Pakistan’s current energy crisis is not only destroying the economy but also disrupting the state’s political system. The mechanism of power distribution in Pakistan is obsolete and inefficient hence power losses occur to adequately meet the consumer demand. The reasons behind this energy crisis need to be studied in depth if there is to be any hope of effectively tackling it in the future.
“Power outages are not because of less supply of energy in Pakistan, they are because of fluctuations on transmission lines which have not been updated from time to time, and hence the basic issue is of the difference of generation capacity and capacity to transmit it to the distribution companies”
– Simra Sohail, Pakistan’s Power Crisis
In 2020, 20% of energy was lost during transmission in Pakistan. It is also said that Sui Gas reserves deplete fast and will soon be exhausted in Pakistan. At the most, they may survive three years or less and then we will be forced to import it. Many experts are of the view that the decision to use natural gas as CNG in cars in Pakistan proved to have more drawbacks than benefits if seen in the backdrop of long-term impacts on gas supply.
A Financial Crisis Created by Circular Debt
The circular debt of the country’s energy sector has reached a staggering Rs 5.422 trillion while capacity payments to IPPs have jumped to Rs 2 trillion (February 2024).
In many cities of Pakistan, there are frequent energy shortages.
“The power outages in Pakistan are because of the circular debt issue. When the government cannot pay in time to the power distribution companies (DISCOs), because of circular debt, these, in turn, cannot pay the power generators (GENCOs). These power generators (GENCOs). These power generators then struggle to pay their fuel suppliers who have no money to import oil. Thus these cash flow problems lead to delayed payments which affects the whole power sector even though we have sufficient generation capacity.”
– CBNC
Domestic Energy in Pakistan
Domestic energy production in Pakistan heavily relies on the import of fossil fuels. Setting up coal-fired power plants on imported coal when coal was available locally was strange indeed. Due to insufficient storehouse sites, annual floods wreak havoc on the stockpile.
What is required?
To overcome the energy problems of Pakistan, consistent growth of the economy and its upscaling is required. A strategy to get rid of the dependence on fossil fuels is needed owing to their contribution to carbon emissions. Although Pakistan does not have as many contributions to global emissions as other developed countries do, the state must still be careful that these effluents do not exceed acceptable levels.
Pakistan As of Now
The need of the hour is the distribution of cheap electricity to the population. Electricity shortfall climbed to 6,623 megawatts during May 2024. There is a rampantly volatile commodity price, double-digit inflation, dwindling foreign exchange reserves ($14.64 billion as of July 12, 2024), and dangerously high national debt. Economic instability and the exorbitant cost of living are worsened by the ongoing challenge in energy production and distribution which are adversely impacting economic development.
Pakistan has supply mismanagement issues. Overarched planning by the regulatory bodies in Pakistan needs to be improved. The focus should be on areas like energy management, infrastructure, and economic planning. The industry must be made competitive.
Pakistan has participated in 24 IMF programs since signing its first agreement in 1958 to help overcome the economic crisis. The IMF’s policies are narrowly based and they want to secure their loans. Pakistan has also sought financial assistance from China, Saudi Arabia, and the UAE.
Causes of the Energy Crisis
The mismanagement in the oil and gas companies’ licensing processes, permit applications, and the subcontracting of parts of a company’s operations lead to chaos whereby inflated energy prices and industry closure become the apparent manifestations. Lack of technical expertise is also responsible. Inefficiency and myopic policy commitment to IPPs are another reason.
Per capita energy consumption is directly related to the economic development of any country. According to NEPRA Pakistan’s per capita annual electricity consumption was 644 kilowatt hours in 2022 which was among the lowest in the world. In fiscal year 2023, Pakistan’s total electricity consumption, as measured in terms of sales, amounted to 112,891 GWh, which is equivalent to approximately 456 kWh per person. According to still another source Pakistan’s annual electricity consumption for 2024 is 83,109 GWh which is equal to 331 kWh per person in Pakistan
Conventional Energy Resources
Conventional energy resources are depleting with time. Moreover, they emit harmful emissions like carbon dioxide, methane, sulfur dioxide, nitrogen oxide, and nitrous oxide. These points are proved by the direct correlation between economic development and carbon emissions. “The global surface concentration of carbon dioxide averaged across all 12 months of 2023 was 419.3 ppm (parts per million)” and it should be noted that as many as five years are taken to reduce 1 part per million. Due to increased carbon emissions and climate change, extreme weather patterns are visible.
The abovementioned factoid also emphasizes having recourse to cleaner sources of energy. Renewable energy resources are environment-friendly and are viable to meet the future energy demand. In Pakistan, there are abundant natural resources. They are in North West KPK and at the coastline of Sindh where there are vast resources of wind energy.
We should follow a route that complies with nature and pay special attention to the alternative energy measures that ensure our survival in the future. If we go against nature, it will simply recoil against us. At some point, the global population will reach a point where the Earth won’t be able to support it.
Energy Economics
Energy economics should be incorporated into the state’s energy policies. For this, we need experts. Students should be given proper training in colleges and universities to enable their participation in the field.
Most importantly the culture of “being the son of the soil” should be engendered in the youth. They should get rid of the fixation on leaving the country for good. It should be in their minds that they may leave temporarily to enhance their capacity but must come back to utilize their expertise for the uplifting of their country. This commitment is lacking in our youth.
Recommendations
Incentivizing renewable energy and energy efficiency ensures the development of economics and trade. We need to socially contextualize energy crises. Individual contribution—using energy-efficient devices, and LEDs and propagating behavioral changes including using public transport, reducing the use of private cars, walking more, and cycling—can help foster an energy-saving culture.
Other measures include cutting carbon emissions to limit temperature increases and maintain it at 15°C.
The government should be more proactive in its shift to renewable sources of energy. Pakistan needs sustainable economic growth for a reasonable period.
Pakistan’s prime challenge is economic growth. It should aim at an economic growth rate of 6 to 7% which can be achieved through a stable monetary policy, a balanced capital account, and preservation of biodiversity and ecosystem along with other factors. Pakistan’s energy mix currently indicates that we are more inclined towards non-renewable sources.
Energy sources such as solar, wind power, and tidal have a low share. Pakistan must prepare for a sustainable energy transition. There is a need to diversify the energy mix. Energy security is a fundamental requirement for any country. It leads a country to be prosperous.
Way Forward
Excessive dependence on non-renewable energy sources must be avoided. A resilient energy infrastructure is required. We should go for utilizing untapped green energy sources like solar, hydro, wind, tidal, nuclear, biofuels, and geothermal. Upgrading grids and overhauling the transmission process is also important. Sustainable energy policies are required as well. These are necessary steps for any country to take when dealing with an energy crisis.
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Ghazala Anbreen's work spans energy, journalism, and advocacy; making her a multifaced contributor to important discussions.