AhsanAmin
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Economy of a country like Pakistan with a population of 210 millions of people is a very vast subject and it is very difficult to sum up everything regarding prosperity of a country like ours in a small post. I will therefore limit myself to most compelling of the problems that need to be addressed to make the vision of our current Prime minister a reality. I will only write about how to best fulfill the energy needs of Pakistani nation, and how government should take steps to realize Imran Khan’s vision for a prosperous Pakistan.
Our national electricity generation is based mostly on imported fossil fuels. Unfortunately we have very small oil and gas natural resources in our country and we have to rely on fossil fuel imports to satisfy our national demand.
Due to huge emphasis on clean energy resources, latest modern research in advanced countries has made wind and solar energy generation competitive and many times even cheaper when compared with fossil fuel energy generation. Major problem for a country like Pakistan is that we do not have any industrial infrastructure for production of wind and solar energy generation equipment on a vast scale to fulfill our national electricity generation needs.
When comparing the cost of fossil fuel electricity generation and renewable electricity generation, we totally forget to take into account the lasting impact of fossil fuel imports on our current account deficit and our forex reserves. Whenever oil prices increase in international markets, our forex reserves start to decrease sharply and our circular debt balloons at a huge pace. Falling forex reserves result in devaluation of our currency and state bank of Pakistan has to increase the interest rates to bolster the rupee something which dramatically increases the financing costs for new investments and industrial ventures in our country putting further brakes on our economic growth. Devaluation of the rupee has several other undesired effects that include appreciation of foreign debts and depreciation of our domestic assets and foreigners also avoid investing in our country in a climate of uncertainty. Due to myopic decision making by previous governments, we have neglected these indirect costs when setting our electricity generation priorities.
If we take all of the indirect costs of large fossil fuel imports, we realize that fossil fuel energy generation is already extremely costly as compared to renewable energy generation methods. Renewable electricity generation requires one time investment cost and does not need huge resources like large amounts of foreign exchange required to import the raw inputs required for electricity generation.
The major problem with wind and solar energy generation in Pakistan is that advanced technologies to produce the energy generation equipment are not available in Pakistan. Of course this is a huge issue. But now is the time to take the right start. We have to ask our large industrial groups to partner with renewable energy generation companies abroad for local manufacturing of wind and solar energy plants on a large scale. I will request Prime minister Imran Khan and finance minister Asad Omer to take personal interest in the matter due to crucial importance of the matter. Our industrial groups can find partnerships with Chinese, Turkish or European companies that are producing renewable large scale energy generation equipment. Our universities have to hire professors from abroad that are working on the advanced renewable electricity generation methods and their industrial implementation. Government has to give huge incentives to industrial groups for large scale renewable energy generation. And government should even consider guaranteeing that she would buy all the electricity generated by the new industrial plants.
Needless to say that cheap electricity generation is very important for any country and it makes the entire industrial sector of the economy competitive on a world level bolstering exports. One of the reasons behind failure of our export sector is that we have never been able to provide them the electricity as cheap as for example provided in China and our other neighboring countries.
Below I have given some statistics that warrant that Pakistan's energy demands would continue to increase at a breakneck space for decades and would have extremely large growth potential for part of Pakistani power sector based on renewable energy technologies.
Green Energy Generation, its significance and Future Potential in Pakistan.
Pakistan is a highly energy-starved country. Though the current government has taken steps to bridge the consumption and supply gap, our per-capita consumption of electricity remains greatly smaller than that of other countries of the world. With a growing population and a steady development course for Pakistan's economy, we will have to continue to invest in energy sector at a break-neck pace in order to meet the fast growing energy demands of our economy. A few statistics are in order. The installed capacity of our country is now close to 25,000MW. Pakistan’s electricity consumption, roughly 470 KWh per capita as per International Energy Agency, is five times less than the world average of 2,700+ kWh. Even if we aim to match India’s 800 KWh of per capita consumption, it would translate into an expansion of 70% capacity over our existing base. Our current electricity consumption rivals that of African nations like Angola, Ghana and Mozambique. Hong Kong, Singapore, South Korea and Taiwan — on the other hand have 15-20 times higher electricity consumption per capita. Given a steady projection of development course for economy of our country, Pakistan's energy needs will continue to grow at a very large pace as our per capita energy consumption increases to that of more developed countries.
Most of the countries in the world who are positioning their economies for the future are almost entirely fulfilling their energy infrastructure expansion needs through new investments solely in the green energy sector. I will give example of India how they are dramatically changing the energy generation landscape of their country. India has its 2022 renewable installed power capacity target of 175,000 MW. India has set a target to produce 100,000 MW of solar power by 2022. Current Wind energy generation installed capacity in India is 32,000 MW while the Indian government has set a target for 60,000 MW of operational wind energy capacity by March 2022. According to Gaurdian, 57% of India’s total electricity capacity will come from non-fossil fuel sources by 2027. In the 2027 forecasts, India aims to generate 275 gigawatts of total renewable energy, in addition to 72GW of hydro-energy and 15GW of nuclear energy. Even If we intend to match a fraction of India's per capita targets for renewable energy, it would translate into a sharp increase and very large investments in renewable energy sector in Pakistan.
Given the projections of Pakistan's sharply increasing energy needs in the future and shifting emphasis on renewable energy generation, there is very huge potential for investment in research and manufacturing of renewable energy generation systems like wind turbines and solar energy generation equipment. Contrary to common wisdom that such advanced industrial technologies cannot be developed in Pakistan, I strongly believe that we can manufacture state of the art energy generation equipment that could easily compete with the best anywhere in the world while at a fraction of the costs associated with such development elsewhere in the world. We could cater to local energy industry demands while exporting to many other countries in the world.
