Saturday, October 30, 2010
Wednesday, October 27, 2010
LPG sector; has open market regime worked
Tuesday, October 26, 2010
Re-organisation Of electrical sector; the closure of PEPCO
Reorganization of Electrical sector: closure of PEPCO issue ?
Contradictory reports are coming in regarding the closure of PEPCO, which was created a few years ago in the wake of restructuring of WAPDA. Earlier WAPDA used to be the sole organization, responsible for the power sector, which was a continuation of an early power regime, where hydro power used to be a major component of the electricity supplies. Reorganization was done as under; WAPDA restricted to the dams, irrigation system and the hydro generation facilities like Tarbela etc. WAPDA happened to be the owner of these assets and facilities. PEPCO was given the ownership and management of Power distribution companies (DISCOs) and possibly the thermal generation plants. NTDC (National Transmission and Dispatch Company) was to own and manage the Transmission facilities and act as an integrated system operator (ISO) responsible for power dispatch management. There is a CPPA (Central Power Purchasing Authority) under NTDC with a low profile, which bought electricity from all the IPPs and GENCOs and sold it to the distribution companies (DISCO). The need for this arrangement was felt because of a uniform tariff regime system, under a huge subsidy. The whole system except for KESC and other IPPs was in public sector.
Under a Power Utopia, the entire power sector would be eventually privatized, there would be no subsidies and there would be separate regional or DISCO tariff and thus no WAPDA or PEPCO. Two developments have taken place recently. CPPA has been upgraded from a section under NTDC to a full-fledged company under GOP guarantee. Perhaps this was a step in the right direction. It had to be a guarantee company because, it would be entering into power purchase agreements, that had to have the benefit of GOP guarantee for the satisfaction of investors and IPPs. It is being wishfully contemplated by the Power theorists of multilateral agencies under which all reform is being engineered that the subsidies would go away along with the uniform electricity tariff in the country.
The whole electricity sector has been structured under a unified model of uniform tariff and central investment. All assets and fuel sources have been developed under it. Power sector, under 18th amendment has become a Federal subject, rather than being on the concurrent list as it was earlier. Subsidies may go, but a regional tariff is impossibility due to the baggage of the past. In a decade, the sector configuration may change appreciably due to increased contribution of IPPs. Regional tariff may then be a possibility.
Nationalists of KP, rightly or wrongly, already allege that cheap hydro electricity is bought from Tarbela, and sold back to the province through PESCO at a rate many times higher. They, however, forget conveniently that, it is the federal investment through which cheaper hydro electricity is produced. KP contribution it is of its location, which is rewarded under a royalty system. Except in
All of this can lead to a political disaster, threatening and risking not just the sustainability of democratic system, but the very foundation of a united federal
Coming back to PEPCO, its role and its rationale, in
We cannot possibly afford to be reckless theorists unmindful of the consequences of policies and new regimes. The foreign advisor and theorists do not buy the same medicine for themselves as they prescribe for us. Had they done so, there would have not been much of an inefficient manufacturing sector in their countries surviving on trade barriers .Even agriculture survives there on trade barriers and subsidies. Inefficient and labour intensive sectors would have been long shifted to this part of the world promoting mutual welfare and employment in labor surplus economies. This has not happened and would happen very gradually, minimizing dislocation on the part of adjusting people, labor and sector. Same gradualism would be advised here and not the abrupt actions under the knife of IMF and dagger of project loan giving agencies. PEPCO may be allowed to continue or merged with CPPA.
Monday, October 25, 2010
Electricity for All-rural electrification ?
Electricity for All ,Rural Electrification ?
Electricity for All remains an elusive goal for the developing world including
On a global level, 78.2% of the world population has access to electricity of sorts, as against South Asian average of 60.2% .In Pakistan, access rate is 70.4% , out of which 60% is rural and 93% urban. According to the Mouza statistics, 64% of Mouzas have electricity, 19% have no electricity at all, and the rest are in between. It may be of interest to keep in view the comparative, cooking fuel availability. Only 20% of people in
Electricity for All had to be achieved by 2007, by electrifying all the villages in
Leaving aside data controversy, it has been studied that about 8000 villages may not be electrified at all ,in foreseeable future , keeping in view the long term grid expansion plan . Rural Electrification project has targeted these villages for electrification, mostly through solar energy. The programme has been estimated to cost 500 Million USD .GOP had committed 18 MUSD, to electrify 400 villages (3200 house-holds) in Sindh and 300 villages in Balochistan.
One Solar Household system (SHS) has been assigned a Solar PV installed capacity of 50-120 Watts. For, 1000,000 house-holds in 10,000 villages would generate a demand of 100 MW of solar PV power. This would also mean, a 100 kW load per village. At a rate of 4 USD per watt for PV capital costs, it adds up to 400 MUSD for generation and a 100 MUSD extra for other costs. Admittedly cost estimates appear to be reasonable.
However, only 18 MUSD has been committed, which would not meet more than 5 % of the target, according to the afore-mentioned numbers? It is also doubtful, that reasonably sufficient funds would be available to implement this programme any sooner, esp. in the scenario of economic and budgetary difficulties in the post-flood situation.
There is one shaft of hope that Solar PV costs are fast coming down. Already, PV costs of under 1 USD are being quoted, although of solar PV Cells only. It is expected that by 2015, solar prices would be competitive with fossil power. Thus one may have to be a little less ambitious, run the program at a slow speed, and go in high gear after 2005.There are, however, a few solar application that may already be competitive and affordable. Solar Pumps with DC motors do not require expensive balance -of -the –system (BOS) ancillaries. For these applications 2 USD per Kw of solar PV costs would be competitive with expensive diesel based power. Some of such applications could be continued with whatever funds that may drip by.
