Energy Sector Audit

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

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

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.

Energy security in Pakistan

Dr. M. Asif

Pakistan has been in the throes of a severe energy crisis for a decade now. The problem is not just about electricity outages, as is often portrayed by policymakers, but it is actually far more complex and costly as the country experiences an acute level of energy insecurity.

Energy security is the main foundational block of the national and international energy frameworks across the world. From the geostrategic perspective, energy security is also deemed critical for national and international sovereignties.

Historically, the importance of energy security was realised for the first time during the First World War in terms of access to advanced energy resources. Pursuit for energy resources led to several battles both during the First World War and World War-II. Energy embargoes were also used to cripple the opponents as early as 1940s. Not only that, robust utilisation of advanced energy resources played a decisive role in the outcome of the battles. The leveraging role of oil in the Second World War, for example, has been appreciated not only by countries on both sides that fought it but also by independent analysts. Germany suffered heavily from the shortage of oil in the later years of the war and Adolf Hitler had to admit: “To fight, we must have oil for our machine”. Highlighting the decisive factors in the outcome of the war, Winston Churchill stated: ‘Above all, petrol governed every movement’. The Soviet leader, Joseph Stalin, expressed the importance of oil as: “The war was decided by engines and octane”. One of the most interesting comments was made during a post-war interrogation by Prof Wakimura of Tokyo Imperial University as: “God was on the side of the nation that had the oil.”

In recent decades, the concept of energy security has significantly evolved and has become broader and more meaningful. The traditional idea of energy security has been refined that the needed energy resources should not exist outside the geographic boarders; in other words a country should not be relying on energy imports. On top of this, the modern philosophy of energy security demands the energy supply to have three key dimensions; adequacy, consistency and affordability.

Firstly, a society should have sufficient amount of energy to meet all its requirements; secondly, the energy supply should be reliable and disruption free; thirdly, the supplied energy should be economically affordable. Through this approach energy security also advocates for sustainable development and human security in a society.

Energy security with these three tentacles is at the heart of modern energy policies across the world. In fact, the energy policies of advanced countries have three essential pillars: ensuring energy security, promoting energy conservation and enhancing the share of environmentally-friendly renewable energy.

Pakistan’s energy security situation on any of the above scales is far from being satisfactory. To begin with, there is huge dependence upon imports especially in terms of oil and gas. With nearly 90% of the countries in the world in need of importing fossil fuels to meet their requirements, in times of peace it is generally an acceptable condition as long as appropriate levels of strategic petroleum reserves (SPR) are maintained.

Nevertheless, Pakistan should have vigorously exploited its indigenous oil, gas and coal reserves to curtail dependence on imports. Furthermore, over the last three decades attention has not been paid to boost the water storage capacity by building reservoirs to support the energy and agriculture needs.

The state of affairs with the three modern dimensions of energy security is truly unenviable. Looking at the two interlinked aspects of energy security, adequacy and reliability, it is obvious that while over a third of the population lacks access to grid, the connected ones have been facing ferocious power cuts thanks to the huge gap between demand and supply. Considering the key role of energy in socio-economic development, the situation is nothing less than a nightmare. Coming to the third aspect of energy security, affordability, the picture is not very bright either. Energy prices, be it for utilities tariff or transportation fuel, take a hefty toll on the monthly income of middle class families. While affordability of energy is an issue for most of the societies in the world, including the advanced countries, the situation in Pakistan is quite acute. For example, fuel poverty — that deals with the thermal comfort inside buildings — can be affecting more than 10% of the population in several European countries. The same yardstick would reveal that well over 95% of Pakistanis live in fuel-poverty.

It is time that Pakistan realised the importance of energy security and developed its energy policy framework and implementation road map around it. Capitalisation of indigenous resources, both conventional and unconventional, and energy conservation and management would have to be at its heart. Solutions to problems must be holistic rather than unwarranted and makeshift. For example, setting up new power plants will not help much if they cannot deliver electricity at a price affordable by the common people. Lessons need to be learnt from the reckless episodes of the 1990s independent power producers (IPP) and the recent rental power plant (RPP) sagas. Energy should be seen not in isolation but in conjunction with economic, environmental and social development. A close partnership with Foreign Office taking care of regional and larger international geo-political landscapes is always helpful. Technological self-reliance and human resource development should also be an integral part of Pakistan’s energy security doctrine.

