Nothing succeeds like power – electric power in this case. In modern societies it has become one of the most basic indicators to judge where each one of them stands at the ladder of worldly success. Pakistan, always torn between a rising demand and a lagging supply, has been running up and down this ladder quite frantically since it first brushed with watts and volts. In its efforts to keep playing the catch-up with those ahead of it, the country has traversed a whole gambit of ideas - from producing and supplying it locally, to manage it through a centrally-managed public sector organisation, to private entrepreneurs brought in to substitute for a state perennially failing to deliver.

The modes for generating, distributing and supplying electricity have changed as frequently as the economic paradigm that wins the battle of ideas in a long running war for the ownership of human spirit.

Equally numerous have been the sources to produce electricity — water, wind, sun, coal, gas and nuclear reactors. Pakistan has toyed with all of them and will keep doing so because none of them has solely been serving any nation well. An energy mix is desirable not just because none of the sources of electricity is above controversy, it is also sought because different sources cost differently — even within countries, depending on natural factors like geography and weather and man-made ones like technology and physical infrastructure.

Since electricity is not bought like fruit and other household items, there have always been arguments how best to collect money from those who consume it and at what rate.

This Special Report comprises a selection from The News on Sunday articles. It takes a long-term view of all these issues — generation, distribution, supply, management and pricing — with an aim to show how much Pakistan has done over the last decade or so to resolve them. If the readers feel that the country is still standing where it was 12 years ago, it is not because of a lack of effort on the part of various governments. Only most of those efforts have been either ill-timed and ill-directed or ill-suited to the country’s socio-economic and cultural environment. That there is no solution in sight for Pakistan’s electricity enigma is as much a statement of the fact as it is a harbinger of more troubles to come.

While the federal government is determined to privatise WAPDA in phases, people apprehend that the privatisation of Wapda’s thermal power houses would cause a rise the electricity tariff, exactly as in the aftermath of the privatisation of ghee mills and cement factories.

Not only have some prominent engineers such as Dr. Mubashir Hasan, Chaudhry Javad Akhtar and members of the Chambers of Commerce & Industry opposed the privatisation of Wapda, but panic has also spread among Wapda workers who see their future at stake.

Being the largest public utility of the nation, Wapda is providing electricity to almost 8.5 million consumers. Its profitability is important and the decision of the government asking it to pay royalty on the Tarbela Project amounting to Rs. 8 billion to the provincial government of NWFP has further raised the financial liability of this national institution.

The thermal power station at Kot Addu is a very modern unit. It is generating electricity at almost 97 paisa per unit which is likely to be reduced to 33 paisas per unit after its recycling plants are operational and the supply of gas is increased in a few months.

Secretary-general of Pakistan Wapda Hydro Electric Central Labour Union (CBA) Khurshid Ahmad says the proposed sale of Kot Addu Thermal Power Station to foreign entrepreneurs at 26% equity rate and the handing over of complete management to foreign entrepreneurs will not only cause a perpetual loss to Wapda, making it pay four times more than the cost of thermal generation.

The Hub Project is being built by private entrepreneurs at an estimated cost of Rs. 58.5 billion and would generate 1292 MW (Megawatts) by the end of next year.

"The idea of generating electricity from coal is a good one, because that is cheaper than using gas or oil," says former federal finance minister Dr. Mubashir Hasan, an engineer by profession. Dr. Mubashir, however, says the most suitable resource for power generation in Pakistan is river water, from which approximately 50,000 megawatts (MWs) of power can be generated at only 40 to 50 paisas per unit.

"After water, coal is the cheapest resource for power generation which will cost not more than one rupee per unit," he says, adding that unfortunately the government is not interested in utilizing water and coal for power generation.

Dr. Mubashir Hasan says developments in the power generation area over the last six months have shown the government is bent upon buying power generated from imported oil or local gas, which would cost two rupees a unit.

"Coal reservoirs, especially in Balochistan and Sindh, are in great abundance and must be utilised for power generation," he says. The Balochistan power generation station in Quetta is run on coal but is out of order at present because of negligence by the federal government.

