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Pakistan’s energy conundrum

Pakistan's energy conundrum

The concept of energy security was introduced in the early 2000s to cater to the needs of a dynamic, industrial world that required uninterrupted power supply, and a secure energy paradigm to be able to flourish and some of the key components involved in the theory are diversification of energy resources; improving energy efficiency; enhancing energy infrastructure and promotion of energy conservation.

However, none of these policy prongs seemed to have engaged Pakistan’s policy makers. As a result of this, Pakistan’s energy trauma is compounding. It’s now ubiquitous, with grave impacts and consequences showing up on all fronts that matter for the country’s march to progress.

Pakistan’s energy security remains precarious, and its present and future remains foggy as well. For instance, the average energy shortfall in Pakistan is around 4000-5000MW. Peak demand shortfall hovers around 7000-8000MW in roasting summers. Total energy losses exceed 20 percent of the generated electricity due to a worn-out energy infrastructure. Transmission and distribution losses account for nearly 15 per cent of the generated electricity. The average duration of power outages is about 7-8 hours in urban areas and about 12-15 hours in the rural areas.

What has all of this bred and resulted in?

According to several reports, this dilapidation is costing Pakistan economic losses between $9 to 15 billion annually.

Additionally, it is incurring a serious loss of about 3 to 4 per cent to our GDP. In terms of industrial losses, it is siphoning off about $8  billion.  Add to it, agricultural losses of around $1.3 to 2.6 billion annually. In terms of tax generation, Pakistan is squandering about $670 million.

The energy crisis isn’t a novel phenomenon in Pakistan, and nor are the people with authority unaware of it. All one needs to do is to get through the mega losses that Pakistan has had to suffer in the last ten years, owing to the lackluster displayed on the matter in the corridors of power.

For instance, textile contributes 8.5 per cent to Pakistan’s GDP, forming around 60 per cent of total exports. It employs over 30 per cent of Pakistan’s workforce.  Despite being such a central player in our economic mosaic, the textile industry has atrophied due to the indifference of policymakers. Over 1,600 factories have shut down, with frequent layoffs due to power outages. Plus, the industry is suffering an estimated loss of $900 million to $1.2 billion annually.

All of this is becoming a routine tale every day, courtesy of the over-reliance on imported fuels. In 2023 alone, Pakistan’s fuel import bill stood at $17.5 billion. It demonstrated an increase of 96 per cent from the previous year. It is expected to somersault to  $31 billion by 2031, and up to $60 billion by 2048, if the decline in gas production is not reversed.

Now that Pakistan is standing at these crossroads, what must it do to beat this demon that’s haunting Pakistan’s way forward? Pakistan shouldn’t look further, but needs to focus on how other countries faced with similar hitches, walked over their problems and undertook bold and ambitious initiatives.

Other countries growth

India started the ‘Power for All’ initiative in 2014, which aimed to provide 100  per cent electrification to the whole of India by 2019. As per reports from the Indian media, it has been able to accomplish this humongous task by about 99 per cent. The initiative exclusively focused on installing 30 million solar home systems and 3 million biogas plants. It sought to add 100GW to the national grid through renewable energy outlets like solar and wind. The results emerging from this policy drive have been enormous, as India has overtaken the United Kingdom as the fifth largest economy, with an annual growth rate of 7.2 per cent in the last few years, which is the second highest among G20 countries.

Singapore is another scintillating example of a country that envisioned itself as becoming a hub of technology through the introduction of a holistic energy management approach. In 2014, it resumed the ‘smart nation initiative’ which introduced an integrated approach to energy production, consumption and conservation. The introduction of smart grids, energy storage systems, and green technologies revolutionised the energy dynamics of the country. The dividends are massively productive, as the annual economic growth increased by 3.3 per cent and is believed to have bolstered its GDP by 10 per cent.

Contrast this with Pakistan, which is still embroiled in the conventional problems, when it comes to energy management and security. For instance, Pakistan’s circular debt issues hinder it a great deal. It owes $14 billion to power distribution companies, which leads to frequent power outages. Besides this, Pakistan is unable to utilise its full potential of energy generation, which is around 29 GW. Pakistan’s ‘over binge’ on imported fuels is yet another factor for its retardation.  Moreover, Pakistan’s power grids are infested with several problems.

The infrastructure is aged, with transmission, distribution lines, transformers and substations all conniving to underperform simultaneously. Along with this, the distance between power plants and load centres wastes about 4-5  per cent of energy.

Theft and pilferage account for about 10 to 15 per cent of losses. Outdated grid infrastructure and inadequate maintenance capacity furthers these losses. 

So what must Pakistan do to strangulate this ‘economic killer’?

Some steps have already been taken by various stakeholders in Pakistan, but they inspire little confidence and delivery.  Given as follows are some of these initiatives:

— The first positive leap in this direction was taken with NEPRAS’ Competitive Trading and Bilateral Contract Market (CTBCM). It aimed to enhance Pakistan’s energy outlook with a set of wide-ranging reforms. But it holds a little future considering the ground realities that were overlooked during its formulation phase. For instance, the future of this initiative, which promises to boost energy production and efficiency, looks compromised as it can’t take place in the absence of smart grids. Plus, high energy costs, which this project carries may discourage potential investors, which is also another bottleneck in its way.

— Another important stride was the Ministry of Energy’s Alternative and Renewable Energy Policy (AREP, 2019). As per policy targets a total of  20% of power generation is to come from renewable sources by 2025 and about 30% by 2030 and 40% by 2035 respectively. This initiative also lacks concrete policy guidelines in terms of implementation, as the targets delineated looked too ambitious to be achieved.

The latest World Bank report on Pakistan’s energy sector, published in April 2024 doesn’t paint a rosy picture of Pakistan’s energy future. It lamentably implies that Pakistan’s lack of resolve to invest in the energy sector and the paucity of foreign exchange reserves will freeze Pakistan’s self-sustainability in the energy matrix.

In order to become self-sufficient, Pakistan will have to adopt the following measures instantly to do the impossible so far in its case:

— It needs to add more vigour to green technologies by encouraging the public to go for them through microfinancing.

— Pakistan’s current power generation stands at 29,000MW. An additional 10,000MW through renewable energy sources to the national grid can help mitigate the grave situation in which Pakistan’s economy looks stuck.

— The government should adopt an intensive public awareness campaign, related to energy conservation.

— The government needs to opt for smart grid technologies over the current grid system that’s leaking a lot of energy for nothing.

— The government can embark on the ‘diversify energy mix’ journey to clip its reliance on energy generation through fossil fuels.

— The government can also offer incentives to IPPS and other private entities, willing to invest in this sector.

Finally,  Pakistan needs to heed these words of Vladmir Putin, “Energy independence is a matter of national security”.

Without being dominant in the energy security domain, the prospects of Pakistan being able to change its destiny is next to impossible.


The writer is a freelance columnist.

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