Analysing The Power Crisis In Pakistan Environmental Sciences Essay

Analysing The Power Crisis In Pakistan Environmental Sciences Essay

Energy production of a state is the premier index of its economic system. For a state to be economically stable and comfortable, it needs to hold sufficient energy at its disposal. No state can get high economic growing without bring forthing sufficient energy. Energy production reflects the industrial end product, transit and agricultural end product etc. restricting energy supply to an industry adversely affect its end product, ensuing in higher production cost, due to which many industries shutdown go forthing labor unemployed. In Pakistan, the electricity burden casting is an alarming issue. The rush of rising prices is due to energy deficit in the state. Number of people populating below poorness line is increasing due to unemployment and rising prices, both of which are the byproducts of energy crisis.

From the last few old ages, Pakistan has been confronting an unprecedented energy crisis. The ground being that it ‘s energy substructure is non to the full developed, deficient and ill managed. Despite of important addition over the last few old ages in the disposable incomes, increasing usage of power intensive contraptions, urbanisation and industrialisation which has caused the power demand to outpace supply, no serious stairss have been made to put in new coevals capacity. Consequently, burden sloughing has been seen as the common phenomena in Pakistan. During the last 10 old ages, Pakistan ‘s power demand has risen by CAGR ( Compound Annual Growth Rate ) of 5.2 % , while supply has grown by merely 2.2 % ( Pakistan Power Sector, 2009 ) . Presently, state ‘s entire electricity demand stands at around 19,000MW. Demand supply shortfall ranges 2500-4500MW depending on peak clip and season, ensuing in burden sloughing of 4-8 hours day-to-day and 8-12 hours during the extremum summer season.

In Pakistan, entire installed coevals capacity is about 19,754MW ( Exhibit 1 ) , of which thermal is about 12,500MW i.e. 64 % of state ‘s entire coevals capacity, but the existent available capacity is limited to 16,500MW due to several grounds: power losingss during distribution stage due to poor-quality transmittal lines, electricity ‘s larceny, low works burden factors due to aging generators and hapless care at KESC and WAPDA workss, lessening in hydel coevals capableness due to fluctuation in the reservoir degrees particularly in winter season ensuing in the deficit of 2500MW to 4500MW depending on peak clip and season.

Reasons of power crisis in Pakistan:

Lack of large dikes in the state.

Decline in hydro beginnings of energy ( a cheap resource ) and over trust on the expansive beginning of electricity i.e. Thermal based power coevals. Soon, oil and Gas-based thermic workss histories for 68 % of bring forthing capacity, hydroelectric workss for 30 % and atomic workss for merely 2 % ( Exhibit 2 ) . Rise in the oil and gas monetary values pushes the electricity duty really high. Consequently, leads to high coevals costs, which in bend adversely impact the economic system.

Lack of strong political leading in Pakistan, to convert and safeguard the reserves of people on the building of one of the controversial dams- Kala Bagh Dam and other non-controversial dikes like Kohistan dike and Basha dike.

To bridge the demand supply spread, around 5,000MW of IPPs and rental workss are expected to come online between 2009-2012 ( Pakistan Power Sector, 2009 ) . Though the state is endowed with huge hydel and coal based power potency, it is yet to to the full work these resources and cut down dependance on oil based coevals.

Coal as an alternate energy resource:

Coal is presently the universe ‘s fastest turning fuel around the Earth. Estimates show that around 40 % of universe power supply and 26 % of primary energy comes from the coal entirely. China, being the universe ‘s largest manufacturer of coal, fulfil 78 % its entire energy demands through coal which ranks it as the universe ‘s largest consumer as good. Similarly, USA stands at 2nd place in utilizing coal, 60 % of its energy demands comes coal. Many states like UK, USA, Germany, India, Indonesia and Australia have embarked upon the new coal based power workss. But, unluckily, Pakistan holding the 6th largest coal militias in the universe, with over 185 billion metric tons of proved coal militias, has non been successful in using coal as an alternate energy beginning.

It is estimated that 100,000 MW of electricity could be generated from merely half of these resources, for 30 old ages, if exploited decently and the Energy contents of these resources are more than the energy contents of Saudi Arabia and Iran ‘s joint oil resources ( Pakistan ‘s Thar Coal Power Potential, 2008 ) .