According to Dr. Mubashir, proposals to generate power from coal discovered at Lakra in Sindh have been under consideration since 1974. Several feasibility reports on this have been prepared over the last 21 years. "It was, however, the government of General Ziaul Haq that took solid steps in this direction."

A great deal of attention is currently being focussed on the privatisation of Kot Addu, with a spate of uniformed and misleading reports surrounding the process. Kot Addu is the prototype project of the power sector’s privatisation. The government is in the process of learning as it embarks on this endeavour. Understandably journalists are also entering unfamiliar territory and are not cognisant with the exercise of divestiture.

What are the aims of the power sector privatisation?

The primary goal is to maximise the availability of electricity at an affordable price for the nation. To sustain a yearly growth rate of 6.5% in GDP it is estimated that Pakistan will need to increase its electricity output by at least 11%. This means that to meet this growth generation demand an annual investment of about. Rs. 58 billion is required for the next five years in the power generation sector. These forecasts do not reflect the current ‘suppressed demand’ in rural and low income communities. Electricity is currently available to only 40% of the population. This translates into an average per capita power consumption which is among the lowest in the world. The gap between the supply and demand of electricity is manifesting itself in unscheduled load shedding. Apart from the discomfort to domestic consumers, the nation is paying very heavily for the disruption in commercial and industrial activities.

NWFP Chief Minister Aftab Sherpao expressed confidence that PPP members from all provinces would adopt a united stand on Kalabagh Dam.

In an interview, he said the project would be taken up only if all provinces agree, Excerpts.

Question: What is the PPP’s stance on Kalabagh Dam?

Answer: Unless the four provinces agree on its construction, this project will not be taken up .This was highlighted by the Prime Minister when she came to Charsadda recently. Otherwise, she said, we will go for the alternative, which is Basha Dam.

We passed a resolution about Kalabagh Dam in the PPP’s central executive in 1986, and it was reiterated a year later. We still believe that if some provinces feel aggrieved by a project, it should be dropped.

Q: Is there a difference of opinion among PPP members from different provinces about Kalabagh Dam?

A: We have to adopt a stance that conforms to the needs of national integrity. Even If PPP leaders in Punjab feel that the dam should be built, they will go along with the party stance, because we are all for national solidarity.

Q: Will Kalabagh Dam really lead to water logging and salinity in the Peshawar Valley, submerge or flood Nowshera, or dislocate a large number of people?

A: The Peshawar Valley is a low-lying area, and once this dam is built the valley will become waterlogged. The SCARP projects being implemented in Mardan and Swabi districts will become ineffective. There would be a large displacement of people. We have already experienced the dislocation of people by Tarbela Dam, and they still have not been fully compensated and rehabilitated.

Building yet another dam would be detrimental to the interests of our province. These are some of the problems which NWFP would confront as a result of Kalabagh Dam, and unless these are addressed, we cannot approve the project.

Q: Is it possible to build the dam with certain adjustments, like lowering its height and reducing its harmful effects?

A: I don’t agree with that. There is a bottleneck at Attock, and even if you lower the dam’s height, the waters of the Kabul and Indus rivers would backflow during floods. Moreover, reducing the dam’s height would affect its viability. I don’t know if studies have been done, but I feel Kalabagh won’t be a viable dam at a reduced height.

Question: What is your present position on the Kalabagh Dam?

Answer: On principle, the ANP opposes all that is against the interests of our people. A survey and a WAPDA report about Kalabagh Dam alerted us that it was more harmful then beneficial for NWFP, especially the Nowshera district. Since then have opposed it tooth and nail on all fronts and in all ways...Kalabagh Dam is a dead horse now.

Q: Why is this issue still alive?

A: Thanks to our efforts, it was clearly mentioned for the first time in the 1973 Constitution that the provinces will be paid royalties for the use of their resources. Led by Wali Khan, our party demanded royalty payments, but Zulfikar Ali Bhutto agreed to pay royalty only on electricity. After that, several democratic and dictatorial governments came and went, but no one bothered to solve the water apportionment and electricity royalty issues until Nawaz Sharif.

Wali used to say that only a Punjabi prime minister could give the Frontier its rights by taking a decision to save his central government. This is what happened. NWFP got the money and presented its first deficit-free budget... People like Mustafa Khar, who have no political position or loyalty, want to become heroes for Punjabis by constructing the dam.

