Securing energy

With the laying of the foundation stone of the 1,223MW Baloki power plant near Kasur on November 10, work has begun on three gas-fired power projects of 3,600MW cumulative capacity.
The construction of the 1,180MW Bhikki power plant, one of the three power plants, is being funded by the Punjab government whereas the 1,200MW Haveli Bahadur Shah (Jhang) and 1,223MW Baloki power plants will be financed by the federal government. These projects are set to be completed by 2017 and will add a total of 3,600MW to the national grid on completion.
The addition of this quantum of electricity from gas-fuelled projects will go a long way in alleviating power outages in the country. One of the chief highlights of these projects is that they are being built near the load centres.
On being voted into power, the present government was confronted with three key policy areas – elimination of terrorism; end of the energy crisis; and the revival of the national economy through deep-rooted, structural reforms.
The energy crisis, whose severity cannot emphasised enough, did not happen all of a sudden. It was years of criminal neglect that led us here. The hours-long power outages not only literally darkened our households but also took a heavy toll on our economy.
Our energy problem is much more complex than we understand. The problem is not just confined to the widening gap between demand and supply. While generation of electricity remains a dominant challenge, it is cheap and affordable energy that we need the most to run the economy.
Energy governance, revamping of the transmission and distribution network and circular debt are other key challenges the government is dealing with. The present high tariff of electricity is due to costly sources of power generation. Unless we broaden our energy mix and shift its focus from expensive sources to cheap sources of power generation, we cannot resolve our energy crisis on a more enduring and sustainable basis.
Following the 18th Amendment whereby provinces were allowed to launch their own power projects, the government of Punjab has initiated a number of projects to overcome the severe energy shortages. The government is tapping all available resources in the province such as coal, solar, and wind to generate cheap, clean and environment-friendly electricity. There is no preference for any fuel as harnessing all available resources for electricity generation is a strategic imperative to bridge the demand-supply deficit.
From mooting of the idea of setting up gas-fired power plants to the groundbreaking of these projects, the process took five months to complete. There are a number of defining characteristics of these projects.
The first relates to savings. In all these projects, the government has ensured a phenomenal saving of Rs110 billion, something unheard of in a country where corruption in energy projects was the name of the game in the past. These phenomenal savings are tangible. All three projects are being built at half the price at which similar gas projects have generally been installed to date. The Guddu Power Plant was constructed at the cost of $836 per kilowatt. The per kilowatt cost of the Uch Power Plant was $987. In the same way, the cost of various IPPs ranged from $800 to $930 per kilowatt. Compared to these, the cost of $466 per kilowatt will be incurred on the construction of the Bhikki power plant.
It is not just the reduced and the minimum cost factor that makes these power plants landmark projects. Importantly, they will be installed by using the most efficient and state of the art technology compared to the already installed LNG-powered plants. The world renowned American corporation, General Electric, has won the contract for supply of machinery and equipment for the plants.
The second is the efficiency factor of these plants. A brief comparison is instructive here. The Guddu Power Plant is considered the best in terms of efficiency – at 54.48 percent. Comparatively speaking, the efficiency of these power plants will be 61 percent, which is seven percent more than that of Guddu. For Nepra, a plant is considered to have achieved acceptable efficiency benchmark if its efficiency level is 57 percent. In case of all three gas-fired plants, efficiency will be 61 percent, representing an increase of more than four percent compared to the acceptable level of efficiency.
It is relevant to mention that the entire process of selection of contractors including preparation of detailed engineering design and tender documents, and pre-qualification was concluded in just five months under the supervision of world-renowned consultants and in accordance with the best practices of transparency.
Globally respected firms such as General Electric, Mitsubishi and Simmons participated in the bidding process, which testifies to the fact that Pakistan is becoming a preferred destination for international investors. The renewed and extraordinary interest the international firms are taking in Pakistan owes, among other factors, to the seriousness of the government’s development agenda, track record and credibility.
These gas-powered projects have established new benchmarks: first, the cost of plants is almost half of the cost of plants installed to date. That brings a new culture of realistic cost for power projects and provides fair returns to investors without being burdensome for the consumers. Second, the bidding process was completed in a meticulous manner according to the laid-down timelines. This is unprecedented in the power sector.
Third, the physical infrastructure and security documents now in place would facilitate construction of plants near load centres. Four, after the 18th Amendment the government of Punjab has developed the capacity to undertake large-sized power plants in the province.
The vision underlining the power projects in Punjab is characterised by transparency, efficiency, compliance with requisite standards and quality controls and accountability.
The twin factors of cost-overruns and delay in completion of projects have been a recurring phenomenon in our development history. The government should make sure that it completes energy projects within the stipulated costs and timelines.
With energy sector development being the focus of the CPEC, the day is not far when Pakistan will achieve self-sufficiency in the field of energy, which is a vital component of our national security paradigm. For its part, the present government is committed to eliminating power shortage from the country and making it energy secure in line with its vision of a ‘Roshan Pakistan’.
Email: amanatchpk@gmail.com