Why Coal can be an of import beginning of energy?

Some of the grounds why coal is of import for Pakistan future energy state of affairs are as under:

Current Energy Crisiss: Demand for electricity has outpaced its supply ; the state is presently confronting power deficits ranges between 4500 to 5,000 MW and it is expected that demand would transcend supply by beyond 5,500 MW.

World-Renowned Companies Already Operating in Pakistan: Around twelve Independent Power Producers ( IPPs ) are runing in the power sector of the state.

Predictable Multi-Year & A ; Long-run Duty: Typically, the authorities allows a long-run duty of 25 – 30 old ages with the power buyer. The IPPs, therefore, are non subjected to market hazard for their end product. The undertakings are expected to gain an attractive / competitory and stable return on investing.

Abundant Coal Potential: Pakistan is blessed with big coal sedimentations peculiarly in its Sindh Province. The Thar brown coal militias, which are suited for power coevals, in the Province of Sindh are estimated to be about 175 billion metric tons.

Research Aims:

The chief aims of this research are, foremost to analyze the development of coal based power undertakings in Pakistan, learn about the deepness and comprehensiveness of this country and seek to foreground the key challenges and hazards associated with the investing in power sector of Pakistan in-terms of environmental restraints ( both locally and globally ) , security issues, authorities and regulative restraints etc. And secondly the research will take to analyse the power coevals sector of Pakistan utilizing Porter ‘s five forces analysis tool and place the function of Coal fired works in this sector. Such analysis of industrial profitableness will enable us to place the countries that need to be addressed to do the industry more attractive.

Personal Claim:

The grounds of taking this research are, foremost the research worker personally has a acute involvement in energy sector of Pakistan. Second, the demanding state of affairs in the energy sector of state, particularly power sector is the premier incentive to make research on the subject ‘Development of Coal Based Power Projects in Pakistan ‘ . And in conclusion, the chosen country is new one as non much has been done in the coal-based power coevals sector of Pakistan.

Outline of the Undertaking:

Chapter 2- Research Methodology

3.1 Introduction

This chapter will look at the necessary research methods required to transport out the research in order to accomplish the research aims. In order to accomplish this I have looked at the counsel given in ( Saunders et al 2003 ) .

3.2 Aims and Justification

The aim of this research methodological analysis is to place the agencies of roll uping valid and dependable primary and secondary informations. It analyses all facets of the research methodological analysis.

3.3 Research Approach

Inductive and deductive are two types of attacks that can be used whilst carry oning the research ( Saunders et al 2003 ) . This research will utilize the deductive attack where the findings of the research will be used to look into the literature sing the fiscal state of affairs of Jessops. The deductive attack will let roll uping quantitative informations, and will besides help in making a hypothesis and a research scheme to prove the hypothesis. As in the instance of this survey fiscal theoretical accounts will be used.

The inductive attack is where, from the findings and analysis a theory is proposed ( Saunders et Al, 2003 ) , therefore this attack will be used to prove the hereafter of Jessops.

3.4 Research Doctrine

Saunders ( et al 2003 ) , indicates there are three types of research doctrines that are interpretivism, positivism, and pragmatism. Positivism is where ‘the theory generates a hypothesis that can be tested and thereby will let account of Torahs to be assessed ‘ ( Bryman & A ; Bell, 2007 ) . The function of this research is to prove the theories from the literature, hence positivism will be used. Positivism besides strongly links with the deductive attack that will be used.

Interpretivism considers that the universe of concern is excessively complex and is ever changing where definite Torahs can non be defined. Hence this method is irrelevant for this survey.

3.5 Research Strategy

I will choose the study method for my research. I will utilize a questionnaire which will let more in depth comparings. It is besides seen good to utilize this method as it is easy understood by people, other benefits of utilizing such a method are that it is most efficient in clip, cost, and flexibleness and will let consequences to be analysed with easiness, which is extremely applicable for this survey. The usage of a study will besides supply greater response rates from participants ( Bryman & A ; Bell, 2007 ) .

The questionnaire will let me to place from the directors and fiscal departmental workers at Jessops to why gross revenues at Jessop have plummeted and will supply grounds for premises to look at the hereafter of Jessops.

