IEEJ: August 2012 All Right Reserved

IEEJ : May 2012

Energy Policy

ByAamer Mehmood,Research Officer (Power)
Planning Commission
Planning & Development DivisionIEEJ: August 2012 All Right Reserved

IEEJ: August 2012 All Right Reserved

Who’s who in Pakistan’s Government Today:

President: Asif Ali ZadariPrime Minister: Yousaf Rasa
Gilani

Chairman of the Senate: Farooq
Hamid NaekIEEJ: August 2012 All Right Reserved

A few facts about Pakistan
Total Area: 796,095 sq km
Population: 167,421,000
Language: Urdu (National) English (official)
Divided into 4 provinces: Sindh, Punjab, North West
Frontier Province, and Balochistan.
Capital City: Islamabad

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A few facts… continued
Major Dams

Currency:
Imports:
Exports:

Government :Mangla Dams
Tarbela Dam
Warsak Dam
Pak. Rupee.
Industrial equipment, chemicals, vehicles,steel, iron ore, petroleum, tea etc.
Cotton, textile goods, rice, leather
items carpets, sports goods, handi-crafts,
fish and fruits etc.
Parliamentary form

IEEJ: August 2012 All Right Reserved

Employment
Total Labour force:
90.52 million
 Employed Labour Force:
43.22 million
18.60 million
 Agriculture Sector:
 Manufacturing & Mining sector:
5.96 million
 Construction:
2.52 million
6.39 million
 Trade: Transport:
2.48 million
 Others:
6.98 million

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Pakistan - Geographical Location
NorthEast

WestEast

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Current Energy Policy andMeasures

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Energy Policies•Presently seven policies related to energy sector are in place orbeing updated.
• Liquefied Natural Gas (LNG) Policy-2006• Liquefied Petroleum Gas (LPG)-2006• Natural Gas Allocation & Management Police-2005• Petroleum Policy -2009• Policy for Power Generation Projects-2002• Pakistan Renewable Development Policy-2006• National Policy for Coal Development-2010(Inprogress)
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IEEJ: August 2012 All Right Reserved

Power Policy

OBJECTIVES OF THE POWER POLICY:*To provide sufficient capacity for power generation at the least
cost, and to avoid capacity shortfalls*To encourage and ensure exploitation of indigenous resources ,which include renewable energy resources ,human resources,
participation and local engineering and manufacturing capabilities.
*To ensure that all stakeholders are looked after in process , ie awin-win situation for all; and*To be attuned to safegaurding the environment.

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Features of the Power Policy• Proper feasibility study for a particular site-specific hydel orindigenousfuel-based/renewable resource-based project• Hydel projects in the private sector will be implemented on buildon-operate-transfer (BOOT) basis. Thermal projects in the private
sector, however will be established either on BOOT or build-onoperate(BOO)basis• The GOP will guarantee that the terms and conditions of executedagreements i.e. the Implementation Agreement (IA), Power
Purchase Agreement (PPA), Fuel Supply Agreement (FSA)/GasSupply Agreement(GSA).Coal Supply Agreement (CSA) andWater Use License(WUL), including payment terms
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IEEJ: August 2012 All Right Reserved

Features of the Power Policy• Power companies will be allowed to import plant and equipment
not manufactured locally at concessionary rates. Companies will
also be completely exempted from the payment of income tax.
• To promote indigenization the local engineering industry will beencouraged to form joint ventures with foreign companies in orderto develop power projects with a cumulative capacity

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IEEJ: August 2012 All Right Reserved

Power Policies

Measures:Pakistan ’s previous polices encouraged the thermal power
generation which used furnace oil, but ignored the futurehigh prices of the furnace oil which ultimately resulted inhigh cost of power, so overall result is high cost/ kWH.
Now our government is seriously thinking to prepare apolicy which encourage power generation from renewableenergy sources i.e., shift from thermal power generation tohydel power generation also gonernment of Pakistan isworking for a policy attractive for investors.

