Like many others, I am convinced that it is not terrorism but energy scarcity which stands as the biggest problem of Pakistan. Country’s power sector is exposed to multiple challenges including expensive fuel mix, insufficient network capacity, theft and nonpayment of electricity bills.
Despite having generation capacity of approximately 27,000 MW, the demand hovering around 21,000 cannot be met, which results in power cuts of upto 18 hours in parts of the country.
To picture peoples’ routine life, TV coverage may be lost in the middle of a cliffhanger cricket match; without electric fans, mosquitoes proliferate; people get stuck in elevators; meat rots in refrigerators and mothers spend nights blowing hand fans to help their children sleep.
The electricity shortage has hit industry hard, which reflects on the fragile economy. A large number of cottage industry units have shut down while those, affording captive power generation are braving profit cuts.
Analysts and government officials estimate that Pakistan loses about two percent of its GDP every year due to the electricity crisis. Trade bodies estimate about a million jobs lost over the last five years.
It is a fact that the power sector is beset with power outages and faces significant challenges in revamping its network. High power tariff, inefficiencies in production and distribution, low recovery and an inefficient subsidies mechanism leads to a resilient circular debt.
Inadequate capacity in the networks is a bottleneck in the system and prevents the existing power plants from operating at their maximum capacity while also delaying the commissioning of new power generation plants, thereby adding to the energy deficit.
This persistence of energy deficit has grown into a severe energy crisis affecting future economic growth and leaving little financial space to help poverty reduction efforts.
Being a small open economy, Pakistan’s power sector is vulnerable to challenges posed by changes in the international market; such as volatile fuel prices. On the other hand, it is also open to global technological advances in the field of energy.
Given current global dynamics, regulation of the power sector requires dramatic changes. The need for such transformation is being driven by various factors including technological advances in renewable energy and the need to tap into this potential, enhanced efficiency in the energy production, increasing concerns about climate change, simultaneously ensuring sustainable economic development and increased access to electricity by the poor.
The government needs to fast track the coal-based and renewable power generation instead of prioritizing import of liquefied natural gas (LNG), which is already tagged with corruption allegations. Besides, it is not affordable for the country to sustain LNG addiction after oil’s.