3.6 Data Collection and Sample

3.6.1 Sample

The sample size will be in entire 30 participants selected indiscriminately. All participants will be employees of Jessops, as this will let the research worker to derive valued informations because employees will hold a better penetration into the company. However the response was non a coveted 1 as merely 17 participants completed the questionnaire. However due to clip restraints non much could be done to get the better of this issue, even though the position of 17 participants was still considered of import due to their functions within the company.

3.6.2 Primary Data

This research uses both primary and secondary informations. Primary research as mentioned above we be collected via questionnaires. The questionnaire will be aimed at current employees of Jessops of who are shop directors and the remainder of who work within the fiscal section. This is a critical sample for the research as the positions and remarks of the proposed participants will supply important penetration into what is go oning within Jessops, and will assist analyze their fiscal public presentation.

3.6.3 Secondary Data

Secondary informations will be taken from literature ( i.e. diaries, books, articles etc. ) ; nevertheless another facet of secondary research will be company histories and studies. This will be critical as utilizing company histories and studies will let the research worker to to the full analyze the state of affairs of Jessops and will assist organize a footing in the hereafter of Jessops. The histories will besides enable the research worker to utilize the fiscal theoretical accounts such as Altman ‘s z-score theoretical account.

3.7 Questionnaire Design

The questionnaire is seen to be an of import tool for research harmonizing to ( Naftali, 2001 ) , therefore the questionnaire needs to be precise, accurate and good designed. Naftali ( 2001 ) was used as guidelines for the design of the questionnaire. The questionnaire was designed to achieve relevant informations required for the primary aims of this research. Hence the questionnaire was designed to maintain inquiries simple and to the point to have the coveted consequences. A transcript of the questionnaire can be viewed in Appendix B.

3.8 Data Analysis

The information from primary and secondary research will be analysed in many ways. The quantitative consequences from the primary research will be analysed utilizing Excel, whereas SPSS will besides be used to place relationships and correlativities between responses of participants to supply a clearer position on the research. The above methods including secondary informations will be presented diagrammatically where necessary utilizing graphs, tabular arraies and charts.

3.9 Reliability and Validity

The information was collected after with planning and due attention. The informations collected can be considered dependable hence the specified beginning of information was chosen. However the primary informations to an extent may non be dependable as participants may confabulate replies with each other.

The secondary research can be identified as dependable and valid as all information was collected via company histories and studies.

3.10 Research Restrictions

Time was a cardinal restriction within this survey as designing and administering the questionnaire ‘s required a batch of clip. Receiving all consequences was besides clip devouring as it did non give a clear thought on how many consequences would be attained. A longer clip frame would hold allowed countering this job.

3.11 Research Ethical motives

All research was conducted within the Lcmit University Research Ethics guidelines. The moralss declaration can be viewed in Appendix A. All participants opted by pick to take portion in finishing questionnaires and participant individualities were kept anon. to the highest degree.

3.12 Alternate Methods

A possible method of deriving primary research that could hold been used was an interview. The interview method would hold allowed for elaborate analysis to inquiries and more precise responses from the interviewee. The research worker did non utilize this method due to clip restraints, and besides the research worker felt the usage of interviews may hold resulted in more colored consequences.

3.13 Drumhead

This chapter takes into consideration the methodological analysis that will be conducted in order to transport out the research for this survey. The following chapter will exemplify the existent findings of the primary and secondary research.

Literature reappraisal:


Pakistan is blessed with big coal sedimentations peculiarly in its Sindh Province. The entire coal resources of Pakistan are over 185 billion metric tons out of which about184 billion metric tons exist in Sindh entirely ( Exhibit 3 ) . The coal sedimentations of Sindh are of Lignite which is suited for power coevals. The reported one-year coal production in 2003 was around 3.3 million tones ( Exhibit 4 ) . The immense coal potency of Pakistan can good be utilized in power coevals for sustainable socio-economic development of the state.

Constitutional Position on Coal

Coal is considered as mineral and under the ‘Constitution of Pakistan ( 1973 ) ‘ mineral is a provincial topic. The Provincial Governments are responsible for the development of coal. The ‘National Mineral Policy 1995 ( revised in 2002 ) ‘ focal points all activities and determination at Provincial degree while the Federation would supply needed support and advice to the Provinces to take up the challenge of accomplishing benefits from the development of coal resources. Some of the Fiscal & A ; Financial Incentives for Coal Development are discussed in Appendix 2.

