The poor man’s fuel: Regulate the use of CNG, not just the price

By Khurram Baig Published: November 19, 2012 A Toyota Prado lines up with a Suzuki Mehran for a CNG refill. Consumers like these destroy the benefits of providing the cheap fuel as a means to lessen the poor man’s burden. PHOTO: FILE KARACHI: The merits of the idea can always be argued. There are supporters as well as opponents to the idea of switching to CNG. The efficacy of the idea however needs no argument. The switch to CNG to mitigate or to some extent lessen the economic burden of the masses has failed to bring about the desired results. I feel the bigger issue is about who actually ends up using CNG. There is the general perception that CNG is a poor man’s fuel and the shift from petrol was initiated to enable the lower income groups to benefit. However, while that may have happened in some cases, for the most part, the real beneficiaries of CNG, regardless of what price it is being sold at, are those who were never really less privileged or ‘poor’ to begin with. And this becomes quite obvious when one sees long lines of Corollas, Citys, Civics and other expensive cars, including fancy SUVs lined up to get CNG. I tried, I really did, but I could not come up with any economic rationale to classify these people as less privileged. In fact, the less privileged do not usually own cars. The less privileged do not use taxis and rickshaws. The less privileged either use motorcycles or public transport to get to work or go about their daily commute. And I think we can safely argue in today’s economic environment that anyone who can afford nothing more than a 800cc car also falls within the domain of middle or lower middle class. Motorcycles do not use CNG. And while transporters have made the shift from diesel to CNG in large numbers, fares have not been reduced to reflect this change. So we have established that the idea is probably flawed, based on the fact that it has not worked. That can be as a result of two things. One is that the idea was based on unsound economic principles to begin with, or the execution was flawed. I believe that in this case the idea was workable, and still is workable. It could have made a change, but the execution was pathetic. I cannot be clearer than that. But before I go into that, let’s take a second to figure out exactly how much one saves off CNG and if it really is worth the hassle, the conversion cost, and the increased engine maintenance cost. Let’s use some rounded off numbers and peg the price of Petrol at Rs100 and the price of CNG at 90, closer to where it was before the Supreme Court intervened to reduce prices. The reason I am using that as a peg is because current prices are interim, and they will in all likelihood be revised upwards based on the new formula being proposed by Ogra. On average – barring extreme exceptions – the daily mileage racked by most car owners is usually not more than 50 kilometres. So that means about 5-6 litres of petrol consumed, Rs500 to Rs600 spent. A car running on CNG, would travel the same distance using about 4-5 kilogrammes of CNG. This translates into Rs360 to Rs 450 spent on a daily basis. I have based this on the average consumption of a 1300cc car. This translates into daily savings of Rs150, monthly Rs4,500. Is this really meaningful for someone who can afford a Rs1.5 million car, or Rs2 million? And factor in the fact that the car owner invested in the CNG conversion kit and also pays more on the maintenance of the engine as a result. It really doesn’t make economic sense to me. Most of us can easily save more than this or even more by resorting to other means like saving on electricity consumption, driving less, carpooling, or buying a smaller car. But I guess this means a measure of self-discipline but that’s no fun is it? The government has to put its foot down to insist that the savings made by public transport owners – since the shift to CNG and LPG – be passed on to consumers. The mass-shift to CNG in private cars without any regulation which has resulted in the current shortage is also the government’s fault. They can still fix it. I believe any car with an engine capacity over 800cc should not be allowed to run on CNG. It should be restricted to mass public transport and not even prime movers. It certainly should not be allowed in Civics, Corollas, Citys and SUVs. If one can buy an expensive car, one probably is and should be willing to pay the cost of running it. If you can’t, then buy a smaller car! Published in The Express Tribune, November 19th, 2012. =============== Coal-powered energy – the best substitute By Faiza Hai / Creative: Faizan Dawood Published: November 19, 2012 According to last estimates made in 2011, coal deposits in the country are up to 185 billion tons. DESIGN: FAIZAN DAWOOD KARACHI: Since Pakistan came into being, people have been facing loadshedding due to shortage of power supply, with frequent outages affecting economy in many ways. Uncountable working hours have been lost, leading to an increase in poverty and economic loss of billions of rupees to the country. Surprisingly, it is happening despite the fact that only about 60% of the population has access to electricity. According to the World Energy Statistics 2011, published by the International Energy Agency (IEA), Pakistan’s per capita electricity consumption is one-sixth of the world average. World average per capita electricity consumption is 2,730 kilowatt hours (kwh) compared to Pakistan’s per capita electricity consumption of 451 kwh. According to the Pakistan Energy Year Book 2011, the country’s installed power generation capacity is 22,477 megawatts and demand is approximately the same. The country needs to redesign the electricity portfolio and substitute oil and gas with an abundantly available indigenous fuel source. It must develop indigenous energy resources to meet future electricity needs and can overcome energy crisis by utilising untapped coal reserves. Fortunately, Pakistan has a very inexpensive source to get energy through coal. Coal is economically viable and a long-term