Research Report On Electricity Shortage In Pakistan (research Methodology)

Electric it y s hor ta ge in Pak istan in compar ison with air condit ioner s impor ted and Pr oduced i n 2005 -2006 Husnain Afzal

Page 1 of 36

mc060401747

Subm itted b y Hu snain Af zal mc060401747 Fall 2008.

Vir tual Un iv er sit y of Paki stan, Def ence Road of f Rai wind Road, Lahor e.

Husnain Afzal

Page 2 of 36

mc060401747

Ex ecutiv e Su mmar y: Electricity Shortage in Pakistan becomes more severe during the year 2005-2006 due to extensive use luxurious appliances of electricity by domestic users.According to the report, in the fiscal year 2005-06, some 2,250MW power was required to operate some 7.7 million electric home appliances i.e. number of refrigerators in the country were 1,100,000 and power required for them was estimated at 110MW, the number of deep freezers were estimated at 200,000 and required power for them stood at 60MW, some 1,000MW power was required to run 2 million air conditioners. These figures are so alarming for Pakistan because in the decade starting from 1991 these appliances are less than a half million. the study was made on the topic shortage of electricity in Pakistan in comparison with air conditioners imported and produced during 20052006.in this study the hypothesis were set as, is Electricity shortage in Pakistan is caused by Industrial growth or massive use of Air conditioners by domestic users. However after finding out and analyzing the data that the increased domestic use of air conditioners is the cause of electricity shortage in Pakistan.

Husnain Afzal

Page 3 of 36

mc060401747

Table of Contents : Topic Acknowledgement 1.Introduction 1.1.Introduction to the Problem 1.2.Objective 1.3.Significance of the study 2.Literature review 3.Problem Statement 4.Theoretical Framework 4.1.Inventory of Variables 4.2.Direction of Relation 4.3.Explanation of the Relation 4.4.Propositions 5.Hypothesis 6.Research Design 6.1.Data Collection Techniques 6.2.Population and Sample 6.3.Tools of Data Collection 7.Data Collection, Processing and Analysis 8.Findings 9.Conclusion and Recommendations 10.References 11.Questionnaire

Husnain Afzal

Page 4 of 36

Page No. 6 6 9 9 10 15 16 16 16 17 17 18 19 19 19 19 22 32 33 34 35

mc060401747

Ac kno wledgement Thanks to the ALLAH Almighty who gave me courage and willpower to complete the task I have been given.

Husnain Afzal

Page 5 of 36

mc060401747

1.

Introduction:

1.1. Background of the Study: This study was made to demonstrate the effects of massive installation and usage of air conditioners in Pakistan during 2005-2006.Before going to details here is the some text which gives you the overview of the Pakistan’s economy, and Pakistan’s over all energy usage. The introduction phase consists of three parts. 1. Pakistan’s overall economy review 2. Pakistan’s energy overview 3. And the third portion consists of introduction of load shedding problem in Pakistan due to increase in the usage of air conditioners.

1.

Pakistan’s overall economy review (2004-2006)

Pakistan's economy has recovered from years of sluggishness, caused primarily to droughts, with growth experienced in the agriculture, industry and service sectors. In fiscal year (FY) 2004/2005 (ending in June), Pakistan achieved gross domestic product (GDP) growth of 8.4 percent and in 2005/2006 the country had GDP growth of 6.6 percent. High inflation (9.1 percent) in 2004/2005 was attributed to escalating oil prices, higher housing rents and food item shortages. country in 2005. In an effort to decrease inflation, the central bank of Pakistan announced that it would raise interest rates. The strategy worked, with inflation decreasing to 7.6 percent by the end of FY 2005/2006. The International Monetary Fund (IMF), and the World Bank, both major donor organizations to Pakistan, have acknowledged the favorable performance and progress in Pakistan’s structural reforms, but have stressed even greater reform in the public institutions and the public energy sector where progress has been slow. In 2004, the IMF approved a fresh loan of nearly $250 million as part of its overall $1.5 billion aid package to Pakistan. In 2005, the United States began the first installments of a $3 billion aid package, which will continue through 2010. In 2006, the World Bank approved loans of $185 million for various reform and infrastructure projects, in addition to the nearly $850 million loaned to the country in 2005.The devastating earthquake that stuck Pakistan in October 2005 destroyed lives and caused considerable damage to the country’s infrastructure. However, the majority of the damage occurred in rural areas of the country and had minimal impact on the economy. Furthermore, international aid inflows in the aftermath of the earthquake have served to bolster Pakistan’s economy. The United States pledged $510 million for rebuilding Pakistani infrastructure, but relief coordinators estimate that Pakistan will need billions of dollars and up to ten years to fully rebuild. Pakistan and India decided to extend aid to one

Husnain Afzal

Page 6 of 36

mc060401747

another after the earthquake. They also agreed to continue confidence building measures, which include the notification of missile testing, creating new bank branches and increasing the number of airline destinations in both countries. In recent years, the combination of rising oil consumption and flat oil production in Pakistan has led to rising oil imports from Middle East exporters. In addition, the lack of refining capacity leaves Pakistan heavily dependent on petroleum product imports. Natural gas accounts for the largest share of Pakistan’s energy use, amounting to about 50 percent of total energy consumption. Pakistan currently consumes all of its domestic natural gas production, but without higher production Pakistan will need to become a natural gas importer. As a result, Pakistan is exploring several pipeline and LNG import options to meet the expected growth in natural gas demand. Pakistan’s electricity demand is rising rapidly. According to Pakistani government estimates, generating capacity needs to grow by 50 percent by 2010 in order to meet expected demand.

