ENERGY

Secure, Sustainable and Affordable

INTRODUCTION

Energy is an integral part of the economic order of Pakistan. Infrastructure and networks of roads, rail,optical fiber, electricity grid, and oil and gas pipelines are the building blocks of the supply chains for effective and efficient delivery of public and private service delivery. Supply of reliable, secure, efficient and affordable electricity is one of the primary drivers for sustainable development of Pakistan.

Energy shortfalls have had a significant impact on Pakistan’s socio-economic stability over the last few decades. The supply-demand deficit reached its peak in 2012, with a staggering 66201 MW shortfall, accounting for 50% of the generation capacity. As a result, policy discussions shifted to focus primarily on generation and supply-side interventions. Between 2013 and 2018, Pakistan undertook ambitious capacity additions, adding 12,2302 MW to the energy mix. Notably, the design and implementation of the RLNG (Regasified Liquefied Natural Gas) supply chain in a short time period was a remarkable milestone in Pakistan’s energy mix. The share of RLNG in the energy mix experienced tremendous growth, serving the demands of various power plants in addition to meeting the needs of fertilizer plants and the industrial sector.

In addition to electricity generation projects, flagship project of ±660 KV HVDC Transmission Line Project from Matiari to Lahore for evacuation of 4000 MW capacity has enhanced the grid infrastructure. Distribution, however, remains least invested/upgraded with overloading of the power transformers and events of burning/blasting of the distribution transformers in different DISCOs show no respite 3. A flagship project of Advanced Metering Infrastructure (AMI) is in process that will help in curbing AT&C losses and overloading issues at the distribution value chain of electricity.

Transmission and distribution infrastructure for natural gas/ RLNG shows a similar story with emphasis and bottlenecks at the generation. For decades, natural gas stood up as the leading energy source to serve sectoral and power generation needs. Due to the continuous depletion of the local gas reserves, the supply gap is filled with imported LNG to meet the rising demand. The trend shows that we are moving towards non-indigenous fuel sources and thus are more exposed to the international price shocks. Fertilizer sector remain one of the top beneficiary of this fuel source. Rationalizing subsidies and prices are integral for efficient utilization of this resource.

Oil and its associated products including but not limited to motor spirit (MS) and high speed diesel(HSD) are concentrated with transport sector and have shown continuous growth in demand. Furnace oil (FO) have been tried to phase out from electricity generation sector. Pakistan only produces small fraction of the crude oil whereas the requirements/expected demand of the petroleum products (MS and HSD) may require more refineries in the supply chain. However, with the onset of electric vehicles this demand may be substituted by electricity. To summarize, this supply resource is highly indigenous at we are moving towards non-indigenous fuel sources and thus are more exposed to the international price shocks. Fertilizer sector remain one of the top beneficiary of this fuel source. Rationalizing subsidies and prices are integral for efficient utilization of this resource.

Oil and its associated products including but not limited to motor spirit (MS) and high speed diesel (HSD) are concentrated with transport sector and have shown continuous growth in demand. Furnace oil (FO) have been tried to phase out from electricity generation sector. Pakistan only produces small fraction of the crude oil whereas the requirements/expected demand of the petroleum products (MS and HSD) may require more refineries in the supply chain. However, with the onset of electric vehicles this demand may be substituted by electricity. To summarize, this supply resource is highly indigenous at we are moving towards non-indigenous fuel sources and thus are more exposed to the international price shocks. Fertilizer sector remain one of the top beneficiary of this fuel source. Rationalizing subsidies and prices are integral for efficient utilization of this resource.

Oil and its associated products including but not limited to motor spirit (MS) and high speed diesel (HSD) are concentrated with transport sector and have shown continuous growth in demand. Furnace oil (FO) have been tried to phase out from electricity generation sector. Pakistan only produces small fraction of the crude oil whereas the requirements/expected demand of the petroleum products (MS and HSD) may require more refineries in the supply chain. However, with the onset of electric vehicles this demand may be substituted by electricity. To summarize, this supply resource is highly indigenous and has dented the import bill. 

SITUATION ANALYSIS

 Energy sector is an intricate and interdependent web with stakeholders ranging from regulators (NEPRA/OGRA), suppliers/generators to demand centers (industrial, domestic, commercial etc). A number of institutions are involved in sector level or operation level planning of Energy Sector. The solution for many problems in energy sector lies in coordination and integration of energy planning capabilities within the country. Fast changing dynamics of Energy Sector warrants institutionalizing the Integrated Energy Planning (IEP) capability within the country. IEP supports analysis-based energy decision making for the best interest of Pakistan as a whole, across energy sub-sectors. For energy decisions to be prudent across all levels of multiple energy forms, they must align with commonly accepted goals that are pursued through coordination and consistent policies, plans, processes and implementations.

