Energy Sector Audit

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Dr. M. Asif

Pakistan’s energy woes appear to be never ending despite the loud claims by the present government. While the installed generation capacity is told to have exceeded 25,000MW against a much lower demand, agonising spells of load-shedding and power breakdowns have become a norm and that is even before the start of proper summer. On the other hand, the circular debt is approaching Rs1,000 billion. These indicators beg to suggest that the energy sector is in a dreadful shape as can also be seen from the recent K-Electric saga that made a mockery of the whole system. Alarmingly, the state of affairs with the whole energy sector — in terms of technical, financial and administrative perspectives — is murky. No one knows exactly what is happening on these fronts.

Energy auditing is a universal practice used to identify and rectify losses and inefficiencies. It is the imperative starting point of any improvement effort in industrial, commercial or residential facilities. It is time to apply this approach to Pakistan’s energy sector. No solution will work unless a clear and comprehensive picture of the entire energy sector is developed through a holistic audit. Putting it simply, a doctor cannot treat a seriously ill patient without a thorough examination.

One of the major issues with the energy sector which has surfaced prominently in recent years is its opacity. There is a lack of data in the first place and whatever is available has serious question marks in terms of accuracy. The issue has gradually intensified over the last couple of decades with the present government having mastered it to such an extent that now there is hardly any project for which reasonable level of reliable information is available. The current office-bearers have become arrogant enough to bluntly refuse to disclose project costs even to parliament in the name of national interest. Reportedly, details are being hidden by design as there is also a growing trend of forging the data and statistics on all fronts, including energy demand and supply, numbers on load-shedding and financial sheets.

A circular debt of Rs1,000 billion, to have accumulated within four years, speaks volumes of the financial and administrative turmoil in the energy sector. More alarming is the fact that circular debt has reached these heights when oil prices are almost half compared to a decade ago when the issue cropped up. Such a gigantic and vicious debt circle is bound to have enormous implications on the national economy both at the macro and micro level. The whole issue of circular debt has been an utter nuisance and a consequence of ill planning as well as naïve political strategies making the power sector hostage.

The state of affairs indicates that things are seriously wrong deep inside the energy sector and the way it is managed. Whatever measures the present government has taken in its four and a half years of rule and the earlier governments, since the inception of the energy crisis in 2006, have failed to deliver. As a matter of fact the energy crisis has only complicated both in terms of intensity and dimensions. There has not been any meaningful effort to address the root causes behind the energy crisis. All we have seen over this period are makeshift and adhoc measures that have only added to the woes. The counterproductive rental power plant initiative by the previous regime with the hallmark example of Karkey project, and almost all of the projects orchestrated by the present office-bearers, including Sahiwal coal power plant, Nandipur power project, QA solar park and LNG import deals and terminals, have attracted huge criticism on technical, economic and strategic fronts. Some of these projects are already in disarray with financial corruption inquiries being underway.

Globally, the viability of energy projects is determined in terms of parameters like capital expenditure (capex), operational expenditure (opex), levelised cost of electricity (LCOE), long-term strategic value and alignment with the national energy security objectives. The viability of most of the energy projects set up since 1990s is not clear on any of these parameters. Reports of financial corruption and wheeling and dealing at the top policy and decision-making levels are not new to the energy sector. Ironically, even in the midst of the ongoing energy crisis, priority is to serve vested interests. The level of moral and administrative bankruptcy has grown to such an extent that the allegations of wrongdoing have clouded the office of the prime minister as well. On top of financial corruption, other irregularities are widely reported such as appointments of cronies to key positions, political arm twisting towards management of power companies, deliberately orchestrated load-shedding in the name of maintenance shutdown and suboptimal running of power plants. Enough with fancy slogans and uncalculated colourful plans by successive regimes, these have failed to deliver. To rescue the energy sector from the existing state of directionlessness, self-implosion and opaqueness a comprehensive audit is the way forward.

A team of committed and capable energy and financial experts thus needs to be constituted with the mandate of carrying out a holistic scan of the entire energy sector. It is extremely important that the team has a guaranteed and at will access to all required resources, including power plants, data bases, accounts and log books of ministries concerned, departments and generation and distribution companies. Detailed examination of circular debt taking into account balance sheets of stakeholders concerned developing correlation with factors like load-shedding, international oil prices, power plants’ operations, fuel mix and power purchase agreements will be helpful. Owing to the fact that 6,000-8,000MW of power plants are almost always dysfunctional, the audit must also examine the installed capacity taking into account type of technology, fuel usage, operational efficiency and age. It must be clear that the leaks and losses — technical, financial and administrative — that are fast sinking the energy sector cannot be comprehensively identified and addressed without such a detailed audit.

