Energy Conservation & Efficiency: time to reorganise and restucture ENERCON and introduce regulatory process.

Poor man consumes more energy per unit of pleasure and utility than a rich man , as is the case of poor vs rich nations.Most affording consumers have shifted to energy saver.It is the very poor,who has not and could not due to the price.Similarly it has been estimated that poor and developing nations consume 30% more energy per unit of output(GDP@PPP) than the developed countries.As China progressed over the last decade,it has managed to reduce its energy consumption per unit of output by half and continues to improve on it.India has been doing the same.Energy Efficiency and conservation has come to be known as synonymous with development.

It is no more a fashionable subject.It is down right economics.Energy is getting expensive and scarce as well.It has been established beyond doubt that conservation is more efficient than generation.Where are we on this important front? unfortunately nowhere.ENERCON was established in 1980s under US technical and financial assistance and does not have much to brag in terms of impact,although efforts have not been lacking.To be fair to ENERCON,perhaps financial and economic incentive and pressure has emerged over the last decade ,and hence the private and public lack of interest even if not apathy towards the subject.

It is time to reorganize and revitalize ENERCON proportional to the task and challenge that the organisation has to meet.It is also time to give it some teeth by the way of Energy Conservation ACT of the parliament,which most countries have done including India which introduced a policy and the law in this respect as early as 2001.Force of Law is required to enforce some energy standards and practices and punish the violator. A policy regime similar to the environment has to be brought about.More success potential is expected to be in Energy Conservation and Efficiency because it generally saves money while environmental protection costs money,even though there is a public and societal profit in the latter as well.Many countries and multi-lateral agencies would be willing to technically and financially support reasonably serious initiatives and projects.There is CDM and a host of green credit scheme.Neither is there any dearth of knowledge,technology and advice. Following actions are recommended:

1) Reorganize ENERCON as a highly visible organisation with presence in all the provinces and major cities.ENERCON must be required to prepare a strategic business plan with defined yearly quantified(not stories)targets and achievements.They would require resources and support.For money USAID appears to be too willing to provide capital and technology.

2)Introduce an Energy Conservation and Efficiency law as discussed earlier.Remove duplication with Pakistan Standard Institute and the associated legislation.Energy labeling and standards to be taken away from the PSI and shifted to ENERCON.(Some initial steps have been taken in this direction already)

3)Introduce initially voluntary and eventually legally binding and enforceable programme of Energy Standards and Labeling.Following items be included in the programme:

a)Electric motors

b)fans

c)Washing Machines

d)Refrigerators

e)Packaged Air-conditioners

f)Water pumps of all sizes including agricultural

For those who may not be informed about the Energy Labels,they are referred to my book,"Pakistan's Energy Development".I donot make any money out of the book.Briefly , a five-Star rating/label system is there which certifies products.One Star would mean least efficient and 5-Star to be most efficient.The labels are to be affixed on the product under ENERCON authority.

ENERCON's most earlier projects may have become outdated and are to be scrapped or updated.Famous is their fuel efficiency programme.Most cars with electronics ignition do not require tuning now.Carburettors are no more there.Only spark plugs have to be cleaned and replaced.More innovative sectoral programmes should be initiated such as:

1)Agricultural sectors water-pump improvement.

2)fuel intensive sectors such as Cement,Tiles and Brick Kilns.

3)Energy Efficiency in Commercial High-Rise Buildings with a regulatory process similar to Building Control Authority.(Building Energy Code has been developed already:It was developed in 1980s as well;enforcement structure is required)

4)Co-generation in Textile and Sugar.

5)HVAC

6)Energy Efficiency in Government Buildings.

Lastly we should understand that Energy saved is Energy produced even better.

Demand Management:Curbing Air-conditioning Load

Government has been largely successful in reducing load-shedding by its rather drastic yet required measures.Peak power is very expensive and the peaks should be flattened.The days of no load shedding may never come back in the energy scarcity and high cost regime.It is not Pakistan alone.Many developing countries are afflicted including India,Bangladesh,Egypt etc that I know of.There may be others as well.However Pakistan's problem was and is of crisis proportions and has to be addressed by bringing in more supplies.The role of demand management would ,however,remain.There is one important measure,although of medium term nature,that ought to be introduced,sooner than later.Demand peaks of air-conditioning load must be controlled and discouraged.

One behavioral and attitudinal measure can ,however,cut several hudred MW of peak demand.

Only if our bureaucracy,businessmen,professionals and bankers stop wearing suits and either return to the Qamees-Shalwar regime of ZiaulHaq years or start wearing Bu-shirts with half sleeves.Reportedly Japanese Prime Minister encouraged Bu-Shirts and managed to save quite some load and energy that otherwise goes in chilling the rooms of the well-dressed executive.

The other more significant and technical issue is of very high electrical demand of commercial buildings due to hundreds of packaged air-conditioning units that are installed.Gas-fired absorption chillers and central air-conditioning is being deliberately avoided by builders. A clear cut policy in this respect ought to be announced and enforced.

AC loads of more than 100 KVA should not be allowed in new commercial building and a discouragingly high tariff be introduced on such existing loads.I have come cross a similar policy measure having been taken in Malaysia.High AC load requirements should be either met by self-operated co-generation facilities or where space and scale do not permit,District or neighborhood CHP/CCP facilities ought to be encouraged.In Dubai,Saudi Arabia and Singapore and in some places in the US,Chilled water is being supplied through piping networks from central facilities.In Pakistan's business and commercial areas, there is a scope and potential for installing such facilities.This would curtail demand and save energy as well.Thermal efficiencies of 80% are not impossible in such CCP/CHP facilities .

