Power crisis in Pakistan will worsen starting next month as the sate-owned Pakistan State Oil PSO appears ready to disconnect fuel supplies to the Hub Power Company, Kot Addu Thermal Power Company and Pakistan International Airlines for non-payment.
PSO had already slowed down the supply of oil to these companies and has warned that it completely shut down supply if payment was not made immediately.
In a letter to Hub Power Company (HUBCO) and Kot Addu Thermal Power Company (KAPCO), PSO has threatened the suspension of oil supply in case both failed to pay at least Rs 20 billion out of the total dues of Rs 57 billion. The letter says PSO will not be held responsible for the consequences arising from the discontinuation of supplies.
These receivables have now crossed Rs.103 billion and power sector companies owe over Rs.93, including Rs38.7 billion from Pakistan Electric Power Company, Rs35.5 billion from Hubco and Rs18.7 billion from Kapco.
Finance ministry officials are of the opinion that this debt is still manageable as PSO’s payables have also increased up to about Rs68.5 billion on February 23. Reportedly these include Rs35.3 billion due to Parco, Rs14 billion to Pakistan Refinery Limited, Rs15 billion to Attock Oil, Rs8.7 billion to National Refinery and Rs5 billion to Bosicor Refinery.
Finance ministry officials Wednesday said, “cash flows of power companies will improve as a result of tariff increase. However, receivables of some companies had increased significantly and outgoing finance minister Shaukat Tarin would preside over a meeting on Saturday to ensure some payments to PSO.”
Earlier this month Finance Minister Shaukat Tarin had said that the appointment of the , federal price adjuster, “will ensure the payment of dues to Pepco from the government departments.”
Rana Asad Ameen has been appointed as price adjuster.
“The government will not let PSO default at any cost and the Finance Ministry is working to release some amount to bail out the firm,” the departing Finance Minister had said.
Analysts argue discontinuance of Oil and fuel supplies to the power plants will not only increase the duration of load shedding but also burden the customers with further increase in power rates.
Ibrahim Sajid Malick is a Pakistani-American writer, technologist, and social entrepreneur. He has been writing on Pakistani society and politics since 1986. He has held several media, communications, and technology positions for organizations large and small. Mr. Malick graduated from New School for Social Research with a master’s degree in anthropology. He holds several technology and management certifications. He works for a leading technology firm and blogs at www.ibrahimsajidmalick.com
There have been alot of talk. From hydro to wind to wave. The problem with pakistan is that, none of these options are going to work. Pakistan is a small country compared to its population. hydro dams aside from being expensive in an effectively bankrupt country, drown large amounts of precious land, so Pakistan can not meet all of its energy needs by hydro generation. wind, solar and wave technologies are not proven and are expensive toys which hardly contribute a few percentage of power demands in the most rich and technologically superior countries so Pakistan should not gamble on these toys and spend its precious money on them. Coal power plants are a very attractive option, since pakistan has coal reserves to provide its energy needs for several dozen years, but they are dirty and generally any kind of power plants are not cheap. A 1,000 MW plant costs upwards of a billion euroes, and that is only the price of the plant and does not include a billion dollar more needed to develop a large enough mine to feed coal for the plant. Nuclear plants cost several times more and can cost upto 10 billion dollars for a 1,200 MWh. Pakistan does not have the technology to make nuclear power plant and currently no other country also wants to sell nuclear plants to Pakistan due to terrorism problem. Pakistan as of now is short by 6,000 MW and as the population grows and people’s expectations shoot up and half of Pakistan that is right now not connected to electric grid, become connected, You can imagine how many plants Pakistan has to make. Also it takes anywhere between 4 years for a small coal plant to 12 years for a large dam or nuclear plant to be built.
Right now facilities like airconditioners and computers are used by less than 10% of pakistan and most of the economy is based on ancient agricultural techniques. If pakistan is ever to become modern and industrialized then it needs, at least 1 Kilowatt hour capacity for every person. With a current estimated population of 180 million that comes to 180 thousand Megawatt hour capacity. Pakistan has now just 20 thousand. With growing population Pakistan would need more than 360 thousand MWh of energy by 2050, when Pakistan’s population hits 360 million.
So what is the solution. Pakistan does not have money and technology to develop its own plants. Independent power producers and private generating units are also not a long term option as they are thieves selling the same electricity in Pakistan for up to 55 US cents per kilowatt hour as compared to 12 cents in Canada and United States, under the pretext of investment in a risky terrorist infested country. Only one option remains, which is fortunately for Pakistan is both very cheap and reliable as well as least time consuming. The option has only one glitch, and that is, it will accompany the wrath of USA. That option is Iran. Iran can provide Pakistan with almost unlimited amount of natural gas which is much cheaper than the prevailing LNG prices in the world. Also Iran has a very developed electricity generation system and has offered Pakistan to meet the entire Pakistani shortage of electricity by offering the subsidized rate of 11 cents per kilowatt hour. Iran has even offered to build the entire transmission lines to Pakistan entirely with its own money and expertise on a record time of 14 months. If Pakistan just says ok. there will be no load shedding by the next summer. It is a very brilliant option both economically as well as security wise. Economically Pakistan will get as much power as it needs comparatively cheaply, and can spend its little money on developing industries and other needed infra structure instead of building power plants. And since Pakistan is going to be dealing with a government that is the brotherly government of Iran, Pakistan will no more need to play a slave to IPP’s. These kind of arrangements are immensely successful and promote peace and prosperity, for example almost all of the countries in continental Europe buy their power from France and Germany. But alas our leaders are too afraid of US. They have not learnt anything from Turkey which is in a similar situation to Pakistan being an American client. But Turkey despite being a client has defined its red lines with USA regarding its national security. So Turkey buys both gas and electricity from Iran, and Americans understand that Turkish people will not listen to them in these regards unless USA could satisfy their energy needs instead of Iran. But since USA can not even satisfy its own energy needs and has to import energy itself then Turks buy cheap energy from Iran. Pakistan could do the same if it had the guts to tell Americans that either they should meet the national energy needs by the next summer or that Iranians will be invited to take care of our problem. It is a choice Pakistan has to make today and not tomorrow. Iran is pakistan’s only option. And pakistan is lucky that its only option is in the lap of a brotherly country which is not only trustworhty but also eagerly willing to help out. Pakistan should not die of energy starvation while its brother is willing to feed it.