An insight into Energy Sector 

Engineering Post Report

Energy is an integral component of the national economy and as such quite obviously is considered necessary for nearly all human activities.  In the recent decades there has been a rapid increase  in the global  demand that  was primarily derived from the expansion of economic activities, population growth, and rapid technological change . However, energy bottlenecks  have also become  a5 chronic problem for any country’s economy.

Pakistan has also suffered  from such a situation in the past.  Therefore, several large-scale  projects were  initiated between 2013 and 2018 to eliminate the electricity demand-supply gap and address the  challenge of ensuring  the smooth  delivery of energy services to the people throughout the country without disruption. To this end, the federal government played an important and quite significant  role in abridging  severe energy demand imbalance by importing Liquefied Natural Gas (LNG).

The federal government envisions  focusing  on indigenous energy resources  primarily hydel, solar, wind and Thar coal. In this regard it is paramount to note that  the share of  alternative and renewable  energy sources (AREs) has also increased from zero percent in FY2014 to  6.8 percent  of the electricity’s installed capacity in the last financial year due to the policies formulated in the right direction  ensuring their implementation properly also. However, there was still potential  for AREs  to contribute more  to the national  energy supply and ensure affordable and universal access to electricity.  The federal government was also committed to protecting the national interests by producing low-cost indigenous power.

The federal government also has already  approved  the Framework Guidelines for Fast track solar Initiatives 2022 for promoting and developing cost-effective  local renewable energy sources and reducing the impact of high prices of  imported  fossil fuels in the global  markets,  resulting  in high electricity  tariffs and drainage of  foreign precious foreign exchange. The framework as such covers Solar PV Energy Substitution for Expensive imported Fossil Fuels, Solar PV Generation  on 11 KV Feeders, and Public Buildings Solarization.

According to the information available from the official sources, the federal government  aims to achieve  a 60 percent  share of electricity ‘s generation  capacity through  indigenous  clean energy  technologies  (ARE and hydro) by 2030, based on the Indicative  Generation  Capacity Expansion  Plan (IGCEP).  The plan, prepared by the National  Transmission and Dispatch Company (NTDC) and being processed, considered for approval by the competent official bodies, has projected the country’s demand at 41338 MW and an installed capacity of 69372 MW by 2031 as the base case.

Nuclear power plants (NPPs) are also a reliable  source of electricity as they run up for 18 months  without  refueling and store enough  fuel for another 18 months on site. It makes them immune to short-term  change  in fuel prices  or availability allowing them to achieve  very high-capacity factors. The nuclear fleet comprising six NPPs with a total capacity of  3530 MW had contributed  about 27 per cent of the total electricity generation in the  national grid in December 2022.

It may also be mentioned here that in 2016, the federal government had imposed a moratorium on new imported  fuel-based power projects.  Moreover, the federal government has also planned to convert all commissioned  imported coal independent power producers (IPPs) to Thar coal. Thar has the country’s  largest  coal reserves which  have  been developed  over several years now.  With the addition of  three power projects during the last financial year, the total installed capacity  from  five Thar coal-based power generation  has reached 3300 MW. 

In Pakistan,  the main consumers of petroleum products are the transport and power sectors, which account for  78.5 per cent and 10.8 percent of the total consumption , respectively. However, during the last financial year , the demand for Motor Spirit  and High Speed Diesel  had decreased  mainly due to the high prices of these [products, while the  demand for  Furnace Oil had declined  due to the shift of power generation to Re-gasified Liquefied Natural Gas (RLNG) or coal  and other alternative sources. Thus, the total demand for petroleum products (16.72 million tonnes in July March FY2022) had reduced by 21.9 percent during July-March FY2023.On the other hand, the  natural gas  consumption amounted to around  3258 MMCFD from July-march FY2022 which included 631 MMCFD of RLNG volume. .

And, Pakistan’s energy sector was all set to witness a positive and most welcome transformation phase following  the signing of a much-awaited Memorandum  of Understanding (MoU) recently  for execution of a $ 10 billion  green refinery  project at the strategic Gwadar Port. The project is a joint venture between four  Pakistani state-owned oil and gas companies including Oil and Gas Development Company Limited (OGDCL), Pakistan State Oil (PSO), Pakistan Petroleum Limited (PPL)  and Government Holdings ( Private) Limited (GHPL)  and Saudi Arabian  oil firm  ARAMCO and aimed at  establishing  an integrated  refinery petrochemical complex with a substantial crude oil processing  capacity of at least 300000 barrels per day.

According to the experts in the oil sector, this somewhat ambitious  initiative holds immense importance and promises for the country, especially the energy sector security. The establishment of a state-of-the-art  refinery  will hopefully considerably reduce the  country’s reliance  on costly imported  refined petroleum products. With this refinery establishment in due  course of time, the country will be able to produce a substantial portion of petroleum  needs  domestically ensuring  a stable and secure supply of fuels. Resultantly,  this will also help  in saving billions of dollars on imports bills, leading to a positive impact on the balance of payments. The project also demonstrates Pakistan’s commitment to environmental conservation and the green refinery project will also solidify Pakistan’s position as a significant  player in the regional energy market,  facilitating  energy trade  and cooperation with neighboring countries, the experts added.