Five major gas market players of the near future:Iran ,Qatar,Pakistan,india and China

One-third of the world gas resources lie trapped and quite under-utilised in Iran and Qatar,while in the region Pakistan,India and China can consume all the two countries have to offer.Easier said than done.Reportedly Saudis are not prepared to give passage to Qatari gas pipelines through their territory and there is an intervening ocean in the way.Dolphin pipeline(under-sea) connecting Qatar and pakisatn and India have been proposed earlier and remain dormant till todate.TAPI and IPI pipelines have been proposed.IPI has been reduced to Iran and Pakistan only project.There are parallel projects planned for gas supplies to China from Iran.The gas is in the South and the demand also in the South.

Possibly low gas prices have prevented project investments.India withdrew from IPI due to the high gas prices demanded by Iran and also perhaps due to political duplicity.Pakistan agreed because it badly needed gas.The long term future of fossil sources including gas does not appear very bright,if one studies the forecast of Solar energy carefully.It is no use safe-keeping the gas for future and hoping for very high prices.That is why Russian and the U>S> companies keep producing.It is vital that gas producing countries of the region adopt a more realistic and market friendly attitude.Demand of unrealistically high prices is hindering the regional market development.A good market price may be a sufficient incentive to counter and even resist the U.S. political pressure for isolating Iran.India can be lured back,if the price is right.

Buying countries may also have to liberalize their domestic gas markets allowing free access and pricing of imported gas.A common market framework may have to be developed wherein consumer pays for the gas and investments made by the supplying counties and companies,not in their own countries but possibly in the consumer countries as well.One can visualize an Iranian gas company selling in Pakistan market directly to the large consumers, utilizing the local distribution network.In a separate we have proposed opening up the gas sector,which may encourage significant,if not massive,investments in pipe-lines by countries like Iran and possibly by Qatar.India joining the market network would make things very attractive for the supplier countries investments.

Reorganise gas sector and open it up somewhat ?

The logic of doing so is almost the same as I have argued for electrical power sector.Here I would restrict myself to additional issues and considerations.Following would be the possible aspects of opening up of the gas sector:

1) Separate gas supply,Transmission and distribution as independent entities. To-date only two companies wholly control the sector;SNGPL and SSGC

2)Gas distribution function may be divided among several regional companies ala electrical sector.

3)Gas supplies could be taken away from SSGC and SNGPL which should only handle Transmission business.

4)Competition may be generated in gas supplies which we would elaborate in more detail elsewhere.

5)Gas supplier companies may be promoted which may procure gas from a variety of sources including LNG,pipelines from Iran and Qatar,local stranded gas.

6)A two track gas supply sector be established;one of controlled and regulated consisting of public sector and private companies opting to be in the assured regulated sector in a policy framework.The other sector to be open and unregulated meant for large industrial and utility consumers.This sector to be supplied by E&P companies that choose to be in the unregulated sector under a policy framework.Stranded gas,difficult areas,off-shore resources ,LNG and other imported gas could come under the open sector.

7) In this way,controlled sector would be available to supply residential customers and small industrial consumers.Large customers who may be able to afford higher spot prices or negotiated ones under long term bilateral contracts may be catered by this sector.

Too complicated and complex? in a way ,yes. it is complicated. Efficient markets often are.However easier said than done.It would require quite some analysis to implement this blue print.There are two major issues in Pakistan gas market requiring counteracting actions:cheaper retail prices for a poor populace and higher whole sale prices to stimulate the required investment in E&P sector.Our proposal ,for all its pitfalls,may be able to produce the aforementioned desired results.Moreover increasing the number of actors in the sector may promote creativity and competition.

Time to somewhat open up Electricity sector ?

Currently Electricity sector is totally regulated in terms of price ,investment,quality ,service etc.I do not mean this regulatory framework to go away in Pakistan,although in most developed countries , at least ,electricity generation is an open non-regulated activity whereby whole-sale electricity prices are determined through open market operations via electricity exchanges just like stock exchange.Thus demand and supply determines price.These are called spot prices and market.For spot markets to operate efficiently, there has to be in general an excess of supply over demand,which may perhaps never be the case in countries like Pakistan.Besides,there is a strong threat of collusive price-setting behavior on the part of our businessmen and traders.The bourses in Pakistan could never be exonerated from the charges of foul practices,this being the case where number of market actors is fairly large.In electricity sector the number of market actors would be very small.We have problems in maintaining fairly and efficiently functioning markets in the commodity sector like sugar etc.

Between the extremes of a free spot market and a totally regulated sector , there are midway options for optimization of the sector.A parallel unregulated sector may be allowed for large customers like large industry and real-estate sector.In this sector pricing and investments would be without control and the prices would be mutually negotiated.A legal framework would have to be created whereby Transmission and distribution companies would be under obligation to provide T&D services to this sector under a regulated tariff.Several developing countries have begun to install this parallel electric market ,including India,Thailand,Philipines,Malaysia ans Singapore.

There are following situations,and by no means an all inclusive list, which call for such an intermediate arrangement:

1)Often there is an underutilized or underutilized generation capacity in the captive plants and facilities,which can sell power either to the grid or to a specialized customer located in a different geographical location at mutually acceptable and negotiated prices.