Thursday, October 21, 2010
Should Coal be imported,inspite of Thar Coal ?
Should Coal be Imported , inspite of Thar Coal ?
Coal is being imported in
Hard coal of good quality is also being mined in Balochistan, KP and
In this section, we are concerned with a specific question. Should we import coal for power sector? There is advantage in coal. In
Coal is being much despised and opposed these days by the generally environmentally sensitive world of today. Pollution and Green-house gases are the two principal factors responsible for the opposition and resistance against coal. On the other hand, this is also true that most electricity in the world today comes from coal. In the
Why import, when one is exporting; and why export when one is importing. Trade is done for many reasons seasonal factors, location issues, transportation costs, business linkage etc. In the case of coal, imported coal may be cheaper than domestically produced due to shear logistics reasons. Coastal towns and markets may prefer imported coal for convenience and cost reasons , if domestically produced coal is far off in the inner regions. That is the reason behind energy trade in the
Am I making a case for importing coal for establishing power plants, as some foreign companies have proposed? Why have they done so? For almost the same reasons as we have discussed earlier. However, the primary concern is that people are generally skeptical if Thar coal resource would come on line at all? Our provincial government of Sindh and its relevant departments may not like this kind of skepticism. Every now and then they do announce their actions, projects and approvals. Engro has completed its feasibility study, which gives some credibility and optimism. However, it is still a low key affair, not befitting of a gigantic project of this nature, being largely operated and handled from a single room in Sindh Secretariat. Visibility and profile gives credibility to vendors, technology suppliers, investors etc. Unfortunately, its absence does not appear to be very reassuring. If projects are progressing, these are to be planned, monitored and co-ordinated .It requires qualified managers and manpower, training activity etc. No credible international party is yet on board. The sole public demonstration of such an association is indicted by a trip to
However, I do not think that going for the imported coal option for new power plants would be a good idea at all. First and foremost, such a project would crowd out the investment in domestic coal, after there is a limited supply of foreign capital willing to come to
Converting Oil-fired Power Plants to Coal
Converting Oil-fired Power Plants to Coal
By Akhtar Ali
There is some merit in this proposition. Oil has become quite a risky fuel, as the recent oil price hike has amply demonstrated. While apparently , there is no substitute to oil in transportation sector , the recent trend of installing oil based power plants(IC Engines mainly) has been rather unfortunate.
It is almost certain that oil would be extinct in the next fifty years and as its extinction phase starts, as it already has; its price behavior is projected to be quite volatile. Future price hikes ala 2008 cannot be ruled out. These would occur more frequently in future. Recent reliance in oil has perhaps been for no other short term alternative. Earlier oil-fired power plants have been installed in 30 USD per barrel regime.
Even Earlier oil fired power plants have suffered from low capacity utilization, although these were quite capable of running as base load power plants. A classic example is of HUBCO , which capacity utilization has improved very recently due to the power crisis. Otherwise, oil being expensive, HUBCO came in a low merit order and thus the low capacity utilization, which is ironic indeed for capital scarce countries like ours.
For the reasons discussed , oil fired power stations have been converted to Coal in Europe and ASEAN region in the wake of oil crisis of 1973 , and the trend continues. Despite general environmental dislike and opposition to coal, for instance,
In the U.S already, coal based power is abundantly installed to the extent of 50 % of the total installed power generating capacity , providing cheap power ( 5 cents or lesser per unit) from cheap coal .Apparently ,the U.S. has no reason to increase the already high predominance of coal , while other resource options are there like gas and nuclear.
Coal , however, is not immune to unruly price behavior. Recently, its price also hiked in the international market in sympathy with oil, to three times its usual level. Therefore, while imported coal could be a short term option, the longer term option has no escape from utilizing our domestic Thar Coal (lignite).Optimally Lignite is better utilized at mine-moth power plants. However, Lignite can be transported to a few hundred kilometers quite economically, comparatively speaking, as is being done in (hard) coal scarce northern regions of
Transportation is an important and significant component of the total received cost of coal and can add as much as 50% to the at-mine cost. Interestingly for some coastal towns, imported coal and its transport can be cheaper than domestic coal. This is one of the major reasons in
For a variety of reasons, Thar coal cannot be adequately utilized with Thar based installations alone. By 2030, our famous Energy Security Plan (2005) envisages 25000 MW to come from Thar Coal; even more, if the unrealistic projections of gas are taken into account. All of this capacity cannot possibly be installed at one location, whatever be the dictates of transport optimality. There are many issues like security based dispersal, water, ecological limitations, demand location, manpower etc.
For the time being, it is imperative that the proposition of converting Oil-fired power stations to coal be given consideration. It is a long cycle issue, and may take some 3-5 years to materialize .Already, new power plants based on imported coal have been proposed for Balochistan coast, near Hub Power Plant, and regulatory approval obtained in this respect. However, keeping in view the eventual potential conversion to Thar Coal, it is suggested that coal power plants be based on Sindh coast. There was a proposal earlier, mooted earlier in 1988, to install imported coal power plant at Keti-Bandar under the auspices of ADB. Infact, whole of Sindh coast extending from Bin-Qasim to Keti-Bandar is quite opportune for such siting keeping in view the closeness to Thar Coal.
Technically speaking, there are no limitations to the proposal. This is possible in today’s technology. In steam turbine based power plants, Oil fired boilers are to be replaced with coal fired boilers, although not a cheap proposition, as 30 % of the power plant investment may be in the boilers itself. Capital cost component in the unit product cost, do not exceed 15-20 % , bulk of it being the fuel cost. In the long run, even Gas fired combined cycle plants could be converted to coal based IGCC, a technology that would be commercially available in next five years. But let us not just delay action today for options of tomorrow.