Published in The Express Tribune, May 5th, 2018.

Protecting nature

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Dr. M. Asif

OUR country lies in one of the most vulnerable regions in the world in terms of global warming and climate change. To fight against global warming there needs to be a collective national response on the part of all stakeholders. Like policymakers, industry, academia and civil society, religious circles also have an important role to play.

The subject of caring for the environment is missing in the mainstream agenda and narrative of Islamic circles. Given their crucial role in influencing the trends and values from the grass roots to the national level, they need to rediscover the sublime teachings of Islam regarding sustainability and environmental friendliness.

Global warming, which is widely attributed to human activities especially the burning of fossil fuels, is resulting in catastrophic implications both on land (flooding, hurricanes, droughts and wildfires) and sea (melting of glaciers and sea level rise). The phenomenon of global warming has a striking resemblance with verse 41 of Surah Rum which states: “Corruption has appeared throughout the land and sea by [reason of] what the hands of people have earned so He may let them taste part of [the consequence of] what they have done that perhaps they will return [to righteousness]” (30:41).

The message of the Quran has been understood and interpreted to seek guidance on contemporary issues and challenges over 1,400 years and will continue to be the source of guidance. Global warming, therefore, appears to be a perfect reflection of the stated Quranic verse. The Quran offers insight not only into problems but also guides towards the best solutions.

Sustainability is a fundamental virtue of Islam.

The world has developed the consensus that environmental sustainability is the way forward to address the issue of global warming. In literal terms, the word ‘sustainability’ means the ability to be sustained. From the perspective of environmental sciences, sustainability means balance, equality and justice, as the definition of sustainable development goes: Sustainable development is the kind of development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Sustainability is one of the fundamental virtues of Islam and has been richly reflected upon in the Quran and Sunnah of the Prophet (PBUH). In Islam, adal is one of its core values. ‘Adal’ in different forms and meanings has been used 24 times in the Quran. Though the Quran mostly uses it to describe justice, adal has also been used to mean equality and balance respectively in Surah Namal (27:60) and Surah Infitar (82:7).

The Quran has, time and again, emphasised the need to have a balanced and conscious approach to life and to avoid wasting resources. It says: “O Children of Adam … eat and drink, but waste not by excess, indeed God likes not the wasters” (7:31). Quran also declares wasters as brothers of devils: “Indeed the wasteful are brothers of the devils. …” (17: 27). Similarly, the Holy Book describes a characteristic of one of the worst opponents of Allah as being destructive to the environment: “And when he goes away, he strives throughout the land to cause corruption therein and destroy crops and animals; and Allah does not like corruption” (2:205).

The Prophet also put much emphasis on environmental sustainability both through his actions and words. As is evident from numerous ahadith, he fundamentally advocated respect for life; care for not only human beings but also animals, birds and plantation.

Two of the key dimensions of environmental sustainability are conservation of water and forestation/plantation as the world is suffering from water scarcity and deforestation. Regarding water, the Prophet advised: “Do not waste even if performing ablution on the bank of a fast-flowing large river” (Al Tirmidhi). Regarding forestation, he states: “If the Hour occurs and one of you holds a seed in his hand, then if he can sow it before the Hour occurs, he should do so” (Musnad Ahmad).

In literature on environmental sustainability, it is hard to find statements more powerful than the above two. After the Prophet, the spirit of sustainability was held steadfastly by his companions. Hazrat Abu Bakr used to order military commanders: “Bring no harm to the trees, nor burn them with fire, especially those which are fruitful.”

It is thus obvious that Islam strongly advocates for environmental stewardship. It is concerned not just about prayers, fasting and Haj but also about the duties of individuals towards the well-being of society at large as it declares the removal of a harmful object from a path a branch of the Islamic faith. A Muslim society, therefore, should be a role model in terms of tidiness, discipline and environmental sustainability. The situation, unfortunately, is the other way round. It’s time to reflect!