No government so far has dared to build the giant multi-purpose Kalabagh Dam due to political wrangling. At the heart of the issue are conflicts over how irrigation waters and royalties on hydel power generation should be shared.

Recent efforts for a consensus, launched by President Farooq Leghri and Minister for Water and Power Ghulam Mustafa Khar, have brought no positive results. The governments of NWFP and Sindh oppose the project tooth and nail.

The centre is keen to undertake the project, describing it as vital to the national economic interest but the smaller provinces fear that the major power and water benefits will accrue to Punjab.

The Nawaz Sharif government managed to resolve such long-standing issues as the National Finance Commission Award and the Water Apportionment Accord, but Kalabagh was another story.

The Nawaz government was so fearful of the controversy that despite the PML-N’s alliance with the key opponent of the project, the Awami National Party, the Kalabagh issue was not put on the agenda of the Council of Common Interests (CCI), a constitutional forum for settling vital issues concerning the whole nation. The present administration of Benazir Bhutto is also hesitant to convene a CCI meeting to discuss Kalabagh Dam.

The government was charging Rs. 0.65 per unit on the first 51 used units in 1990. Now, it is taking 0.99 for the same. It was charging Rs. 1.12 per unit for the bill above 301 used units in 1990, while it is now taking Rs. 3.23 per unit for bills above 301 used units. The increase in rates is about 300 per cent.

Wapda has little justification for the large-scale power theft in the country. These power thefts are usually disguised under the name of ‘operational losses’.

Wapda has 2,361 kilo meter long 500 KV lines, 1943 Km lines of 220 KV and 12, 462 Km 132 KV lines. There is no doubt that a proportion of electricity is lost in the system but Wapda is shy to explain as to why these operational losses vary from are to area.

Faisalabad is the biggest industrial area in Punjab but its operational losses are comparatively less. Gujranwala Area Electricity Board covers a bigger area than Lahore Area Electricity Board but operational losses in Lahore are higher.

Lahore is on top of power theft list in Punjab with 17.5 per cent theft in 1993-94, 18.4 per cent in 1994-96 and 22 per cent during August- September 1995. This loss indicates that Wapda is either apparently helpless against power thieves or its officials are involved in this game.

Despite production of over 11,000 megawatts of prime power generation capacity expected to be boosted to about 14000 MW by 1998 and absolute control over the distribution channel in their portfolios, Wapda and KESC appeared to be ill-placed to meet the supply and demand for power consumption in the country over the next decade. Yet these utility companies claim that they will be able to meet the demand with the addition to capacity, primarily through private sector initiative in thermal power generation.

This claim is discounted by the analysts on the ground that almost 60% of textile sector factories are already shut down and the remaining companies are operating at two-thirds of their optimal capacity. Textiles and related sectors comprise over 55% of the industrial production strength of the country, they say. Non-textile sectors also do not present a rosy picture with over 5,000 units declared ‘sick’ and a number of others tangled in or attempting to restructure financings owing to cash flow problems in a declining market faced with the fierce global competition.

Load-shedding, power breakdowns, fluctuations and excess billing are just a few aspects of the horror story that is the KESC. With a loss of Rs.2.2 billion at the end of 1996, today KESC is passing through its worst crisis which is both administrative and technical. And Karachi’s hapless and helpless citizens, the ultimate victims, have every right to know about the travails and ineptitude which plagues the Corporation.

Transformers: One of the most glaring examples of the mismanagement within KESC is the case of 1727 transformers, lying idle in the open-yards, slowly transforming over the last three years into junk. A number of times some half-hearted directives have been issued by the top man agreement for their repair but eventually it all comes to nought.

This year, once again, KESC has invited tenders for its repairs. These tenders are to be opened on July 7, but if insiders are to be believed the tenders were invited after inflating costs and in such a manner that the cost of repair would eventually not be much different from the cost of new transformers and ultimately the KESC will be forced to announce the auction of these units. The cost of these 1727 transformers is around Rs 380 million. However, there are apprehensions that the tenders for repair will touch Rs 175 million. "The actual cost of repair should not be more than Rs 40 million," says an insider.

