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ACKNOWLEDGEMENT

Dear Reader, This report would not have been possible without the support and guidance of our Pakistan Economic Policy teacher, Mr. Zia Abbas Rizvi . He has been a great inspiration to all of his students, and has helped us every step of the way in making the report. This report contains the problems of energy in Pakistan on the economy of our country. We would also like to thank the DEAN of IoBM DR SHAHID AMJAD for giving the time to help us in this report We hope you appreciate the depth of study and effort put into this report. Thanking You Yours Sincerely
Khizer Shafi Batla Mohammad bilal Siddiqui Syed Ahmed Asad

Long term plan for energy


An integrated energy plan was made by the Planning commission of Pakistan in 2009: Following are the summary of features of the plan

Exploration & Production Oil & Gas


Pricing: The single most important factor in attracting investment and making the country a preferred destination for international oil companies is the wellhead price offered for natural gas. It is recommended that the well head gas pricing should be based on 70% of a basket of imported crude price with upper and lower trigger points. Security: To have a formula of making the local population as stakeholders. It is felt that greater incentives to the local population would provide a sense of participation in the exploration effort. Apart from provision of jobs the local population should be given equity in the exploration block through a mechanism that would give them representation on the local management committee and ensure a percentage of future earnings from the block.

Gas Sector Downstream


i) ii) iii) iv) v) RLNG to replace liquid fuel in power sector. LNG Policy 2006 may be revised accordingly. All new Power Plants to be duel fuel CCGT plants. Merger of SSGC & SNGPL transmission business for better distribution / allocation of gas according to the requirements and need. Proper Unaccounted for Gas (UFG) control system should be introduced in both the Sui companies as 1% reduction is nearly equals to 40 mmcfd. Gas Utility companies to work on margin based system as commercial organizations. Gas subsidies to be eliminated. No Gas for water heating, Solar water heaters to be used. No expansion of Gas Distribution Network and LPG/Air mix system to be used wherever possible. Review of Load Management & Gas Allocation Policy and propose Following changes in the priority list: Power Generation Industry Commercial Domestic CNG CNG should only be used for buses in major cities.

Lpg sector
LPG pricing should be market-driven and based on import parity Pricing as stated in the LPG Policy 2001 and 2006. o OGRA intervention on determination of consumer prices should be in the extremis as per the policy and should take place when obvious cartelization appears to be taking place in the marketplace. Integrated Energy Plan 2009-2022

Power sector reforms


Improving governance structure Supportive legal frame work Financial sustainability Supply side management Demand side management Promoting power sector participation Resolution of circular debt

Refining Sector
All refineries in Pakistan are hydro skimming. The international crude and product price trend have forced the Hydro skimming margins to stay negative and in the near future it is highly unlikely that this trend will change anytime in the future. It is our recommendation that the existing refineries be supported for a limited period and directed to upgrade and expand in a defined timeline. Investors should be encouraged to set up only Deep Conversion refineries and develop valuable petrochemical products. No second hand refineries to be allowed unless they have secondary processing facility in place.

Hydro
Hydro capacity of 18000 MW that must be inducted by 2022. Indigenous resource therefore all projects need to be prioritized. Distribution Reduction of peak demand thru energy conservation and load management measures, as a MW saved is in fact better than a MW generated. Closure of shopping centers/ plazas after sun set be made as a national policy. The provinces be taken on board Energy conservation and demand supply management be included in the curricula of schools and colleges

Demand Market Participation (Incentive for customers to reduce load) Dam Capacity (MW) Basha Dam 4500 Neelam Jhelum 969 Kurram Tangi 83 Munda 740 Kohala 1100 Dasu 4000 Bunji 5400 Akhori 600 Total 17,392 Dam Capacity (MW) Basha Dam 4500 Neelam Jhelum 969 Kurram Tangi 83 Munda 740 Kohala 1100 Dasu 4000 Bunji 5400 Akhori 600 Total 17,392Integrated Energy Plan Interruptible contracts ,Load rationing Tariff should be rationalized in a manner so that high consumption domestic customers pay higher cost for using air conditioners and other appliances. This will help curtail overall consumptions and will increase revenue. Smart metering system be developed and be implemented within next three years as a national policy For Loss Reduction, focus is required on HESCO & PESCO both for technical & commercial losses.

Coal Sector
Power projects should be planned in stages i.e. short, medium and long term. In the short term (18-24 months) 150 MW Lakhra coal plant should be rehabilitated to bring the capacity at a level of 125 MW, the second part of consolidated Lakhra coal block may also be simultaneously developed for a new 150 MW power plant in the same area. Exclusive agency for coal mining for power generation should be established to facilitate onewindow operation for potential investors. Exclusive integrated coal mining and power generation policy should be developed to provide comfort to the investor.

Coal pricing mechanism must provide a minimum of 15% return on investment. Indicative reasonable and affordable tariff on coal projects should be developed to attract potential investors and may be based on already carried out feasibility study on Thar coal. The construction of the power plants and open-cast mining projects at Thar should be initiated simultaneously. To exploit the vast coal reserves of Thar, GoP should provide incentives for investors, both financial and in the form of infrastructure development. In the medium and long-term the Thar Coal Reserves may be exploited through large-scale open cast mining and development of mine-mouth power generation plant in stages to generate 350600 MW. No private entity has come up to develop an integrated coal based project. Therefore the GoP must initiate for bringing up the Thar Lignite deposits to the surface by joint private/public partnership for future industrial utilization of coal. The energy mix anticipated by commission

(Integrated energy plan 2009-2022, 2009)

Medium term policy


Power policy 2001
Salient features of power policy in 2001 Public-private sector project Encouragement of exploitation of other resources Custom duty to remain 5% . Ministry of water and power to remain focal point at federal level

Short term policy


Equitable load shedding among all provinces. Reduction in number of working days Closing down of all commercial centers throughout the country at 8pm except for weekends. Subsidy for solar agricultural tube wells Reducing billboards power and use of energy saver To limit the use of energy by government offices, prepaid meters in all federal and provincial government buildings will be installed. Expedite conversion of steam based IPPs/GENCOs to coal With such a good reforms and strategies, if they are implemented the overall energy crises would go down and Pakistan would get benefit

Renewable energy
A board for renewable energy was formed by government of Pakistan that has started working in Pakistan Project at Jhampir on 24th dec of 50 MW 3 lol of 70 Mw capacity have been in Punjab on solar Development board Punjab

Conclusion
Economy is highly affected by the energy crises and energy is therefore required in every area. Pakistan has ample reserves of raw material and production capacities. But due to lack of governance and bad working mechanism our economy is facing energy crises as per our findings. Our textile is going down , exports are decreasing and GDP growth target is missing only because of energy crises. Production

growth LSM graph is going down due to lack of energy. Govt of Pakistan has formulated an energy mix plan for 15 years of by integrated energy plan 2009-2022. Medium term policy was formulated in 2001 and a short term policy was made in 2011 by govt. Government of Pakistan has targeted the energy mix to 30:70 , reversing the current ratio of 70:30 , hydro and oil production. The government has also planned to import lng and oil. Further the plans are enough for the government to achieve the target and boast Pakistans economy