Pakistan has been experiencing severe energy crisis for the last couple of decades. It has several important reasons and multi-sectoral impacts on households, businesses & economy as a whole.
There has been consistently increasing gap between demand and supply of energy over the period of time. Higher demand of energy is because of rapidly growing population, economic growth, extensive use of machinery and advanced technology in businesses over past years, and higher use of electric appliances from household consumers.
On the contrary, the supply side of energy is remaining subdued. Pakistan is producing its energy majorly from oil & hydel resources. We are not sufficiently using coal, wind & solar energy, which have lower production cost as coal’s heavy resources in Thar, Sindh, are available in Pakistan. Further wind and solar have very lower input cost. Pakistan has relied upon independent power producers (IPPs), which are mostly running their plants on furnace oil with highest per unit cost among all the available energy producing options. The higher cost of furnace oil gradually increased circular debt, IPPs stopped their plants & supply declined consequently. Government has recently taken an initiative & paid off circular debt but it was useless & debt accumulated again.
Other major issues regarding energy is the transmission losses and non-payment, very few household, institutions and organizations pay the dues regularly in rural areas while the situation is not even good in urban areas. All the above discussed issues collectively incurred averagely 4000-7000 MW of shortfall in electricity which has numerous negative effects.
On the economic front there has been severe negative impact of energy crisis. We have an example of Faisalabad textile sector that has intensely affected by energy crisis. Most of the industries have shifted, because of energy crisis, outside the country. It has decreased country’s output, increased unemployment and lowered overall welfare of citizens of Pakistan.
In the nutshell, energy crisis is one of the most important factors that are behind the sorry plight of Pakistan’s economy and nation.
There has been consistently increasing gap between demand and supply of energy over the period of time. Higher demand of energy is because of rapidly growing population, economic growth, extensive use of machinery and advanced technology in businesses over past years, and higher use of electric appliances from household consumers.
On the contrary, the supply side of energy is remaining subdued. Pakistan is producing its energy majorly from oil & hydel resources. We are not sufficiently using coal, wind & solar energy, which have lower production cost as coal’s heavy resources in Thar, Sindh, are available in Pakistan. Further wind and solar have very lower input cost. Pakistan has relied upon independent power producers (IPPs), which are mostly running their plants on furnace oil with highest per unit cost among all the available energy producing options. The higher cost of furnace oil gradually increased circular debt, IPPs stopped their plants & supply declined consequently. Government has recently taken an initiative & paid off circular debt but it was useless & debt accumulated again.
Other major issues regarding energy is the transmission losses and non-payment, very few household, institutions and organizations pay the dues regularly in rural areas while the situation is not even good in urban areas. All the above discussed issues collectively incurred averagely 4000-7000 MW of shortfall in electricity which has numerous negative effects.
On the economic front there has been severe negative impact of energy crisis. We have an example of Faisalabad textile sector that has intensely affected by energy crisis. Most of the industries have shifted, because of energy crisis, outside the country. It has decreased country’s output, increased unemployment and lowered overall welfare of citizens of Pakistan.
In the nutshell, energy crisis is one of the most important factors that are behind the sorry plight of Pakistan’s economy and nation.
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