by Mir Hassan and Ali Abbas 21 June 2023
In the 21st century, it is unthinkable for foreigners from countries such as China, Japan, or European countries to live without power even for a short amount; it is said that during world war 2, almost every home in Germany had a constant (24/7) electricity supply. The word “Load-shedding” is foreign to many of the citizens in these countries, but for people living in Pakistan, load-shedding is an everyday reality.
Where other nations had realized the importance of the energy sector and invested heavily in its development, Pakistan should have paid more attention to it (mainly after 1971), leading to an underdeveloped and outdated energy infrastructure. In 2022, Pakistan suffered an electric shortfall of roughly 7000 MWs (That alone means 10 hours of load shedding every day!). Pakistan is termed a severely energy-insecure nation. Still, it is generally not that negative, considering that many developed nations such as China and Japan are also considered “energy insecure” nations (energy insecure means a country that imports energy to fulfill its needs). But since China and Japan handle their energy resources competently, with accountability and transparency, they are able to avert the plague of load-shedding (also referred to as “Rolling Blackouts”).
Although there are many causes that contribute to the Energy crisis, But one of the main reasons of the energy crisis in Pakistan is its reliance on fossil fuel sources such as LNG and LPG, most of which is imported (nearly 50% of energy needs is fulfilled through imports). This means that fluctuating oil and gas prices (such as due to Covid-19 and Russo-Ukraine conflict) can have serious impacts on Pakistan’s expenditure in its energy sector and put a serious strain on the Pakistan’s already suffering economy. Furthermore, limited domestic production, mismanagement and distribution losses have further escalated the crisis. As of FY 2021-22, Pakistan generates 41,557 MWs (from 37,261 according to FY 2020-21), whilst consumption was 89,361 GWh, a slight increase from 84,600 GWh of FY 2020-21.
Second main issue is Political rivalries and instability in Pakistan, which often hinder the development not just in energy sector, but in a plethora of different departments. A project started by a party, such as building a dam, would be immediately shut down and sidelined when the party losses the next elections, and the new party starts a brand new project, sacrificing time and tax-payer money in the process. As a result, the energy infrastructure barely improves, and with increasing demand for energy (due to population increase), the shortfall only accumulates year after year.
Another major issue is the rampant corruption that plagues and rots the Pakistani bureaucracy and politics. A significant portion of the cash and resources that are allocated to the development of energy sector often disappears into private pockets, and the construction that does take place is usually done by companies that carry favor with the political parties, and not on the basis of their competence or performance, resulting in inadequate and subpar development efforts.
Lastly, the accumulation of circular debt within the energy sector, caused by a combination of low recovery rates, transmission losses, and subsidies (with estimates of around Rs 450 Billion subsidies for energy sector in the Fiscal Year 2023-24), has further strained the financial stability of power generation companies. This has led to a vicious cycle of inadequate investments and inefficient operations within the energy sector.
This energy crisis has adverse effects on both society and the economy. It strangles the nation’s economy like a viper around the throat, and disrupts everyday lives of average citizens. Constant and prolonged blackouts cause many industries and small businesses to lose production or seek alternative methods of energy such as diesel generators, solar systems or UPS systems that further increase the production cost, which in turn increases the product price. The loss in production shrinks the economy and lowers the GDP, increases imports and reduces exports. Furthermore, these protracted blackouts add to the suffering of average citizen, as power outages rob the citizens of news, internet, media and entertainment, air-conditioning in hot summer months. Effectively throwing a wrench in their day to day lives, depriving them of being able to learn or study through the internet, be aware of the country’s situations though media and news, the worsening GDP further creates inflation, and hospitals and educational institutions are unable to properly function due to shortages of power, which further adds to the misery of already struggling people.
The people and industry of Pakistan suffer immensely at the hands of this energy crisis, but that is not to say that the government of Pakistan has not tried again and again to remedy this, such as The national Power policy 2013, Power Generation policy 2016, Alternative and renewable energy policy 2019, and the most recent 10-year Indicative generation capacity expansion plan 2022-31 (IGCEP-2022). But despite these various attempts, the government has failed to effectively combat this threat, and the results of IGCEP-2022 remain to be seen, which begs the question: What efforts could solve this conundrum?
