Independent power (or pollution) producers? Electricity reforms and IPPs in Pakistan

This paper examines Pakistan's experience with electricity reforms pertaining to the various energy policies enacted in Pakistan over the past two decades. The effects of privatization in general and IPPs' investments in Pakistan's electricity sector in particular are analyzed. For long-term integrated assessment of electricity reforms and IPPs' investments, the development, validation, and application of a unique dynamic model is demonstrated. Contrary to the generally perceived positive effects of privatization and IPPs' investment, Pakistan's electricity sector is enduring severe gaps between demand and supply, higher electricity rates, and increasing CO2, SO2, and NO (nitrogen oxide) emissions. IPPs, due to their major investments in pro-oil generation, are the major electricity-related pollution producers. Through an immediate government intervention, a pro indigenous resource-focused alternate energy policy appears to provide cheaper and cleaner electricity in Pakistan.

[1]  Andrew Ford,et al.  Using system dynamics for conservation policy analysis in the Pacific Northwest , 1989 .

[2]  Olivier Massol,et al.  Construction of a fuel demand function portraying interfuel substitution, a system dynamics approach , 2011 .

[3]  Patricia Ochoa,et al.  Policy changes in the Swiss electricity market: Analysis of likely market responses , 2007 .

[4]  Roger F. Naill,et al.  A System Dynamics Model for National Energy Policy Planning , 1992 .

[5]  A. Gabriele.  Policy alternatives in reforming energy utilities in developing countries , 2004 .

[6]  E. Woodhouse.  The Obsolescing Bargain Redux? Foreign Investment in the Electric Power Sector in Developing Countries , 2005 .

[7]  A. Qayyum,et al.  The Demand for Electricity in Pakistan , 2009 .

[8]  John D. Sterman,et al.  System Dynamics: Systems Thinking and Modeling for a Complex World , 2002 .

[9]  Hassan Qudrat-Ullah,et al.  Understanding the dynamics of electricity generation capacity in Canada: A system dynamics approach , 2013 .

[10]  George P. Richardson,et al.  A petroleum life cycle model for the United States with endogenous technology, exploration, recovery, and demand , 1990 .

[11]  Adelino J. C. Pereira,et al.  Generation expansion planning (GEP) – A long-term approach using system dynamics and genetic algorithms (GAs) , 2011 .

[12]  S. Hussain,et al.  Electrical Energy Crisis in Pakistan and Their Poss ible Solutions , 2011 .

[13]  Munawar A. Sheikh,et al.  Energy and renewable energy scenario of Pakistan , 2010 .

[14]  Richard Perkins,et al.  Electricity sector restructuring in India: an environmentally beneficial policy? , 2005 .

[15]  John Mingers,et al.  A review of the recent contribution of systems thinking to operational research and management science , 2010, Eur. J. Oper. Res..

[16]  I. Dyner,et al.  Regulation and development of the Argentinean gas market , 2011 .

[17]  Reza Ghazi,et al.  An improved mechanism for capacity payment based on system dynamics modeling for investment planning in competitive electricity environment , 2008 .

[18]  Erik R. Larsen,et al.  Sensitivity of reserve margin to factors influencing investment behaviour in the electricity market of England and Wales , 1992 .

[19]  Prem Vrat,et al.  Application of a system dynamics approach for assessment and mitigation of CO2 emissions from the cement industry. , 2006, Journal of environmental management.

[20]  Hassan Qudrat-Ullah,et al.  Understanding the dynamics of electricity supply, resources and pollution: Pakistan's case , 2001 .

[21]  A. Rashid,et al.  Overview of Pakistan's Electricity Crisis, Generation-Mix and Renewable energy scenarios , 2012 .

[22]  Agence pour l'Energie Nucléaire.  Projected Costs of Generating Electricity 2010 , 2010 .

[23]  Y. Barlas.  Multiple tests for validation of system dynamics type of simulation models , 1989 .

[24]  Hassan Qudrat-Ullah,et al.  MDESRAP: a model for understanding the dynamics of electricity supply, resources and pollution , 2005 .

[25]  Ioannis N. Kessides,et al.  Chaos in power: Pakistan's electricity crisis , 2013 .

[26]  Andrew Ford,et al.  Using simulation for policy evaluation in the electric utility industry , 1983 .

[27]  Charles O.P. Marpaung,et al.  Carbon pricing and energy efficiency improvement -- why to miss the interaction for developing economies? An illustrative CGE based application to the Pakistan case , 2014 .

[28]  Abbas Seifi,et al.  A system dynamics analysis of energy consumption and corrective policies in Iranian iron and steel industry , 2012 .

[29]  A. Qayyum,et al.  Electricity consumption-GDP nexus in Pakistan: A structural time series analysis , 2014 .

[30]  Erling Moxnes,et al.  Interfuel substitution in OECD‐European electricity production , 1990 .

[31]  T. Govindaraj.  Characterizing performance in socio-technical systems: A modeling framework in the domain of nuclear power , 2008 .

[32]  Hassan Qudrat-Ullah,et al.  How to do structural validity of a system dynamics type simulation model: The case of an energy policy model , 2010 .

[33]  Andrew Ford,et al.  System Dynamics and the Electric Power Industry , 1997 .

[34]  Hassan Qudrat-Ullah,et al.  On the validation of system dynamics type simulation models , 2010, 2010 International Conference on Information Science and Applications.

[35]  A. Chaudhry.  A Panel Data Analysis of Electricity Demand in Pakistan , 2010 .

[36]  Hassan Qudrat-Ullah.  Green power in Ontario: A dynamic model-based analysis , 2014 .