2. Pakistan’s energy overview In recent years, the combination of rising oil consumption and flat oil production in Pakistan has led to rising oil imports from Middle East exporters. In addition, the lack of refining capacity leaves Pakistan heavily dependent on petroleum product imports. Natural gas accounts for the largest share of Pakistan’s energy use, amounting to about 50 percent of total energy consumption. Pakistan currently consumes all of its domestic natural gas production, but without higher production Pakistan will need to become a natural gas importer. As a result, Pakistan is exploring several pipeline and LNG import options to meet the expected growth in natural gas demand. Pakistan’s electricity demand is rising rapidly. According to Pakistani government estimates, generating capacity needs to grow by 50 percent by 2010 in order to meet expected demand.

Table evaluating Pakistan’s Energy Supply. Sector Oil Natural Gas Hydroelectricity Nuclear Coal LPG

Energy Supply 29.40% 50.30% 15.69% 1.20% 7.60% 0.40%

Diagram evaluating Pakistan’s Energy Supply.

Husnain Afzal

Page 7 of 36

mc060401747

Coal, 7.60%

LPG, 0.40%

Nuclear, 1.20%

Oil, 29.40%

Hydroelectricity, 15.69%

Oil Natural Gas Hydroelectricity Nuclear Coal LPG

Natural Gas, 50.30%

3. Introduction of load shedding problem in Pakistan due to increase in the usage of air conditioners: Pakistan is facing a huge electric power crisis today. This crisis appears insurmountable in the near or even long-term future, unless proper understanding and correct implementation is undertaken on priority basis. At present total power production capacity in the country is about 19,500 MW, out of which Hydel Power is only 6,500 MW, balance of 13,000 MW is thermal either using Natural Gas or Furnace Oil. Small capacity of 450 MW is Nuclear and only 150 MW is through coal. The problem of massive load shedding in Pakistan was properly introduced in 20042005.Because in these days the overall GDP growth was very high near about 9% per year. In these years the business progress was very well and banks industry grows at a vigorous speed. Banks introduces new schemes in which peoples were provided home appliances on lease. Thus resulting an increase in production and exports of home appliances. These home appliances not only include the necessity objects like refrigerator but also the Luxury objects like Air conditioners. Although most of the air conditioners were made in Pakistan but 60% of the raw material used in air conditioners was imported from different countries of the world. Due to these reasons Pakistan was hit badly by two basic problems such as budget deficit and shortage of electricity. Now a days the consumption of Air conditioners in Pakistan is slow comparing to 20052006.But the Load shedding Problem becomes more severe. Husnain Afzal

Page 8 of 36

mc060401747

1 . 3. Objectives of my research: The main objective of my research is to find out either the consumption of air conditioners in Pakistan is responsible for Load shedding or the growth in industrial sector in Pakistan is responsible for load shedding, or no installation of new power plants is responsible for the problem. From different resources it is also confirmed that during 2002-2006 Pakistan’s industry sector was also at boom so without testing the hypothesis we cannot say that the Load shedding problem is due to usage of Air conditioners. Here we also have to note down that the ratio of growth in consumption of electriicty to production of electriicty. To find out the past trends of electriicty consumption and present and future situations is also an objective of my research.

1.

4. Significance of the study:

The research work on load shedding will help us to demonstrate the true reasons of load shedding problem. It also helps us to find out the total energy consumption and production of Pakistan. The province wise electriicty production and consumption and a brief note on line losses of electriicty due to bad power supply system of Pakistan. The study will also help us to evaluate how much growth is needed in electricity production sector to cease the load shedding problem. In our study we will also compare Pakistan’s energy production consumption ratio with other countries of the world. Whenever we

2.Literature Review:

