Khyber Pakhtunkhwa’s hydro-power plan

Khyber Pakhtunkhwa’s 10-year hydro-power plan
By Tahir Ali
13th August, 2012

THE Khyber Pakhtunkhwa government has launched a 10-year hydro-power action plan under which several projects would be executed in the province to generate 2100 megawatts of electricity.

Under the action plan 2011-2025, the Sarhad Hydro-Development Organisation (Shydo) would initiate eight hydro projects with a capacity of 628MW. These are Matiltan HPP, Swat, 84MW; Sharmai Dir 115MW; Koto Dir 31MW; Karora Kohistan 10MW; Jabori Mansehra eight MW; Shushai-Zhendoli Chitral 144MW; Shogo Sin Chitral 132 MW and Lawi Chitral 69MW.

KP Chief Minister Amir Haider Khan Hoti recently inaugurated the Matiltan and Daral Khwar hydro power projects (HPPs) in Swat with 84 and 36.5MW capacity each.

The Matiltan power station would have 6km long tunnel and would be completed in next five years while the Daral Khwar HPP at a cost of Rs7bn was expected to be ready in next three years. The later will be funded through Hydro Development Fund (HDF) and ADP in a ratio of 90:10 respectively.

According to official documents, Shydo has also started feasibility study of another 13 projects with a capacity of 1322MW to be completed in next two to three years at a cost of Rs5 billion.

Shydo is currently operating four projects in the province –one each in Malakand and Swabi districts and two in Chitral district.

The installed capacity of these projects is 105MW with an annual revenue generation capacity of over Rs2bn to 3bn.

A loan agreement has been signed with the Asian Development Bank for the development of hydro power projects at a cost of Rs60bn. Besides funding some projects under the same loan, Shydo has also financed feasibility studies of three projects of 48MW in Koto HPP Dir Lower, Shangla and Mansehra. Construction of these plants would start this year.

Shydo has also completed pre-feasibility studies of 10 sites in various districts of the province and these sites will be offered to private sector for development.

Chief officer of the Planning and Development Department Usman Gul said energy and power sector were priority sectors of the KP government. “We have entered the implementation stage and now the infrastructure will be developed in these areas.

However, these are long-term projects which will bear fruit in 4-5 years,” he said.

Though the rest of Malakand division accounts for most of the planned hydro power projects, Swat has very little share in the programme. Swat has great potential for run of the river projects.

According to the Shydo official, the government was spending 50 per cent of the funds in Malakand Dvision. “Almost 13 out of 15 ongoing projects and Rs600mn of Rs1.137bn total are for Malakand. Of the total cost of Rs23bn, the total project cost in case of Malakand division comes to around Rs16bn,” he added.

The provincial government from this fiscal year has doubled the royalty for power generating areas to 10 per cent of the net hydro profits receivable from Wapda/federal government from five per cent which would be spent on development in the areas.

The said share will be over and above the districts’ and provincial ADP.

Solar technology on the rise in Pakistan

Rise in sale of solar panels

President Zardari recently asked the concerned bodies to shift Presidency to solar power on the pattern of Planning Commission and Pakistan Engineering Council. – File photo

While the huge hydro-power potential of the country still remains unutilised, quite a few people hit by loadshedding and power tariff hikes in Khyber Pakhtunkhwa are turning towards solar energy.

Facilitated by high intensity sun-rays in the tribal belt, the sales of solar panels are going up. Wakeel Ahmad, a Peshawar-based dealer of solar panel, said people are turning to this technology as load-shedding/cost of power and the rising expenses on generators have left them with no option but to adopt solar technology. Nazir Ahmad, a dealer of solar energy equipment in Swabi, claimed that scores of solar energy panels are being sold in the area.

“Solar lamps have been installed near Peshawar bus stand with plans to install them on roads and streets in the city soon. Individuals are also coming up in great numbers to buy these panels,” he said.

“Solar panel is sold at Rs250 per watt with 20 years warranty. A normal household with daily consumption of 1000 watt would thus have to spend Rs250,000. The family could also buy a solar panel for Rs40,000 to charge the electricity-based uninterrupted power supply systems to use the power later in their homes,” he added.

A Wapda official in Dir said people in this difficult terrain have installed imported solar panels which have revolutionised their lives as well as agriculture. Over a million tube-wells in the country are using 1000-1500MW of power, straining the weak national grid, consuming over billions of rupees in power subsidy.