Wapda has opted for a desperate gamble by shifting the whole blame on to IPPs, instead of looking for a palpable operation that could rescue it from the brink of near-default.

Quite astonishingly the proposals given by the IPPs have so far been rejected by the government. The five proposals made by the IPPs’ Task Force include:

(a) Reduction of furnace oil prices and an end to PSO’s monopoly which is buying furnace oil at Rs 2800 per tonne and selling at Rs 6200 a tonne, i.e. 112% higher than the prices in the world market. Such a measure can help lower the energy component of IPPs’ tariff from Rs.1.40 to 94 paisas per kwh.

(b) Allowing IPPs to export surplus power to India, especially from the units located closer to the border. Whoever exports surplus power to India will help bring down the 60% capacity charge by helping the IPPs to run at 85% maximum capacity — bringing down the capacity charge component of Rs 1.70 to Rs 1.20.

(c) Withdrawal of duties and development charges. Tariff will further go down marginally by dispensing with these unnecessary charges.

(d) clearance of pending applications and hooking industrial sector at confessional rates will help raise demand, consume surplus energy and bring down capacity charge. An IFC study for Faisalabad Area Electricity Board in 1996 showed that 330,000 applicants were still waiting for connections after paying the connections fees. It shows the level of suppressed demand which Wapda has miserably failed to meet.

(e) Overcoming Wapda’s mess, corruption, theft, power losses and inefficiency — a major cause behind the whole trouble. Even if the IPPs agree to reduce tariff, Wapda can’t be rescued from disaster without corporatising, restructuring and commercialising its distribution system.

The recent 40 to 45% increase in the electricity charges reflects heavily in the electricity bills. The surcharge, fuel adjustment and extra-surcharge increase the price of electricity manifold. But another major reason for overbilling is the unbridled corruption in Wapda.

At present the the oustanding amount (arrears) paybale to Wapda by the public and private sectors is Rs 38.69 billion. Rs 20.6 billion is due from various government departments while another Rs 18.1 billion from various industrial, commercial agriculture and domestic consumers. In the Punjab, the Lahore Area Electricity Board’s arrears are the highest at Rs 3.1 billion.

Sources say that to adjust these arrears Wapda officials over-bill consumers, particularly during the hottest months, when the consumption is high.

As expected, the fragile transmission and distribution system of KESC could not sustain the first spell of monsoon showers on Tuesday and all the incompetence and unreliability of KESC staff came to the surface with the rain. Not only did half of the city remain without power, a considerable number of consumers continued to undergo the ‘backwash’ effects of the rain for the next two days. And the chaos caused by the rains proved that KESC’s claims of having carried out annual preventive maintenance were false. As we all know, 90% of troubles stem from weaknesses in and of the system. Since 1985, preventive maintenance of the system has been missing.

Power bills issued to KESC’s about 1.2 million consumers are not always correct. Many clients of KESC get wrong bills with the last date of payment just three or four days ahead. To get a power bill corrected is one of the most difficult jobs in this country. Non-cooperation of the billing department, feeding of incorrect data into KESC’s computer network, and absence of an appellate forum against the whimsical decisions of the billing department are major causes of distress. It sometimes takes him weeks to get the bill corrected.

If, after all the hue and cry, the government decides to initiate work on the 2400 Megawatt Kalabagh Dam Project, it will have far reaching consequences for the country — not just politically but environmentally and socially as well.

Moreover, who would benefit from this additional electricity? The large number of the rural poor living far away from the national grid will continue to depend on bio-mass for their fuel wood and heating needs. The energy needs of this segment of the rural poor will not be met by building large dams simply because they are nowhere near the grid and the cost of bringing their areas onto the grid is prohibitively high.

In order to make the project look good on paper Wapda has exaggerated the benefits of the Kalabagh Dam to the country’s agriculture. Our experience with dam projects shows that whenever dams have been built, losses in the system have increased.

For example system losses after Mangla Dam were 6.2 million acre feet (MAF) and after Tarbela Dam they increased to 14.7 MAF. Wapda contends that after the construction of Kalabagh there would be a saving of 4.7 MAF. In actual fact, the losses after its building would be higher than the current level of losses in the system.

