EMR - ConsultE M R

1

byMunawar B. Ahmad, PE

EMR-ConsultOct. 2009

Energy is our business

MOVING TOWARDS ENERGY SUFFICIENCY, SUSTAINABILITY &

SOVEREIGNTY

A NEW ENERGY MIX FOR PAKISTAN

THE PAKISTAN AND REGIONAL ENERGY FORUM

EMR - ConsultE M R

1. ROOTS OF PAKISTAN’S ENERGY CRISIS

2

Pakistan today is caught up in an acute Energy Crisis which has its roots in five (5) distinct causes, namely;

i. Lack of Integrated Energy Planning & Demand Forecasting and absence

of central & focused entity responsible for the Energy Sector

ii. Imbalanced Energy Mix with heavy reliance on gas (47.5%) and Oil

(30.5%) (72% imported)

iii. Non-utilization of vast indigenous resources of Thar Coal and Hydel

potential

iv. Lack of effective project structuring, planning and implementation of

indentified and viable projects

v. Inadequate Primary Energy Sources or access to, or local availability /

development

Energy is our business

EMR - ConsultE M R

1. ROOTS OF PAKISTAN’S ENERGY CRISIS

3

As a consequence the energy shortages have snowballed with major supply chain and infrastructure gaps, namely;

i. The Electric Power Sector; has been in static non-growth mode from 2003-

2008, and the peak supply-demand gap has grown to about 3,500 - 4,000 MW

from about 1,000 MW in 2006. (Fig. I (a), I (b) )

ii. In the Gas Sector; the demand - supply gap that emerged in 2007 has grown

to about 800 MMcfd in 2009 due to stalled import projects (Mashal, IPI, PGP)

and local fields not developed / put in production for 5 years ( 500 MMcfd)

(Fig. II )

iii. Inadequate Energy Infrastructure; supply to end customers both for electric

power as well as fuel oil for Power Plants has been constrained

iv. Short Supply of Gas/Oil to Power Plants; the crisis has been aggravated due

to gas supply shortfall and reduced oil supply due to non-payment to OMCs

Energy is our business

EMR - ConsultE M R

4.1 - PAKISTAN’S PRIMARY ENERGY MIX

4

Pakistan’s Primary Energy Mix is essentially imbalanced even on a worldwide comparative basis, with dependence on gas at 47.5%, oil at 30.5% (72% imported) (Fig. V )

The 2005 Energy Plan, projected a continuing dependence of about 48% on Natural Gas in the 2030 scenario, based on mega imports thru Transnational Pipelines (6.5 bcfd) and LNG (1.5 bcfd) (Fig. VI )

With the continuing delay in the planned TNPs and LNG import projects (Mashal, PGP, Engro etc) the primary energy gap is increasing at an alarming rate

By 2015 the natural gas supply-demand gap after LNG imports of 1.0 bcfd (if implemented) will increase to 1.7 bcfd, and is unlikely to be covered as IPI cannot be completed in this time frame

There is clearly an essential need to plan a revised Primary Energy Mix along with a revised electricity generation plan by source in the 2010 – 2030 scenario

Energy is our business

EMR - ConsultE M R

4.2 - PAKISTAN’S POWER GENERATION BY SOURCE

5

With rising cost of crude oil from $ 60 in 2005 to $ 147 in 2008, Pakistan’s oil based thermal generation (32%) became unsustainable and has resulted in a massive Energy Sector debt ( $ 3.6 billion)

Coal utilization is about 9% in the Energy Mix, and only 0.1% for Power Generation vs. 72% in China, 56% in India and more than 50% in the USA

(Fig. VII )

New power generation has remained static for about 7 years (Fig. VIII )

A more rational and Sustainable Energy Mix must be planned for the 2010-2030 scenario.

Significant increase in hydel power generation and optimum use of coal thru gasification and clean coal technologies

As a strategic priority Nuclear Electric Energy has to be increased to about 5% and Renewable to about 3% in the 2030 scenario

Energy is our business

EMR - ConsultE M R

6

Energy is our business

Pakistan’s Thar Coal Potential Worlds Single largest contiguous Coal field extending over 10,000 Sq KMs

(Fig- IX ) Reserves of 175 – 200 billions tons exceed oil equivalent reserves of Saudi

Arabia, Iraq, Iran, with a value of several trillion US$ (Figure-X ) Phased development can lead to 400 – 600 mt /year coal mining in 20 years All of Pakistan’s energy requirements (Electric, Power, Gas, Diesel) can be met

in 2020 – 2030 scenario The most recent ADB report (May 2007) states “Thar lignite once mined, is a

useable fuel or carbon resource” and “Coal to liquids-CTL is considered a serious utilization option”