According to Ahmad, a solar tube-well with 20 years warranty could be installed by one-time investment of Rs0.9mn which can pump water non-stop from sunrise to sunset for irrigation. Solar pumps could fulfill the daily water requirements of small to medium-size fish farms and communities as well. These could pump water from a depth of up to 1000 feet, according to a report.

Pakistan receives high level of solar radiation throughout the year- around 1000 watts per square meter. Mr Arif Allauddin, chief executive officer of AEDB, said recently that 2.9mn MW could be produced through tapping solar energy in the country.

But Pakistan has failed to utilise solar power though it has opted to invest heavily in the oil-run power plants. The AEDB has signed several MoUs on installation of solar energy panels with different agencies. It plans widespread use of off-grid solar technologies in Pakistan through public and private sector cooperation. Setting up of local solar PV manufacturing facilities is also included in its programme.

However, the high installation cost of the system, lack of awareness among people, and banks’ reluctance to finance the system were hindering the spread of the technology.

Failure to establish local solar energy manufacturing units in the country has also made the system comparatively costlier.

Several government companies like AEDB, Pakistan Council for Renewable Technologies etc, dealing with the sector, and the lengthy process of approval of solar energy projects inhibit investors from adopting this system.

The technology may be costly and unaffordable for one person, but is considered within reach when combined investment is made by a few families or the process is supported by the government and international bodies.

But the fact that solar energy system can be installed with one-time investment and there is no need of maintenance or operating expenses.

“While the World Bank and Asian Development Bank are allocating funds for solar technologies, the local banks do not come forward to support the sector. The AEDB will keep on creating high hopes but actually it is doing nothing,” said an expert.

A project, launched by the UN environment programme in 2003 in the Indian State of Karnataka, facilitated over 18,000 loans for solar panels over three years. UNEP recruited two popular banks to take part in the project as part of their ‘priority sector lending’ obligation and it subsidised the loans to help decrease the interest rate. The UNEP plans to initiate similar projects in other countries but not in Pakistan.

The government needs to provide tax holidays and grants to selected villages, schools, mosques and offices, some resource risk coverage, competitive tariff for solar energy and guaranteed purchase agreements from producers.

President Zardari recently asked the concerned bodies to shift Presidency to solar power on the pattern of Planning Commission and Pakistan Engineering Counci. He also advised that one town be converted to solar energy each year; all new development schemes should have solar street lights and solar cookers. Use of water heaters and water pumps should be encouraged, he said.

According to a report in the Guardian recently, Greece may allow Germany to develop about 20,000 hectares of solar power parks for exporting renewable energy to Germany.

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Original text of the article

Utilising the solar energy

By Tahir Ali

In the wake of apparent government’s failure to utilise the huge hydro power potential and hit worst by the ever increasing load-shedding and power tariff, quite a few people in Khyber Pakhtunkhwa are turning towards solar energy and the sales of solar panels in the province is on the rise.

Particularly, the tribal belt, where there is less pollution and so high intensity sun-rays produce powerful energy, the sales are going up enormously.

Wakeel Ahmad, a Peshawar based dealer of solar technology, said people are turning to solar technology as load-shedding/costliness of power and the rising maintenance and operation expenditures of generators has left them with no other option. Nazir Ahmad, a Swabi based dealer, said hundreds of solar energy systems are sold in the area.

“Solar lamps have been installed near Peshawar bus stand and these are likely to be installed on streets and roads in the city very soon. Individuals are also coming in great numbers,” he said.

“Solar technology is sold in watts at Rs250 per watt with 20 years warranty. A normal household with daily consumption of 1000watt would thus have to spend Rs250,000. The family could also buy a solar panel only at Rs40, 000 to charge its electricity based un-interrupted power supply systems to use the power later in their homes,” he added.

A Wapda official, based in Dir, said people in the difficult terrain of the district have installed even imported solar systems which has brought revolution in their lives and agriculture.

Over a million tube wells in Pakistan are eating up billions in power subsidy and consuming an estimated 1000-1500MW of power, straining the weak national grid.

According to Ahmad, a solar tube-well with 20 years guarantee could be had by onetime investment of Rs0.9mn which pumps water non-stop from sunrise to sunset for irrigation. Solar pumps could fulfil the daily water requirements of small to medium size fish farms and communities as well. These could pump water from a depth of up to 1000 feet, according to a report.