Building Kalabagh Dam will not be the end of the story, but its beginning. After its construction, a series of other big dams on the River Indus are planned, like Basha Dam, Dassu Dam and Munda Dam.

Dilshad Ali Sheikh, Director Press Information, Wapda says the issue has been blown out of proportion without any valid reasons whereas the design of the Kalabagh Dam has passed all the required technical tests.

This is not the first time the army officers have been involved in the running of Wapda’s affairs. There have been martial laws and there have been high-ranking army officials heading the Authority. However, the formula of a general working at the head of a civilian workforce has been replaced this time with a real army takeover right down to the lower ranks.

The civilian surrender has been official. Federal Minister for Water and Power, Gohar Ayub Khan, has admitted on the floor of the National Assembly that the army’s help has been sought as a last resort after other methods aimed at improvements had failed. Finally, the government had invited the help of eight brigadiers, 200 to 300 officers below the ranks of brigadier and 30,000 to 35,000 JCOs and NCOs — in order to help Wapda curtail line-losses, and electricity theft to the tune of Rs 142 billion till June 1999.

The minister informed the House the eight brigadiers will be heading the eight area electricity boards, which have been converted into distribution companies (Discos).

The first move of the newly inducted force was to transfer some senior members of the Wapda and suspend the Wapda workers’ unions. For that purpose amendments were made to Wapda Act 1958 and the 1,30,000 Wapda workers’ right to take part in trade union activities suspended for two years.

Wapda’s decision to enhance electricity meter connection charges and withdraw a 50% cut in surcharge on power bills will add to the misery of the electricity consumers this summer.

This recent step, following a 6.7% raise in power tariff last month, has delivered a hard blow to household budgets, placing the salaried and low-income groups in a helpless situation.

Wapda has raised meter connection charges by 100% to 333%, depending on the kind of meter a consumer applies for. Subsidy on power bills of over Rs 5000 has been reduced to 50%.

The meter connection charges were raised to discourage small consumers. The subsidy was reduced on the plea that people consuming electricity worth more than Rs 5,000 could afford to pay Wapda more.

This immense increase in charges will affect around 5.3 million Wapda consumers all over the country. The main burden will be on the domestic consumers using 100 to 300 units per month.

What is the fault of the people if the Wapda has suddenly discovered surplus electricity on its hands, courtesy the IPPs? The government should think of making alternate use of surplus power.

After almost three years of attempting to find a middle ground with Wapda, Hubco suddenly appears all set to play ball. And the game that Hubco is about to commence is not the government of Pakistan’s forte.

True to its reputation of being a shrewd commercial interest, Hubco has chosen the perfect timing to shift gears and prepare for one-on-one combat. The Pakistan government must have hoped throughout its dispute with the IPPs that matters would never come to this. And now they have.

The government knows it is in a tight corner. It has already signed Memorandums of Understanding (MOUs) with 13 IPPs, scoring a moral victory in the dispute that began after Wapda decided to violate its agreements with the private power producers on unproven allegations of corruption. But the fate of these MOUs hinges on the ultimate resolution of the Hubco dispute, because the foreign lenders of the 13 projects will ratify the MOUs and thus give them the status of agreements only once their largest exposure (Hubco) is secured. Otherwise, the MOUs remain pieces of paper that bind the 13 IPPs to a situation they will find real hard to wriggle out of.

Hubco sponsors have decided to put their foot down and ask the government to prove the allegations of corruption against Pakistan’s single largest project. "There is no commercial settlement to the dispute", is the message.

The company is now asking the government to file criminal charges (since all the government has done so far is to level allegations) or be ready to pay the sky-high tariff as agreed.

The Water and Power Development Authority (Wapda), the Hub Power Co (Hubco) and the government of Pakistan reached a tripartite agreement on the long-standing Hubco tariff issue in Islamabad on December 17, 2000. An objective analysis of this deal, bringing out its salient features, would be useful for the public, particularly those who have been keeping track of the development. The bulk of information on the dispute presented by the parties during the Supreme Court hearings is sufficient for making informed judgments on the recent accord.