2)Geographically dispersed industries under one or several mutually cooperating businesses may be able to install large facilities at one site and distribute it to their owned facilities throughout the country.This would foster scale economies among captive generation sector and would stimulate electricity investment ob a self-help basis.A technical name of such arrangements is Electricity cooperative.

3)Often there are ready industrial and commercial customers who are willing to pay higher than regulated prices and are already paying higher prices through uneconomic self generation facilities.

4)Rental Power controversy could be partially done away with through this open parallel market.

5)There are stranded energy sources not worthy of a large utility investments like stranded gas or small hydro sources.Electrical cooperatives of the large industrial customers may be inclined to cooperatively invest in installing the generation facilities on these sources under this arrangement.

6)There are highly competitive sectors which require cheap electricity and may be able to help themselves through such arrangements where ever feasible.

I nutshell,it is the consenting businesses,if not consenting adults,who are permitted to generate or acquire electricity from whatever source at mutually consented terms and conditions,without the restraint or protection of a regulating bureaucracy.This may save time and money that goes into the regulated and intermediated process.

KESC on the way to improvement.

KESC is on the way to improve its performance.On February 26,201o P.M.Gilani inaugurated its 220 MW Combined Cycle Power Plant(CCPP) at Korangi,replacing the existing old and thermally inefficient power plant.The old Plant was a simple gas turbine with a heat rate of 16000 Btu per Kwh.The new plant, would be having a heat rate of less than 8000 Btu per kwh.This would reduce production cost tremendously, and will also reduce consumption i.e. more than double production with the same amount of gas.Part of the load-shedding is due to shortages of gas also.

Today ,the newspaper supplement announced the arrival of gas turbines for a 560 MW CCPP, termed Bin-Qasim-2.The Thermal efficiency of this plant is also very high(50%).The existing power plant is Steam Turbine based with a heat rate of 10,000 btu per kwh.The new plant is at least 25 % more energy efficient.The new plant configuration is 3 GT(129 MW) +3 HRSG=1 + ST(200 MW)= 560 MW.The plat ,however,would be commissioned gradually and would come on full steam by March 2012.Gas turbines are usually installed fairly quickly.However the steam cycle including Heat Exchangers and steam turbine consume quite some time.By continuing with this kind of BMRE,there is a potential to achieve energ efficiency improvements of around 30-60%. %.In today's energy economics,fuel cost has a predominant share ,often exceeding

60-70% of the total generation cost.If one saves even 1% fuel,one is able to save a lot of costs.

This is the kind of (thermal ) efficiency improvement that consumers and every body elase want KESC to acquire to reduce its losses and start making reasonable return on investment and not through unnecessary demands for increase in Tariff.Current losses are an opportunity. Convert these into profit.

KESC's Tariff system is different than what is applicable on other public sector utilities like LESCO ,FESCO and others.KESC works on a fixed multi-year tariff system with provisions for charging escalations in fuel and O&M costs.Thus any cost saving or increase on account of thermal efficiency improvement or changes are not passed on to the customers.Without such improvements KESC would and continues to run into losses which have passed beyond a level of Rs 100 billion, jeopardizing the financial viability of the company.Thus such improvements in KESC's operations indirectly benefit the users.Elsewhere,it is a cost-plus formula.Utilities are paid what they spend plus a fixed rate of return.NEPRA quarterly makes determinations in that respect.The freedom of charging all costs to the customers have not been given to KESC.It was feared that a private party may charge all kind of costs to the consumer,if it was given a free hand.Although there are comparable ratios,and extra-ordinary benefit cannot be extracted out of cost-plus tariffs.

KESC has also reported reduction in Transmission losses from 4.2 % in 2008 t0 2.4% now,which is again a good omen.There are obvious difficulties in reducing distribution losses which have a high degree of theft and pilferage.This has political and social dimensions.Still utilities own employees are reportedly in league and even force theft on the poor user.It is the middle man(KESC mafia) which makes bulk of the money. Fortunately Smart Distribution transformers have begun to be manufactured in Pakistan,installation of which would significantly help in cutting down on both technical and as well as theft losses.

Rental Power controversy

Rental Power :What went wrong ?

Load-shedding :why? when there is ample capacity

Current Installed capacity of Electrical power generation is 21000 MW.We seldom see in the summer,Maximum demand to be exceeding 17000 MW.And the load shedding is to the tune of 2-3000 MW. And still more astonishing to a lay person may be that there is load shedding in winters as well,when the demand is several thousand MW lesser. What is the problem then.Firstly the installed capacity is not always put to use for a vareity of reasons such as the following:

1)A considerable capacity is of outdated old plants,which run as and when these are not sick or broken down. At least 2-3000 MW of capacity is in that category. In most countries such plants would be replaced by new.It costs only 50-60% of green field project costs and is always the most advisable investment.

2)Hydro capacity goes down to 10% of the installed capacity in winters due to low discharges in the river and possibly lower water requirements as well.So although demand goes down, supply goes down as well in the winters.

3)There is a gas shortage as well.So some capacity is not utilized due to gas shortage.

4)Finally there is a shortage of liquidity in the power sector and oil sector.GOP is not able to pay the subsidy promised by it.Provincial governments do not pay the bills.KESC has been suffering from low liquidity due to its accumulated losses exceeding Rs 100 billion.Oil cannot be purchased and refined to be used in the power plants.In the last NEPRA meeting two of the members were so annoyed with KESC's inadequate capacity utilization,that they did not sign the KESC determination.PEPCO did the same.

