6 Economic cost of energy crisis in Pakistan and the way forward

Energy indisputably is a primary catalyst for national development. It is termed as

the backbone and lifeline of a country’s economy and its availability ensure
accelerated growth and development. On the other hand an acute shortage of
energy can be a great bottleneck in the supply of energy resources to an economy.
Continuous and accelerated supply of energy has turned out to be the biggest
challenge and a matter of serious concern of the contemporary world as the global
scenario is now shifting its face from geo politics to geo economics. As a matter of
fact, there has been an enormous increase in the global demand for energy in recent
years as a result of industrial development and population growth. Supply of
energy is, therefore, far less than the actual demand.

Pak energy scenario

Pakistan’s energy concerns are now assuming serious and horrific proportions
owing to the fact that Pakistan has been suffering from an energy crisis for about
half a decade now. The power crisis is becoming unbearable with every passing
day proving to be a serious threat and impediment in country’s economic progress.
Internal stability of any country is highly dependent on its economic well being
which is directly dependent upon sufficient energy resources and their proper
management. At present Pakistan is suffering from energy deficit of about 4500
MW. This dismal state of affairs has led to the closure of many industrial units
hence rendering a large number of people unemployed. Moreover, large parts of
Pakistan have been affected by power blackouts due to an electricity crisis.
There is a shortage of more than 7,000 megawatts which amounts to 40 per cent of
the total demand. Energy crisis is threatening to become bigger in coming years.
There is an expected shortfall up to 50% because of increase in demand and supply
gap up to 3,000 MW. Pakistan’s total energy requirement will probably increase by
48% in 2011. Power generation in Pakistan is hugely dependent on oil, whereas we
have only 20% oil of the original amount needed for the production. The remaining
oil has to be imported from Gulf States and other countries of world. No major oil
field so far has been discovered in the last three decades. Oil demand is expected to
double by 2015 and quadruple by 2025. This would lead to an alarming trade
shortage, and general price hike.
Sources of energy in Pakistan
Non renewable sources
Pakistan energy sector comprises major sources with share of 50.4% of gas,
followed by oil 29%, hydro electricity 11%, and coal 7.6%. Consequently,
Pakistan imports energy to overcome the problem and maintain standard of living
of people. The major shortfall is expected in natural gas supplies. Pakistan had 28
trillion cubic feet reserves of natural gas in 2006 but due to increase in its demand
it is expected to be exhausted in next two decades.
Current hydro power stations
Terbella dam 3478 MW
Ghazi brotha dam 1450 MW
Mangla 1000 MW
Warsak 240 MW
Chashma 184 MW
Potential hydropower stations
Diamir basha dam 4500 MW
Munda dam 740 MW
Kalabagh dam 2400 -3600 MW
Bunji Dam 5400 MW
Dasu Dam 3800 MW
renewable energy
Nations are using renewable energy, transport policies and eco-cities to overcome
poverty, create millions of jobs, expand industries, attract direct foreign investment
and strengthen economies. Pakistan can solve its energy crisis and join modern
world provided our leaders are willing to adopt effective laws, transparent policies,
get rid of corrupt practices, and explore and invest in renewable and alternate
sources of energy.

Issues faced by energy sector

Let us delve into the issue to chalk out the reasons for this acute shortage of energy
in Pakistan despite the presence of enormous natural resources. Over-reliance on
dwindling hydro power, lack of research and planning, untapped energy
resources, lopsided priorities, poor management and lack of accountability
can be the reasons for the dearth of energy in Pakistan. It has to be kept in mind
that the number of consumers of electricity has significantly increased owing to
the rapid urbanization process and modern living style. The facility of electricity is
now provided to the remote villages. The power loss is to tune of about 15 to 20
percent annually due to poor distribution system. Industrial, transport and
domestic sectors are the three important consumers of energy. It is assumed that a
misplaced use of energy is rampant in industries which need to be curtailed

Pakistan has world’s seventh largest reserves of coal after discovery of THAR.
These reserves are still untouched due to lack of technique in coal mining.
Similarly solar and wind energy in coastal areas of Baluchistan and Sindh have a
lot of potential to generate electricity but acquisition of technology at an enormous
cost makes this an unbelievable source

Pakistan has only two nuclear plants providing two percent of electricity to our
country.

Economic CONSEQUENCES

The power outages have almost crippled normal everyday life of people and
particularly hit industrial and agricultural production. This energy shortfall has
caused 3 to 4 per cent GDP loss in financial year 2010-2011.  As recently as 2001,
the country had 4,000 megawatts of excess power capacity. Today unfortunately
the situation has faced threatening prospects. The Asian Development Bank
(ADB), in a report has said that Pakistan’s economy faces a major hurdle in the
shape of its domestic energy crisis as the economy continues to be affected by
structural problems, including a domestic energy crisis, a precipitous decline in
investment, persistently high inflation, and security issues. Budget deficits
remain high, driven by substantial subsidies and losses at state-owned
enterprises, and tax revenue below target. Losses arising from power and gas
shortages held down GDP growth by 3′ 4 per cent in FY2011 and FY2012. As a
matter of consequence the state-owned enterprises, naming Pakistan Railways,
Pakistan International Airlines (PIA), and Pakistan Steel Mills are bearing the
unprecedented losses.  Nations are using renewable energy, transport policies and
eco-cities to overcome poverty, create millions of jobs, expand industries, attract
direct foreign investment and strengthen economies.

The net effect was a drawdown in the industrial output, severe power outages, an
increase in fertiliser imports and manufacturing costs, a reduction in exports, the
further reliance on imported fuels, an imbalance in the trade deficit, lay-offs and an
eventual malaise in the economy. It is estimated that the economy has suffered
almost three percent annually in terms of GDP growth due to the paucity of energy.

Recommendation

Pakistan can solve its energy crisis and join modern world provided our leaders
are willing to adopt effective laws, transparent policies, get rid of corrupt
practices, and explore and invest in renewable and alternate sources of
energy.

To meet the challenges faced by today’s Pakistan, there is a dire need to go for the
alternate sources of energy. For that matter the process of converting coal into
product gas underground can be a good alternate source of energy. Technically this
process is called as underground coal gasification. Besides coal, the renewable
energy as biomass can also be utilized to overcome this crisis. Similarly the wind
energy is also available in Pakistan which can harness this energy in a much more
effective way. Wind can be utilized to produce electricity at the coastal areas. If
windmill power plants are set up along the coastline and this venture is handed
over to the foreign investors, satisfactory results can be achieved.   Similarly, hot
climatic conditions of some areas of upper Sindh and Southern Punjab may prove
to be a source of solar energy. Solar energy is the best solution for energy crisis,
as the country has a potential of generating 29,000 MW electricity from sun.
. Population explosion is another cause of energy crises. At present Pakistan is
pursuing a multidimensional pro-longed strategy to ensure adequate and
uninterrupted oil and gas supply and other energy resources to sustain the
present pattern of energy for the rapid national economic growth. Greater reliance
on gas, aggressive pursuit of hydroelectric power generation, and enhancing
nuclear power generation capacity are some of the key elements of this strategy.
Pakistan is also seeking to expand its primary energy supply base by encouraging
oil exploration and power generation companies to undertake energy project in
Pakistan. The regional gas pipe line projects in which Pakistan is actively pursuing
to meet its expanding domestic energy demands.
These are the prerequisite for resolving energy crises that, unless resolved
promptly, would cast a long shadow on the short and medium term objectives of
economic growth and development.
To cut the long story short, Pakistan is at a critical juncture entangled with
multifaceted problems. Pragmatic approach coupled with rational decision-making
can show some light at the end of the tunnel.