Review of the Possible Solutions to Pakistan Oil Crisis

Abstract

Oil crises in the past years made more obvious the dependency of economies on fossil fuels. As a consequence, the need for new energy sources became more urgent. Renewable energy sources could provide a solution to the problem, as they are inexhaustible and have less adverse impacts on the environment than fossil fuels. Yet, renewable energy sources technology has not reached a high standard at which it can be considered competitive to fossil fuels. The present study deals with the energy analysis of solar energy, wind power and geothermal energy. That is, the actual use of energy from the existing available energy is discussed. In addition, renewable energy sources are compared with the non-renewable energy sources on the basis of efficiency.

Introduction

Energy is considered to be the lifeline of any economy and most vital instrument of socioeconomic development of a country. Energy is pivotal in running machinery in factories and industrial units, for lighting our cities and powering our vehicles etc. The use of energy in human life has been increasing with the age of civilization. Access to energy is fundamental to fulfil basic social needs, driving economic growth and fueling human development. With the passage of time, the growing needs for improved living standards have increased the need to explore and acquire more energy resources. There has been an enormous increase in the demand for energy as a result of industrial development and population growth, in comparison to enhancement in energy production. Supply of energy is, therefore, far less than the actual demand, resultantly crisis has emerged. An energy crisis can be defined as any great bottleneck (or price rise) in the supply of energy resources to an economy.

The demand for Energy is increasing day by day over the years there is greater need of energy because of enhancement in lifestyle and increase in population, agricultural and industrial growth. Increase in transportation needs increases demand for energy. Pakistan is one of the emerging economies of South Asia, where the government has declared the Power Sector as its top priority of investment. Pakistan’s energy infrastructure is not well developed, rather it is considered to be underdeveloped and poorly managed. Currently, the country is facing the severe energy crisis. Despite the strong economic growth and rising energy demand during past decade, no serious efforts have been made to install new capacity generation. Moreover, rapid demand growth, transmission losses due to outdated infrastructure, power theft, and seasonal reductions in the availability of hydropower have worsened the situation. Consequently, the demand exceeds supply and hence load-shedding is a common phenomenon through power shutdown.

So far energy conservation is limited to newspaper ads lip service in seminars. No serious thought is being given to utilizing the energy at the optimum level. A new culture needs to develop to conserve energy. Sometimes on government level illiteracy is blamed for the failure of the energy conservation program. This is not true, Maximum energy is consumed by the elite class which have all the resources of knowledge and communication. But for their own luxury, they themselves ignore the problem. A government should seriously embark on energy conservation program.

So far, the government is looking for private sector investment in energy sector and for itself, it chooses a role of facilitator and arbitrator. We strongly suggest that a massive investment from the government itself in generating units for conventional as well as new technologies are needed. Once the government sector embarks on massive plans then the private sector will follow immediately. The government exerting great efforts to develop the renewable energy. PPIB has issued a letter of intent to many private sector sponsors. If a serious work is done then the total shortage can be met from Hydro and wind power sector. This is also suggested that small loans should be provided to consumers to install small hydro and solar cells for one family usage of electricity. The mechanism should be made that instead of monthly bills loan recovery each month to be carried out.

Literature Review

Several works in the shape of articles, thesis, books, dissertations and magazines have been done to enhance the reduction of energy consumption and to enlarge energy crisis so the significance of the energy should be realized. The crux of the researchers is as follows: Karen (2008) expounds in his research article that economic crisis is ebbing the industrial world. It is leaving the adverse effects on the entire world. Therefore, it is mandatory to save electricity. He deplores the frittering of energy in terms of electricity. Therefore, he suggests many alternatives to save electricity. Jahaur (2009) elaborates the two reasons for the latest and worst energy crisis in Pakistan and the gap amid demand and supply. Todd (2008) scrutinizes in his article that we should save electricity to cease the recession and energy crisis. The building energy data book (2007) renders a study about heating and cooling appliances.

