Thriving Prospects of Renewable Energy in Pakistan
By Farhana Mohamed, MBA, PhD
Los Angeles, CA
According to the Asian Development Bank’s Asia Development Outlook 2012 Report, energy shortage is the prime reason for Pakistan’s lackluster economic growth (3.6%) for the current fiscal year and projected growth of 4% to 5% for FY 2013. Among the key factors responsible for mediocre performance, the “domestic energy crisis” issue supersedes security, declining investments, poor tax collection strategy, and heavy subsidies to state-owned enterprises (Pakistan Railway, Pakistan International Airlines, and Pakistan Steel Mills).
While the ADB Report acknowledges the current government adding 1,604 MW through six Independent Power Producers (though short-term rental power projects have proved to be too expensive) and a nuclear plant, the energy deficit has hovered from 3,000 MW to 5,000 MW during peak hours. With the dwindling prospects of hydro power and natural gas reserves to meet the growing energy needs, Pakistan government is subsidizing over $2 billion per year to continue importing fuel oil.
“Necessity is the mother of invention” may be a cliché but it fits well to describe how Pakistanis are gearing up to circumvent the incessant energy and gasoline shortage coupled with the escalating cost. Pakistanis definitely have the talent as they have shown in becoming world leaders in proliferation of the compressed natural gasoline (CNG)-powered transportation vehicles. According to the December 2010 Gas vehicles Report by the International Association for Natural Gas Vehicles (or NGV Global), Pakistan leads the world with 2.74 million vehicles equipped with CNG-powered engines; India is also in the top five with about 1.1 million CNG vehicles. According to Pakistan Today, Pakistan is also number two in the world with the largest CNG fleet of public transportation vehicles. Since CNG is a cleaner and cheaper alternative to gasoline, Pakistanis are drawing dual economical and environmental benefits from high usage of this clean alternate fuel. While natural gas reserves are the main source of CNG production in Pakistan, methane (main component of natural gas) can also be extracted as “biogas” after biological or thermal decomposition of solid waste. This option is becoming very popular across the globe and can also be tapped by the enterprising Pakistanis.
However, there are safety issues to reckon with the CNG transportation. While there are several agencies (such as Oil & Gas Regulatory Authority and Hydrocarbon Development Institute of Pakistan) which oversee safe installation of CNG cylinders, substandard practices prevail. As reported by the Express Tribune, 2000 lives were lost just in 2011 due to defective CNG cylinder installations. According to the NGV Global to address safety and CNG shortage issues, Prime Minister Yousuf Raza Gilani recently issued orders pertaining to CNG load shedding and initiation of stricter CNG vehicle inspections.
According to an AFP Report published on March 27 “year-round sun may be a cheap if partial answer” to address the draconian shortage of natural gas and electricity. Pakistanis are increasingly turning to use of solar panels to light up their homes, and to power ceiling fans, air conditioners, and geysers. Pakistan’s first on-grid solar powered 179 KW station came on line in March in Islamabad. Solar panels are, in particular, very effective in providing electricity to remote villages and mountain regions away from the national grid. However, poor quality control standards may become a deterrent in widespread use of solar panels as consumers are weary of spending Rs. 25,000 to Rs. 30,000 for low-end residential solar panels due to reliability issues.
As for using wind to generate power, recently Pakistan received international recognition (The Express Tribune, April 22, 2012) for its infant Jhipmir Wind Power Project, set up by the Zorlu Energy of Turkey. Located near Hyderabad Sindh, the Jhipmir Project was recognized in 2011 by the prestigious Project Finance Magazine as the “Middle East Renewable Deal of the Year.” This stellar accolade can also be attributed to the efforts made by the Alternative Energy Development Board of Pakistan. Set up in 2003, AEDB provided unique wind risk data to the Turkish investors thus becoming the first country to do so. The Jhimpir Project currently produces about 6 MW of solar electricity and has the potential to generate 56.4 MW in the future and will cost $136 million.
Pakistan could address its chronic energy shortage on long-term basis by primarily investing in solar, wind, hydro, and biogas resources to shoot for a reasonable renewable energy portfolio (REP) mix of 20% to 30% - enough to put back the country on the path of economic prosperity while drawing environmental benefits. For funding renewable energy projects the government should consider completely or partly selling its heavily subsidized enterprises which are siphoning off billions of dollars from the national exchequer with little or no return. The government could promote the development of renewable energy projects in collaboration with domestic and foreign investors, easing bureaucratic nightmare, relaxing import duty on equipment, providing reasonable subsidies, and establishing a watchdog group responsible for crafting proper safety regulations and enforceable performance standards. It can also take into account savings from reduced import of fuel oil as renewable energy projects gain ground. As already proven that even with modest investment and efforts in the renewable energy arena, Pakistan is capable of getting international recognition while addressing severe energy shortage issues and drawing environmental benefits.
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