Energy shortfalls have largely set the narrative of energy policy in Pakistan. To reiterate energy is central to economic growth whereas energy efficiency and conservation (EE&C) is a prerequisite for economic development. EE&C is crucial for meeting the challenges of customer affordability and sector financial viability. Demand/Load control programs also come under this thematic area.

Ensuring both the diversification and indigenization of energy sources continues to be of prime importance. Coal is the primary indigenous energy source of Pakistan. Thar has the largest coal reserves in the country which has been actively developed in recent years. The first Thar plant, having capacity of 660 MW, became operational in the first quarter of FY2020. For FY2022, the overall electricity generation from coal has reached to 5280 MW. Thar coal is contributing 1,320 MW, while imported coal contribution in electricity generation is 3,960 MW which is around 75 percent of the total electricity generation from coal in the country. Electricity generation configuration is relying heavily on the imported coal and this trend is likely to change as units based on the Thar field are added to the electricity generation mix . A snapshot of installed capacity and generation mix . 

In order to resolve the energy crisis, the installed capacity of electricity was increased by 30% from 2013-2018. Government of Pakistan (GoP) has announced different policies to ensure the smooth supply of energy to the general public and to boost economic growth. These polices include “The National Power Policy 2013”, “The Power Generation Policy 2015” and “Alternative and Renewable Energy Policy 2019”. The National Power Policy 2013 aimed to develop an efficient and consumer-centric power generation, transmission and distribution system that could meet the needs of the people and boost the economy of the country in a sustainable and affordable manner. The main targets included complete elimination of load shedding, decreasing the aver- age cost of electricity generation, decrease in the transmission & distribution losses, increase in the revenue collection and a reduction in the time required for decision making at the ministry level or other related departments.

Alternative and Renewable Energy Policy main objective was to provide supportive environment for renewable power projects, increase the share of green energy capacity to 20 percent by 2025 and 30 percent by 2030 through attracting private capital in the area of green energy. Consequently, thisnudge has shown positive results. The graphical representation of installed capacity and bifurcation of Renewables for FY 2020-21 and FY 2021-22 is given below:

 

NTDC has transmission capacity of 22350 MVA over 500 kV transmission network and 31060 MVA over 220 kV transmission network. IGCEP 2022-31 targets inclusion of 60% Renewable (33% Hydroand 29% Variable renewables) with almost 69GW Generation capacity by FY 2031. Relying on renewable and indigenous resources will need revamping of NTDC system as well as Distribution from 132kV to 11kV to meter.

STRATEGIC VISION

Diversification and Indigenization of Energy Mix: The Government of Pakistan (GoP) is interested in diversifying its energy mix by investing in renewable energy sources like wind, solar,and hydro power. Likewise, Thar’s indigenous sources will be utilized in an efficient and environmentally responsible manner. By doing so, the country can reduce its dependence on imported fuels and promote sustainable energy development.

Energy Efficiency and Conservation: The GoP is currently working on enhancing energy efficiency across all sectors, including industry, transportation, and households. This effort aims to reduce energy consumption, cut costs, and promote environmental sustainability.

Infrastructure development: To improve the efficiency and reliability of the energy sector, the GoP is exploring various options for infrastructure development. This includes upgrading supply chain networks for electricity, gas and oil. Smart grid technologies and integrated planning are essential.

Private Sector Investment: In an effort to encourage sustainable energy development, Pakistan has incentivized private sector involvement in the energy sector and created an investment-friendly environment. The involvement of the private sector will bring in capital and expertise necessary for supporting sustainable energy development.

Regional Cooperation: The Government of Pakistan is committed to strengthening regional cooperation in the energy sector by exploring opportunities for cross-border energy trade and collaboration with neighboring countries. By doing so, the country can reduce energy costs,promote regional stability, and facilitate regional development.

 

 Pakistan Vision 2025 recognizes that sufficient, reliable, clean and cost-effective availability of energy– for now and the future – is indispensable to ensure sustainable economic growth and development.

 

 

Short-Term and Medium terms recommendations:

POWER SECTOR

NATIONAL ELECTRICITY PLAN

 The 5-year NE-Plan provides a strategic framework for implementing the electricity policy recommendations and monitoring their achievements. The implementation of this plan is key to achieving the stated goals. It provides an overarching framework to the stakeholders to ensure integrated planning,institutional reforms, adoption of modern technologies, and complementing legal and regulatory frameworks. Pakistan can reap the multiple benefits of a secure, equitable, and sustainable energy system.

INDEPENDENT SYSTEM AND MARKET OPERATOR (ISMO)

 The ISMO will perform six functions: System Operations (NPCC), Market Operations (CPPA-G), Power System Planning (NTDC PSP), Reliability Compliance Enforcement (NEPRA Compliance Department)and Generation Procurement (PPIB & AEDB). These roles create synergies when done centrally, as evident in many global power system structures. This will help in liberalization of the wholesale electricity market towards multi buyer model.