solution to balance the demand and supply chain of electricity in the country, which has the fifth largest coal deposits in the world. According to last estimates made in 2011, coal deposits in the country are up to 185 billion tons. The largest deposits are in Thar desert, which is about 850 trillion cubic feet spanning over 10,000 square kilometers, surprisingly more than the oil reserves in Saudi Arabia having a collective quantity of approximately 375 billion barrels. At present, 40.6% of world’s electricity is being generated from coal and it is the single largest contributor to world electricity generation. By looking at the electricity generation mix of the countries that are blessed with coal, it is evident that coal is the largest contributor. Countries like Poland, South Africa, China, India, Australia, Czech Republic, Kazakhstan, Germany, USA, UK, Turkey, Ukraine and Japan are generating 96%, 88%, 78%, 78%, 77%, 72%, 69.9%, 52.5%, 52%, 37%, 31.3%, 27.5% and 22.9% of electricity from coal respectively. In comparison, Pakistan generates only 2.27% of electricity through coal. However, coal reserves of only Thar can generate 20,000MW of electricity for the next 40 years without loadshedding and at a rate Rs4 less than the current cost of electricity production. The government has given the task to experts to enhance energy efficiency by focusing on coal and ensure large scale power generation through this resource. How coal produces electricity Technically, producing electricity through coal is a simple process. In most coal-fired plants, chunks of coal are crushed into fine powder and are fed into a combustion unit where they are burnt at a very high temperature. Following this, the burning coal is used to generate steam that is used to spin one or more turbines to generate electricity. However, during the process, sulfur dioxide and nitrous oxides are produced as well, which cause an increase in smog, ozone depletion and acid rain. Nitrous oxide is also a very powerful greenhouse gas. Even before power is produced, the transportation of coal also poses health risks due to coal dust and emissions from vehicles. Lastly, heavy metals from coalmine waste can seep into groundwater and rivers. Despite the negative aspect, the significance of coal is not easy to ignore. Recently, work on a 50MW Underground Coal Gasification (UGC) project has started, which is expected to cost Rs8.898 billion with foreign exchange component of Rs5.847 billion. It has been approved by the Executive Committee of National Economic Council (Ecnec). If successful, the project will encourage investment from leading international companies. At the International Coal Conference 2011, Pakistan had invited investors from around the world, encouraging them to pour money into coal power projects as the country initially requires $1.2 billion to build power generation infrastructure in Thar. Japan is keen to finance transmission lines from the Thar coalfield to the national grid and Chinese companies have expressed interest in developing coal-based power plants in Thar and Badin. The writer comments on economic and energy-related issues Published in The Express Tribune, November 19th, 2012. ===================== Sidra Humayun Umar One of our teachers is doing PhD in Bio-Chemistry. As part of his field work, he has been contracted by Dr Samar Mubarakmand for development of coal gas in Thar, for production of electricity. The care serves were found to be deep in water and extraction very difficult and costly. So as a step one they have successfully managed production no water gas which can be used by industrial units for their domestic production of electricity at almost no cost!!Later the coal gas can be used for the normal PPs. He is one of five scientists tasked with this project. And they have successfully achieved the task in less than half the time allotted.They were then asked by Dr Saman to make a presentation to the PM -Nawaz Sharif. This is what my teacher tells me;-They made the presentation to the PM and he praised them and said he had heard of their good work, and that we will be giving the Awam good news very soon. Thereafter he said you should stop this project and we will pay you manifold from what these people are giving you. Just saythat the project cannot proceed - - -!!My teacher says that they were briefed before the meeting that they should not ask any questions or raise objections. So they kept in stunned silence at the utterances of the PM. However one of their teama Miss Shiza spoke up and said that we are not doing this for you but for Pakistan, and you should not be talking like this - - -. The bold girl berated Nawaz openly, while he shrunk into his seat and did not say anything, and was looking glum!The next morning when Miss Shiza left her home in her car, she was fired upon!!! The message was clear.Then one of the advisers of PM sent them a message that they should abandon the project where it is. A similar project had been launched earlier which had failed. Now they will say that the second attempt b ythe country's scientists has failed and now we will invite some foreign firm. In the meantime electricity will be imported from abroad(India?). If you stop this project, you will be " weighed in notes".Earlier on one of PM's advisers had visited their work site in Thar and told them to ensure the project fails and "you will be compensated heavily" During their meeting with the PM, the latter had asked them to think seriously about what the "Musheer" had talked to them!My teacher is very upset. he says that as per their calculations the electricity could pe produced at a maximum of Rs 0.75 per unit. How much could they eat out of that??!However the up side is that Gen Wyne, Chairman, Joint Chiefs of Staff, has sent them a message through Dr Samar to carry their work and not to worry as "they will protect you".I thought I should let you know what is actually going on. This is no hearsay. Its my own teacher involved and I have questioned him extensively before writing this.Do let every one know. Do whatever we can. ==================