Media reports on the agreement have already highlighted the positive impact of the deal. Any baseless propaganda at this stage may nullify the fruits of the outcome of this agreement, which will not be in the national interest.

In the press conference at Islamabad, the Wapda chairman informed that the authority would encourage. Hubco for conversion to gas. Also feasibility is being worked out for direct supply to the KESC. It is important to note that conversion to gas will further reduce the tariff from revised 5.6 cent per Kwh (unit) to around 4.5 to 5 cents per Kwh (unit). If the gas project does materialise, sizeable benefits may accrue to the consumers.

The Punjab government’s inability to take a firm, or in fact any stand on serious matters relating to Wapda has and is costing the province billions of rupees. The issues that required resolution were decisions on payment of electricity bills, on the Scarp tube wells scheme, Scarp tariff on drinking water, tax on Wapda’s lines at a rate of Rs 2 per meter and an enhancement of duty as a result of amendments in the Stamp Act 1899 by the Punjab government.

For a long time, the Punjab government failed to arrange a meeting between Punjab governor Muhammad Safdar and Wapda Chairman Lt. General Zulfiqar Ali Khan due to one reason or the other. At last, after repeated requests from Punjab a meeting was scheduled to solve the problems Punjab government was facing at Wapda’s hands, but it in fact resulted in a loss of many sources of annual income in provincial taxes.

Unfortunately, instead of doing this, the government allowed IPPs to generate electricity with imported Residual Furnace Oil (RFO) and as a result of the ensuing agreements, Wapda ended up paying them heavy amounts even when it did not purchase any electricity from them.

A huge sum of around $1 billion is now being spent on the import of RFO every year to run these power plants. Besides this, Wapda paid Rs.42.5 billion to the IPPs in 1998-99, Rs 54.2 billion in 1999-2000 and Rs.85.8 billion in 2000-01. This financial year, the authority paid Rs 113.5 billion to the IPPs.

As in other countries, power sector reforms in Pakistan have been presented as a technical matter of improving productive efficiency rather than an intensely political issue that begs public participation. The reform programme is a forcing the expenditure of public money on a process that will restrict ownership and control of a huge and vital productive resource to a few foreign investors. Wapda is running a loss of Rs.40 bn and the KESC is losing over Rs.12 bn a year. Since no investor will undertake such a liability, the government is forced to inject enormous amounts of money into the sector to attract bidders.

Soaring electricity prices have had a crippling effect on the economy in recent years, fuelling inflation and increasing the cost of producing goods and commodities, pricing them out of export markets.

The problem has been compounded by the country’s high dependence on thermal power generation, which now constitutes 70% of total generation capacity. Most of the thermal power stations built in the 1990s are oil-fired and use imported furnace oil as fuel.

The government needs to look at electricity not as a product on which to levy higher and higher taxes but as one of the most vital inputs in manufacturing and agriculture. In this context, the government should even consider selling electricity at below cost.

The ever-increasing financial burden on Zubaida’s family has forced her to get her electricity connection disconnected when she decided three months ago that she was not in a position to pay a monthly bill ranging from Rs 1000 to Rs 1500. This is a story of Zubaida’s family which lives without electricity in a time when the government boasts of taking electricity to the different nooks and corners of the country.

"We had no option. The day I had to borrow Rs 1200 to pay my electricity bill, I decided to get my electricity disconnected and save myself from such a humiliation in the future.

Hydal power production is wiser

The World Bank delegation expressed consternation in a meeting with the President of Lahore Chamber of Commerce and Industry over the issues of electricity distribution and power tariff in Pakistan a few months ago. The head of the delegation Turcane Basin revealed that Pakistan is going to be bereaved of $35b WB funding due to delay in the privatisation of Wapda and KESC and a lackluster attitude in the implementation of other reforms in power sector. He concluded that this dereliction has adversely affected development in health, education and social sectors.

On the other hand, Wapda — the leader supplier of electricity — is charged with 22.2% of transmission and distribution losses while its auxiliary consumption is 2.1%. Thus a total of 25% loss accrues to the overall distribution by Wapda. It is shocking to know that three among seven companies of Wapda show more than 35% losses.

