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Solutions for Energy Crisis in Pakistan I Solutions for Energy Crisis in Pakistan i ii Solutions for Energy Crisis in Pakistan Solutions for Energy Crisis in Pakistan iii ACKNOWLEDGEMENTS This volume is based on papers presented at the two-day national conference on the topical and vital theme of Solutions for Energy Crisis in Pakistan held on May 15-16, 2013 at Islamabad Hotel, Islamabad. The Conference was jointly organised by the Islamabad Policy Research Institute (IPRI) and the Hanns Seidel Foundation, (HSF) Islamabad. The organisers of the Conference are especially thankful to Mr. Kristof W. Duwaerts, Country Representative, HSF, Islamabad, for his co-operation and sharing the financial expense of the Conference. For the papers presented in this volume, we are grateful to all participants, as well as the chairpersons of the different sessions, who took time out from their busy schedules to preside over the proceedings. We are also thankful to the scholars, students and professionals who accepted our invitation to participate in the Conference. All members of IPRI staff — Amjad Saleem, Shazad Ahmad, Noreen Hameed, Shazia Khurshid, and Muhammad Iqbal — worked as a team to make this Conference a success. Saira Rehman, Assistant Editor, IPRI did well as stage secretary. All efforts were made to make the Conference as productive and result oriented as possible. However, if there were areas left wanting in some respect the Conference management owns responsibility for that. iv Solutions for Energy Crisis in Pakistan ACRONYMS ADB Asian Development Bank Bcf Billion Cubic Feet BCMA Billion Cubic Meters per Annum BOO Build, Own and Operate Bpd Barrels Per Day CCI Council of Common Interests CHASCENT CHASNUPP Centre of Nuclear Training CNG Compressed Natural Gas DRO Debt Retirement Organisation E&P Exploration and Production ENERCON National Energy Conservation Centre ETS Emissions Trading Scheme EU European Union FDI Foreign Direct Investment GDP Gross Domestic Product GENCO Power Generation Company GNP Gross National Product GoKP Government of Khyber Pakhtunkhwa GoP Government of Pakistan GUSA Gulf-South Asia IAE International Energy Agency IAEA International Atomic Energy Agency IP Iran-Pakistan IPC Iran-Pakistan-China IPI Iran Pakistan India IPPs Independent Power Producers JEXIM Japan Export Import KANUPP Karachi Nuclear Power Plant KINPOE Karachi Institute of Power Engineering KKH Karakoran Highway KPT Karachi Port Trust LCDC Lakhra Coal Development Company LNG Liquefied Natural Gas LPG Liquefied Petroleum Gas MBTU Million British Thermal Units mcf Million Cubic Feet mcm Million Cubic Meter MIT Massachusetts Institute of Technology MMcf/d Million Cubic Feet Per Day Solutions for Energy Crisis in Pakistan v MMCMD Million Metric Cubic Metres Per Day MMTOE/MMOE Million Matric Tons of Oil Equivalent MoU Memorandum of Understanding MW Mega Watt NCNDT National Centre for Non-Destructive Techniques NDFC National Development Finance Corporation NEPRA National Electric Power Regulatory Authority NPPs Nuclear Power Plants NREL National Renewable Energy Laboratory NSG Nuclear Suppliers Group NUST National University of Sciences and Technology‘s OECD Organization for Economic Cooperation and Development PAEC Pakistan Atomic Energy Commission PEPCO Pakistan Electric Power Company PIEAS Pakistan Institute of Engineering and Science PMD Pakistan Metrological Department PNRA Pakistan Nuclear Regulatory Agency POL Petroleum, Oil, & Lubricants PPIB Private Power & Infrastructure Board PPP Public Private Partnership PQA Port Bin Qasim PSEDF Private Sector Energy Fund PWI Pakistan Welding Institute SECMC Sindh Engro Coal Mining Company SHS Solar Home Systems SNRS School for Nuclear and Radiation Safety SNS School for Nuclear Security TAPI Turkmenistan-Afghanistan-Pakistan-India TPES Total Primary Energy Supplies UNOCAL Union Oil of California US United States of America USAID US Agency for International Development WAPDA Water and Power Development Authority WHS Wind Home Systems WISDOM Woodfuel Integrated Supply/Demand Overview Mapping XENEL Xenel Industries Limited vi Solutions for Energy Crisis in Pakistan Contents Acknowledgements Acronyms Introduction i Welcome Address Dr. Noor ul Haq 1 Opening Remarks Mr. Kristof W. Duwaerts 2 Inaugural Address Dr. Masoom Yasinzai 4 CHAPTER I An Overview of Pakistan‘s Energy Sector: Policy Perspective Mirza Hamid Hasan 5 Renewable Energy in Pakistan: Potential and Prospects Professor Dr. Khanji Harijan 21 Economics of Energy Mix: The Case of Pakistan Dr. Vaqar Ahmed 39 Least Cost Power Generation Dr. Gulfaraz Ahmad 42 CHAPTER II Prospects of Biofuel in Pakistan Dr. Ehsan Ali 54 Nuclear Power Generation: Challenges and Prospects Syed Shaukat Hasan and Afia Noureen 64 Hydel Power: Confronting Dwindling Resources