In addition to Electric Power, SNG, Chemicals, Fertilizer, etc can be produced for self consumption and surplus can be exported (Figure-XI )

Contribution to GDP in plants, products, services, employment, etc, would be in the range of $200b-$300b which exceeds Pakistan’s current GDP of $ 170 b

Thar Coal is God’s Gift of “Black Gold” to the People of Pakistan and will ensure the Nation’s Energy & Economic Future 6

5.1 THAR COAL UTILIZATION

EMR - ConsultE M R

7

Co-Production Plants based on Thar Coal Gasification

Coal production costs have to be in the range of $20 - $25 /tons, which equates to a crude oil cost of about $50 per barrel in order to achieve economical levels

To achieve cost benchmark mine capacity of 50 mtons/year is required in three phases of (1) 15 mtons/yr (2) 30 mtons/yr and (3) 50 mtons/yr

Following co-production plants will need to be set-up in the three phases to match with coal production over 3-5 years;• Phase 1) IGCC 500 mw (3 mtons/yr) and SNG 250 mmcfd (12 mtons/yr). Total 15 mt/yr

• Phase 2) IGCC 500 mw (3 mtons/yr) and FTD 30,000 barrels/day (12 mtons/yr). Total 30 mt/yr

• Phase 3) SNG 250 mmcfd (12 mtons/yr) and FTD 20,000 barrels/day (8 mtons/yr). Total 50 mt/yr In subsequent phases, chemical and fertilizer plants would be set-up as part of a

Mega Petro-Chemical Complex which would be supported by additional coal mining Power transmission line of 500 KV will be planned and constructed for 1000 mw

power dispersal to NTDC Network A 36”-42” Hi-Pressure Gas Transmission Pipeline will be planned and constructed to

connect to the SSGC Network at Hyderabad / Jamshoro

7

Energy is our business

5.1 THAR COAL UTILIZATION

EMR - ConsultE M R

8

5.2 - HYDEL POWER GENERATION

8

The country has an estimated Hydro Resources Potential of about 45,000 MW, currently whereas only 6,500 MW have been installed with 11% share in the Energy Mix.

It is proposed in the long term scenario to increase share of Hydro in Primary Energy from 6,500 MW (11%) at present to about 32,100 MW (20%) by 2030 (30% share in Power Generation)

This will entail set up of 8,000 MW small/medium hydro units on rivers/canals, run of the river plants and four large hydro multipurpose reservoirs/dams with capacity of about 17,600 MW upto 2030

The four large Hydro Dams are, (i) Kalabagh – 3,800 MW, (ii) Bhasha – 4,600 MW, (iii) Bunji – 5,400 MW, (iv) Dasu – 3,800 MW

It is necessary to maintain an optimal Hydro/Thermal Mix, in base load operations to cater for reduction in output during low hydel periods.

Energy is our business

EMR - ConsultE M R

7. SET-UP OF NATIONAL ENERGY AUTHORITY - NEA

9

An essential step towards preparation and implementation of a National Energy Plan is the set-up of a statutory body, “The National Energy Authority (NEA)”

The NEA would be an independent and focal entity with a Chairman and 12 Board members, (6 private sector professionals and 6 energy sector experts, MDs etc from the Public Sector/GOP)

The NEA would be responsible for, and have the authority to undertake strategic planning in the Energy Sector and prepare a comprehensive ENERGY POLICY.

The NEA would prepare an integrated and Comprehensive National Energy Plan (NEP) for the Short, Medium and Long Term based on robust projections on a scientific basis.

The NEA would also identify, plan and pursue implementation of Energy Sector Infrastructure augmentation/expansion by the OMCs, PEPCO, SSGC, SNGPL etc.

The NEA would coordinate with the sectoral organizations, public companies OMCs, E&P Companies, IPPs etc and relevant Ministries etc for the NEP implementation

The NEA will also act as a monitoring authority for all Energy Sector projects, and ensure compliance to project road-maps and milestones

Energy is our business

EMR - ConsultE M R

10

Figure-VII

PRIMARY ENERGY SUPPLY BY SOURCE 2007-2008

Energy is our business

ELECTRICITY GENERATION BY SOURCE 2007-2008

China 72%

India 56%

USA 51%

Coal Power Generation

EMR - ConsultE M R

11

Current 2008

Energy is our business

2030 Per 2005 Energy Plan

Revised Plan 2030

PRIMARY ENERGY MIX (a)

Figure- XII

EMR - ConsultE M R

12

Figure- XIII

Current 2008

Energy is our business

2030 Per 2005 Energy Plan

Revised Plan 2030

ELECTRICITY GENERATION BY SOURCE (b)