According to the study, space heating and space cools cover 31% and 12% of the electricity bill respectively. Horsky and Simon (1983) scrutinize the effects of advertisement on new and novel products. Chris (2007) exemplifies that TV sets use energy even when TV sets are turned off. Dawood (2007) suggests replacing old appliances with energy-efficient models in order to save energy or electricity. Meier (2004) renders in his study that programs to save electricity through the change in behaviour are very salutary and the aftermath of these programs are very fateful because these programs enforce the hasty implementation. Dave (2010) explains in his article the history of electricity. Andrew (2010) suggests people change their lifestyle so that the reduction of energy consumption can be made possible. Jones (2010) sheds light on the significance of energy savers. Tom (2010) highlights the importance of wind power. Solar (2009) exemplifies that we should use heavy appliances during nighttime instead of daytime. George (2008) elaborates that a full refrigerator consumes less energy than an empty fridge. Oglivy (2006) highlights the rules to build and run a good campaign. In the same way, Business (2010) in their online article emphasizes the points of good advertising. A low and stable level of inflation is one the major goals of any economy. The question then arises that how to achieve a low level of inflation or how to maintain inflation at the current level. To understand this, one needs to look at the causes of inflation. Inflation can be caused by two broad situations. One is where “too much money is chasing too few goods” i. e., demand-pull inflation.

The other is when the increase in prices of raw materials drive up costs of production, which feed into the prices of finished goods. This is referred to as cost-push inflation. Inflation has a twofold effect on the economy. It can be bad as well as good. Inflation can be harmful to the economy (Bruno and Easterly, 1998, Khan and Senhadji, 2001, David et al., 2005) beyond a threshold level. In the case of Pakistan, that threshold happens to be 9% (Mubarik, 2005). These touch upon different aspects of the topic, but what I perceive is lacking in scholarship is an approach to analyze Pakistan’s energy basket as a whole, along with political, regional, and global implications.

Current literature reveals that energy poverty is a diverse, long-standing, and multifaceted issue. However, economists regard it as an issue of only circular debts. Elizabeth Mills, an expert on energy and environmental issues, has described Pakistan’s energy problems as follows: “For the political observers, it is an issue of absent political will. For the aid organization specialist, it is a governance problem. For the engineer, it is a matter of resolving technical problems, improving energy conservation, and addressing issues like theft and nonpayment of electricity bills. ” (Mills). The aforementioned problems are logical, yet regional energy and geopolitics are important additional factors that seriously influence Pakistan’s current energy scenario. This situation is a testimony to the country’s inability to capitalize on regional energy resources. Therefore, the review of literature can be summarized as follows.

Problem Identification

Pakistan is in the midst of one of the worst energy crises in its history. This is both slowing the pace of economic activity and causing public unrest with prolonged outages of electricity and gas. Limit use in some key ventures has tumbled to almost 50 percent. Most exceedingly terrible influenced is the manure business, which faces intrusions to its gas supply and constrained terminations. Pakistan has the ability to create more than one million tons in exportable surplus urea, yet in 2011-12 it imported more than 1. 1 million tons. This dissolved the nations outside trade holds and adequately involved the instalment of a large number of dollars in sponsorships, is the contrast between the expenses of privately delivered and imported urea. Pakistan desperately needs to settle on some vital choices and change the national vitality blend.

Promptly in the wake of accepting force, the new government thought of two approach choices: pay a large portion of a trillion rupees (just shy of $5 billion) to vitality organizations and report another power strategy. The two stages are gone for settling issues tormenting the organizations having a place with the vitality tie and conveying change to Pakistan's vitality blend to advance the normal cost of power age.

Pakistan's administration paid Rs260 billion in real money to free influence plants (IPPs) to clear exceptional obligation. It likewise issued securities to pay off liabilities relating to state-possessed organizations, for example, investigation and creation firms and oil and gas showcasing elements. In the wake of clearing the obligation of the IPPs, it was normal that they would have the capacity to create 1, 700MW in extra power, weakening the shortage that as of now surpasses 6, 000MW. The circumstance is probably going to enhance after some time.

