industrial policy, its spatial aspects and cluster development in ...

Hydel or Hydropower
While the generation of electricity using hydropower saves fuel, greater investments are
required in hydropower than in thermal generation. Hydropower plants are also located
away from areas where demand for energy is high, raising transmission costs for
hydropower. But keeping these constraints in mind, estimates suggest that hydropower
is more attractive as its maintenance costs are lower and that it is more efficient when
fuel prices rise and discount rates decrease [(Ministry of Industries (2005)]. The hydel
projects which are in the pipeline should be completed as soon as possible. These are
Neelum-Jhelum (969MW), Tarbela 4th Extension (960MW), Suki Kinari (840MW),
Munda Dam (700MW), Khan Dubar (130MW), Allai (126 MW), and Jinnah Hydro
(96MW) [Institute of Public Policy (2009)].
Coal
Coal is an under-utilized resource and generates only 5 percent of Pakistan’s energy
needs and 1 percent of electricity needs. In comparison, India uses coal to meet 54%
and 47% of its energy and electricity needs respectively [Ministry of Industries (2005)].
In addition, coal can also be used for gasification, fuel and chemical extraction,
briquetting and in the processing industry. Substitution of coal for gas has taken place in
the cement industry, but coal is mostly imported. Thus in the long-run there needs to be
a development of coal fields (in Thar for example), and setting up of power plants. This
sort of exploration and development is a provincial matter and provincial governments
will need to be on board if coal is to become an alternative energy source.
Oil and Gas
It is estimated that at prices of PKR11000 per ton for oil and PKR172 per MCF for gas,
the substitution of gas for oil will reduce the fuel component of electricity generation by
PKR0.52 per kWh to PKR2.37 per kWh. This amounts to a reduction of 18% in fuel cost
and 13% fall from the average electricity tariff of PKR4.09 in 2003 (WAPDA, 2003).
Furthermore the World Bank (2003) estimates annual savings of 130,000 tons of fuel as
a 300MW plant is converted from oil to gas. Yet caution is advised, as conversion to gas
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