Pakistan Reader

CWA # 1432
Pakistan Reader
Energy in Pakistan: Five Takeaways

Vetriselvi Baskaran
31 July 2024
Photo Source: Pakistan Economic Survey 2023-2024

On 11 June, Finance Minister Muhammad Aurangzeb unveiled the Pakistan Economic Survey report for the fiscal year 2023 -24. Pakistan economic survey is an annual report published by the Ministry of Finance that provides an in-depth analysis of “macro-economic trends, sectoral accomplishments, development policies and strategies.” The report contains 17 chapters:  from Growth and Investment to Climate Change. Energy, one of the chapters in the report provides a detailed analysis of the sector’s growth. The report delineates various measures undertaken by the government pertaining to the energy sector.  Following are the six takeaways from the report:

1.    PPIB has achieved significant accomplishments.

In 1994, the Private Power and Infrastructure Board (PPIB) was created as One Window Facilitator to promote private investment in the power sector. In 2012, the board was given statutory status through an Act of Parliament- PPIB Act, 2012- which allowed it to facilitate certain public sector power and its related infrastructure projects in Independent Power Project mode (IPP). Until now, the PPIB has successfully managed the development of 100 IPPs with a capacity of about 24,958 MW. This has also helped attract Foreign Direct Investment (FDI) of over USD 33 billion. Additionally, PPIB has also initiated five multiple fuel-based IPPs of 1,066 MW which are now at the advanced stages of construction. For cheaper electricity generation, PPIB has further promoted the use of indigenous Thar-coal and hydel resources. This is expected to help in accelerating hydel and Thar-coal-based power generation projects. In this regard, under the Integrated Generation Capacity Expansion Plan (IGCEP) 2022 and other policies, PPIB is striving to complete 12 ongoing IPPs with a capacity of 1,563 MW during 2024-26 in order to comply with short-term targets.

During July to March in FY 2024, PPIB has succeeded in the implementation of various stage IPPs. This includes the successful completion of three solar projects by Scatec, Norway (PPIB assisted in securing commercial Operation Dates), the Suki Kinari project (the largest hydro IPP of 884 MW), and the 32 MW Bagasse-based project by Shah Taj Sugar Mills.  The net metering-based solar installation has also surpassed 400 in number due to efforts by the PPIB.

2.    The government has focused on promoting and developing indigenous renewable energy resources

In an effort to reduce the impacts of prevailing high prices of imported fossil fuels in international markets and its result on high electricity tariffs, the government has taken initiatives for the promotion and development of indigenous renewable energy resources. In this regard, the government has approved the Framework Guidelines for Fast-Track Solar PV Initiatives 2022 for fast-track deployment of solar PV. This includes three key frameworks.

First, the substitution of expensive imported fossil fuels with Solar PV Energy. Under this, the government has decided to implement three solar PV projects in Kot Addu or Muzaffargarh, Jhang, and Layyah.

Second, to overcome the poor power quality in Pakistan, the government plans to advance Solar PV generation on 11 kV feeders i.e. medium-voltage network, thereby reducing local losses and improving the voltage situation. This will also help provide cheap electricity to the national grid without any infrastructural upgrades. In addition, under this initiative, an additional 2000 MW of solar PV capacity will be added to the country’s existing capacity.

Third, the solarization of public buildings. This move will help in reducing the electricity load for a particular portion, reduction in electricity bills in public offices, and relieve electricity utilities from long-term dues.

3.    Despite international embargoes, six new Nuclear Power Plants have been developed.

After the operationalization of the Karachi Nuclear Power Plant (KANUPP), Pakistan attracted international embargoes, on civil nuclear technology transfers. For nearly thirty years, this move affected the expansion of nuclear energy generation capacity. However, due to persistent efforts both technological and manpower, Pakistan was able to develop an additional six NPPs with 3530 MW capacity. These new reactors are Pressurized Water Reactor (PWR) and were designed and built with Chinese assistance as opposed to KANUPP which was built with Cananda’s help.  These reactors boast a unique feature: they can generate electricity for 14-18 months once fuled.  This saves the country from “short-term energy price fluctuations” and ensures a “secure energy supply” to the grid. These six power plants generated around 16,753 million units of electricity during July -March FY 2024. Further, this has also helped the country avoid about ten million tonnes of Green House Gas emissions.