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Pakistan Primary Energy Mix (%age)

IEEJ: August 2012 All Right Reserved

1995

2004

(36.34 MTOE)(50.8 MTOE)
Nuclear,
0.03

Hydel, 15
Coal, 6Coal, 6.5

Nuclear, 0.8Oil, 42
NaturalGas, 37

Hydel, 12.7

Renewable,0Natural Gas,
50

Renewable,0Oil, 30

Source: Pakistan Energy Year book15

Pakistan Primary Energy Mix (%age)

IEEJ: August 2012 All Right Reserved

2009(62.55 MTOE)

Coal, 7.6Hydel, 10.6
Nuclear, 0.6

Natural Gas,
48.3

LPG, 0.6

Oil, 32.1

Source: Pakistan Energy Year book 2008-09
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IEEJ: August 2012 All Right Reserved

Energy Mix in Power Generation (%age)
1995-96

2004-05
COAL
0%

OIL
16%

OIL
29%

COAL
0%
HYDRO
34%

HYDRO
42%

1%

GAS
27%

Renewable
1%

Source:Pakistan Energy Year book

GAS
48%

NUCLEAR

NUCLEAR2%
Renewable
0%17IEEJ: August 2012 All Right Reserved

Energy Mix in Power Generation (%age)
2009
COAL
0%
HYDRO
30%

OIL
36%

NUCLEAR
2%

GAS
32%

Renewable
0%

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IEEJ: August 2012 All Right Reserved

Power Generation Plan (2010-30)
M.W

Years
2005

Nuclear Hydel

Coal

Renewable

Oil

Gas

Total

Cumulative

400

6460

160

180

6400

5940

19540

2010-15

900

7570

3000

800

300

7550

20120

47540

2015-20

1500

4700

4200

1470

300

12560

24730

72270

2000

5600

5400

2700

300

22490

38490

1107602025-30

4000

7070

6250

3850

300

30360

51830

162590Total:

8800

32660 19910

9700

7760 83760 162590

Addition:2020-25

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IEEJ: August 2012 All Right Reserved

INTEGRATED ENERGY POLICY
ISSUE

The energy sector has various policy documents for the oil, gas, power
and renewable energy sectors drafted at different times: There are shortcomings in structure/scope and no linkage acrossenergy fuels.
 Some critical aspects are missing, incomplete or outdated.
 Stakeholders face ambiguity in policy, rules and procedures.
WAY FORWARD
The development of an energy policy document should be initiatedcovering all pertinent aspects of the energy supply chain.
Active participation of all stakeholders should be maintained for proper
buy-in of the policy document during the development phase.
Detailed procedures, rules, etc. will emanate from the policy and will
be developed by the implementing agencies.

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ISSUES AND WAY FORWARD
Crisis situation: Circular debt, weak financial position of energy
companies, falling gas production, high dependence on oil/gas (over80%), low exploitation of indigenous coal and hydel resources andunutilized power generation capacity owing to fuel supply constraints
leading to severe energy shortages.
Non-technical T&D losses remain high (estimated to be around 1012%) which include theft, non-payment of bills, defective meters andunmetered supply.
Pakistan’s industry is energy intensive because of:High losses.
Wastage throughout the supply chain.
Lack of investment in replacing obsolete technology andinfrastructure
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IEEJ: August 2012 All Right ReservedISSUES AND WAY FORWARD
Implement a national plan to improve tariff collections (withnecessary legislation for penalties): Out source high loss feeders for tariff collection.
 Introduce pre-paid smart metering.
 Promulgate anti-theft law.
 Launch Public awareness campaign - if bills are paid andsmart meters are installed, load shedding will be reduced.
 Adjust electricity bills of provinces/defense installations at
source with federal govt.
 Assign priority of supplies to DISCOs (with lower loadshedding) in areas with improved collection and lower losses.

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Power Crises

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Transmission & Distribution Losses and Theft
DISCO
LESCO
GEPCO
FESCO
IESCO
MEPCO

Transmission
Losses (%)

6.6%

Distribution
Losses (%)
13.02
1110.811.5
16.8

PESCO+TESCO

34.5

HESCO
QESCO
Total WAPDA
KESC
Expected31.8
21.5
24
29.0

5.1%
Total: 7 – 8 %Areas with greater
private industrial load

The high losses need to be reduced.
i) Up-gradation of transmission & distribution system; ii) improvement in recovery in Electricity
consumption bills

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Circular Debt in the Energy Sector

Pakistan Electric Power Company (PEPCO) in-ability to payIPPs.

IPPs have to pay to Pakistan State Oil (PSO) for furnace oilon a regular basis.

PSO have to make payments to refineries and productimports on regular basis.

The situation becomes even more complex when thegovernment increases the power tariff to narrow the deficit,
however with this the pilferage/losses goes up

Due to non-payments to IPPs, GENCOs results in less26
generation and causes power crisis

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Earth quake 2005

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Flood in 201029

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Terrorism 2009-201130

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Contact : report@tky.ieej.or.jp

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