Why Coal neglected so far?

Pakistan ‘s power sector is chiefly dependent on the thermal based power workss. Thermal coevals dissolution shows that gas fuel histories for 55 % of thermal-based bring forthing capacity, furnace Oil for 44 % and Diesel Oil for merely 1 % and Coal 0 % ( Exhibit 2 ) . It is a known fact that Pakistan has the 6th universe largest coal militias, but unluckily, coal has non been developed for power coevals.

The research conducted by Tipoo Sultan ( 2008 ) indicates that in the past, many powerful transnational oil companies and trusts have been involved in understating the use of coal as an energy beginning in the development states, as they do non desire to see coal as the replacing of oil that they sell.

Miss-perceptions about the coal public-service corporation have affected the authorities policies. The quality of coal and big sum of capital demand has make coal addition less importance in the development precedences. Second, the authorities has been failed to pull the foreign investors to put in coal based power undertakings. Few of the investors after being confronting immense losingss were forced by the authorities to discontinue their undertakings. For case, Zafar Bhutta ( 2008 ) , in his article “ Sino Coal, Engro Pakistan to work on Thar coal undertaking ” , reported that “ Chinese Company, Shenhua was ready to construct the integrated excavation and power coevals composite at a guaranteed power duty of 5.75cents per unit but NEPRA refused to pay more than 5.34 cents. Chinese company packed its operations in Pakistan and went back to China go forthing no good mark for the investors interested in coal based power workss. ”

There are other factors, besides those stated above, that has added to the investor ‘s reluctance in the development of Pakistan coal resources. These are as follows:

The foremost barrier to foreign investing is the provincial liberty over the coal excavation. A recent illustration indicated by Aftab Channa ( 2010 ) in his article: “ Power workss at Thar Coal: Czech Republic unlikely to put 500 million euros ” , is the WTC group of Czech democracy who are interested in puting atleast 500 million Euros at Thar Coal for coal-burning power workss of 300 to 600 MW but unluckily the response of Sindh authorities is non overpowering ‘yet ‘ . The Technical Director, WTC Group, Karel Galuska forwarded a missive to Secretary Coal and Energy Development Department Aijaz Khan on June 21, 2010 stating that: “ We would wish to inform you that therefore far we have non received any information from you. We are get downing to believe that the authorities of Sindh is non taking ‘coal ‘ as a serious plus for its state and for work outing energy crisis in Pakistan. “ ( Karel Galuska ) .

Lack of needed substructure like roads, railroad lines, communicating webs, H2O supply, life support systems, community services and etc

The policies of the authorities are non consistent. They alter with the changed authorities.

There is Political uncertainness in the state.

The Law and order state of affairs in the state was non favorable and still its a questionable fact.

absence of modern coal excavation proficient expertness

deficient fundss

There is a quality concerns as good with the coal deposits found at Thar.

Current Situation

Pakistan is a coal-rich state, but, unluckily, coal has non been developed for power coevals for more than three decennaries due to miss of substructure, deficient funding and absence of modern coal excavation proficient expertness. The Government is now seeking to advance and ease private investors in developing and advancing autochthonal coal for power coevals.

The demand/supply projection indicates that power deficits appeared from the twelvemonth 2006, and has increased to 4,500 MW in the twelvemonth 2010 will increase farther if no steps are taken to convey in new capacity. In order to turn to these deficits, the GOP announced Power Policy 2002 which provided a set of inducements to pull the much needed investing in power coevals. The cardinal points of the new policy are International Competitive Bidding ( ICB ) and an accent on puting up power undertakings based on autochthonal fuel resources such as coal, hydal power and renewable energies.

General Regulations sing coal-based Power Undertakings:

The power policy 2002 lays major accent on the development of power undertakings based on autochthonal coal. Merely Provincial Governments are authorized to allow rentals and licences for coal prospecting and coal excavation to Private Sector and Public Sector companies or organisations. There is no function of Federal Government and Public Sector to allow rentals and licences for coal excavation. Coal is considered as mineral and mineral is a Provincial Subject harmonizing to the Constitution of Pakistan.

