Energy crisis in Pakistan,causes and remedies


Gazala Anbreen

For Pakistan’s growth energy sector is very important. In Pakistan 75 percent energy comes from fossil fuels at present. Pakistan’s energy mix indicates that natural gas is largely used for electricity production in Pakistan and has a share of 35 percent. Next comes hydroelectric power. Approximately 26 percent of electricity is produced from water and then there is about 17 percent use of coal. Renewable sources have a very minimal share. We must not forget the fact that Pakistan is blessed with immense renewable energy resources like sun, wind and tidal power. Studies suggest that 1000 Megawatt energy can be produced through Thar Coal reserves. Although there are impurities, yet it has a great potential to mitigate the energy crisis to a considerable extent for many years. It would be important to note that a large amount of electricity can be  generated through tidal and wind energy sources.

  We have to understand modern day energy economics in term of energy generation to supply and to consumption. The environmental factor should also be considered alongside. Also it is necessary to understand what is the issue with Pakistan’s energy crisis?

Financial crisis in the power sector has created the circular debt amounting to 5.5 trillion Rupees as reported by World Bank in a recent study. Circular debt in the power sector is actually the power sector deficit in which a situation ensues upon when the money owed by the electricity distribution companies to the distributor (power supplier) is not transferred or partially transferred. Its effects are very detrimental to the economy. The results of this increasing circular debt in the power sector are alarming. Power outages and high tariffs are some of the examples. The government is forced to borrow from the commercial banks to meet this power deficit and a huge share of the budget is shared to finance the power sector deficit, which leads to neglecting the other development expenditures consequently.

The causes responsible for energy crisis are multiple.  There is high generation cost from thermal sources and an unfavorable dollar to rupee parity. There are technical and management problems and governance issues. The way the power is distributed is obsolete. The equipment is outdated at most places.Transmission lines are not upgraded with the passage of time. Old technology is used in generation and distribution of electricity. Infrastructure is aging and line losses are also there.

  In 1994 an IPP policy was promulgated to encourage the investor in power sector. It gave inequities to the investors in terms of dollars. IPPs operate independently and sell the electricity to the end user or distribution companies (DISCOs). Last year according to an ADB report inefficiencies of DISCOs  were largely responsible for energy crisis in Pakistan. Mainly 31 percent of the burden was because of inefficient DISCOs and 35 percent was because of inability of the government to collect increase in tariffs. There were delayed tariff adjustments in terms of fuel prices.

On Technical side there are problems as for instance the issue of raising power capacity is not being addressed properly. Tackling the the energy crisis should be the top priority. For this purpose a transition to sustainable sources from short term to long term is desperately required.

There is a monopoly of distribution companies. Their efficiency should be increased. Renegotiation of tariff packages can also be done.

I believe that a gradual shift to renewable energy should be adopted. However, here mention may be made of the suggestion propounded by an energy expert, who said that, “In my opinion currently Pakistan has round 46,000 MWh of total energy production with peak demand of only 29,000 MWh. The transmission network capacity is at around 22,000 MWh so we are unable to use not even 29k MWh of energy of the total 46k MWh. This also results in a power shortage of 7,000 MWh in summer. So we may increase our transmission capacity to utilize that installed capacity which is enough to cater for increase in electricity consumption for the next 10 years. It will result in cheaper electricity in the long run. And then we can think about going solar gradually in the coming decades”.

The authorities must control the power theft issues, manage the line losses and adopt on grid solution like increasing power generation and reducing transmission and distribution losses.

Some international oil and gas companies expressed interest in purchasing abandoned gas wells in Pakistan which signifies that there are potential shale reserves in our country. Shale gas, a form of natural gas can be used as an energy source. Hydraulic fracture technology for shale gas also known as (fracking) can be a technique for this purpose.

Structural adjustments in economy are required. Power sector needs swift policy reforms. Instead of importing furnace oil the government can rely on autochthonous renewable energy sources.

A strict financial strategy oriented towards punishing the defaulters who do not pay the bills for more than two months can be implemented. Another way of penalizing the culprits is that load shedding can be centered more in areas of high theft. Innovative policy solutions are required to deal with the issue of meeting the power theft or non payment of electricity bills. For curbing power theft and dismantling illegal kunda (direct hooking), installing  kunda resistant cables can be encouraged. This does not allow to draw electricity from power supply cables and may lead to stop electric theft.

As regards the addressing the question of how to socially contextualize energy problems, transition at household levels like installing solar panels can be adopted as it is a tested and clean technology. Further in order to save energy all markets may be closed at 8.00 PM. On technical side extenuating the line losses, raising efficiency of DISCOs and upgradation of grid must be done. Deregulation of administrative and operational activities of  the distribution companies can also be a way out.  Efficiency can be increased through public private partnerships and liberalization of energy market.