Husnain Afzal

Page 9 of 36

mc060401747

Almost two years ago the then WAPDA chairman who happens to be a caretaker minister admitted that WAPDA cannot meet the current demand for electricity. It’s surprising that such a senior and experienced person took so long to find this out. On top of that the government which talked about Pakistan’s supposedly booming economy failed to understand the gravity of the situation. General Musharraf (R) after becoming Chief Executive used to talk about building dams especially Kalabagh Dam. This was one of the many promises he failed to keep. Even after that very few power plants have been set up to meet the demand for electricity. During the second government of Benazir some independent power plants were set up. Had they not been setup then we would have had a much bigger crisis with life almost coming to a standstill. I come from the software industry which has been badly hit by the present power crisis. On an average the generator at my office is on for three hours. Our work is not much affected but overall the company’s operating expenses have increased. The policy makers of Pakistan have so far failed to understand one thing. They do talk about making dams and setting up nuclear power plants but why do they not understand the importance and benefits of alternate energy sources such as solar, windmill energy etc. They are cheap and quick methods for producing electricity. Pakistan is a very blessed country because solar energy is available in most cities all year round similarly wind energy is readily available in the coastal areas. These energy sources if tapped can be of great help in reducing the current demand supply gap. After the founding of Pakistani State in 1947, the Government’s economic policy concentrated attention on developing an economic infrastructure, achieving self-sufficiency in food, and developing export industries. However, an intrusive and over sized public sector, an over regulated economy, excessive discretionary powers often incompatible with the level of the official, and an absolute lack of transparency, provide the optimal environment for opportunities of corruption restricting the economic development in the country. Combination of these factors with weak accountability ensures that economic backwardness get entrenched into the entire fabric of society. Despite the pervasive pessimism that is undoubtedly felt, we have come across many who would willingly embrace new practices if only the scourge of corruption could be lifted from their lives. The countries that have surged ahead, on the other hand, are characterized by high level of human capital accumulation where the educated labor force has raised the level of output and the rate of growth over a sustained period of time. Inefficient public expenditure process, higher cost of basic input, lack of skilled human resources, corruption and nepotism restrict Pakistan far behind in development according to recently announced World Bank report. Pakistan is suffering from shortage of infrastructure in the water, irrigation, power, and transport sectors. Infrastructure is essential for sustained growth and competitiveness both in the local and international markets. The gaps between demand and supply in these sectors are alarming. The plans needs to put in place urgently, these critical shortages would continue to undermine the efforts to improve socio-economic indicators and to reduce poverty. Without adequate irrigation resources, power and transport infrastructure, the very sustainability of Pakistan as an independent nation may be at stake as shortages could lead to increased social discontent and disharmony amongst the federation and the provinces. Pakistan is on the list of the most water stressed countries in the world, and forecasts indicate that available resources are depleting rapidly, possibly leading to a state of water scarcity in the next two decades. Much of the water infrastructure is in poor repair and Pakistan has to invest almost Rs 60 billion per year in new large dams and related infrastructure over the next five year. In the energy sector,

Husnain Afzal

Page 10 of 36

mc060401747

Pakistan will face severe power shortages of approximately 6,000 megawatts by the year 2010 (equivalent to about three Tarbela dams) and 30,700 MW by the year 2020.The per capita energy consumption in Pakistan is amongst the lowest in the world and a lack of adequate energy resources precludes industrial growth affecting all sectors of the economy. Similarly, the transport sector inefficiencies are costing the economy between 4 to 5 percent of GDP each year indicating the need for massive investment in roads, rail, air and ports as indicated in the World Bank report. There were large gaps have been observed between the actual and allocated funds for infrastructure development projects. Public agencies were taking too much time and delivery was too little. Majority of the developmental projects were based on political priorities. The infrastructure projects in Pakistan cost twice as much and take three times longer than planned time there are few number of known firms in Pakistan and majority of big projects were given to them. There are implementation, monitoring and feedback missing in the projects and the average cost of every project increases more than double due to several gaps. Given the paucity of human resources and materials, the poor planning and management skills, and the inability to timely attract ‘substitute’ external implementation resources, it appears difficult that the large infrastructure projects can be implemented on-time and within budget unless some drastic reforms are undertaken. Out of the four broad thematic areas of business environment, human resources (HR), plant and equipment and construction materials, HR and business environment were identified as having the maximum number of constraints. Delays in project implementation reflect poor planning, programming and weak implementation capacity. Public agencies take on too many projects in their development programs and end up delivering little, and what they do deliver is often determined by political priorities. The delays in payment, imbalanced contracts, inefficiencies and corruption in the system force contractors to incur additional financial and economic costs resulting in squeezing the already poor margins in the industry. The contractors and consultants are not being paid the right cost for products and services. Costs of materials and equipment inputs in Pakistan were found to be about 200 percent higher as compared to other countries in the region, while contractors’ rates in Pakistan were more or less the same as those prevailing in the region. Local rates despite appearing to be “competitive” in a regional context are in fact unworkable - most contractors also contend that rates are low, precluding adequate profit margins and allowing better salaries to professionals and workers. Given the current disparity between market rates and actual product costs, demand-supply gaps will widen when the Medium Term Development Framework (MTDF) program is implemented, unless rates are increased. Pakistan should lesson from international case studies on the development of the construction industry and the literature reviews clearly show that a holistic long-term planning and a detailed strategy must be evolved with a clear vision and commitment towards developing the industry, and this process may take as long as a decade or more of sustained effort. The Government needs to make serious efforts to strengthen revenue mobilization, contain its unproductive expenditure, and utilize scarce external assistance more efficiently.The country is facing a huge electric power crisis today. This crisis appears insurmountable in the near or even long-term future, unless proper understanding and correct implementation is undertaken on priority basis. At present total power production capacity in the country is about 19,500 MW, out of which Hydel Power is only 6,500 MW, balance of 13,000 MW is thermal either using Natural Gas or Furnace Oil. Small capacity of 450 MW is Nuclear and only 150 MW is through coal. Although gas is to be provided for 5800 MW to various thermal plants, but in actual fact much less gas is

