CPEC-Reshaping energy portfolio of Pakistan


Yasir Arrfat, Muhammad Sheryar Fulaly

MANY things here in Pakistan change with time but one thing which needs to be addressed is power shortage. This is quite unfortunate that despite having vast energy resources especially the coal reserves in Thar, Baluchistan and Punjab, Pakistan is in the throes of energy crisis. Its energy potential remains largely untapped or goes to waste due to incapable institutions and investment policies. Pakistan continues to face an approx. average shortage of 4,000 megawatts in the power sector owing to a substantial disconnect between installed power capacity and actual generation. Due to energy shortage, industrial and commercial entities have installed back-up diesel generators, while households use UPS apparatus, often at significantly higher costs. Small and medium-sized industrial and commercial enterprises and households which cannot afford these high-cost alternatives have frequently been at the rough end of the stick. Despite hydropower being the cheapest source of electricity for Pakistan, the prohibitively high capital costs to supplement the existing hydro resources has distorted the hydro-thermal ratio in the power generation mix and resulted in a significant increase in energy cost.
Energy is a fundamental ingredient of modern society and its supply impacts directly on the social and economic development of nations. Economic growth and energy consumption go hand to hand. The development and quality of our life and our work are totally dependent of a continuous, abundant and economic energy supply. This reality is being faced worldwide as basic energy resources become scarce and increasingly costly. Within that framework, electricity has become a favourite form of energy usage at the consumer end, with coal, oil, gas, uranium, and other basic resources used to generate the electricity. With its versatility and controllability, instant availability and consumer end cleanliness, electricity has become an indispensable, multi-purpose form of energy. But due to lack of techniques and maintenance we are not producing our desired amount or simply we are not fulfilling our demand because of which we are facing large amount of energy crisis in the form of load-shedding in Pakistan.
Information and Communication Technology (ICT) and in particular connectivity offered by communications services play a critical role for achieving each of the targets. ICTs enable among others pay-as-you-go schemes, support operation and maintenance of power grids, make integration of renewable energy sources into grids possible and improve energy efficiency e.g. by providing consumers with information to reduce consumption. On the other hand, it is important to note that any economy will only be able to reap the full benefits of ICT if access to energy is secured. Also, energy consumption triggered by ICT may pose a challenge in particular to decoupling energy consumption and economic growth. Recent study of World Bank, there is a potential of 4000 MW to 6000 MW power generation using Biomass (including bagasse) as a fuel. The government of Punjab also estimates a potential of around 1500 MW using biomass as a fuel for power generation. Similarly, the potential of 1000 MW power generation through solid waste. Current estimates stand at 200 MW to 400 MW of electricity through waste heat recovery.
Whereas now CPEC is a real game changer in the field of energy because the prioritization of energy projects as part of the China-Pakistan Economic Corridor (CPEC) investments has enhanced the confidence of stake holders in Pakistan’s energy sufficiency. The ninth Pakistan energy forum 2016 discussed energy sufficiency in Pakistan considered CPEC to be geared towards harnessing economic turnover in the country and providing sustainable industrialization and export-led growth. About two third of the funding for CPEC, $33bn, is committed towards establishing energy and power projects in Pakistan. The energy projects under CPEC will add more than 17000 MW of energy where power generation projects other than CPEC will add up to 3633.5 MW of energy to national grid very soon. The Chinese have invested in power generation from coal as well as hydel, wind and solar power. A new transmission line funded by them will carry electricity from new power generation units in Sindh to load centres in Punjab. Shanghai Electric, a sister company of China Power, has also expressed interest in acquiring a major stake in K-Electric, which is the main provider of electric power to over 20 million people in Karachi. The Chinese are therefore covering the entire power sector value chain – from fuel extraction (mining) to end-user distribution. Improved energy supply could enable Pakistan to boost its flagging indigenous industries such as textiles, agriculture and manufacturing, increase exports and ultimately lead to sustained economic growth in the long term.
The energy projects under CPEC would help overcome energy crisis by 2018 as $33 billion would be spent in the sector. Therefore, having a sustainable energy overflow throughout the country CPEC energy projects is playing a key role which will help us in our success towards global aspects. It may be noted that new projects of around 10,000 MW would be added to the system over the next couple of years, along with more than 1000 MW through mostly renewable energy based projects around 16,000 MW is expected to be available by December, 2020, when CPEC would also benefit the less privileged areas of Pakistan. It would connect Pakistan with the world and open avenues for cooperation for the people, communities and states across the region. CPEC at the moment covers 12 early harvest energy generation projects including Sahiwal coal fired project, Port Qasim power plant and Karot Hydro power station. It is also strongly believed that these projects will be completed by 2017-18 which would help to meet energy requirements of the country sufficiently. Recently the OBOR Summit in China held in the mid of May 2017 brought further hopes for Pakistan especially in the energy sector along with other significant infrastructural areas. Pakistan and China sealed agreement on a number of energy projects under the ambit of CPEC.
Yasir Arrfat, Acting Head of Policy, Center of Excellence-China Pakistan Economic Corridor (CoE-CPEC)
Muhammad Sheryar Fulaly, Research Assistant, Centre Of Excellence-China Pakistan Economic Corridor (CoE-CPEC).