1

16th MCMC

Case Study

Syndicate - CEnergy Crisis in Karachi

Sponsor ADS: Ahmed Iqbal ShahSyndicate Incharge : Ms Shagufta

WarisDate: 11th October, 2013

NATIONAL INSTITUTE OF MANAGEMENT, KARACHI2

Composition3 Sr

#Name Sr.

#Name

1. Aijaz Anwer Chohan 10. Usman Ghani

2. Moazzam Ali Marri 11. Dr. Razi Ur Rehman

3. Atta Ullah Shah

4. Shaheen

5. M. Kamran Khan

6. Zubair A. Siddiqui

7. Tahir Nawaz

8. Tarique Shiekh

9. Saleem Memon

4 Methodology

Primary sources

Discussion with the colleagues

Secondary sources

Material provided by NIM

Material available on Net

5 Requirement Number 1

Critically analyze the recent crises of Energy Shortage in Karachi and its impact on the overall economic development of the country especially on our industrial sector.

6 Requirement Number 2

Critically Assess the overall performance of previous governments to enhance the generation capacity with special reference to its overall demand (50,000 MWs) in 2025 and what is the role of major stakeholders for this crisis.

7 Requirement Number 3

Make workable strategy at operational & Tactical level to handle this energy crises and also suggest a realistic road map to enhance the existing generation capacity.

8

Acronyms

SSGC

Sui Southern Gas

Company

SNGPL

Sui Northern Gas Pipe

Line

KESC

Karachi Electric Supply

Company

GOP

Government of Pakistan

IPPs

Independent Power

producers

MW

Mega Watt

KV

Kilo Volt

PAEC

Pakistan Atomic energy

Commission

9 Sequence of Presentation

Recommendations

Role of Stakeholders

Performance of previous governments

Impact of crisis on economy

Recent Crisis

Introduction & Background

10 Introduction

Pakistan Economy being devastated by • Earthquake 2005• Floods in 2010-11• War against terrorism 2001 onwards

Energy Crisis resulted in loss of 2% points of GDP growth/year

GDP Growth sunk from 7% in year 2007 to 3% in year 2012-13

11 Recent Energy Crisis in KarachiKarachi remained immune to Power break down in comparison to other provinces which were facing

longer hours of painful load shedding

Politicians agitated and demanded equal distribution of load shedding which resulted in start of load shedding

in Karachi for few hours

The recent crisis worsened due to diversion of gas supply by SSGC to SNGPL resulting in 50% cut off from

share of KESC

KESC Production by power plants reduced to half due to less supply of Gas

12 Current Scenario

Total demand of electricity in Karachi 2400 MW

Total production of electricity 2000 MW

Shortage 400 MW

Total install capacity of Karachi-

KESC 1756 MW

IPPs 2737 MW

KANUP 137 MW

Total 2630 MW

13 Power generation capacity of KESC at present

0

400

800

1200

316 80 100

1260Capacity of KESC

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Hydel; 30.3%

Coal; 0.1%

Oil; 35.4%

Gas; 32.4%

Nuclear, 1.8%

World Pakistan

A Comparison of Power Generation fuel Mix 2012

Nuclear 15%

Hydro 16%

Gas 20%

Oil 6%

Coal 41%

Others 2%

15 Impact on overall economic development of Pakistan

No future investment in industrial

sector

Balance of payment problem

worsened due to heavy

import bill of

petroleum

Unemployment &

Poverty increased

Increase in cost of

production due to self generation

(Diesel) Generators are used.

Reduction in

production & exports order are affected

16 Performance of previous Governments

Lack of futuristic approach upto 1990 • 60MV inherited at the time of independence in 1947

Ayub Era• WAPDA was established in 1958 for power Schemes

Bhutto Era• Production rose to 1331 MV with the installation of number of thermal

& Hydel Power units (Tarbela and Mangla dams were built)

Zia Era• No power scheme was introduce

17 Performance of previous Governments cont ..…

1993• Energy Task force was formed in 1993 by

Benazir• On recommendations of task force a power

policy was introduced in march 1994• “Policy framework package of incentives for

private sector power generation projects”• 22 IPPs invested capital in energy sector and

started production• Pakistan become self sufficient in energy

and was in a position to export surplus electricity to India.

18 Futuristic approach in Benazir Era

1993-

96

• CEPA (consolidated electric power Asia) project in Keti Bander in 1995 with following salient features:

• Production of 5280 MW• Development of a sea port at Keti Bander.• Industrial zone between Thatta and Jamshoro• Employment opportunities for 7000 people

Cont’d. . .

19 Reversal of futuristic policies by successive Governments

The futuristic policy of Benazir was scraped by successive governments of Nawaz Sharif and Pervez Musharraf

Inconsistent policies in energy sector worsened the energy crisis because the political rivalries resulted in roll back of power development programs

Not a single mega watt was added in national grid in Pervez Musharraf era

Rental power projects in previous Government was abandoned on the orders of Supreme Court because there was an element of corruption in these projects

However, present government has taken serious steps towards power production

20 Role of Major stakeholders for this crisis

Politicians-- lack of vision &will

Bureaucrats– lethargic attitude

Policy makers– inconsistent policies

International Oil Mafia– vested interests

General Public– divided on ethnic lines

Action-1: Reduce power shortages by 10% each year

Step-1 : Plug leakages & improve recoveries

Implementation:• Phased reduction in theft from 25% to 5% in max. 3

years• SDO be accountable thereafter for theft beyond 5%• Competitive market based salary• Technical losses from 14% to 7% by upgrading

equipment• Electricity meters with GSM communication modules –

successful pilot project in Shadbagh and Delhi Gate, Lahore [line losses reduced from 12% to 3.4%]

• Involve local district govt. officers & community elders for monitoring

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Action-1: Reduce power shortages by 10% each year

Step-2: Conservation

Implementation:

Public awareness for responsible use of power

Daylight saving time

Closure of markets by 8pm & restaurants/marriage halls by 10pm

Energy efficient appliances

Tariff rates: based on units consumed and locality of its consumer

Increase taxes on sale of Air conditioners

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Action-2: Revisiting Energy MixStep-1: Reduce dependence on imported oil

Implementation:• Conversion of oil and gas fired plants to coal• ECC already approved• Needs to be taken up seriously

Step-2: Harness Alternative Energy Resources

Implementation:• Expedite 24 Gharo-Keti Bandar Wind Mill Projects• Expansion of Biodiesel

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Workable Solutions24

Action-1: Additions to Installed Capacity

Step-1: New projects on gasification through coal

Implementation:• Develop power generation plants on model of Dr.Mubarak Mand’s project• Lessons from India and China

Step-2: Gas share from gas-fields of Sindh

Implementation:• Provision of agreed share of gas to KESC• Withdrawal of 720MW given to KESC from national grid and supply to

HESCO

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Action-1: Increasing installed Capacity

Step-3: Develop Alternative Energy

Implementation:

• Solar thermal (50 MW each) projects• Wind-farms in Gharo-Keti Bunder corridor• Increase biogas through biological processes• Indigenize RET / ToT in collaboration with India /

ChinaStep-4: Run-off River Projects and Nuclear Power Generation

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27Thank You