Husnain Afzal

Page 11 of 36

mc060401747

being made available, the deficiency is being filled through furnace oil. It can be inferred that in the recent past, only furnace oil was used as fuel for about 9000 MW generation. It is very important to understand the consequence of the prevailing situation. Current price of furnace oil is about Rs 49,000 per ton, which amount upto Rs 49/- per kg. On an average one kg of furnace oil produces 3.8 kWh of electricity. Thus, the cost of furnace oil for generating one unit of electricity is about Rs 13. On top of this the fixed cost of a thermal plant works out to be about Rs 3 per unit. Therefore, one unit (kWh) of the electricity produced by all thermal plants using furnace oil is Rs 16 per unit. According to WAPDA/IPP agreement, the private power producers will charge WAPDA the actual fuel cost for which they have a direct contract with PSO. As we all know that WAPDA tariff charged from the consumers is about Rs 5 per unit (kWh).The production cost of furnace oil electricity is Rs 16 per unit, add to it the transmission, distribution cost (including loses), “the total cost of such electricity works out to approximately Rs 22 per kWh. The difference between WAPDA tariff and the furnace oil electricity is Rs17 per kWh.” It is estimated that the country consumes at least 25 billion units of electricity produced annually through furnace oil, which amounts to the total deficit of Rs 425 Billion. If WAPDA has to balance its books it would require a subsidy of Rs 425 Billion. This deficit is somewhat reduced due to cheap power produced through hydel energy and natural gas, but the deficit cannot change substantially, unless bulk of electricity is produced through hydel energy. Obviously, a deficit of Rs 300-350 Billion cannot be sustained, the government does not have resources to pay such a huge subsidy, and it is also not feasible to increase the power tariff very much. Therefore the power crisis is far greater than what is being perceived. In the absence of extremely heavy subsidy, WAPDA is delaying payments to IPPs and also to the oil companies. The result is that IPPs are now producing much less electricity than their capacity. To any planner, it should be obvious that the country cannot afford electricity produced through oil. Indigenous fuels like coal, gas, atomic will have to be developed and developed quickly. The final solution however lies in depending on the hydroelectric renewable energy, but unfortunately the narrow minded bickering on construction of dams has persuaded the planners to find an easy solution, which we cannot afford any more. Since the shortage or high price of electricity has severe detrimental effect on all sectors of economy, the situation calls for concerted short-term, medium-term and long-term actions to overcome the problem of energy shortage. Way Forward: In the shortterm, the shortages have to be somehow met. The foremost immediate action which can give some relief is the conservation of energy. The government has already announced certain measures like shutting down power on billboards, hoardings and neon signs. Recently in Lahore super size televisions have been installed on important traffic points. In order to keep the temperature down air conditioners are installed behind these sets. In spite of government directions, the energy saving measures is not being implemented. Shops use excessive lights, which can be conveniently reduced. A suggestion that cities are divided in zones, and the market on these zones be closed on different days, can also save peak time energy usage. In order to implement conservation measures, the nazims, naib nazims should visit the areas and try to convince and negotiate with the people, shopkeepers etc requesting them to cooperate in the overall interests. At present the IPPs, and WAPDA owned thermal plants are averaging about 50 percent plant factor, which means that they are not being used to their potential level, 70 to 80 percent plant factor is quite feasible; this would require better maintenance of such plants. A higher plant factor on these power stations can provide 20 to 30 percent more energy, which will circumvent the present

Husnain Afzal

Page 12 of 36

mc060401747

shortages to a certain extent. Improving the plant factor of the existing plants is far more economical then setting up new plants, although new plants will still be needed. One of the reasons for low plant factor is that the funds are not made available for the purchase of oil; solution for this factor will help in short term increase in energy production. The government has announced that immediately 1200 MW of additional plants will be set-up. If these plants will operate on furnace oil, the deficit will further increase. At present the country has about 28 Trillion cft of recoverable gas available, the yearly consumption is about 1.2 Trillion cft, which means that even if gas consumption is increased, the existing recoverable gas will be sufficient for the next 15 years. Therefore the additional thermal generation should be based on gas, but in order to make additional gas available, the gas pressure and its transmission system will have to be enhanced. The money saved by using gas instead of furnace oil, should be invested in developing new gas fields which have already been discovered. Mid and Long Term: The oil prices are not going to come down drastically; therefore all efforts are needed to stay away from oil. For thermal plants only Coal and Natural Gas should be used. Vast deposits of coal exist at Thar, but it is inconceivable why the mining of this coal has not yet started. There is a number of new gas fields discovered; but their development has been put on the back burner, again for some unknown reasons. The gas purchase agreement with Iran be finalised immediately, even without India. A large power station using this gas can be installed at Gwadar, 500 KV transmission lines can bring the power to load centres. In addition agreement with Kazakistan is persued diligently for the import of gas. Currently the country loses 29 billion units of electricity annually due to heavy losses in the system. All efforts must be genuinely applied to reduce the losses. If losses are reduced by even 5 percent, the saving will be over 7 Billion rupees. For hydroelectric projects, the large ones can only be built on the Indus River, where not only hydroelectricity can be produced, but highly needed water storage can also be a by-product. Some legitimate objections on the environment and social impacts of large dams are there, but solutions for such objections can be satisfactorily found. The will of the government leaders is needed, with the present coalition partnership in the centre, matters can be resolved. Experts from various provinces can get together and put forward a solution for mitigating the objections. It was due to the clear vision of the leadership that the Tarbela Dam was constructed, without which where would we have been today. Similar visionary approach is needed and needed now. There are a number of other attractive runs of the river hydel projects which are being offered to the Private Sector. None of these projects have yet started, because the tariff is still not finalised. With the huge losses being accumulated in thermal plants, again it is strange that the hydel projects in the private sector are not being encouraged. Under the present circumstances, a rational and market oriented policy has to be adopted, hopefully the present government will immediately look into this. It is good to know that the work on Neelum Jhelum Hydro Project (900MW) has started by WAPDA.The current power crisis is grossly due to very high oil prices, and the country has to prepare itself at least for the next several years to somehow cope with it, since no immediate cheaper alternate solutions are available. It has been a big set back that new Hydel Projects have not been undertaken, neither the indigenous coal mining has started, investments in the existing as well as new gas field have been lacking. The policy orientation needs a drastic modification and indigenous resource like hydel energy.

