I have previously discussed the idea of forming a mathematical modeling and technology company in Pakistan. I did some lukewarm efforts to find some serious investor who could financially back the proposed company. I have decided to make some serious efforts in that direction again. The idea is to do research in renewable energy generation technologies including solar power generation, wind power generation and tidal power generation with the aim to manufacture state of the art renewable energy generation equipment in one to two years.
Cheap energy is the single most important requirement for success of so many industries in the export market. For example Chinese have been using cheap domestic coal for decades to produce electricity and that is one of the major reasons that their production cost is a fraction of the cost it takes to manufacture the same things in Pakistan and most domestic manufacturers cannot compete with their exports in our markets. Chinese are also very intelligently shifting towards renewable energy generation and most of the new wind energy generation capacity installed in the world every year is based in China.
As Pakistanis, we have to consider that all the intelligent world is shifting towards renewable energy generation. Intelligent nations are not emphasizing energy generation from fossil fuels. Fossil fuels are commodities whose cost be very unpredictable in the future. It is extremely difficult to project what the commodities cost would be in the long run. For example, Furnace oil was used to power many of the thermal power plants that were installed in Pakistan in late nineties. At that time crude oil was very cheap and typically remained in 10-20 dollars range and nobody at that time was bullish about the oil prices. Crude Oil however skyrocketed to 150 dollars a barrel in 2007-8 and that was a major reason for power outages that also caused political unrest and Musharraf and PML(Q) became instantly unpopular because they happened to be the incumbent government at the time when the prices of oil skyrocketed resulting in power outages. Present government has been emphasizing the use of natural gas for power generation but we have to understand that it is also a commodity and really nobody could easily predict the prices after a few years. Natural gas today is not very different from oil in late nineties. Just like oil was considered perpetually cheap in late nineties, natural gas is considered cheap in recent years but there can be large moves in the natural gas prices after five years that can unsettle all the planning that government and industry has done about the prices of electricity and other related energy costs causing disruption and large scale in-competitiveness in many industries. I am trying to make the point that it is very difficult to do risk management and stable projection of future prices when fossil fuels that are commodities are used to produce electricity.
Renewable energy generation, on the other hand, has a fixed initial cost but unlike commodities, the cost of generation of electricity in the future can be very reasonably estimated and there are little risks associated with future cost of electricity generation as compared to fossil fuel energy generation whose price can have sharp swings as the commodity prices change unpredictably in the future. Renewable energy generation is already becoming very competitive even when they are compared to present day cheap gas prices while not considering the large uncertainties involved due to possibility of sharp changes in the fossil fuel prices. Present government has to consider while setting up new natural gas based plants they might be repeating to some extent the scenario of setting up oil based power plants in late nineties when oil was very cheap causing problems in our economy a few years into the future.
Coming back to the original discussion, I intend to go to Karachi early next year and have candid discussion with intelligent people in industry and business there and share ideas about formation of the new proposed mathematical technologies research company, how to run it, its future goals, management and raising capital. I hope to make a thorough effort towards that goal and find help from similar minded people in business and industry in Karachi. However, I am very sure that some state infrastructure in Pakistan would ask many people I intend to meet to snub me in order to thwart my efforts so as to please Americans as is the nature of many Pakistanis that has kept us backward for decades.