The writer is an energy and environmental scientist.

dr.m.asif@gmail.com

Published in Dawn, April 6th, 2018

Incapacitation in the energy sector

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Dr. M. Asif

The last couple of decades have seen an enormous transformation in the global energy scenarios in terms of trends, policies and technologies. The situation in Pakistan, however, has been dismal. The country is suffering from a dire energy crisis for the last decade or so. The problem is apparently an issue of gap between demand and supply. The solution is to bridge this gap by boosting supplies. It will, however, be a short-lived and costly endeavour unless the causes that fostered this gap are addressed in parallel. This is a subject that is missing in the national debate.

The root cause of Pakistan’s energy woes is incapacitation in the energy sector in terms of vision, strategy and commitment. These traits have rapidly diluted since the 1990s. The situation inevitably led to a decline in professional integrity and competence. The effect has been catastrophic both in terms of magnitude and implications. The objective functionality of the energy sector has eroded, especially at the policy and decision-making levels. Consequently, most of the energy projects conceived over this period — including IPPs, Rental Power Projects and in the recent past Quaid-e-Azam Solar Park, Nandipur plant and Sahiwal Coal Power Project — are untenable for various reasons including financial irregularities and strategic as well as technical flaws.

Political interference has crippled the energy sector more than anything. Integrity and autonomy of energy departments, for example, have been practically overrun by successive governments. There is little regard for merit in key appointments; so much so that even in the midst of the ongoing energy crisis the most sensitive of the positions are given away to cronies. For years the ministries of water and Power and oil and gas were without full-time ministers. Instead, the present as well as the previous regime sought special advisers to run the show. The fact that these advisers were from the medical profession speaks volumes about the agendas and seriousness of the regimes. Arm-twisting of energy sector entities to serve cartels, lobbies and vested interests is a norm. Regulatory bodies have been made spineless. Energy departments have also been undermined by thousands of political appointments burdening them with a compromised, incompetent and potentially corrupt workforce. Dedicated and competent officials, not many left in the system anyway, are marginalised when it comes to vital policy and decision-making; thus resulting into unviable and toxic initiatives and projects. Given these ill-practices, the present energy turmoil should not be a surprise. This is just a wee reflection of the administrative irregularities while the mind-blowing financial scams clouding the energy sector — as even the highest offices, including that of prime minister, have attracted numerous allegations of corruption — are obviously not the focus of this article.

A classic example of the consequences of incapacitation in the energy sector is the famous water-car saga of 2012 which made a mockery of the whole system. It wonderfully exposed the shallowness of not only the policymakers but also the engineering, scientific and media elite. It started when a less than ordinary guy, with a history for fraud and robbery, walked in the policy corridors claiming to have devised a car running on water. Fine up to this point as this is a well-established technology, but the fun started when he made a series of earth-shattering claims that his car needed no energy input for the electrolysis of water and could run perpetually. The guy basically toppled the laws of science and thermodynamics. Interestingly, he was showcased with great pride by a senior federal minister on mainstream TV channels; and was invited in dozens of prime time talk shows receiving applause from top TV anchors. The minister then threw the joke of the century by expressing government’s concerns over the safety and protection of this guy from powerful lobbies as the oil companies were facing being out of business.

The comedy of errors didn’t stop here; this absurd water-car idea was appreciated by the federal cabinet and a special committee was formed by the prime minster to follow-up on the matter. It was sad to see this fraud appreciated by the leading scientists and executives of the engineering and scientific bodies. Only a handful of academics withstood to challenge this fraudulence. This water car-saga made the country a laughing stock in the scientific world. A favour it did, however, was that not only it exposed the people at the helm of affairs for their dearth of professionalism and technical intellect but also showed how easily they can be conned.

Wide-ranging capacity building is thus imperative for the revamping of the energy sector. Augmentation is needed in areas including but not limiting to the power generation and transmission, human resource development and technology-transfer. The most crucial of all, however, is to address the incapacitation at the policy and decision-making levels in terms of vision, strategy and competence. Credentials like sustainability and value-engineering need to be deeply embedded into the policy and decision-making processes. Without fostering an across-the-board culture of commitment and integrity, Pakistan’s energy problems cannot subside no matter how many megawatts are added.

The writer is the author of Energy Crisis in Pakistan: Origins, Challenges and Sustainable Solutions.

dr.m.asif@gmail.com

Published in The Express Tribune, November 26th, 2017.