Husnain Afzal

Page 13 of 36

mc060401747

3.Problem Statement: “Do the increased consumption and production of Air conditioners in Pakistan is responsible for severe load shedding in Pakistan or other factors like growth in industry and no installation of electricity capacities were responsible for that.”

Husnain Afzal

Page 14 of 36

mc060401747

4.

Theoretical Framework:

After analyzing the Pakistan’s energy shortages and their different reasons for these shortages the following variables were identified.

4.1. Inventory of Variables: Dependent Variable:  Electricity

Husnain Afzal

Page 15 of 36

mc060401747

Independent variables  Air conditioners  New electricity capacities installed  Industrial growth Air Conditioner

NEC Installed

Electricity Shortage

Industrial Growth

4.2. Direction of Relations:  In above relations usage of air conditioners negatively affects electriicty supply.  No installation of new electriicty capacities negatively influences the electricity supply.  And in last industrial growth positively influence the electriicty supply.

4.3. Explanation of established relationships among variables. The Increased usage of air conditioners in homes will ultimately affects the electriicty supply in the country because it is very difficult to control production process in the country. If the income levels in the country are high then people will ultimately use luxury items. on the other hand heavy industry also needs much electriicty to generate production in this scenario we can say that if during 2005-2006 new industries open then this will also create shortage however this could be decided in the findings portion of the report that either industrial growth or no installation of electriicty capacities or massive usage of electriicty appliances is responsible for this problem.

Husnain Afzal

Page 16 of 36

mc060401747

4.4. Inventory of propositions in a sequential order:  Massive domestic usage of air conditioners due to high income level negatively affects electriicty supply.  No installation of new electriicty capacities negatively influences the electriicty supply.  The industrial growth during 2005-2006 positively influences the electriicty supply.

5. Hypothesis: 1. Null Hypothesis: H0: Massive usage of air conditioners in the country is responsible for the electriicty shortage in the country.

1. Alternative Hypothesis: H1: Massive usage of air conditioners in the country is not responsible for electriicty shortage in the country. Husnain Afzal

Page 17 of 36

mc060401747

2. Null Hypothesis: H0: Growth in industrial sector is responsible for shortage of electriicty in Pakistan.

2. Alternative Hypothesis: H1: Growth in industrial sector is not responsible for the shortage of electriicty in Pakistan.

3. Null Hypothesis: H0: No installation of new electricity capacities is responsible for electriicty shortage in Pakistan.

3. Alternative Hypothesis: H1: No installation of new electricity capacities is not responsible for electricity shortage in Pakistan.

6. Research Design: 6.1. Classification of research: In my research the purpose of study would be descriptive and also quantitative because substantial information is known about situation and hand on how this particular issue have been solved in past.

6.2. Data Collection Techniques: Husnain Afzal

Page 18 of 36

mc060401747

As my research is based on historic data. Such as data regarding shortage of electriicty in pakistan during 2005-2006.So the process of data collection involves two steps first step was to collect data from two historic sources such as different government sources and the second source is private institutions such as newspapers.and the second step was to send questionnaire to different energy suppliars of the country.these resources are contacted through PEPCO to provide necessary information. For the purpose of data collection a request was sent to PEPCO to provide data regarding Electriicty. The research was of quantitative nature and the quantitative data was collected through various sources.

6.3.

Population and Sample:

As my research is totally based on historic data so for data collection the population is all power supply companies of Pakistan.These all companies are headed by PEPCO.(Pakistan Electric Power Company. ) These companies are responsible for electric supply in pakistan. A list of these companies is given below.

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Husnain Afzal

Electricity Supply Companies. LESCO. GEPCO. FESCO. IESCO. MEPCO. PESCO. HESCO. QESCO. TESCO. NTDC. GENSCO. KESC. GENCO I. Page 19 of 36

mc060401747

14.

GENCO II.

