Running on Empty? Kim Jong Un’s struggle to fuel his economy

“In reality, we think they have obtained four times the annual quota in the first eight months of this year,” Haley said. (File Photo: Kim Jong-un/ Facebook)

PYONGYANG, Korea, Democratic People’s Republic Of — More than 20 years after his father almost bargained them away for a pair of nuclear reactors, North Korean leader Kim Jong Un has his nuclear weapons — and a nation still plagued by chronic blackouts.

Even on the clearest days, plumes of smoke from two towering chimneys linger over the centre of Pyongyang. The Soviet-era Pyongyang Combined Heat and Power Plant smokestacks are one of the North Korean capital’s most recognizable landmarks.

Possibly more than anything else, this is Kim Jong Un’s Achilles heel as he turns his attention from developing the country’s nuclear weapons arsenal to building its economy.

If stalled nuclear talks with Washington ever get back on track, helping Kim solve his country’s chronic energy deficit could be one of the biggest carrots President Trump has to offer. Washington, Seoul and Tokyo tried that back in the 1990s, and were even ready to pay for and build those two reactors Kim’s father wanted.

Years of intensive sanctions have severely impacted North Korea’s supply of fossil fuels from the outside world, but they also have spurred the country to cobble together a smorgasbord of energy resources, some of them off the grid and some of them flat-out illegal.

Here’s a look at where Kim stands and what he is doing to win his country’s real struggle for power.

———

THE BIG PICTURE

Among the most iconic images of North Korea are nighttime satellite photos that reveal it as an inky abyss ringed by the bright lights of China, South Korea and Japan.

The whole nation of 25 million uses about the same amount of electricity each year as Washington, D.C. It uses as much crude oil in a year as the U.S. consumes in just 12 hours. South Korea has about twice the population of the North, but its electricity consumption in 2014 was about 40 times bigger.

Hydroelectricity, which is subject to seasonal swings, provides about half of the fuel supplied to the national energy grid. Coal accounts for the other half.

The grid is leaky, archaic and badly needing repairs.

That smoke-spewing power plant in the capital, which supplies much of the power and hot water needs for central Pyongyang, dates back to the 1960s. Lights in the huge concrete apartment blocks of Tongil Boulevard across town stay lit thanks largely to the East Pyongyang Thermal Power Station — built by the Soviet Union in the 1980s.

What electricity there is is unevenly distributed.

The showcase capital and cities near coal or hydroelectric power plants get the best coverage. Military facilities also take precedence and often have their own supply. So do important party and government operations, some of the higher-profile residences and hotels in the capital and even some restaurants. Lights used to illuminate portraits of the leaders at night never go out.

Still, it’s not uncommon for the power even in many higher status locations to flicker on and off. Dancing beams of flashlights are commonplace on the streets or in otherwise darkened apartments. In rural villages, even that often fades to black.

———

KEEPING THE OIL FLOWING …

North Korea must import about 3-4 million barrels of crude oil each year to sustain its economy.

Most of it flows through one pipeline.

The China-North Korea “Friendship Oil Pipeline” runs from the border city of Dandong under the Yalu River to a storage facility on the North Korean side about 13 kilometres (10 miles) outside the city of Sinuiju. From there, some is sent across country by truck or rail to the east coast, where it is stored at the port of Munchon. More is transported to Pyongyang for priority recipients such as the military, government departments and state enterprises, and to the port of Nampo, southwest of Pyongyang.

The pipeline —technically there are two, one for crude and the other for refined products — was built between 1974 and 1976.

North Korea used to have two refineries. The pipeline from China terminates at the Ponghwa Chemical Factory, which produces gasoline and diesel. The other refinery was built by the Soviet Union in the north near the Rason Special Economic Zone in the 1970s. It shut down in 1995 with the collapse of the Soviet empire. The pipeline that connected it with Siberia has long been out of use.

Under U.N. sanctions imposed late last year, North Korea can import a maximum 500,000 barrels of refined oil products along with 4 million barrels of crude oil per year.

Along with its Chinese connection, the North has been supplied by Russian tankers that ship oil and petroleum products to Munchon and another east coast port, Hungnam. It has found willing suppliers in the Middle East, or on the open market.

Since the imposition of the import cap, Pyongyang has been implicated in increasingly sophisticated schemes to augment its supplies with hard-to-track transfers of oil by tankers at sea.

Washington’s ambassador to the United Nations, Nikki Haley, told the Security Council in September the United States tracked at least 148 instances of oil tankers delivering refined petroleum products obtained through illegal ship-to-ship transfers in the first eight months of this year. She claimed the amount of illegally transferred oil — about 800,000 barrels — was 160 per cent of the annual 500,000 barrel cap.

“In reality, we think they have obtained four times the annual quota in the first eight months of this year,” Haley said.

———

… AND GOING OFF THE GRID

David von Hippel and Peter Hayes of the Nautilus Institute have been following North Korea’s energy issue for years.

Comparing Chinese trade figures from 2000 through 2017, they found explosive growth in North Korea’s imports of passenger cars and trucks that put an additional 107,000 vehicles on its roads. Tractor sales also rose and sales of “electricity propelled” bicycles or scooters, a category that wasn’t even listed until last year, doubled to 128,000.

The truck and tractor sales almost certainly reflect an upgrade to the North’s transportation and agricultural sectors. Being able to get around is a key to doing business in a market-centric economy, and so is having enough spending power to buy things like electric scooters.

Moreover, in a study released this month, Hayes and von Hippel also found that imports of diesel- and gasoline-powered generators, coupled with solar panels that are already ubiquitous in the North, are creating an energy system increasingly independent of the national power grid.

“The data … reinforces a picture of a DPRK in which a more vibrant, modernizing, increasingly (at least functionally) market-based economy is providing households, business and institutions with the wherewithal to invest in both off-grid electricity supplies and increased transport services,” they wrote, using the acronym for the North’s official name.

Still, keeping the power on often can be an elaborate routine.

Solar panels, the cheapest option, can keep a room lit, a mobile phone working and maybe a TV or another appliance going. When electricity from the grid is actually flowing, it can be used to charge batteries before the next blackout hits.

Those with a little more clout or money use diesel- or gas-powered generators that can power anything from a restaurant to an apartment block.

Or a military installation.