FAST TRACK SOLAR DEPLOYMENT

 The GOP envisions deploying solar power on a fast track basis to eventually complement and/or substitute the expensive imported fossil fuels. Such initiatives include:

  • Solar PV Generation on 11 kV Feeders
  • Solarization of Public Sector Buildings
HIGH PRESSURE COGENERATION PROGRAM

 Launching a programme to shift the low-pressure co-generation to High pressure cogeneration program in sugar mills is estimated to result in annual energy savings of 166 GWh and .10 billion USD/annum can be saved. EE&C initiatives such as incentive based demand management, T&D loss reduction, generation efficiency improvement, and UFG loss reduction offer a financial savings of 4.6 billion USD.

OIL AND GAS SECTOR

INTEGRATED ENERGY PLANNING

A dedicated Energy Planning & Resource Centre (EPRC) equipped with suitable staff and physical resources is established at Energy Wing, Planning Commission. Detailed resource requirements for a five-year institutionalization of the IEP process have been developed in a comprehensive PC-I ensuring timely provision of resources required at the Planning Commission (i.e., EPRC, to act as the GoP’s designated IEP secretariat and technical resource center), the Ministry of Energy, universities and other relevant entities.

PIPELINE AND TERMINALS

PSO plans to build oil and LNG terminal at Hub, Balochistan. Pipelines include Machike Tarujabba and access to the Central Asian Corridor (Kazakastan – Pak). Expand LNG Storage & Regasification capacities by investing in land-based storage. Encouraging private sector for the import of LNG and investment in new terminals.

ENERGY INFRASTRUCTURE

 TAPI pipeline and North-South Gas pipeline infrastructure are flagship regional cooperation projects.Pipeline infrastructure to gain access via Gwadar to Europe for LNG exports. ISGS also plans for underground gas storages using depleted fields

COAL

 The Government of Pakistan gives great importance to indigenous coal utilization. Indigenous coal resources are fairly large (over 186 billion tons) and sufficient to meet the energy requirements of the country on long-term sustainable basis. Domestic production of coal has increased on account of start of commercial production from Thar coalfield Block-I, with existing production of nearly 7.8million tons per annum. Also, after expansion of existing mine, production from Block-II has reached to nearly 7.6 million tons per annum. Indigenous coal production is mostly consumed by power generation plants situated at Thar coalfield whereas productions from other coalfields are utilized in brickilns industry. Province-wise coal production is tabulated as under:

Besides the conventional use of coal in power generation, Government of Pakistan is working for alternate utilization of coal giving due regard to environmental concerns by converting coal into gas/liquids. Propositions are also under consideration to increase the share of indigenous coal utilization through blending with imported coal for Sahiwal, HUBCO, Port-Qasim and Jamshoro power plants. The cement sector heavily rely on imported coal therefore, efforts are underway to enhance use of local coal in the cement sector.


Ministry of Energy (Petroleum Division) is in the process to develop zero-draft of “Coal Gasification Policy” and will shortly share the same with all stakeholders for their inputs before placing it for approval of the Competent Forum. It is therefore, proposed that the coal gasification initiatives may be included in the Energy Chapter of 5Es.

INTEGRATED GAS PIPELINE INFRASTRUCTURE PLAN

The inclusion of the Pakistan Stream Gas Pipeline Project, TAPI Gas Pipeline Project and Iran-Pakistan Gas Pipeline Project within Pakistan’s energy infrastructure framework holds immense potential for the country’s energy security and regional cooperation. These flagship regional cooperation initiatives pave the way for enhanced connectivity and access to Europe and Asian countries through strategically located ports like Gwadar and Port Qasim. These Projects once completed has the potential to extend further, connecting Pakistan to other regional markets and creating opportunities for economic cooperation.

 

Furthermore, these projects offer Pakistan the opportunity to leverage its strategic geographical location. The integration of these flagship regional cooperation initiatives within the energy infrastructure framework of Pakistan demonstrates the country’s commitment to achieving sustainable and long-term energy security. By leveraging strategic partnerships, accessing diverse energy sources,and utilizing ports such as Gwadar and Port Qasim, Pakistan is well-positioned to strengthen regional connectivity, promote economic growth, and ensure a stable and reliable energy supply for its domes

In addition to the regional cooperation projects, ISGS is also developing the underground gas storage facilities using depleted fields which play a crucial role in strengtheningPakistan’s energy infrastructure.Underground gas storage provides a reliable mechanism for balancing supply and demand fluctuations,ensuring a stable and uninterrupted gas supply throughout the year.

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