There was a job that when prospective investors got a excavation rental and had signed a MoU with the several provincial authorities, so such unasked natural site had to be considered. On designation of a natural site by the provincial governments, PPIB advertises coal natural sites for seeking proposals from investors ( see appendix-2 ) . PPIB can besides transport out International Competitive Bidding ( ICB ) after acquiring a bankable feasibleness survey completed.

The GOP guarantees the footings and conditions of executed understandings, i.e. IA, PPA, including payment footings, which are maintained for the continuance of the Agreements for undertakings. The coal power bring forthing companies would be allowed to import works, equipment and machinery non manufactured locally, at concessionary rates. The power companies would besides be wholly exempted from the payment of income revenue enhancement and keep backing revenue enhancement on imports.

In order to advance indigenization, the local technology industry will be encouraged to organize joint ventures with foreign companies to develop incorporate undertakings of coal-mine and coal-burning power workss with a cumulative capacity of at least 2000 MW by the twelvemonth 2015. The inducements for puting in coal based power workss in Pakistan are given in Appendix-2.

How to continue frontward with coal-based power workss?

The ordinance and processing of the applications by investors takes topographic point at the provincial every bit good as federal degrees. The measure by measure process is given in Appendix-3 ( Courtesy: PPIB ) and subsequent appendices.

Requests for Proposal ( RFP )

It is mentioned that the Request for Proposal ( RFP ) for an autochthonal coal-burning undertaking with capacity above 50 MW will be for an incorporate coal excavation and/or power coevals works composite. The particulars required for a undertaking offered for competitory command in a typical RFP are mentioned in appendix-4.

Feasibility Study

For integrated coal-mine and power coevals workss, the feasibleness survey will cover all facets of coal excavation and power coevals, including, but non limited to, coal militias, mine ability, hazards involved in excavation, legal facets of excavation etc. , besides storage/transportation of coal to the power works, operations of the power works on coal, necessary inside informations about the power coevals works itself and, above all, the commercial viability of the undertaking. The feasibleness survey may or may non propose a ‘Coal Supply Agreement ( CSA ) ‘ in such instance. For a stand-alone coal-based power coevals works, the excavation subdivision would non be covered in item. However, handiness of a sufficient and dependable coal supply for power coevals would be considered, besides other necessary facets. The feasibleness survey may necessitate a CSA even if the coal provider is sister concern of the power generator. Some farther demands are as mentioned in Appendix-6.

Evaluation of Commands

The process is given in Appendix-6. PPIB will reserve the right to reject any or all commands without delegating ground therefore, and will non presume any liabilities or claims for compensation in connexion therewith. Once the command is accepted and tariff approved by PPIB, the successful bidder will be issued an LOS by PPIB against bringing of a Performance Guarantee ( PG ) in favour of PPIB, in the needed sum valid up to three months beyond the Financial Closing day of the month specified in the LOS and upon payment of the cost of the feasibleness survey to PPIB. Further stairss to be taken are given in Appendix-8.

Power Duty:

The development of a coalmine, constitution of coal-burning power works and transit installations to provide dependable coal for the incorporate undertaking of power works and mine, require significant investing. These disbursals are to be accounted for in the power duty in the signifier of capacity and energy charges.

The duty will be denominated in Pakistan Rupees

Bidders will be asked to cite their duty in two parts: ( 1 ) Energy Purchase Price ( EPP ) and ( 2 ) Capacity Purchase Price ( CPP )

The RFP may stipulate the maximal per centum of overall duty for the capacity constituent

The CPP will be paid provided the works is available for dispatched to criterions specified in the PPA. The EPP will be paid upon the sum of kWh of energy dispatched

In order to guarantee sustained involvement of the patron during the full life of the undertaking, the amount of the EPP and non-debt related CPP ( computed on a kWh footing at the mention works factor specified in the RFP ) will stay changeless or increase over clip. The debt-related CPP watercourse may fit the loan refund watercourse

Environmental issues and Pakistan ‘s coal based development

Fossil fuel power coevals is non environment friendly as its CO2 emanation contributes to air pollution and it has been connected with planetary heating. Soon, the emanation of gases like C dioxide, S dioxide, and N oxides, into the air is the lone pollution caused from coal-burning power workss.

