Energy Crises in Pakistan and its Future Perspective

Pakistan faces not only an inadequate amount of Load-shedding but also mounting prices of electricity bills. The energy crises have far-reaching negative implications on industries, agriculture, markets, domestic life, and the public sector. These crises must be addressed to overcome their negative implications on the national life of Pakistan.

The shortfall was well above 7200 MW In 2022, but it was 10,000 MW From 2007 till the end of 2016. The load shedding in the urban centers was around 8hrs a day. But, in rural areas, it was more than 18 hours of load-shedding daily.

Expensive electricity generation is a major problem of Pakistan, number one in Asia. Domestic unit charges vary from 34 to 65 PKRs, while commercial charges vary from 48 to 90+ PKRs per unit cost. The prices have more than doubled in the last two years.

Pakistan generates more than 70% of its electricity through Hydrocarbons (HC). 12000 MW of electricity units are installed with a capacity of diesel, more than 7000 MW of LNG, and around 6500 MW of coal. Almost all the HC being consumed for the production of electricity is imported. The prices of HC jumped up in the international market because of the war in Ukraine and Sanctions on Russia. All the HC has been purchased in Dollars while the Rupee has been devalued against dollars. In 2021, if 1-billion-dollar oil is imported, it costs 178 billion PKR; in 2023, it is more than 300 billion PKR.

Pakistan has made expensive agreements with IPPs (Independent power producers). IPP, or the private sector, produces electricity from HC. They were installed from 1986 to 2014. A major reason for expensive electricity is the capacity payments made to them. In the summer of 2023, the demand was around 28,000 MW. In winter, it was less than 14000 MW. Pakistan faces an unprecedented increase in the capacity payment, which is currently more than 2.3 Trillion PKR. Unfortunately, all their Payments are being paid in Dollars, including local, resulting in a decline in the dollar reserves.

The transmission lines of Pakistan are mainly expired. As a result, the line lost in Pakistan is highest in Asia, at 17%. It means out of 100 MW being produced and 17 MW being lost in lines. This is a loss for both the state and consumers. 

Secondly, power theft is one of the major reasons for the increase in electricity prices. In South Asia, Pakistan is at the top of the list. The common pattern of electricity theft is the Kunda system, temper the meter reading, etc. There is no single city where electricity theft is not reported. In urban centers, it is mostly done by industrialists and builders; in rural areas, it is done by agriculturists. 

The industry is one of the major and worst hit. The electricity generation cost has been higher, resulting in higher production costs of industrial products. Therefore, Pakistan’s products cannot compete in the international market with those produced in Bangladesh and India. As a result, Pakistan faces a decline in exports and an increase in trade deficit.

The agricultural sector faces severe setbacks in Pakistan; more than 30% of agriculture in Pakistan is based on electricity-powered tube wells since the late 1970’s. Moreover, overall, national life is disturbed due to the electricity crises.

Domestic life is highly disturbed because of Energy crises. An unprecedented increase in per unit price of electricity has greatly disturbed the routine budget of every household. Repeated load shedding has greatly affected domestic life.

The commercial market per unit cost of electricity has been increased. Hence, the shopkeepers increased the prices of the products because they were forced to use generators and pay high electricity bills. 

Renegotiation of IPPs Agreements can be beneficial for Pakistan. In 2020, renegotiation took place on the term that local IPPs would pay off in PKR. It was a positive development, but it has solved the problem maximum by 40%. The majority of them being installed between 2011 and 2014 cannot be renegotiated till 2040.

The energy policy of 2030 focuses on the indigenization of electricity generation. 15000 MW of electricity would be produced from hydel projects, in which Diamer-Bhasha Dam would add 4500 MW, Dasu Dam 4300 MW, Mohmand Dam 800 MW, Karot Dam 730 MW, Sukhi Kinari Dam 883 MW etc. Secondly, increasing focus on electricity from local coal of Thar, Asone project of 1320 MW, and four projects of 320 MW are already completed. Thirdly, 4500 MW would be produced by wind turbines and 2000 MW from solar projects.

Transmission lines need to be updated. The local transmission and the broader network NTDC (National Transmission Dispatch) urgent upgradation can be beneficial for Pakistan. The line loss and the electricity theft should be controlled. The country’s serious measures for hydel electricity can be highly beneficial. 

Opinions expressed in this article are those of the author.

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