While the government-IPPs relationship runs smooth, the current situation has the potential to offer sleepless nights to the consumers. "An hour or two without electricity is certainly a severe test for the people," says Muhammad Ahmad, a consumer in Samanabad, Lahore. There were reports of brawls between residents of the area and the Lesco officials in the wake of a recent breakdown.

Nuclear power plants in Pakistan contribute barely 2.3% of the total electricity generated in the power plants of Wapda, KESC and the IPPs. Worldwide nuclear power plants produce 11% of the world’s electricity and with the completion of nuclear power plants presently under construction this figure would rise substantially in the years to come. The present energy-mix in Pakistan is highly un-balanced. This position needs to be reviewed in the light of developments taking place in the field of energy internationally.

The US and UK, which had put brakes on new nuclear power projects, are now in the process of reviving their nuclear power programmes, including installation/revival of reprocessing plants, because they cannot afford to forego the economic advantages of cheap, reliable energy produced by modern nuclear plants, and also because this is the only way by which they can reduce the emission of greenhouse gases, to meet the targets agreed in the Kyoto Protocol. Pakistan also needs to take a deep look at the nuclear option for meeting our energy requirements.

Change is inevitable for KESC within three months as its management is set to be taken over by M/s Kanooz Al-Watan of Saudi Arabia at the start of the new financial year.

At present, the corporation has a total of 20,181 employees, including 10,362 regular and 9,819 contract employees. According to one independent report the corporation needs at least a staff of 22,000 to 24,000 to cater to the needs of the most populated city of the country.

The decision to privatise KESC was taken only once the army management realised that the corporation’s situation could not improve in the public sector. While the army management introduced various packages to control over billing and to streamline recoveries, the services never really improved. The army management convinced the government in 2002 that privatising the corporation was inevitable.

According to data available with the Planning Commission, consumption in the industrial sector is 38.3 per cent, in transport sector 32 per cent, residential and commercial sectors 25 per cent, in agriculture sector 2.5 per cent and in other government sectors 2.2 per cent.

Officials admit that unavailability of sustained and affordable energy to industry has suppressed economic growth and has decreased the opportunities of industrial investment in the country.

Major decisions to be taken by the government to meet the country’s energy requirements are construction of water reservoirs and laying of gas pipelines from Iran, Turkmenistan or Qatar.

In a bid to meet part of this shortage by increasing domestic power production capacity, WADPA has been working on a number of hydro power projects. Out of these, five projects of 525 MW will be completed in the year 2006. The projects are Khan Khawar (72 MW), Allai Khawar (121 MW), Duber Khawar (130 MW), Golen Gol (106 MW) and Jinnah (96 MW). These five projects will be completed with an estimated cost of Rs 44.277 billion. Eleven new Independent Power Producers (IPPs) with a total capacity of 2346 MW are also scheduled to submit their final feasibility reports to the Private Power Infrastructure Board (PPIB) during the current year.

Of these eleven newcomers, six IPPs with a total capacity of 1148 MW would operate on gas and one with a capacity of 150 MW on residual furnace oil. The remaining four IPPs will be hydel projects with a total capacity of 1048 MW.

The total estimated cost of gas-fired projects in pipeline is around $0.9 billion and that of the hydel projects in private sector’s $1.2 billion. The only upcoming oil-fired IPP is Attock Refinery Power Generation project with a capacity of 150 MW and will be constructed with the cost of around $0.12 billion.

"Pakistan is one of those lucky regions which are blessed with a lot of windpower. A wind corridor that runs from Sindh to Indian state of Gujarat through Keti Bandar is highly suitable for installing windmills. The speed of wind in this corridor is double the speed required to run a wind turbine," says Shahid Hamid, chief of Alternative Energy Development Board. "Gujarat, which lies at the end of this corridor, already has a number of windpower projects running successfully. Any project at the start or in the middle of the corridor should have more reasons to be successful."

"We have a potential to produce 50,000 megawatts of electricity through wind but all of this potential may not be realised. Still we expect that we will be producing 800 megawatts by 2010."