To collect data these companies are contacted through PEPCO for better cooperation.Thus the data collected from these sources is divded into two froms one is domestic consumption of electricity and the other one is commercial consumption of electriicty during 20052006. The staff of PEPCO also forwards me a report made by Engineer Tahir basharat cheema the chairman of PEPCO. which was presented to the Prime minister.

6.4.

Tools of Data Collection:

The data collection tools were Filling up a questionnaire in which the details for electriicty consumption and production were asked from the staff members of thse companies.the analysis data was also colleced from different news papers, websites and other sources. The responsible members of different electric supply companies are contacted through e-mails and Telephones. The e-mail id,s and phone numbers are given in references.

6.5. Forms of data collected: Thus data collected from different sources are of two typs one type is completely filled questionnaire and the other type is different reports on Electriicty supply and shortage.The data thus collected is and managed so that results can be identified and also the trends of electriicty consumption during different seasons in Pakistan. There are two objectives of data one is based on past situation and one is based on present and future situations.

Husnain Afzal

Page 20 of 36

mc060401747

7. Data Collection,Data Processing and analysis The Primary and secondary data collected from different sources thus managed. Primary data was collected in the form of filled questionnaire and the secondary data was collected in the form of reports of different journalists and other government officials. The data collected in the form of filled questionnaire is of primary nature thus it is directly analyzed by using different statistical tools such as coefficient of variation and other measures of location and measures of dispersion. Then the data was arranged and presented in a graphical form so that any one can analyze the situation of electriicty shortage in Pakistan.

Here is the picture of Forecast of Pakistan’s Energy Consumption and production. (Source: World Energy Data.)

Husnain Afzal

Page 21 of 36

mc060401747

As it is clearly evident from the figure that consumption of electricity was increasing day by day. Now looking at the data which was collected from different electriicty supply companies of Pakistan. B e f o re g o i n g t o d e t a i l e d s t u d i e s h e re a re s o m e C o n c e p t s a n d Definitions

CONCEPTS AND DEFINITIONS: WATT:

Watt is a unit of power. A watt is defined as the rate of doing one joule (J) of work in one second. Common units of power are multiple of the watt. These are as under:

One Watt (W) One kilowatt (KW) One Megawatt (MW) One Gigawatt (GW)

Husnain Afzal

Page 22 of 36

= = = =

01 J/S 103 J/S 106 J/S 109 J/S

mc060401747

KILOWATT HOUR: Kilowatt hour is a precise measure of energy and work. It is the work equivalent to 1000 watts (Joules per second) over one hour time. Work = One Kilowatt hour (Kwh) = One Million watt hour (Mwh) = One Giga watt hour (Gwh) =

Power x Time 3.6x103 Joules 3.6x106 Joules 3.6x109 Joules

Domestic Supply It includes power supply to residences, places of worships, approved charitable institutions, Government approved educational institutions, hospitals etc. Commercial Supply It includes power supply to offices and establishments such as shops, hotels, restaurants, petrol pumps, private hospitals, cinemas, offices of associations and consultants etc. Industrial Supply It means power supply for bona fide industrial purposes in factories including the supply required for the offices and for normal working of the industry and also for water pumps and tube wells other than those meant for irrigation or reclamation of agriculture land. Agricultural Supply “Agricultural Supply” means a supply for lift Irrigation Pumps and/or Tube wells intended solely for irrigation or reclamation of agricultural land or forests, and includes supply for lighting of tube well chamber. Maximum Demand “Maximum Demand” means the highest demand obtained in any month measured over successive periods each of 30 minutes duration. Public Lighting Public Lighting means illuminating public lamps.

Bulk Supply

Husnain Afzal

Page 23 of 36

mc060401747

“Bulk Supply” for the purpose of this tariff means a supply given in a bulk at one point to consumers having their own distribution facilities, i.e. own grid station etc. Beside that Electricity consumed in auxiliaries and system losses are referred as other Consumption. Statistics of Number of Consumers of Electricity by Branch in Pakistan All Nos. are in (000) Branch 1 Total

