industry will be in a slightly better position to withstand the shocks of increasing fuel prices.

Thirdly; industrialists, investors and businessmen have to take the energy sector on board as a potential area of business. It is inevitable for Pakistan in order to run its businesses safely to supplement its energy supply end with over 1,000 MW every year. Taking benchmark figures of $ 1-1.5 mm / MW, it turns out to be a multi-billion dollar investment per annum.
It is worth noting that energy is one of the most lucrative business areas on the planet. Our industrialists and investors do not appear to be much aware of the true potential of the energy sector. Consequently, we see hundreds of millions of dollars worth business going overseas every year.

Just to give an example, India having realised the potential of the renewable energy, took timely initiatives a while ago and now has become a major exporter of renewable energy technologies, such as wind turbines and solar photovoltaic. Reports suggest that even Pakistan is in a process of purchasing some of this stuff. However, we would hardly find much disparity between the two countries, especially in terms of per capita socio-economics and human resources calibre.
The noticeable difference we find is that of vision. The state of affairs indicates that we are going to take another late start as we did in the case of the IT industry.

It is time industrialists and investors realised the true potential of the energy sector. It is important for them to closely observe the modern energy trends across the world. Investment needs to be made in both conventional and non-conventional (renewable) energy systems.
The latter has actually been growing at a faster rate than the former -- reports indicate that in 2006 investments made in renewable energy sector grew by 26 % against 2 % growth (apart from china and India where the electricity market grew by 6-9 %) in the area of conventional electricity. Therefore, emphasis should be placed not only on setting up new power generation facilities but also on technology transfer.

The writer is a lecturer in renewable energy at Glasgow Caledonian University in the UK.

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