The chief ground for increasing usage of coal burning is because it is inexpensive and it plays major function in carry throughing energy demands. Since 1950, planetary concern over impact of nursery gasses has emerged into international ordinances for restricting CO2 emanation in ambiance.

First international regulation pact in this respect was Kyoto protocol ( 1997 ) . It obliges 37 industrialised states to run into binding CO2 emanations marks. Footings of the dainty are such that globally there is bound to how much CO2 can be produced, and some states produce more CO2 than others. Those who use more than their bound can borrow C credits from states non utilizing their quota. Interestingly, USA recognizes the pact but it has non agreed to follow with the C emanation marks although it is a major dodo fuel consumer.

Carbon recognition system under Kyoto Protocol requires single corporations to countervail their C emanation by either retrofitting the works to cut down its C emanations or put ining carbon-capture equipment to cut its emanations by a million ton, or purchase carbon beginnings from a C bargainer for a undertaking in a underdeveloped state like Pakistan. ( Exhibit 5 )

The issue of emanations control has to be decently addressed under Kyoto protocol. In the longer term one must besides maintain in head that CO2 extenuation initiatives down the route may go mandatary for the states like Pakistan excessively. This will add to the cost of coal power coevals as has happened in the developed universe. One must maintain in head that a typical power coal works generates 3 million dozenss of CO2 or 17 dozenss of C per megawatt and draws approximately 2.3 billion gallons of H2O per annum from nearby beginning while on land, whereas Sind which has 90 % of Pakistan ‘s coal modesty is earnestly lacking in the supply of H2O ; produces quicksilver which non merely renders H2O useless for human ingestion but besides for irrigation intent as good.

Area of chance is that C beginning market is existent and major Bankss involved are involved in it. Entire C beginning market is about $ 6 billion ( Jan 2010 ) , and it is projected to transcend 50 billion dollars after the US joins C trading so Pakistan can profit from any C recognition potency in different industries. In 2008 Pak-Arab Fertilizers ( Pvt. ) Ltd. , earned $ 13 million through selling CER ( The Nation newspaper ) . Islamabad is establishing C recognition undertakings from beginnings runing from landfills to vehicles. Asiatic states have several CDM undertakings registered


Proposed Strategy continue with the development of coal-based power undertakings

Scheme is driven by lacks and chances inherent in a peculiar industry. To unearth these two variables the industry has to be scrutinized utilizing a scientifically established tool. In our instance we will be utilizing Porter ‘s five forces to analyse the power coevals sector of Pakistan and place the function of Coal fired workss in this sector. Such analysis of industrial profitableness will enable us to place the countries that need to be addressed to do the industry more attractive.

What is an Ideal Industry?

An ideal industry would be one where ;

The dialogue power with buyer/suppliers is low.

The competition is minimum.

Substitutes do non be or even if they exist they are excessively expensive to move as replacements.

Entry barriers are comparatively low.

It will be interesting to see if the power sector of Pakistan has all the above mentioned factors to do it attractive for investors.

Power Sector of Pakistan ( Analysis utilizing Porter ‘s Five Forces Model )

Buyer Power

Before we embark upon discoursing the magnitude of the power held by the purchasers in the power sector it is of import to first place the purchasers in the industry. Chiefly the purchasers of the power in Pakistan are authorities organisations such as WAPDA which has sole distribution rights of electricity in the state. WAPDA, KESC etc service as the jobbers between the concluding consumer and the power manufacturers. This means that though there are merely a few purchasers and logically talking the lower the figure of purchasers the greater their power but kineticss of the industry in Pakistan are such that the purchaser is vulnerable and power providers are at a much more powerful place. To authenticate this statement we need to look into the per unit monetary value addition of electricity in Pakistan over the last few old ages.

Electricity Price Inflation

The past four old ages data indicate that there has been a stable addition of 13 % -14 % in electricity duties on one-year footing. Two grounds seem to confirm this rising prices in duties ;

Demand/Supply Dynamics

Over the past few old ages the state has been bring forthing power at a steady rate without taking into consideration the one-year population growing rate of 2 % . This has led to a 4000MW deficit of electricity in 2009-10. ( Exhibit 7 )

This shortage in supply has led to a demand supply instability taking to hyperbolic duties. Similarly we may see the same scenario from a different angle. Harmonizing to the per capita power ingestion rates Pakistan ‘s rate is 464KWh which is 41 % lower than Asia and significantly lower than the mean rates of the universe. ( Exhibit 8 ) . The low per capita power ingestion rate is due to the fact that installed power is less than the needed power.