Load shedding in urban Pakistan or a likelihood of that happening should not be the only reason for Pakistanis to take account of the ever widening gap between the country’s energy demands and supply. There is enough reason in the high industry tariffs and the near unbearable rates charged of domestic consumers, villages still waiting to be electrified and houses hoping to receive gas, to have an idea of the huge burden on our energy sources. While judicious use has to be advised, the importance of exploring new viable sources cannot be denied. Already, the big petrol-for-CNG swap on the country’s road provides an example how alternatives can lessen the burden on users, and indeed on the national economy.

Despite all the cynicism around, the country has managed to reach a stage where we are talking solar and wind and atomic energy. The officials at the helm assure us that they hope to carry the operation forward to a point where it becomes some kind of an alternative available to people in certain situations, if not in all cases. Also, the import of energy from abroad is a serious option, and one Pakistan will have to go for, hopefully, sooner than later, so that fears of a life without verve and vitality are effectively put to rest. This alternative course gains greater significance when viewed in the background of our ever-depleting resources for hydro power generation, and the political conflicts this decline in resources creates and fuels.

Prolonged, unannounced power outages are nothing new in Karachi. As the city has grown in area and numbers, so has its electricity crisis. To address the problem, the Karachi Electric Supply Corporation (KESC), responsible for providing power to 12 million citizens and numerous industrial units of this mega-polis, has changed hands more than once in the last six years: from civilian government to military government and finally to foreign ownership.

According to the KESC Directors’ Report & Annual Accounts and the Auditors’ Report 2002-2003, the Corporation’s own electricity generation increased from 8,709 million KWh in 2002 to 8,808 million KWh in the year 2003, while the balance shortfall in its system was met through import of power from WAPDA, Independent Power Producers (IPPs), Karachi Nuclear Power Plant (KANUPP) and Pakistan Steel.

What exactly are the reasons for loadshedding? Market data confirms that sale of airconditioning units, fridges and other home appliances has increased manifold in recent years. Chairman Pakistan Electronics Manufacturers Association Sarfrazuddin estimates that 700,000 air conditioners units will be sold in Pakistan this summer. Introduction of less power consuming split air conditioners in the market is main reason, he says.

Electricity consumption is "11 per cent more than what it was last year. From April 20 to May 1 this year, it increased by 25 per cent compared to the corresponding period last year," says Member Power Wapda Muhammad Anwar Khalid.

Dr A. H. Nayyar from Sustainable Devleopment Policy Institute (SDPI) gave a very informative presentation on the available as well as alternative sources of energy. He emphasised the need for finding alternative sources of energy in Pakistan as the available sources were about to be exhausted within the coming few years. At the present rate of growth, he explained, we would need 143 megawatts of electricity by the year 2020.

Dr Nayyar presented a vivid picture backed by facts and figures. The nuclear power plants are highly expensive to set up in the first place. They are by no means safe or clean as they produce highly toxic radioactive waste which remains radioactive for thousands of years. It is also a fact that no country in the world today has been able to devise a method of disposing of that waste.

The latest concessions to IPPs have revived the debate about NEPRA’s role in ensuring relief for consumers. The decision to approve an upfront tariff for new thermal IPPs, ranging between 5.9 and 13.8 cents per unit, has also raised many a question about NEPRA’s mandate.

Experts say the new tariff, a slight departure from the 2002 power policy, has paved the way for a virtual revival of the 1994 policy that had come under severe criticism due to the high consumer tariff it fixed. The IPPs are seeking a 16 per cent benchmark IRR (internal rate of return) for investing more in the power sector against the normal IRR of 19 per cent. NEPRA’s 1994 policy was based on a 7-8 per cent economic growth rate that could not be sustained in the subsequent years; yet the upfront tariff has also been based on 7-8 per cent GDP growth.

The electricity shortage in the country in the next two summers — 2007 and 2008 — is going to be acute, even worse than this year. The reason being that the demand is constantly increasing while the new power generation will not come on line before two years — the winter of 2008.

Insiders say Wapda had realised in 2003 that there was a shortage of electricity in the country to the tune of 700 megawatts and it wrote about this to the ministry of water and power. At this, the government asked Private Power Infrastructure Board (PPIB) to invite private parties to set up thermal power plants. The board kept inviting letters regarding expression of interest and did not go for international competitive bidding on any project in this period.