Would Invite Disaster For Pakistan

By Waheed Hamid

There is no denying the fact that shortage of power generation is one of  the major cause of Pakistan’s current weak economic and social condition and this is being viewed as grave contributor  to the future economic condition of the country.   The experts estimate  that electricity shortages  cost Pakistan some $13.5 billion a year. Pakistan, a country of 180 million people, is currently producing  11,000 megawatts of power, falling well short of the estimated demand of 17,000 megawatts. Power outages of 12 to 20 hours a day have crippled industry and made life miserable for business and households. The previous government poured billions into the sector without eliminating the debt or significantly increasing the supply of electricity. The industry is riddled with corruption and professional losses  and depends  extensively on oil for power generation, instead of coal , wind or other alternate energy  generation power sources.  Gas another cheap alternative is presently being  misused with losses resulting in huge differences in gas input and electricity output of the power plants. PML-N government is correctly focused to resolve electricity crisis being the main challenge for which PML-N was given a mandate by the people of Pakistan.

The  sources confirm that the government  has decided to give top priority to the IPPs and steps will be taken to meet their  requirements.  Money is being arranged to reduce circular debts  and ensure supply of petrol/diesel to IPPs.  Gas is being diverted to gas run power plants by imposing heavy cuts on other sectors using gas.  Experts  however  have started raising many questions on government’s decision on gas distribution and its priority sectors. The main debate is focused on  the order of priority  among the IPPs, CNG and the fertilize sector. The experts  view that the deciding factor should hinge on two main factors FIRSTLY on technical terms and encompass  the best utility of the gas with minimum losses . SECONDLY on social and economic   terms  the order of priority will mostly depend on  the accumulated effects of distribution on public as a whole in longer run.

  Karachi Stock Exchange DHIYAN (FORECAST) for Tuesday, 15th Jan, 2013

A  research concluded that  Fertilizer industry  is the most energy efficient in comparison to others which include power sector, Fertilizer industries and CNG sector. Federal minister of Petroleum Khakan Abbasi  and Khawaja Asif  have assessed over 30%  theft  of gas in CNG sector and the systems of power generation sector too lacks an efficient input output ratio analysis system . Fertilizer industry sources while quoting a comprehensive research report prepared by international Resources Group for the Asian Development Bank and the Ministry of Planning and Development Government of Pakistan informed that, “The System Level Economics Valuation indicates that reducing gas to the fertilizer sector costs the economy Rs. 196 million per mmscfd.  While increasing gas to the power sector costs the economy Rs. 98 million per mmscfd.” The plant level comparison between fertilizer and power plants show that using 100 mmcfd for power saves Rs. 6.4 billion compared to heavy fuel oil imports. Thus, using natural gas for fertilizer has a higher savings relative to using it for power generation by Rs. 23 billion. This compares well with the value from the economic model, which for use of 100 mmcfd in the fertilizer sector gives a net benefit of Rs. 19.6 billion. Sources said that the team working on the report applied two approaches: an energy system economic analysis, and a plant-level comparison. Both approaches gave a similar result, which is that natural gas has a higher economic value for fertilizer production.

Economically and socially Pakistan is an agricultural country. Its total area is 7, 96,096 square kilometers. 70% of our total population is living in the villages. The major source of their living is agriculture. Agriculture employed 66% of the total workforce in 1950-51 but by 1999-2000, this figure dropped to 47.3% and this trend continues. This shows that people are now not interested in farming. This decline indicate decreasing incentives by the government in the agriculture. With Population growth there is increase in the demand for food. The Expanding cities spread out across productive land, reducing the agricultural production and food production. The demand of increase in per acre production therefore becomes an important facet of agriculture in Pakistan which can not be met without cheap availability of Fertilizer to the farmers. Presently domestic produced urea prices are ranging between Rs 1600-1800 per bag and in-case of import they cost Rs 2400 to 2600 per bag excluding investment on foreign exchange and loss to government against tax which it charges  to domestic fertilizer industry. High fertilizer prices play a huge role in constraining the use of fertilizer by small farmers which directly effects  over all agri produce.

The power shortage is indeed a great issue but resolving it at the cost of food  security may not be a wise decision. Imagine the environment of food scarcity like Ethopia . Food scarcity  is considered the mother of all evils and has direct relation on law and order. We are passing a crisis situation in a electricity shortfall environment but has someone thought of the society with no food.  All stakeholders have to be consulted and taken on board on logical  grounds to come to a solution which is good and longer lasting for future of Pakistan and avoid jumping out of frying-pan into fire.