Raw Material Price Inflation

The 2nd most important ground for the uninterrupted rush in electricity monetary values has been increase in oil monetary values. ( Exhibit 9 ) . The above chart indicates that most of the power workss in Pakistan are thermic based and fueled by furnace oil. Similarly if we look at the tendency of furnace oil monetary values in Pakistan we see that the monetary values have been systematically on the rise. This addition in monetary values is reflected in the hyperbolic duties that are being charged by the power manufacturers. ( Exhibit 10 )

Deductions of Low Buyer Power

Made the industry attractive for new investors.

High costs to consumers have made the authorities incentives the power sector so as to pull to more investors. ( Appendix-9 )

New window of chances for workss based alternate fuels ( such as coal ) so that the consumer gets cheaper electricity.

Since a larger ball of electricity is being used by industrial and commercial units the burden casting entirely in 2009 led to $ 210 billion losingss to the national economic system. ( Exhibit 11 )

Barriers to Entry

Barriers to entry be given to do the industry unattractive for new entrants. In stead of the power crisis being presently faced by Pakistan the authorities in its capacity should and it must get the better of any entry barriers to the industry. Three barriers to entry have been identified ;

Capital Intensive Sector

The authorities is concentrating on promoting power workss that are based on alternate fuels such as coal. But the sum of capital required to put up a coal fired works is really high. ( Exhibit 11 ) Investors may be encouraged to put in capital intensive undertakings by supplying them with inexpensive entree to capital and high rate of return.

Government Regulations

The whole procedure of using for a coal rental country and so acquiring an blessing from the relevant governments for puting up a works is highly boring and clip consuming. The patrons have to take blessing from both provincial ( in instance of renting mine country ) and federal authorities ( LOI, LOS, PPA, IA etc ) . The authorities can cut down the elaboratenesss in application procedure by giving authorization to one organisation which could be PPIB to function as a interface between the authorities and the investors.

Infrastructural Issues ( Coal power workss )

Coal excavation sector of Pakistan is extremely developing.

Right of manner to most mines is under developed.

Most countries that have been advertised by PPIB are devoid of H2O.

To get the better of these issues the authorities has to work manus in manus with the prospective investors. Some remedial actions that can be taken by both the parties are ;

Use belowground H2O as a beginning of H2O.

The authorities should supply grapevines to transport the H2O to the sites.

Increased use of belowground H2O will do the excavation of coal easier.

Bucket wheel excavators alternatively of shovels and trucks could be used to retain higher net incomes and achieve better efficiencies. ( Appendix-10 )

3- Intensity of Rivalry

Some factors that contribute to the strength of competition have been listed in Exhibit-5. By analysing the nature of the power sector we see that about all the factors that must be at that place in an industry with intense competition are non applicable to the power sector of Pakistan. One major lending factor that reduces the competition is the intensely regulated environment of the power sector.

4- Supplier Power ( Coal )

As mentioned before since the authorities is be aftering on working alternate beginnings of energy to supply cheaper electricity to the consumer ; so an in depth analysis of coal supply in the state reveals the fact that about 185 billion dozenss of coal militias are still untapped ( Exhibit-1 ) . This is adequate coal to supply 100,000 MW of energy for 300 old ages.

Since there are barely any constituted coal houses in Pakistan that can function as exclusive providers of coal to the power workss, therefore most of the workss will hold to backward integrate in to char excavation. Soon there are certain hurdlings in back ward integrating as the ordinances refering to char excavation have yet to be established by the authorities of Pakistan. Though our suggestion would be to border ordinances that encourage back ward integrating.

5- Substitutes ( w.r.t Coal )

There are several utility beginnings of energy available to char, nevertheless most of them require greater capital outgo as compared to char based power undertakings ( Exhibit-6 ) .

Handiness of the replacements is besides limited as compared to the handiness of coal therefore doing the replacements unattractive for investings.