5)Rental Power could not come on stream due to long debate and protestation in the media and the parliament with accusations of corruption.ADB was called in which more or less supported the government position and the go-ahead was give belatedly.Benefit of the rental power was partly washed away due to the inordinate delay.

What is to be done.Most of the required steps have already been taken by the government.I would be narrating and critically evaluating those and offer one or two of my own thoughts.

1)Drastic steps have been taken to manage the demand,which has caused a consuderable reduction of Peak Demand by 1000-1500 MW.Similarly steps have been taken to manage gas load to supply more gas to the power sector.

2)Tariffs have been raised already and additional increases would be gradually made to reduce the subsidy requirements and the consequent circular debt.GOP has taken steps to inject money into the system.Provincial governments have been asked to pay their dues.

3)Steps are under way to undertake BMR(balancing, modernization and replacement).Assistance of USAID has been sought in this respect as well.

Perhaps this is all that was required except that implementation of the decisions be made seriously and swiftly.The outdated plants should be maintained for peak loading purposes and should be run on oil rather than gas.Rental Power which has been discussed elsewhere should ha ve been acquired for peaking purposes which would have cost lesser in fixed costs.

Gas fired IC engines should be installed in IPP or Rental mode or by PEPCO itself on stranded gas fields and wells.Also there are a number of Low Btu gas fields that should be utilized for these purposes.Some adjustments and arrangements should be made with companies like UCH power whose expansion project has not moved as per expected schedule, and thus gas resources remain unutilised.A good inventory of stranded gas should be taken to identify possibility of extra gas and implement gas based I.C.engine power projects on fast track basis. Reorganize and rejuvenate PPIB.They also need a BMR.A closer liaison and coordination between Ministry of Petroleum and Ministry of Water and Power is required.

Are Energy Prices high in Pakistan ?

It depends on what are you comparing with.If compared with the purchasing power of people, energy prices are way too high.Unfortunately energy is generally priced at international level,which is generally high ,but with some exceptions.I n most of the oil producing Middle East ,petrol is literally free: only perhaps distribution cost is charged.In venezuella,even there is a subsidy on distribution cost.That is why perhaps that people are so happy with President Chavez

and he challenges the mighty US so often and can afford to fraternise with Iran's Ahmedi Nejad.

Even domestically produced petroleum has to be priced at international prices:firstly its share is too low and secondly most inputs are imported .Lower labour costs are usually compensated by lower efficiencies not of the labour only but of the larger energy market's inputs and supplies.There is taxation on oil retail in Pakistan,almost 45%.In the US also petroleum prices are lower than in Pakistan due to lower taxation and more efficient oil industry.In India,petrol prices are almost the same as in Pakistan.In Europe, as a general rule petrol/diesel prices are twice as high as in Pakistan:major reason is heavy taxation,which has deep ideological routes in Europe.

Gas prices have remained generally quite low: lower than India, Europe and USA.Middle-east and Iran obviously have much lower prices.Gas prices are expected to rise as a result of rationalization of royalties and Gas Development Surcharges.

Electricity prices used to be low in Pakistan due to cheap hydro electricity.These days one-third

of electricity is being produced with imported oil which has become more expensive locally due to heavy devaluation of Rupee.Government has been subsidising electricity for the last several years,costing it Rs 100 billion per year.Governments capacity to pay such heavy subsidy has been going down which has resulted in accumulated circular debt.Besides there are IMF conditionalities now. Electricity Tariffs are to be raised as a result.Even after the increase,electricity tariff would remain comparable with other countries.

In Pakistan and India differential tariff is charged:very low rates for the poor smaller consumers.The lower rates are passed on to be charged to the larger consumers.What is the way forward then?

In Pakistan,electricity losses are phenomenal: 25% + as opposed to an average of 4% in advanced countries.More than half of these losses are composed of theft and pilferage and about half or slightly less are technical losses which could be brought down.Very poor or very powerful are involved in electricity theft.Utility employees are usually partners in such a process.Electricity theft used to be more rampant and has been brought down somewhat recently.Electricity theft is very high in Karachi, interior Sindh, KP,and Balochistan.Amazingly ,it is much too lesser in most Punjab.In Punjab, Gas theft is higher than elsewhere.Why these peculiarities?Textile sector in Punjab is notorious in gas theft.

Thar Coal and Hydro electricity offers a good opportunity for cheaper and domestic and affordable energy. In both we must be on a fast track.

bio-mass and bio-diesel:some caution required

Biomass is generally agricultural residue coming out of plants and shrubs or waste from agro-food industry like sugar mills and rice mills.Biomass is burnt in boilers to generate electricity.Also ethanol , a petrol like bio-fuel , is made out of sugar industry by-products like molasses.Bio-Diesel is made from the fruit of a plant called Jatropha.It contains an oily material which is squeezed out of Jatropha,refined and used as a Diesel substitute.

These are good alternatives to the fossil fuels like oil and gas which we are short of.They are also environmentally friendly.However,following factors should be considered before adopting a wider development of these energy sources;

1)Pakistan is a populous country short both of water ,land and food. Bio-mass and Bio-fuel compete with food chain.