Pakistan receives high levels of solar radiation throughout the year- around 1000 watts per square meter for most parts of the year. Mr Arif Allauddin, chief executive officer of AEDB said recently said that 2.9mn MW could be produced through tapping solar energy in Pakistan.

But Pakistan has failed to utilise solar power though it has opted to invest heavily in the oil-run power plants.

The AEDB has signed several solar energy MoUs or contracts with different agencies for widespread use of off-grid solar technologies in Pakistan through public and private sector and for dissemination of solar energy and setting up local Solar PV manufacturing facilities.

However, the high cost of solar system installation, public unawareness and banks’ reluctance to lend to investors was further hurting potential projects, however, are keeping the technologies from dissemination.

Failure to establish local solar energy manufacturing units in the country has also made it comparatively costlier.

And several government companies -AEDB, Pakistan council for renewable technologies etc-dealing with the sector and the lengthy process of approval of solar energy projects inhibit investors.

Non-seriousness of authorities can be judged from the fact that AEDB has yet to issue the new updated alternate energy policy. The present policy was drafted in December 2006.

The technology is deemed costly and unaffordable for one person, but is considered within the reach when combined investment is made by a few families or the process is supported by the government and international bodies.

But the fact that solar energy system can be installed with one time investment and then there is no maintenance or operating expenses, those who can afford it are coming towards the technology in great numbers, Ahmad opined.

“While the World Bank or Asian Development Bank are allocating funds for solar technologies, the local banks do not come forward support the sector. AEDB will keep on creating high hopes but actually it is doing nothing,” said an expert.

A project, launched by the UN environment programme in 2003 in the Indian state of Karnataka, facilitated over 18,000 loans for solar panels over three years. UNEP recruited two popular banks to take part in the project as part of their ‘priority sector lending’ obligation and it subsidized the loans to help decrease the interest rate. The UNEP plans to initiate similar projects in other countries but Pakistan is not included.

The government must provide incentives such as tax holidays, grants to the selected villages, schools, mosques and offices, some resource risk coverage, competitive tariff for solar energy and guaranteed purchase agreements from producers and the like.

President Zardari recently asked the concerned bodies to shift Presidency to solar power on the pattern of planning commission and Pakistan engineering council, being financed by Japan. He also advised that one town be converted to solar energy each year, all new development schemes should have solar street lights and solar cookers, heat pumps, water heaters and water pumps be encouraged.

According to a report in the Guardian recently, Greece plans to sell its sun to Germany which plans to develop about 20,000 hectares of solar power parks for exporting renewable energy to Germany. And Greece, facing a default after it secured £97bn in rescue funds, hopes solar energy can help it out of its debt crisis.

Germany is the global leader in solar energy but it has a lot less sun than Greece. After Japan’s Fukushima nuclear disaster, German government has decided to close its nuclear reactors by 2022.

Foreign debt accumulation and its implications

The Debt Collection

Image via Wikipedia

Foreign debt accumulation and its implications

By Tahir Ali Khan

The News 16-5-2100

With grave threats to the economy such as terrorism, deteriorating law and order situation and recent floods, the government has resorted to obtain foreign loans that amount to billions of dollars. In such difficult state of affairs, should the government consider to seek a debt waiver from the international community?

Pakistan’s external debt has doubled in the past four years and the government is currently spending more than four times as much per person on servicing external debt than on healthcare.

Latest loans from IMF ($7 billion), World Bank ($1 billion) and Asian Development Bank ($2 billion) will further increase the country’s present foreign debt of about $58 billion. Its external debt will go up to about $73 billion in 2015-16, as debts that were rescheduled after 9/11 in return for Pakistan’s support in war on terror are effective again. The ratio of debt servicing will also expand as a result. This may lead to an already debt-trapped country to face even more predicaments in a few years time. The country is currently paying on average over $3 billion on debt-servicing. It means payment of Rs710 million a day and Rs30 million every hour to lenders.

The government’s inability to adopt austerity measures and curtail its burgeoning expenditure has left it with no choice but to seek costlier foreign loans and thus overload the people with more taxes to repay these borrowed funds.

The reconstruction and rehabilitation of militancy and flood-battered areas require billions of dollars. In addition, the ruling leadership has limited finances to run the country’s affairs. If the government’s scarce financial resources are utilised on repaying loans, then what will be left for poverty alleviation and social sector development? These areas have clearly been neglected by successive governments in the past and even today things have barely changed for the better.