4.    There has been a decline in demand for oil.

During July -March FY2024, a notable decline in oil demand was witnessed: the demand declined from 13.3 million tonnes to 12.3 million tonnes. The Survey suggests that this could be the result of a decrease in demand for High-Speed Diesel (HSD), Motor Spirit (MS), and Furnace oil (FO) which constitute 95 per cent of the demand. The demand for petroleum products remained at 17.5 million tonnes during FY2023 and declined by 7.23 per cent during FY2024.  There has been a shift from thermal to renewable sources of energy.

During July–March 2024, the country's total installed power capacity was 42,131 MW, with thermal power accounting for 59.4 per cent of the overall capacity with hydel, nuclear and renewable accounting for 54.1 per cent of the share.   The survey revealed that the reliance on thermal power has decreased over the years. This indicates a shift away from “thermal to cleaner sources” and towards a more environmental friendly and indigenous sources of electricity.
 

5.    There have been large-scale renewable energy investments to achieve clean energy goals.

The Private Power & Infrastructure Board (PPIB) has been actively facilitating the development of renewable energy projects in Pakistan through various initiatives. It facilitated renewable energy power projects to achieve milestones and resolve issues faced by different public sector entities. Further, PPIB engaged with the World Bank to conduct a study on renewable energy development in Balochistan, titled “Balochistan Renewable Energy Development Study.” The objective of this study was to strategically develop utility-scale solar and wind power in Balochistan to help meet Pakistan's ambitious renewable energy.  Additionally, it has redesigned and reactivated an online net-metering portal (ONMAP) for the online processing of consumer applications for net-metering-based systems. The portal is currently being expanded with advanced settings such as solar PV equipment verification, tracking, and a rooftop solar monitoring program. PPIB, with the support of GIZ, has also initiated a program for the training of 500 solar technicians using a Competency-Based Training and assessment approach. Furthermore, it is engaged in international initiatives such as the Danish Energy Transition Initiative (DETI) and RELP, an international NGO.

Energy
What did the Economic Survey say in the 2022 and 2023 reports?


Pakistan Economic Survey 2022-23
Energy demand was on the rise mainly driven by economic expansion, population growth, and rapid technological advancements.  However, during the period 2022-23, the country faced challenges due to dependence on imported fossil fuel and energy supply limitations. Thus, the government took initiatives to endorse the utilization of local energy sources such as hydel, solar, wind, and Thar coal. These initiatives bore results in 2023-24. The government also made efforts to substitute expensive imported fossil fuels with “solar photovoltaic (PV) energy, implementing solar PV generation on 11kV feeders, and solarising public buildings.” During this period, the government installed three Thar coal-based power plants with 3,300 MW and an additional six nuclear power plants with 3,560 MW capacities. Accordingly, the electricity generation shares of different sources were 28.6 per cent (hydel), 21 per cent (nuclear), 4.2 per cent (renewables), and 46.2 per cent (thermal). The demand for petroleum products had witnessed a decline similar to the 2023-2024 period. High focus was given to the diversification of energy sources, reduction of reliance on imported fuels, and investment in renewable energy infrastructure to ensure long-term energy security and economic stability.
 
Pakistan Economic Survey 2021-22

This period observed a notable increase in the oil import bill by USD 17.3 billion compared to the corresponding period in the previous year when the increase in the bill was USD 8.69 billion. This increase in bills was fuelled by higher oil prices in the global market and the depreciation of the Pakistani currency. The government had introduced an energy efficiency plan intending to save up to 15 per cent of energy. During this period, the country implemented policies like “The National Power Policy 2013”, “The Power Generation Policy 2015” and “Alternative and Renewable Energy Policy 2019” to ensure the smooth supply of energy. To facilitate private investment in the energy sector, the power generation policy was upgraded. The total energy consumption had increased by 11.5 per cent with a slight change in the percentage share of different sources of electricity generation.


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