As per the accessible information, at introduce introduced control age limit in Pakistan is assessed to 22, 500MW (barring the Karachi Energy Supply Company, more on which beneath), however genuine power age drifts around 15, 000MW, somewhat as a result of obsolete and wasteful power plants and mostly in light of a money crunch, which regularly does not allow influence plants to work at ideal limit as a result of the powerlessness to purchase the required heater oil. This could be best comprehended when one takes a gander at the accessible information on control plants working in people in general part, which have an introduced limit of more than 4, 800MW yet genuine age drifting around 1, 200MW.

At introduce, the majority of power supply originates from hydroelectric plants (6, 500MW) and IPPs (6, 500MW). The yield of the hydro plants is reliant on water accessibility in the dams and can tumble to as low as 2, 500MW when water levels drop radically. Also, as we have seen, IPP yield is restricted by cash issues.

Pakistan's troubles have been exacerbated by its exorbitant dependence on warm power plants, principally utilizing heater oil. Two components added to the rise of this circumstance: an adjustment in moneylenders from people in general to private area, and Pakistan's inability to finish a hydroelectric undertaking in late decades. The last super dam, Tarbella, was finished in the mid-seventies and no other dam has been built since. After the marking of the Indus Water Treaty with India, Pakistan was required to finish development of one super-size hydroelectricity plant every decade to guarantee year-round accessibility of minimal effort power and water system water.

Of Pakistan's 6, 500MW hydro limit, the mass is contributed by three undertakings: Mangla, Tarbella and Ghazi Brotha. There are almost two dozen IPPs, yet the real players are Hub Power Company, Kot Addu Power Company and Uch Power Plant. Pakistan likewise has three atomic power plants, two in Punjab and one in Karachi, with a total limit of more than 800MW. In any case, the Karachi plant is toward the finish of its powerful life and its ability can't be named 'trustworthy. '

Dissimilar to whatever is left of Pakistan, Karachi gets its power from a minimal utility, Karachi Electric Supply Company (KESC), which handles age, transmission and circulation. The greater part of its age originates from the Bin Qasim Power Plant, which has an introduced limit of 1, 260MW. Another 500MW originates from littler units. Since privatization, KESC has included another 500WM limit at Bin Qasim, however, its yield has stayed unpredictable in view of the conflicting supply of gas. The main causes of Energy crisis are the growing demand for energy where for its production there is lack of integrated and proactive planning which leads it towards crises. Non-utilization of enormous indigenous energy resources like Hydal power generation and Thar coal, Pakistan is rich in these recourses but lack of management causes energy crises. Imbalanced energy mix is also one the cause of Energy crises in Pakistan. Consequences of Energy Crisis in Economic Factors are getting worse, same Agriculture, Industrial Sector. Unemployment is increasing day by day due to energy crises so as Social Issues. Poverty is also increasing due to energy crises.

Recommendation/Solution

Energy crisis can be curtailed by Government if they invest to cover up line loses, they have to pay the circular debt. The government of Pakistan, in order to conserve electric energy, should convert inefficient gas plants to efficient one. They must have to invest in alternating electricity sources such as Wind Energy plants and Solar Energy plants (while they are less mechanical then wind plants). As Industries takes 33% of our electricity, Government must have to apply Management measures and Energy Conservation Systems. The government of Pakistan can start producing their own energy with their own investment without depending upon the grid. Energy crisis can be reduced by reducing the unnecessary use of Energy. Reducing unnecessary use of transportation by developing a good transport public system (more like metro bus system) and also, by strengthening Railways System. Crisis can be curtailed by making some awareness campaign for energy saving that people should use electric saving devices.

Moreover Reduction in industrial uses with the installation of effective equipment/ energy efficient and with increasing efficiency of the workforce (cost effective). Decreasing reliance on rental power projects, because instead of doing any good, they are increasing prices of electricity. Also, by decreasing line losses by using efficient power transmission cables. Judicious energy use/saving unnecessary energy usage is the best solution to the energy crisis. Use of electricity saving devices can save electricity. By starting some Awareness campaign for energy saving through media, radio, newspapers and posters. Reduction in unnecessary transportations will save the unnecessary use of energy people should instead use public transport. Installation of effective equipment/energy efficient in industries is the best way to save energy same as decreasing line/transmission losses can decrease energy crises.