Though the UN made a historic appeal to the international community last year (after Pakistan was hit by ravaging floods) to wholeheartedly provide assistance funds to the country for the reconstruction process, promises of loans have so far failed to materialise. Last year international aid agencies, Oxfam and ONE International called upon international finance institutions (IFIs) and lending countries to cancel all of Pakistan’s external loans.

It is an ironic fact that France received more than fifteen times, Japan more than five times, South Korea four times, and China three times money in debt payment from Pakistan last year as compared to their respective flood donations, as calculated by Oxfam. Consuelo Lopez-Zuriaga, Oxfam’s Head of Humanitarian Campaigns had dubbed it madness and absurdity and urged that Pakistan’s debts were written off so that reconstruction was started in full swing. Pakistan, however, could not capitalise on the aforesaid case.

There was contradiction in the narratives of two federal ministers at the Pakistan Development Forum last year. While the Interior Minister Rehman Malik requested for waiver of Pakistan’s external debt, Finance Minister Dr. Abdul Hafeez Shaikh disowned the call made by Rehman Malik, saying that asking for a debt write-off was never an option before the government and that it was a grave issue with serious consequences. This could negatively affect the country’s sovereign credit rating and make it difficult for it to raise money from the capital market in future.

He argued that most of the foreign debts were obtained from multilateral agencies and Pakistan had made commitments to these institutions while seeking loans, therefore being a sovereign nation, Pakistan should/would fulfil its commitments.

The government has announced measures to restrict its internal borrowing to 10 per cent of the previous year’s revenue collection and provincial borrowings at an equivalent of six-week expenditure of the previous year, but nothing of this sort has been done on the front of foreign loans.

It seems that the economic managers of the country are more interested in creating money to repay foreign lenders than to take Pakistan out of its present quagmire. Out of the total loans received from the US, almost 85 per cent of the aid money goes back to Washington.

There are numerous laws and resolutions which support the notion of writing off debts. Article 25 of the International Law Commission stipulates that “in case of an actual threat or a prospective peril to a state’s essential interests, the state is excused for not performing an international obligation”. A number of democratically elected governments -Argentina, Burkina Faso, Peru, Mexico, Paraguay, and Ecuador for example- have had refused debt payments on the basis of this rule. Pakistan can also decline to pay back its loans under this principle.

Pakistan’s current debt-to-GDP ratio is around 62 per cent, exceeding the 60 per cent limit set under the Fiscal Responsibility and Debt Limitation Act. Pakistan is fast approaching the debt-to-GDP ratio of 80 per cent, which according to the World Bank is default stage.

According to a 1980 resolution by UN commission on international law, a state cannot be expected to close its schools, hospitals and universities, abandon public services to the point of chaos, simply to have money to repay its foreign debts.

IMF had cancelled all its debt ($268 million) to Haiti, after a catastrophic earthquake hit it earlier this year. The cancellation was given through a newly established Post-Catastrophe Debt Relief Trust Fund, set up for this purpose. Pakistan, hit by a similar calamity, could have also resorted to the same measure.

Beginning in 1996, developed countries, under the Heavily Indebted Poor Countries and Multilateral Debt Relief Initiative, cancelled debts amounting to $110 billion and $93 billion, which belonged to African countries. The facilitated countries agreed to channel their debt savings to poverty reduction.

The success story of these nations can be replicated in Pakistan where expenditure on health and education combined stands at less than 2 per cent of the GDP. The foreign debts incurred by various regimes did not benefit the people of Pakistan. Therefore, Pakistan should appeal to the international community and the IFIs to cancel these loans, as they did in the case of Haiti.

In long term perspective, foreign loans become a source of poverty, backwardness and economic subjugation. New loans are taken to repay old ones and most debtors in turn have to spend more on debt servicing than they do on health and education combined.

If the rupee is devalued or dollar gets stronger, the rupee cost of the foreign debt goes up. At the moment, the government is buying dollars at almost Rs85 to service foreign loans obtained at Rs9.90 for a dollar or a little more in the 1970s and 1980s.

Foreign loans should be taken only for development projects in the country. A debt audit commission should be established to make an inquiry into all the foreign loans attained thus far and how these funds have been utilised. On a final note, the government needs to restart a national self reliance scheme for self-sufficiency and to get rid of the debt burden.

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