1998-99 2 Nos. % 12,248 100.0

1999-00 3 Nos. % 13,192 100.0

2003-04 4 Nos. % 15,841 100.0

2004-05 5 Nos. % 16,718 100.0

2005-06 6 7 Nos. % 17,795 100.0

Domestic

10,005

81.7

10,783

81.7

13,086

82.6

13,888

83.1

14,838

83.4

Commercial

1,840

15.0

2,001

15.2

2,313

14.6

2,379

14.2

2,476

13.9

Industrial

220

1.8

224

1.7

230

1.5

234

1.4

245

1.4

Agriculture

174

1.4

175

1.3

201

1.3

204

1.2

223

1.2

Others

09

0.1

09

0.1

11

0.1

13

0.1

13

0.1

FIG.7.1 Partition of consumers of electriicty by branch

Industrial 1%

Agriculture 1%

Others 0% Domestic Commercial

Commercial 14%

Industrial Agriculture Others

Domestic 84%

Husnain Afzal

Page 24 of 36

mc060401747

Statistics of Electricity Consumption in MKH by Branch Branch 1 Total

1998-99 Units % 2 45,756 100.0

1999-00 Units 4 46,358

% 5 100.0

2003-04 Units 6 59,316

Domestic

19,268

21,485

46.4

25,394

42.8

27,601

43.6

30,720

43.7

Commercial

2,381

3,586

6.0

4,080

6.4

4,730

6.7

Industrial

12,924

28.3

13,972

19,738

33.3

20,561

32.5

22,441

32.0

Agriculture

5,620

12.3

4,542

9.8

6,669

11.2

6,988

11.1

7,949

11.3

239

0.5

271

0.5

306

0.5

353

0.5

3,576

7.7

3,658

6.2

3,762

5.9

4,048

5.8

Public Lighting

225

Bulk Supply & others

42.1 5.2

2,544

0.5

5,338

11.6

5.5 30.1

% 7 100.0

2004-05 Units 8 63,298

% 9 100.0

2005-06 Units 10 70,241

FIG.7.2 Electricity consumption in MKH by branch Bulk Supply & others 6% 0% Lighting 0%

Domestic

Public 1% Agriculture 11%

Commercial Industrial Domestic 43%

Agriculture Public Lighting

Industrial 32%

Husnain Afzal

Bulk Supply Commercial 7%

Page 25 of 36

& others

mc060401747

% 11 100.0

Electricity Consumption by Province and Branch (2005-06) All nos are in (000) Branch

Pakistan 2 70,241

Punjab 3 43,618

Sindh 4 14,448

NWFP 5 8,256

Balochistan 6 3,919

Domestic

30,720

18,884

5,873

5,562

401

Commercial

4,730

2,953

1,276

411

90

Industrial

22,441

15,599

5,252

1,383

207

Agricultural

7,949

3,668

698

451

3,132

353

170

162

18

3

4,048

2,344

1,187

431

86

1 Total

Public lighting Bulk supply and Others

Year-wise Electricity Consumption by Province Year 1 1996-97

Pakistan 2 43,486

Punjab 3 25,121

Sindh 4 10,062

NWFP 5 6,638

Balochistan 6 1,665

1997-98

45,112

25,638

10,976

6,794

1,704

1998-99

45,756

25,245

12,581

6,243

1,687

1999-00

46,358

27,033

10,975

6,528

1,822

2003-04

59,316

36,246

12,573

7,230

3,267

2004-05

63,298

38,591

13,480

7,645

3,582

2005-06

70,241

43,618

14,448

8,256

3,919

Year-wise Electricity Consumption by Branch MKH

Husnain Afzal

Page 26 of 36

mc060401747

Year

Total

Domestic

Commercial

Industrial

Agriculture 6 5,619

Public Lighting 7 262

Bulk Supply & Others 8 2,091

1 1990-91

2 32,128

3 10,400

4 2,066

5 11,690

1991-92

34,962

11,458

2,144

12,824

5,848

310

2,378

1992-93

37,180

13,205

1,726

13,658

5,620

287

2,684

1993-94

38,246

14,134

1,786

13,392

5,772

298

2,864

1994-95

40,385

15,583

1,941

13,306

6,252

325

2,978

1995-96

42,479

17,116

2,174

12,885

6,696

378

3,230

1996-97

43,486

17,684

2,241

12,754

7,086

390

3,331

1997-98

45,112

18,670

2,334

13,042

6,937

387

3,742

1998-99

45,756

19,268

2,381

12,924

5,620

225

5,338

1999-00

46,358

21,485

2,544

13,972

4,542

239

3,576

2003-04

59,316

25,394

3,586

19,738

6,669

271

3,658

2004-05

63,298

27,601

4,080

20,561

6,988

306

3,762

2005-06

70,241

30,720

4,730

22,441

7,949

353

4,048

Graph Showing Electricity Consumption by Branch during 2004-2005 FIG.7.3 2004-05 30,000 25,000 20,000 15,000 10,000 5,000 0

Husnain Afzal

2004-05 Bulk Supply

Public

Agriculture

Industrial

Commercial

Domestic

2004-05

Page 27 of 36

mc060401747

Graph Showing Electricity Consumption by Branch during 2005-2006 FIG.7.4 2005-06 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Public Lit.

Agriculture

Industrial

Commercial

Domestic

Total

2005-06 2005-06

Graph Showing Electricity Consumption by Branch during 1999-2000 FIG.7.5 1999-00 25,000 20,000 15,000 10,000 5,000 1999-00 Public

Agriculture

Industrial

Commercial

Domestic

1999-00 Total

0

The above tables and graphs show some facts of Pakistan’s power energy data. Now we will look at the electricity generation graph of Pakistan.

Husnain Afzal

Page 28 of 36

mc060401747

Year

Units Generated

Units

System Losses Losses %

MKW 1 1996-97

59,894

2

3 14,172

4

1997-98

62,915

15,453

25.5

1998-99

65,402

17,179

27.3

1999-00

66,562

17,664

27.6

2003-04

83,607

21,117

25.3

2004-05

88,379

21,603

25.4

2005-06

96,478

22,521

24.3

24.6

Graph of System Losses FIG.7.6 2005-06

System Losses 19% Units Generated System Losses Units Generated 81%

We can clearly see the difference between consumption of electricity during 2004-2005 and 2005-2006 and 1999-2000. FIG.7.1 to 7.6 illustrates the story. That how electricity consumption increases from 46,358 MKW to almost 60,000 MKW. Here is a point to note that during year 2005-2006 system losses or line losses are about 20% which is alarming.

