30,000 tonnes furnace oil being used daily for thermal power generation

[Naveed Yaseen]

Speakers at a seminar on Monday said that Pakistan, despite having an enormous potential for hydal and other alternative sources of power generation, has been consuming 30,000 metric tonnes (MT) of furnace oil daily for running its thermal power generation units.

The seminar on “Tariff mechanisation for renewable energy technologies”, was organised jointly the Wind Energy Project of the UNDP and the Alternative Energy Development Board (AEDB).

Pakistan Electric Power Company(PEPCO) Director-General Tahir Basharat Cheema said that the cumulative power generation capacity in the country was 19,500 Megawatts (MW) but at present they had been producing just around 15,000MW.

He said that due to the under-capacity working of the power generation units the country had been facing a power shortfall of over 5,000MW causing countrywide load-shedding.

He said that as there has been over-emphasis on the use of furnace oil, the country needed to import oil tankers of 50,000 MT capacity each day to end the menace of power load-shedding. This means that Pakistan has to spend Rs1.5 billion each day for importing furnace oil to rid the country of the serious load-shedding problem.

A tanker of furnace oil every day would keep load-shedding at bay, said DG PEPCO in a lighter vein at the seminar.

He said the PEPCO’s outstanding amount against power distribution companies in the country had increased to Rs269 billion while the country also owed Rs159 billion to independent power producers (IPPs)and suppliers of furnace oil. He said that the present consumption of 30,000 MT furnace oil daily would increase to 43,000 MT in the future in case of decrease of gas supplies to power generation units.

Cheema also lamented the menace of circular debt and energy shortfalls because the government did not allow any generating plant in the country over the last 15 years, resulting in a big gap between electric supply and demand.

AEDB CEO Arif Alauddin said that energy shortages and planned and unplanned power outages were causing a loss of over US$6 billion annually to the national economy. It was also causing an increase in poverty, unemployment, reduced productivity and reduced economic growth.

Pakistani producers were unable to meet their commitment to their foreign buyers, and were also becoming less competitive in the international market which was resulting in the cancellation of orders, a reduction of export earnings and dwindling foreign exchange reserves of Pakistan, he said.

Currently Pakistan is fulfilling 29 percent of its energy needs from gas while in the future with an apprehended shortage of gas, Pakistan would require a huge amount of furnace oil, Alauddin said, adding that the first Wind Farm in the country was expected to be inaugurated this month in district Thatta. Similarly, the first wind power-based lights at the Marine Drive will become a reality this summer.

Since not all renewable energy sources can work in all locations, the feed-in tariff must be universal for all technologies so that investors and consumers are encouraged to install the technology that is best for the site, rather than one that has the highest financial incentives, Alauddin said.

The tariff should be at a rate that encourages a sensible choice by the consumers, he said, addng that Pakistan’s Renewable Energy Policy had so far largely focused on attracting private investment.

He said that in order to achieve the desired level of private investment, Pakistan will have to overcome investor perceptions of significant political risks, determination whether the economy and people’s capacity to pay justifies the larger investment requires, and assessment whether key customers with historically large arrears are causing circular debt and finally how to support the private investors in their financial closure in today’s tough market and to protect private investment.

He said the AEDB has sent three wind projects for financing to the International Finance Corporation (IFC). They included Tapal Energy, the Wind Power of Dawood Group. He pointed out that the sponsors of three wind projects had also purchased land on their own from private parties. As many as 40 small windmills ranging from 2 kilowatts to 250 kilowatts capacity, were already in operation in Karachi and supplying additional power to others.

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