2)Biomass is a fuel of the poor.Natural gas or LPG network is not available every where.Poor people use plants and shrubs and other agricultural residue as a cooking fuel.Bio-mass base projects would commercialize this almost free source of energy for the poor.

3) In western countries there are large plantation and forest resources and thus large surplus and residue is available.Besides it is not used as a cooking fuel by any body.We are an arid country and are not blessed with such massive bio-sources.

Process waste such as bagasse and rice-husk and corn-cob coming out of agro-food processing industry does not divert away the poor man's fuel and thus may be welcome.Similarly Ethanol production as a bye-product of sugar industry only would not compete with food chain.

However the widely dispersed plant material and agricultural residue should not be allowed as an input for upcoming biomass based power plants,Similarly the ultimate impact of Bio-diesel and Jatropha plantation on water and land should be carefully considered before major initiatives are launched.Studies should be commissioned on these issues by AEDB and Planning Commission.

4

Bio gas and Fertilizer from food and vegetable waste.

When I pass near Boat Basin Clifton,there are two types of bad smells and air that I inhale: stink of untreated sewerage that stagnates in Nehre-Umar Khayyam and its outfall into the basin and stink of putrefying food waste.Similarly in vegetable markets and Sunday markets , one comes across vegetable and fruit waste creating foul smell and degenerating the general environment and sanitation.The keepers complain that the waste is too much to be lifted away by the local municipality.The irony is that this kind of organic waste can be treated/composted at site.The space often spoiled and occupied by accumulated and spilled waste can be utilized or substituted.

The output of such treatment is biogas and fertilizer.Biogas can be bottled or consumed locally by the workers for cooking food and making tea.All it requires is two or more rather deep excavation of an area compatible with the waste stream volume.A rubber sheeting to cover and provide anaerobic conditions and a few suitably perforated pipes dug into the waste for collecting the biogas.

This is not a too difficult job .Local municipalities employees could be trained in Composting and services of a bio-scientists provided. The core municipality team could then go to the localities and train the local staff of the markets.One or two specialist malis could be hired and made incharge of the routine work.In Pakistan there should be several hundred such spots needing this kind of service and facility

The problems and risks of nuclear power

There are many political and economic issues related to more nuclear power in Pakistan.Planning Commission's erst-while Energy Security Plan projects 8000 MW of nuclear power capacity installed by 2030.There are following problems that need to be considered.

1)Capital costs of nuclear power are very high;3000 usd per KW ,more than twice the normal thermal power plants.

2)Fuel cost is probably the cheapest,only second to the free hydro and wind.

3)No IPP in a foreseeable future would enter nuclear power in Pakistan,which means all equity,if not debt,has to come from government budget. Would government have the money? Should it invest in commercial projects ,leaving behind other priorities in social sector?

4)Pakistan's nuclear weapon status has not been fully accepted politically.Questions and concerns have been raised of possible terrorist attack on nuclear facilities and get hold of nuclear weapons and thus rationales are created to somehow de-nuclearise Pakistan.

5) Having a large number of nuclear power installations may make Pakistan more vulnerable to non-proliferation policies and pressures.

6)Nuclear Supply Guidelines(NSG) may prevent any further nuclear trade with Pakistan.Chines have withstand the pressure this time,arguing that the new rules do not apply to existing deals.Chinese are increasingly becoming involved with the US and becoming more "co-operative".It is not certain that the soft Chinese policies vis-a-vis nuclear nuclear supplies to Pakistan may continue.

7)There may be commercial costs in the Chinese monopoly to Pakistans nuclear power market both in terms of prices and quality.There are safety issues involved also.

8)A Pakistan nuclear deal ala Indian nuclear deal has been flatly rejected by the US administration.Some modus-operandi through France has been talked about in this respect,as was previously allowed to India for Tarapur Fuel purposes.

9)Nuclear power does not add to nuclear weapon capability as the commercial fuel cycle is under IAEA safeguards.Only some marginal possibilities of confusion could be exploited.

Keeping the above in view,it is obvious that there are problems ,risks and disadvantages in commercial nuclear power.It may much more advisable to invest in Thar Coal and Hydro power . Unfortunately western governments are opposing coal worldwide.Recently The World Bank was criticized for supporting Thar project,even though the technical assistance was very small.World Bank assistance reportedly has been restored after being put in abeyance for a while.This episode tells enough of international policies and preferences which are instrumental in foreign IPP investments.We have delayed Thar Coal project unnecessarily.Clear signals for a full-fledged implementation and utilisation of Thar Coal are still not visible.The clouds appear to be too dark.

It is highly improbable that the target of 8800 MW of nuclear power by 2030 would be achieved.We would be lucky if we get even 2000 MW more in this period.And keeping the afore-mentioned risks in view,that may be optimal as well

Sugar problem:People vs Elite?

Sugar pr0blem is poised to emerge again.Ramzan ,the fasting month,is approaching.Today newspapers reported sugar prices crossing the mark of Rs.70 per Kg.Sugar in the previous months have been sold at Rs.100 +.And it was not available at all under Supreme court edict and Governments somewhat lame crack-down on sugar mills ,traders and other hoarders.Sugar is an essential food item and more for the poor,whose staple diet is bread(Roti),onions and tea.Sugar is a great source of energy and enthusiasm for the poor workers.Why does the government and Supreme court could not do much to address the problem?