Published in The Express Tribune, October 13th, 2017.

Missing out

Dr. M. Asif

PAKISTAN continues to pay a huge price for ignoring energy conservation. The whole energy equation — take the case of electricity that involves generation, transmission and distribution (T&D), and consumption — is full of losses and leaks. Yet improving the productivity and efficiency of the energy equation has never been a priority with policymakers responsible for coming up with national energy frameworks.

This is one of the most important aspects of energy frameworks across the world. The modern understanding is that a unit of energy saved is greater than a unit generated in the context of production, transportation, and T&D losses. International trends towards energy saving can be highlighted from the 20-20-20 directive of the European Union that demands all member states to ensure a 20 per cent reduction in energy consumption by 2020 through improved energy efficiency.

Energy conservation measures can typically be categorised into three types. Firstly, no-cost or housekeeping measures, for example switching off lights and appliances. Such measures can bring about 10-20pc energy saving. Secondly, low-cost measures such as replacing old light bulbs with LEDs. Thirdly, cost-intensive measures including major changes and modifications, such as replacement of single-glazed windows with multi-glazed ones and old technology with modern solutions. Overall, with technically mature and commercially viable solutions, 30-80pc energy saving can be achieved.

Although Pakistan’s energy policies have talked of energy conservation, there has never been a proper road map for implementation. The latest policy development is the National Energy Efficiency and Conservation Act, 2016, that has replaced the Pakistan Energy Efficiency and Conservation Act, 2011. But laws and policies can never deliver unless there is robust implementation.

The conservation law must be enforced.

The focal point of energy conservation activities is the National Energy Efficiency & Conservation Authority (Neeca), formerly the National Energy Conservation Centre (Enercon). Established in the 1980s, the entity has been subject to continuous administrative and inter-ministerial shuffling, indicating a lack of direction. The 2016 act states that the federal government shall establish a body, the Pakistan Energy Efficiency and Conservation Board (PEECB), to oversee affairs. It has been almost a year and half since the law was passed but we are still waiting to hear about its status.

International aid agencies and developmental programmes have launched initiatives over the years to improve energy efficiency. Groups such as the UN Environment Programme, USAID, the Japan International Cooperation Agency, to name a few have led the drive for energy efficiency in Pakistan. Their contribution has been pivotal. Even the inception of Enercon is the result of a USAID project. Unfortunately, efforts by these foreign entities have not been supported by local stakeholders.

It is high time we realised that energy conservation is the cornerstone of energy prosperity. It is the easiest and most cost-effective solution to shortages, and an extremely viable solution in terms of application at both the macro and micro levels, and potential outcomes: the national grid, utilities, industry, and commercial and domestic consumers can all draw multiple benefits. At the national level, it would reduce the need for new generation capacity, ease the T&D network, reduce the energy import bill and curtail the perennial problem of load-shedding across the country.

Policymakers must demonstrate pragmatism. The focus has to be on the implementation of the conservation law, in letter and spirit. Bureaucratic hurdles need to be minimised. What­ever body is in charge, Neeca or the PEECB, it must not be a victim of political arm-twisting; it must have due authority and adopt a carrot-and-stick strategy to deliver results. The trend of taking half-hearted measures only to be abandoned — eg, daylight-saving, the early closure of shops, and energy-saver bulbs — needs to end. There is a wealth of international experience and success stories on the policy and implementation fronts to learn from.

Adopting international best practices is a viable strategy. Sector-specific and goal-oriented standards and regulation should be enacted to deal with all sectors, including utilities, industrial, commercial and domestic consumers. Chambers of commerce, and industrial and trade bodies can be engaged to hold awareness workshops, share success stories and organise training and knowledge-dissemination activities. Professional bodies including the Pakistan Engineering Council, the Institute of Engineers Pakis­tan, and the Institute of Electrical and Electronic Engineers should be involved.