Our national electricity generation is based mostly on imported fossil fuels. Unfortunately we have very small oil and gas natural resources in our country and we have to rely on fossil fuel imports to satisfy our national demand.
Due to huge emphasis on clean energy resources, latest modern research in advanced countries has made wind and solar energy generation competitive and many times even cheaper when compared with fossil fuel energy generation. Major problem for a country like Pakistan is that we do not have any industrial infrastructure for production of wind and solar energy generation equipment on a vast scale to fulfill our national electricity generation needs.
When comparing the cost of fossil fuel electricity generation and renewable electricity generation, we totally forget to take into account the lasting impact of fossil fuel imports on our current account deficit and our forex reserves. Whenever oil prices increase in international markets, our forex reserves start to decrease sharply and our circular debt balloons at a huge pace. Falling forex reserves result in devaluation of our currency and state bank of Pakistan has to increase the interest rates to bolster the rupee something which dramatically increases the financing costs for new investments and industrial ventures in our country putting further brakes on our economic growth. Devaluation of the rupee has several other undesired effects that include appreciation of foreign debts and depreciation of our domestic assets and foreigners also avoid investing in our country in a climate of uncertainty. Due to myopic decision making by previous governments, we have neglected these indirect costs when setting our electricity generation priorities.
If we take all of the indirect costs of large fossil fuel imports, we realize that fossil fuel energy generation is already extremely costly as compared to renewable energy generation methods. Renewable electricity generation requires one time investment cost and does not need huge resources like large amounts of foreign exchange required to import the raw inputs required for electricity generation.
The major problem with wind and solar energy generation in Pakistan is that advanced technologies to produce the energy generation equipment are not available in Pakistan. Of course this is a huge issue. But now is the time to take the right start. We have to ask our large industrial groups to partner with renewable energy generation companies abroad for local manufacturing of wind and solar energy plants on a large scale. I will request Prime minister Imran Khan and finance minister Asad Omer to take personal interest in the matter due to crucial importance of the matter. Our industrial groups can find partnerships with Chinese, Turkish or European companies that are producing renewable large scale energy generation equipment. Our universities have to hire professors from abroad that are working on the advanced renewable electricity generation methods and their industrial implementation. Government has to give huge incentives to industrial groups for large scale renewable energy generation. And government should even consider guaranteeing that she would buy all the electricity generated by the new industrial plants.
Needless to say that cheap electricity generation is very important for any country and it makes the entire industrial sector of the economy competitive on a world level bolstering exports. One of the reasons behind failure of our export sector is that we have never been able to provide them the electricity as cheap as for example provided in China and our other neighboring countries.
Below I have given some statistics that warrant that Pakistan's energy demands would continue to increase at a breakneck space for decades and would have extremely large growth potential for part of Pakistani power sector based on renewable energy technologies.
Green Energy Generation, its significance and Future Potential in Pakistan.
Pakistan is a highly energy-starved country. Though the current government has taken steps to bridge the consumption and supply gap, our per-capita consumption of electricity remains greatly smaller than that of other countries of the world. With a growing population and a steady development course for Pakistan's economy, we will have to continue to invest in energy sector at a break-neck pace in order to meet the fast growing energy demands of our economy. A few statistics are in order. The installed capacity of our country is now close to 25,000MW. Pakistan’s electricity consumption, roughly 470 KWh per capita as per International Energy Agency, is five times less than the world average of 2,700+ kWh. Even if we aim to match India’s 800 KWh of per capita consumption, it would translate into an expansion of 70% capacity over our existing base. Our current electricity consumption rivals that of African nations like Angola, Ghana and Mozambique. Hong Kong, Singapore, South Korea and Taiwan — on the other hand have 15-20 times higher electricity consumption per capita. Given a steady projection of development course for economy of our country, Pakistan's energy needs will continue to grow at a very large pace as our per capita energy consumption increases to that of more developed countries.
Most of the countries in the world who are positioning their economies for the future are almost entirely fulfilling their energy infrastructure expansion needs through new investments solely in the green energy sector. I will give example of India how they are dramatically changing the energy generation landscape of their country. India has its 2022 renewable installed power capacity target of 175,000 MW. India has set a target to produce 100,000 MW of solar power by 2022. Current Wind energy generation installed capacity in India is 32,000 MW while the Indian government has set a target for 60,000 MW of operational wind energy capacity by March 2022. According to Gaurdian, 57% of India’s total electricity capacity will come from non-fossil fuel sources by 2027. In the 2027 forecasts, India aims to generate 275 gigawatts of total renewable energy, in addition to 72GW of hydro-energy and 15GW of nuclear energy. Even If we intend to match a fraction of India's per capita targets for renewable energy, it would translate into a sharp increase and very large investments in renewable energy sector in Pakistan.
Given the projections of Pakistan's sharply increasing energy needs in the future and shifting emphasis on renewable energy generation, there is very huge potential for investment in research and manufacturing of renewable energy generation systems like wind turbines and solar energy generation equipment. Contrary to common wisdom that such advanced industrial technologies cannot be developed in Pakistan, I strongly believe that we can manufacture state of the art energy generation equipment that could easily compete with the best anywhere in the world while at a fraction of the costs associated with such development elsewhere in the world. We could cater to local energy industry demands while exporting to many other countries in the world.