I have not personally investigated the problem but keep reading about various aspects of the problem.The major argument is that one cannot fight market and the greed.When prices are high in international market , and domestic controlled prices too low,either price control would be defied ,or hoarding and smuggling would take place.Government can do very little about it,it is argued.But do consumers get the benefit,when international prices are low.Consumers can get benefit if it imports the foreign sugar at the right time and in right quantities which it somehow fails to do.Sugar mafia somehow manges to put a hammer in the process and contentious debates ensue as to who was responsible.

There is a simple answer,may be a little too facile,but still reasonable and defend-able;sugar mills are owned by the political and even military elite.In the days of General ZiaulHaque , there was a Parchi system under which most politically desirable and powerful politicians were given loans by the DFIs and banks.One parchi for banks and another for HMc and KSEW who mostly supplied the machinery and installed the plants.The beneficiaries were mostly the right wingers and todays principled politicians of PML(N) and not very principled PML(Q) leaders, who were together in those days.A whole new political class was developed and strengthened in the country to support the military general.Then came PPP government of 1988 which repeated the sugar mill parchi syndrome with a vengeance.Mr. Zardari and his associates benefited this time to complete the circle. As a result a sector developed which predominantly is owned by the political elite,who rule the country .Whether democracy reigns or dictatorship ,one powerful group defending the private interests of the sector is always there.Opposition also has its representation in sugar mafia.So it is people vs elite.And they say jo maza haram kamane main hay wo halal main kahan and who says it is haram?

Those who are older like me would remember the famous Ration Shops in General Ayubs period.Every Mohollah used to have a ration shop and every family used to have a ration card which also used to double as an identity card in those days when NADRA and NIC were not there.In those days of no computers,families and there ration shops were registered with nearby ration shops which supplied ATA(flour) and sugar for fifteen days of a family quota defined by the government.I remember going to these shops regularly fortnightly and get the ration,on payment and not free,as some may be akin to dream?This was a stable system and worked well without computers to keep a tab on misuse.No big scandal was reported ,although in such regulatory and control system some misuse is expected.The ration shops were in private sector and worked under government license.Today a near equivalent of Ratio shops is the Utility store owned by the government but no ration cards and fixed quotas. As a result Utility store sells to the hoarders and every body else till the supplies lasts and most deserving consumers do not benefit from the concessionary rates.

It is time to revive ration shops and ration cards and include utility stores in the system as well.Poverty and food items pricing and scarcity issues are not expected to go away.I have discussed tis issue in my book:Pakistan's development challenges as well.

Local manufacture of wind Turbines

A conference was held the other day on this subject at a local hotel the other day under the aegis of AEDB/UNDP project.Regrettably,I could not attend despite registration due to the extra ordinary law and order situation in Karachi.Normally the hotel areas and where I live remain calm despite disturbances,I was too scared to come out.More daring would have participated and those from outside the city who were already staying in hotels.I take this opportunity to share my thoughts on the subject with the readers.

The subject is of extra-ordinary importance , as no wind power capacity,except a few MWs of Zorlu could be added despite interest of entrepreneurs and support of AEDB/GOP.Some 100+ LOIs were issued and required tarriffs approved by Nepra for several projects.In the meantime the Wind Turbine market was very hot and no foreign supplier would supply the equipment to Pakistani projects despite earlier agreements.The lead times used to be inordinately long even for foreign projects abroad.The situation is changing.Inventories of some wind turbine manufacturers are building up.Last year was particularly bad for the international turbine industry.Stampede to wind power has perhaps ceased to exist,however sustained and stable interest does remain.Moreover,now possibly every able country and manufacture has started manufacturing turbines.Previously even companies llike Siemens were not into wind business.Siemens joined in much later.There used to be 5 or 6 manufacturers in Denmark,Germany and Spain.Now wind turbines are being offered by more than 20 companies in 10 or more countries.Even more may join in.The reason: it is not as difficult and sophisticated item as,let us say,Gas turbines and Steam Turbines are.

Wind turbines are in sizes/capacity of 1-2 MW running at 20-25 rpm as opposed to gas and steam turbines in 200+ MWs running at 1500 rpm.That makes it easy.In India there are 9-10 manufacturers,local and foreign with an aggregate capacity of production of several hundreds of MW PER YEAR.Almost every one is represented not by a sales agent but by a production venture.India is in this business for more than a decade now having a total wind power generating capacity of 11ooo MW with 1000 MW additions every year.One of its Manufacturer is SUZLON which is now a multinational producing and exporting from several countries including India itself.

Why does the limbo still persists in Pakistan.I have not spoken to the project promoters lately on the subject.I suppose bankers would be very reluctant to finance wind projects esp in the wake of circular debt issues laying bare the limits to financial capacity of GOP and as well as consumers to pay for the real and unreal costs of electricity.In India, Wind Power projects are being stalled at a price tag of 1200 USD per KW as opposed to the last NEPRA approval of 2600 USD per KW for a project.Some of the factors are easily understood and well known,but this extra ordinary difference is possibly also due to cheaper local manufacturing in India.It is true that there is no fuel cost in Wind Power,but that cannot be taken as a license for unreasonably high capital costs .It should be kept in mind that wind power suffers from a very low load factor of 25-30% as opposed to more than 80 % for thermal power, which would mean a capital cost factor for wind power as high as six times that of thermal power.Clearly Capital costs of Wind Power is to be brought down.The hypothesis to be examined is whether local manufacture can be cheaper.Evidence from India points that it should be cheaper.Local car manufacture does not possibly support that local manufacture would be any cheaper.But the two are probably not comparable.Car manufacture is a mass production issue and our market being too small for scale economies.Wind Turbine manufacture is a literal jobbing and at most a batch production.A batch size of 20 turbines may be optimal in our conditions for example.