One of the potential solutions to this is increased investment in renewable sources of energy, with main emphases on hydroelectric plants and dams that harness the kinetic energy of flowing river water to generate energy, but one of the main challenges for this is the amount of rivers in Pakistan. There is only one major river in Pakistan (The Indus river), and other rivers are all its tributaries (such as Chenab, Jhelum, Ravi etc.). Another significant challenge is that India is the upper riparian country through which the Indus flows into Pakistan. Despite the Indus-water treaty (1960) between the two nations, there is no guarantee that India would not control and redirect the flow of the rivers in the future to put Pakistan at a disadvantageous position.
Another potential solution would be to allocate resources to the construction of Nuclear power plants in the country. Although not renewable, they are far stronger than both renewable sources (Wind, Solar, Hydroelectric) and Fossil-fuel based sources, as a nuclear power plant is able to generate electricity in 100s to 1000s of MWs, whereas Fossil fuel based plants are limited at 10s to 100s of MWs, whilst simultaneously occupying a much larger area, and having a significantly much more abhorrent impact on the environment. Nuclear power plants use uranium as fuel which has a much higher lifetime as compared to coal or gas used in fossil fuel plants. Although nuclear power plants exude their own waste and pollutants, they are a much better alternative to fossil fuels, although being much more costly, and could be used as a stepping stone towards a purely renewable future (as is the case in many Western nations).
Another solution would be to seek international assistance in solving the ongoing energy crisis, in particular from China, who may be willing to assist Pakistan on such an issue. China has provided Pakistan many loans in the past, and has previously offered assistance to Pakistan on its energy crisis, along with many other issues, many of which Pakistan has often declined, seldom accepting their help. One may hear rumors that assistance from China would only make Pakistan a slave to it, but Pakistan’s governments have so far failed and proven incompetent to solve the many issues and challenges faced by Pakistani citizens, therefor it would not be too bad of a remedy to swallow one’s misplaced pride and accept the assistance of others such as China to help dig us out of the hole that continues to deepen.
Lastly, another potential solution would be to end the monopoly in the energy sector that the government has established (WAPDA). If that is not possible, perhaps another approach would be possible, called “Public-Private Partnership” or PPP for short (not to be confused with the political Pakistan People’s Party). It would see the government working together with various private firms in an attempt to jointly solve the issues and challenges that they collectively face. Pakistan has already implemented this but its implementation is greatly limited, and where it has been implemented, the results are sub-par. PPP in Pakistan faces many challenges that obstruct their efficiency and effectiveness, such as regulatory framework which is still evolving and may lack clarity or consistency which can lead to uncertainties and delays in project development and implementation, political instability and changing government policies, lack of institutional capacity and expertise, and lack of resources. Private electric companies such as K-electric have also failed to produce significant results.
Overall, the energy crisis in Pakistan has only deteriorated with time. More often than not it is overshadowed by political turmoil, natural disasters, and conflicts and issues with other nations. Even according to the most recent Pakistani budget of FY 2023-24 shows that the increase in the resources allocated to the energy sector are merely to match the increase in energy consumption by households and industry, not to effectively fix the issues of shortages. The government should provide incentives and focus on construction of new hydroelectric power plants and momentarily limit its focus on business and entrepreneurial sector, as any new business that is started would need electricity, putting strain on the already strained energy within Pakistan. Instead, improving the energy sector would increase the production of already existing firms and businesses, lower the cost of many products (as production cost would decrease since firms won’t pay for generators or UPS energy systems), and improve the day to day live of average citizens, which in turn would increase productivity.
Mir Hassan is a Lecturer, Department of Public Administration, FMS, BUITEMS. Ali Abbas is a student, BSPA (6th semester, Department of Public Administration, FMS, BUITEMS). BUITEMS stands for Balochistan University of Information Technology, Engineering and Management Sciences.