Husnain Afzal

Page 29 of 36

mc060401747

i.e. 20% of energy made by Pakistan is lost in lines during delivery of electricity to destinations. In developed countries the line losses percentage is only 3%. Analysis: According to The Director General (Energy Management & Conservation) PEPCO. It was found that half a million ACs mainly of the split version was sold and added to the power system during fiscal 2005-06. Thereafter, another 750,000 pieces of such equipment was installed in Pakistan during the next financial year. 2005-06. Importers and manufacturers of air conditioners had planned to sell upwards of a million ACs during 2006-06, but due to the on-going power crises they could only purvey 750,000 such appliances. A market survey revealed that people wanting to add three ACs during 2008 would now buy two and spend the rest of the money on procurement of a generator. The sale figures for the three years viz. 2005-08 add to a phenomenal two million pieces or an addition of 4000 MW of load or at least a usage effect equaling 800 MW at 20 per cent diversely factor. It was estimated that four million ACs of both the window and the split versions (in addition to package and centrally air conditioned buildings) were added between 2000-08 or a load of 1600 MW (with due diversity) to the system. One can safely assume that a large number of such contraptions would be hooked up to the system in addition to the equipment bought during 2000-2008. And if we quantify such use, we safely come up with the figure of about 4000 MW as specifically AC load on the system. This 4000 MW of AC load simply vanished from the system demand after the mercury dropped by 7-8°C on late September 5. The system remained so till September 08 where-after it has slowly built up at a rate of 800-900 MW a day. Energy labelling is unheard of and Pakistan remains a dumping ground for gas guzzling and inefficient electrical equipment. The present requirement of cooling is being managed by double the required load viz. only 2000 MW. As such, besides being unduly loaded by a non-productive AC load of 4000 MW, the power system has also to arrange for expensive peaking generation without many returns. Pakistan cannot afford such extravagant usage of ACs and that all such usages have to necessarily result in great increase in utility revenues. We must use ACs most frugally, and these have to be energy labeled with only efficient models allowed to be imported and manufactured locally.

Husnain Afzal

Page 30 of 36

mc060401747

8. Findings From above analysis it is found that shortage of electricity in Pakistan is caused by only frequent use of Air Conditioners in by domestic consumers only. As it is evident from graphs that domestic consumption of electricity is raised about 30% during 2005-2006. The other variables of our research such as industrial growth and consumption of electricity in industry has almost no impact on shortage. Because industrial growth is only 7% during 2005-2006 raised from 3.5% from previous year. But Domestic consumption is increased from 5% per year to 30% which is alarming. So we accept the first null hypothesis that Massive usage of air conditioners in the country is responsible for the electriicty shortage in the country. And we reject all other hypothesis.

Husnain Afzal

Page 31 of 36

mc060401747

9.

Conclusion & Recommendations

 The problem of energy shortage can be solved by imposing more duties on luxurious goods such as Air Conditioners.  Installation of low cost new energy generation plants is very necessary. (Low cost plant includes solar energy and wind energy systems theses systems are expensive at purchasing but after installation these are the free sources of energy).  Line losses should be decreased to 3% currently it is 20%  Line loses in shape of theft of electricity should also be decreased by making new and harder laws.  A strong media campaign should also be introduced on TV. Channels to create awareness in the society to decrease energy consumption.  Electricity saver appliances should be introduced in the country.

Husnain Afzal

Page 32 of 36

mc060401747

 Home users use less energy so that industrial can benefit from it.

10.References: World Energy Data: www.eia.doe.gov Daily Times Daily News Contemporary issues in Pakistani Economy by DR. M. Aslam(2005-2006 Edition) Major issues in Pakistan’s Economy BY. A.Hamid Shahid(2005-2008 Edition) Statistical bureau of Pakistan PEPCO (Pakistan Electric Power Company) www.worldbank.org

Husnain Afzal

Page 33 of 36

mc060401747

11.

Questionnaire:

1.Name and Address of Electric Supply Company:____________________________ _______________________________________________________________________ 3.Tele PhoneNos:_________________________________________________________ 4.E-Mail:_______________________________________________________________ 5.Type of Owner ship: Public___ Private___ (Please tick mark).

Husnain Afzal

Page 34 of 36

mc060401747

6.Electricity Statistics Table:

--The End—

Electricity Received from PEPCO: In Table Format Electricity Lost In Line Losses:

In Table Format

Electricity Used by Branch (All available In Table Format records) Electricity Shortage by branch wise(All

In Table Format

available records) No. of users by branch wise(All available

In Table Format

records)

Husnain Afzal

Page 35 of 36

mc060401747

Husnain Afzal M.B.A (VU) Sialkot, Pakistan. E-mail: [email protected] Ph: 052-8116425 Cell: 0333-8691306

Husnain Afzal

Page 36 of 36

mc060401747