Local manufacture may,however, be organised on the same lines of a deletion programme aiming at 80% local content in 5-7 years.There was a ready market for Suzuki car and ironically no competitor could emerge to SUZUKI.Those who tried to come in became bankrupt.Wind Turbine market and manufacture is a chicken egg syndrome.Some kind of guaranteed lifting/sales have to be given to a local or foreign party or most probably a JV.Some 200 MW of approved projects would have to place their orders through a PEPCO/GOP demand aggregation and guarantee programme.Several nucleus already exist at Karachi Shipyard,Heavy Mechanical Complex and DESCON.May be a few more details on this subject have been provided in my book:Pakistan's Energy Development.I may further dilate on the subject a little later when sufficient data is completed at my end.

Sugar Industry's Energy Potential II :Ethanol & BIOGAS

Ethanol is equivalent or substitute for Petrol used in the Cars.Normally some carburettor adjustments have to be made if 100% Ethanol is to be used.HOwever,if mixed with Petrol in a ratio of 25% , no carburettor adjustments are required.In Pakistan,Ethanol mixed Petrol is being marketted by PSO.The response from ordinary consumers has not been very well for understandable skepticism.Institutional customers should be targetted first , including military,government departments and large companies.In Brazil ,Ethanol is a usual and successful automotive fuel.Pakista is also a producer of Ethanol and has a considerable potential due to its large sugar industry.

In Pakistan, there are 84 sugar mills producing 3.5 million tons of sugar annually.There is a production of 2.5 million ton of Molasses and 500,000 tons of Ethanol, 75% of which is exported and the rest consumed for non-fuel industrial purposes.There is an upper limit on sugar plantation acreage but production could be doubled gradually by enhancing agricultural productivity and cane quality.This a is another question that sugar cane consume a lot of water and we are falling short of water.More sugar consumption may not be good for health reasons also,although for poor workers sugar happens to be the only readily available source of energy from a cup of heavily sweetened tea.

Ther is a potential to produce 1.5 million tons of Ethanol which means some 3 million liter of Petrol.Domestic consunption of motor spirit is 1.5 million tons, of aviation fuel another .6 million tons and of kerosene another .25 million tons.Thus self sufficiency in Petrol is on the cards,provided all sugar mills install distilleries. At present only 10 sugar mills have installed distilleries out of some 80 mills.There is a long way often converting potential into reality.

There is an added advantage.Considerable amount of biogas can be extracted from the waste water of Distilleries.A 50,000 liter distillery, a typical size, can generate 50000 units of electricity a day which means an revenue income( not profit) of 2.5 million rupees a day,and Rs 300 million per year.Recently Shakarganj sugar mills near Faisalabad have installed a bio-gas based Power Plant of 7 MW. 7 IC engines of 1 MW each have been installed. Bio-gas based I.C. engines are a relatively new development. Bio-gas, on the average,is 65% Methane and 35% CO2.

It is almost same as the gas at UCh.

These investments are eligible to CDM revenues ,for these power plants consume methane which would have otherwise been evaporated to the atmosphere through gradual decay of methanated matter.An added advantage, heavy pollutants from the distillery is extracted of reducing most of the BOD load.A potential of 500 MW of Green Power is expected from this Bio-gas alone and another 2000 MW from Bagasse, and self-sufficiency in Petrol. Perhaps too good to be true.But it is true indeed.It can be done and perhaps will be done eventually depending on the relative economics and options.

Sugar Industry's Energy Potential I :Bagasse

The down-stream sugar industry can produce at-least 30+ products and chemicals including some pharmaceutical ingredients.This has been widely known and has been utilized in many countries.The actual feasibility of individual projects in countries depends on product supply, demand,trade, taxation and cost and profitability.The energy potential of sugar industry has,however,been appreciated and recognized more widely only recently.There are three different options and not mutually exclusive to extract energy from sugar industry waste , namely Bagasse/biomass , Ethanol from Molasses and Bio-gas out of waste water digestion.

Bagasse is burnt to produce energy even today in low efficiency boilers.In the bygone times of low oil prices, Bagasse was almost a liability and a mere disposal issue.Low efficiency boilers adequately consumed bagasse for the self requirements of the sugar mills.New technology with almost twice more efficiency(high temp and pressure boilers and steam turbines) and higher energy prices has generated interest and rationale foe replacing the existing low efficiency equipment by higher efficiency equipment , and sell the surplus to the Grid.Electric companies are also more geared today to buy electricity from these resources , technically,procedurally and financially.Several projects are in the pipeline after successful negotiations with NEPRA. There are ,however, some genuine problems and issues faced by implementation of such projects.Except for Brazil,perhaps the largest sugar producing country,the full bagasse potential has not been utilized even in India with a longer history and scope and size of sugar industry and Bagasse utilization.

The major problem is the limited season of sugar cane availability.Sugar mills in Pakistan have a crushing season of only four months.Storage could probably be done for another two months requirement.In other places,sugar season is longer but usually not more than six months.Thus the plant and facilities,very expensive ones, are potentially available for six to eight months.Apart from poor utilization,where should the customer go for the remaining months.Although this is not a unique problem,hydro power also suffers from the same difficulty of seasonality.However no fuel cost in case of hydro power is a major redeeming feature.

