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Energy Crisis in Pakistan

Introduction
Energy is the ability to do work. It is considered to be the life line of any economy and most vital
instrument of development of a country. It is considered to be the backbone of a country's
economy and its availability ensures accelerated growth and development. There are different
sources of various kinds of energy. These sources can be divided into two categories:
 Primary Sources
 Secondary Sources
Electricity is the most common and popular form of energy, which itself is made from energy
released by burning coal or oil or by using nuclear fuel or waterpower. Each of these four
sources of energy is called a primary source. Electricity is a secondary source because it is
produced from a primary source.
In this industrial age, it is necessary for any country to be strong in energy sector. Without
making reasonable achievements in energy sector, not a single country can get success in any
field. In this technology era where everything is to be made automated, no one can breathe
without moving forward in energy sector. Energy, being an essential component of every
production process, plays a pivotal role in the growth process of a country.
The production process has undergone a massive transition from labor intensive to energy
intensive techniques. Now, it is widely recognized that industrialization is an energy-intensive
process; hence, uninterrupted supply of energy is necessary to keep the production process in
run. There has been enormous increase in demand of energy as a result of population growth,
industrialization and enhancement of living standards. There is very fast increase in demand of
energy as compared to supply of energy especially in the form of electricity, diesel, petrol and
coal. Currently in year 2015, supply of electricity is 15,500 MW against the demand of 21,000
MW.
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Pakistan Economic Survey

(2013-2014)
Electricity Consumtion

Household Sector44.2%
Industrial Sector 31.1%
Agriculture Sector 14.3%
Government Sector 7.4%
Commercial 5.5%
Street Lights 0.07%