Dr. Shaheen Akhtar 76 Solutions for Energy Crisis in Pakistan vii Power Generation from Coal Mr. Ejaz Ahmad Khan 87 CHAPTER III Legislation for Energy Conservation Barrister Aemen Maluka 110 Impact of 18th Amendment on Energy Generation Advocate Ameena Sohail 116 Diplomacy and International Dimension of Energy Management Dr. Nazir Hussain 136 Role of Universities and Think Tanks in Energy Conservation in Pakistan Mr. Muhammad Mustansar Billah Hussain 145 CHAPTER IV Private Power Generation & Infrastructure Mr. N. A. Zuberi 157 Grids & Infrastructures: CWS Combustion Technologies Mr. Salman Qaisrani 178 Energy Conservation through Redesigning of Buildings Dr. Ashfaq Ahmed Sheikh 204 CHAPTER V Pakistan‘s Energy Vision 2030 Dr. Shaukat Hameed Khan 217 Contributors 235 Index 239 IPRI Publications 243 Solutions for Energy Crisis in Pakistan i INTRODUCTION Ambassador (R) Sohail Amin Air Commodore (R) Khalid Iqbal and Aftab Hussain his volume is based on the papers read and presentations made at the two-day National Conference on Solutions for Energy Crisis in Pakistan jointly organised by the Islamabad Policy Research Institute T (IPRI) and the Hanns Seidel Foundation (HSF), Germany at Islamabad Hotel, Islamabad on 15-16 May 2013. Prominent scholars, academicians and policy-makers from Pakistan participated and shared their views on different aspects of the energy crisis which Pakistan is facing and what could be the possible solutions to address the issue. Pakistan is facing an acute and lingering energy crisis which is not only affecting the daily life of the people but is also hindering overall development and progress of the country. Although the installed generation capacity is greater than peak summer demands, exorbitant production costs make electricity unaffordable for the domestic consumer and uneconomical for commercial users. Electricity prices have skyrocketed due to an increasing reliance on thermal sources. Regrettably, most of the vendors presenting alternative routes end up focusing more on production issues than the actual cost. As stop-gap measures, various agreements with neighbouring countries have already been put in place to meet the country‘s energy demand through direct purchase of electricity. Moreover, Iran-Pakistan (IP) and Turkmenistan- Afghanistan-Pakistan-India (TAPI) gas pipeline projects are already underway. Studies reveal that Pakistan has a huge potential for generating renewable energy from sources such as solar, wind and water. Biomass, coal and nuclear power generation are other untapped cheaper options. The central challenge facing the country at the moment is to find cheaper and sustainable means of generating electricity and to reconfigure the energy mix for continued supply of uninterrupted power, at an affordable price — a task easier said than done. Considering the importance of this issue, Islamabad Policy Research Institute (IPRI) organized a two-day national conference in collaboration with Hanns Seidel Foundation, Islamabad, focused on the topic Solutions for Energy Crisis in Pakistan, on May 15-16, 2013, at the Islamabad Hotel. Its aim was to formulate a ―National Energy Vision: 2030‖, covering aspects like policy making, alternative energy sources, attraction of investment, development strategies and estimating the amount of electricity required in 2030 in order to sustain an economic growth rate of 6-8 per cent. The proceedings of the conference including the speeches, papers read and presentations made are ii Solutions for Energy Crisis in Pakistan being compiled in a book for the use of policy makers and other interested readers. The book has two parts. The first part includes the inaugural address by the chief guest, Dr. Masoom Yasinzai, Vice Chancellor, Quaid-i-Azam University, Islamabad, welcome address by Dr. Noor ul Haq, the then Acting President IPRI, and opening remarks by Mr Kristof W. Duwaerts of the HSF. The second part of the book consists of sixteen papers/presentation/ abstracts, presented at the conference. The papers describe the overall energy mix of Pakistan, its economics, the options, impediments for renewable energy and the National Energy Vision 2030. Mr. Mirza Hamid Hasan, former Secretary, Ministry of Water and Power presented a paper titled ―An Overview of Pakistan‘s Energy Sector: Policy Perspective‖ which said that access to reliable, affordable and uninterrupted supply of energy was the key to economic growth and welfare of any society. Discussing the current energy situation he pointed out a number of factors which were responsible for the severe shortage -- line losses caused by inefficient transmission and distribution systems, high level of theft, low recovery of revenues by distribution companies (DISCOs) from public as well as private users, and inadequate
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