One option mostly practiced in India is,where ever there are comparatively longer sugar crushing seasons,keep the plant unutilised in off season and utilize it in must -run mode in the season, trying to get an yearly load factor/utilization of 60% or so.Burning coal is avoided due to environmental costs and other reasons such as loan conditions and CDM income and provisions.

The other option is to burn coal, which has futher two options.In one option usually followed in developing countries including India as well and the same has been proposed for recently approved projects in Pakistan.The bagasse stoker boilers are generally low efficiency as compared to a typical coal boiler:25-28% for stoker and38% for coal. This means that burning coal in bagasse boilers is about 33% less efficient,which is a big loss but averages out by higher efficiency increase of bagasse boilers.This is probably not a very good solution but often found feasible.Coals pollution and traffic congestion that may be generated by massive coal traffic on the roads would be additional problems to cope with.The other option mostly adopted in the developed countries with coal power plants is co-firing of biomass including bagasse in conventional coal boilers, but in a manageable ratio of 10-15%.And this is done without loss of efficiency.We do not have coal power plants and thus cannot benefit from it in the near future.

Perhaps the best option is to utilise other biomass which may be potentially available in sugar off-season.Agricultural residue,rice husk , corn-cob and shrubs etc.The solution should be implemented where ever feasible.No compromise on efficiency , no coal pollution or traffic congestion. Besides the projects would remain eligible for CDM revenues and other concessional green financing.Some of our bright entrepreneurs have seen the light and are considering to move in this direction.

NEPRA's quarterly determinations of DISCOs;wasteful and nauseating

As per new rules ,Energy Charges of DISCOs are determined monthly and Distribution Margins quarterly.There is a justification and need for more frequent (monthly) determination of energy charge due to the volatility of fuel prices these days.However,one is not sure of Quarterly determinations of DISCO's margin,which is usually less than a rupee per kWh,i.e. less than 0% of the average selling price, excluding T&D losses which are a long term issue.Every quarter same data is provided and long advertisements costing millions of rupees have to be published.Nothing changes,no new wisdom or edicts are generated.Public has mostly lost interest and enthusiasm in such proceedings.It is high time that the quarterly determination process is reconsidered and replaced by an annual determination.

However and ironically, until very recently,energy charge which forms 90% of the tariff,used to be simply conveyed in a two liner without any detail, determination or explanation.Only recently I noticed some details being published.The argument behind a summary handling is that most of the constituting tariff of IPPs and GENCOs have been earlier determined through a public process.This is only partly correct.NEPRA determines only a reference tariff, and actual payments are quite different.There are a number of variables and factors for which payments are made by PEPCO/CPPA, which requires some kind of public scrutiny.As such the issue of fuel charge requires , at-least,annual discussion and regulation.Monthly publication of energy charge details is a welcome practice initiated by NEPRA.It needs to be followed up and its scope expanded.

To be fair,it must be explained here that NEPRA has had no part in deciding that quarterly determinations of DISCOs would be made.It came from the legislation prepared by the wise men and most probably consultants of the sorts of the Ministry of Water and Power. NEPRA's wise men would probably be happy with me for once on my opposition to quarterly determinations

Even Garbage and Human Waste have something to offer?

In Pakistan,with a population of 178 million people, a lot of human waste is generated, which creates a permanent problem of its disposal ,contributing to many water borne diseases and non-sanitary conditions.This could be converted into an asset, by suitably treating the human waste and utilizing the energy and fertilizer content of it.Human waste is of two types;one is the garbage and the other is the output of Latrines.Both can be treated and are useful and pay for their treatment.

On the average,a family in Pakistan as in other poor developing country generates 0.6 kg of garbage,most of it is organic biomass which contains compost-able material generating biofertiliser and as well as bio gas.In Karachi , like many other big cities in the country and elsewhere,this would main a daily generation of household trash to the tune of 2000 tons. Less than half of it is actually collected , and the rest somehow appears and disappears.The portion which is collected is dumped on the open public lands near the population of the poor people,who suffer from the nuisance and infections caused to them.The inorganic material is even burnt in the open generating poisonous gases.This actually means returning the garbage to people in gaseous form.

Similarly human refuse(sewerage) can generate bio-gas, fertilizer and recycle-able water for non-potable purposes.We are getting short of both energy and water.Water use efficiency , conservation and recycling offer the much needed solution to our ever increasing requirements.Human refuse, possibly ,the humblest being is offering itself as an opportunity and refuses to continue as a liability.

Leadership,effort,sensitivity and above all money is required in the form of investments that eventually is paid off.Where does the money come from? Industrialized countries are ready to invest and even grant some money for free i .e. no interest , no pay back through the famous Clean Development Mechanism(CDM).Garbage in open litter gives away Methane which is 16 times more harmful as a Green House Gas(GHG) than Carbon Dioxide.So if we collect and treat garbage and utilize its Methane as energy resource and residue as its fertilizer, we solve our hygiene problem and as well as get some free energy.More Mustafa Kamals , as mayors of cities, certainly can provide the required leadership. There are many young men around who have the potential and unfortunately retire and die prematurely ,as no body finds and discovers them.So we need older wise men to discover this younger lot.Dont expect me to do any thing,for I can only write blogs and books.