To find a sustainable solution to Pakistan’s many energy woes, policymakers must give energy conservation at least the same level of importance as capacity addition.

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

dr.m.asif@gmail.com

Published in Dawn, October 27th, 2017

Enabling renewables

by Dr M. Asif

FOR several years now, renewable energy has been a key area of focus on the global energy scene, having outpaced conventional forms of energy on several counts, including investment and research and development. Since 2006, installed capacity figures for solar photovoltaic cells and wind power across the world have increased by over 5,000 per cent and 658pc respectively. These achievements are a result of well-conceived policies, technological advancements and economies of scale.

Nations across the world are actively pursuing renewable energy. EU countries are set to replace their ageing coal and nuclear power plants with renewables. Germany and Denmark, for instance, are already capable of satisfying peak-load demand from renewables under the right weather conditions.

So powerful is this drive that even the GCC countries — with their abundant oil and gas reserves — are investing in renewables. Saudi Arabia, for example, is working towards putting in place 9.5GW of solar and wind projects by 2023. There are remarkable accomplishments in our neighbouring countries too. China has become the world leader in renewable energy in investment, installed capacity and the manufacturing and export of products. India has developed 28GW of wind power and has set a target of 100GW solar energy by 2022.

Sustainable energy needs to be a key priority.

Compared to all this, Pakistan’s performance in the renewable energy field has been dismal, despite a very rich resource base. The brilliant hydropower developments of the 1960s and 1970s could not be built upon in subsequent decades. It is only in the last few years that solar and wind energy have appeared on the scene thanks to a few fragile accomplishments. For instance, the much-hyped Quaid-i-Azam Solar Park is reportedly in disarray. Considering the mandate of the Alternate Energy Development Board (AEDB) and the targets it set in 2003, wind and solar energy projects as of 2017 are a fraction of what was promised for 2007.

So what are the reasons behind such an unenviable state of affairs? Having shown an interest in renewables by establishing the AEDB in 2003, Pakistan was already a late starter. The AEDB, despite being made the focal point for promoting renewables and given a reasonable mandate and backing from the then prime minister — operated in a directionless manner.

The board also got itself into situations that drew allegations of administrative and financial irregularities. Its lacklustre performance in the initial years eroded the confidence of policymakers who decided to place it under the control of the water and power ministry in 2006-07. Ever since, renewable energy has been on the back burner.

Over the last decade, hefty investments have been made in unviable thermal power projects like rental power plants, overlooking renewable energy. A net capacity addition of less than 500MW from solar and wind projects over a period of 14 years speaks volumes for the role of the concerned stakeholders.

Moving forward, Pakistan needs to adopt renewable energy as a key priority. With their established technical and economic benefits, renewable technologies can end our energy woes and drive us towards a sustainable future. Renewables have wide-ranging strategic advantages, including but not limited to the provision of adequate and affordable energy, energy independence, environmental benefits, industrialisation, the creation of jobs and new economic activities across the whole value chain.

To realise this, however, Pakistan needs to have a coherent and goal-oriented approach. Focused and integrated efforts are required on multiple fronts. Like global trends, renewables should be on the top of our energy agenda. The national energy policy should be re-enacted, and engage the concerned state departments.

Rejuvenating the AEDB or replacing it with a new body with a clear mandate and due policy and financial support is important. Coordination between federal and provincial bodies and other institutional stakeholders should be improved. Energy market and regulatory frameworks need to be revamped to attract foreign and local investment, foster public-private partnerships, enact quality standards, and allow room for new and innovative market approaches and business models.

The wheel need not be reinvented; wide-ranging success stories and models are available from around the world. It is vital that renewable projects, both large-scale grid-connected and off-grid, are strategically conceived after due value-engineering. Also, Pakistan should capitalise on CPEC by learning from China’s experiences and industrial brilliance in renewable energy.

To change CPEC’s energy projects from thermal power plants to renewables would be a superior option. It is high time that policymakers give renewable energy its due importance, for it can propel the country towards energy and socio-economic prosperity.

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

dr.m.asif@gmail.com

Published in Dawn, June 22nd, 2017