So, this difference between supply and demand of energy causes energy crisis and it will be fatal
for an economy of any country. In other words, we can define energy crisis as:
“Any great bottleneck (or price rise) in the supply of energy resources to an economy” is called
energy crisis. It usually refers to the shortage of oil and additionally to electricity and other
natural resources. Continuous and accelerated supply of energy has turned out to be the biggest
challenge and as a matter of fact, supply of energy is far less than the actual demand so we need
to focus in resolving this energy crisis.
Background
A large mob emerging onto the streets of Lahore, Faisalabad, or other major city of the country,
demanding an end to the rampant load-shedding that has been plunging entire cities into darkness
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for over 12 hours a day and rural areas for 18–20 hours a day, with the electricity shortfall
reaching 7,000 MW in May 2011 is the situation happened due to energy crisis in Pakistan.
To trace the roots of the problem, one has to go back almost 25 years. The Water and Power
Development Authority (WAPDA), Karachi Electric Supply Company (KESC), Independent
Power Producers (IPPs) and Pakistan Atomic Energy Commission (PAEC) are four major
organizations responsible for the generation, transmission, and distribution of electricity in
Pakistan. Until the mid-1980s, electricity was produced primarily through hydropower projects,
keeping the production cost minimal.
With an increase in demand in sight, it was felt that additional generation capacity was required
quickly. So, power generation came to rely more on imported furnace oil than hydropower. The
resultant increased power generation costs, coupled with the high proportion of line losses, while
causing losses to power generation, transmission and distribution companies. This in turn has
given rise to the phenomenon of circular debt in the energy sector, whereby slippage in the
payment of bills trigger a chain of delayed payments for imported furnace oil, natural gas or
other inputs to the thermal generation system, which in turn hamper the operation of the power
plants and result in less than optimum capacity usage.
The current energy crisis began to manifest itself in earnest by late 2007. The immediate trigger
was the 2007 global commodity price boom, when oil prices almost tripled over an 18-month
period. The unprecedented fuel inflation was a key factor in the 36% increase in Pakistan’s
import bill in year 2008. While 2007 is considered the starting point of the ongoing energy crisis,
the issue has its roots in policy decisions taken two decades ago.
In 1994, when only 40% of the population had access to electricity, Pakistan was facing power
shortages of about 2,000 MW during peak load times. The government of the day assessed that
the average annual increase in power demand would be about 8% in the short to medium term,
and generation capacity of the order of 960-1,300 MW would have to be added to the system
annually from the mid-1990s onwards to meet the demands of a growing economy. Thus, the
policy effectively transformed the fuel mix for energy generation in the country. In the 1980s a
little over 60% of Pakistan’s power was generated from hydropower. The 1994 power policy, on
the other hand, was designed to encourage the quick installation of thermal power plants, the
bulk of which were fuel oil based. The government of the time considered this strategy to be the
optimal one, not only because of the relative ease with which thermal power plants could be
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added to the generation mix compared to hydropower resources, which would take much longer,
but also because key proposed hydropower projects, for which feasibility studies had been
prepared, were controversial for political reasons. By 2014, however, the proportion of power
generation from hydro and nuclear sources was about 34.8%, while the proportion of generation
from furnace oil-fired sources was almost equal at 35.2%. Thus, in less than two decades the fuel
mix for power generation underwent a significant transformation.
Pakistan’s electricity generation facilities are not precisely working well, they even thought to be
underdeveloped and inadequately maintained. The regions of Pakistan could be going to face the
critical energy problems, because of the weakening economy and rising of the rapidly increasing
electricity demand in the course of the prior 10 years. Additionally we cannot see any
considerable efforts to meet the demands of these energy problems. In addition, transmitting
failures due to outdated facilities, electricity theft and seasonal shortage of hydropower makes
the situation even worse. Therefore, as a result of strength shut down the load-shedding which is
becoming a very popular phenomenon is increasing rapidly, contrary to load-shedding the prices
of electricity also increasing rapidly.
Resources used for Energy Production:-
Pakistan’s energy demand is fulfilled by a mixture of gas, fat, Methane, fossil fuel and Liquefied
Petroleum Gas (LPG) by using a unique amount of stocks. The amount resources used for power
production are as follows: Usage of Gas is 43. 7 %, fat is 29. 0 %, fossil fuel is 10. 4 % and LPG
is 1. 5%.
In Pakistan, electricity is produced by using two types of resources:
 Non Renewable Resources
 Renewable Resources
Non Renewable Resources
Non-renewable resources are limited and expensive. These resources are not environmentally
friendly and are responsible for a rapid increase in global warming. These resources are found in
the form of coal, crude oil and gas which are further refined to obtain resources like Petrol,
Diesel, coal, charcoal, paraffin oil, organic gases and Liquefied Petroleum Gas (LPG).
Most of the crude oil has been imported to satisfy the energy demand. Oil is utilized in the fields
of marketplace, agriculture and household supports by utilizing in the technology of power
generation, which is generating 35.2 % of power. Pakistan consumed more than 7.4 million tons
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of oil equivalents of furnace oil and diesel oil in 2011-2012. In Pakistan, the manufacturing of
natural gas could be around 4.2 billion cubic feet per day (bcfd), against the need of 6 bcfd.
Natural gas is used in industries and commercially to generate buyer goods, to make concrete
floor, for the Production of fertilizers and for the productions of Pakistan’s electricity. Natural
gas share in generating electricity is 29%. It is also used as a CNG (Compressed Natural gas),
which is utilized in transport system. LPG gas contributes around 0.7% in energy consumption in
Pakistan. The study of the comparison between Electricity, oil and gas shows us the reason of
growing gas demand. World-wide gas is counted among the very expensive resources but in
Pakistan gas is the cheapest energy resource used in households, transportation and industry. Due
to the less cost of a gas, the vehicles have converted from petrol to gas rapidly which is
responsible for the increase of gas demand in Pakistan.
Pakistan’s coal supply is more than 185 million tons. Additionally 175 million tons of coal is
identified in the Thar coal-fields. Coal is largely used in brick kiln and concrete floor market
sectors. According to a rough idea, Pakistan’s coal reserves do not consider to be a high quality
coal.
Renewable Resources
Renewable resources are unlimited and cheap and are created by Mother Nature. These resources
are eco-friendly and are used as a cheap source of generating electricity. These resources include
mineral water, sunlight, breeze, strong wind and tides.
Hydro Power is the very cheap source of electricity generation, which contributes only 34.8% in
the whole power generation of Pakistan. At this time, we are gaining 6555 MW against the
potential required 41000 to 45000 MW. Tarbella Dam, Ghazi Brotha Dam, Mangla Dam,
Warsak Dam and Chashma Dam are the current hydro power generating dams of Pakistan. These
all dams have different capacities like capacity of Tarbella Dam is 3, 478 MW, Ghazi Brotha is
1450 MW, Mangla Dam is 1, 000 MW, Warsak Dam is 240 MW and Chashma Dam is 184 MW.
There are some other planned hydro power generating projects like Kalabagh Dam, Dasu Dam
etc that could be helpful to reach the required level of electricity generation.
Electricity can also be produced through strong winds moving the blades attached to the
generator producing energy. Pakistan has the ability to produce 10000 to 50000 MW by wind
power but unfortunately electricity generation through wind turbines is at initial stage. Solar
energy uses solar panels to convert sunlight into electricity. According to the analysts, Pakistan
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has a potential of generating electricity more than 100,000 MW with the help of solar energy of
Pakistan. The projects of developing solar energy plants are underway in Kashmir, Punjab, Sindh
and Baluchistan.
Energy Generation through Tidal waves is one of a cheap ways of electricity generation. Seaside
tides are a source of fresh, cost-free and eco-friendly source of energy generation. Ideas are
underway in Pakistan for the use of tidal energy, but unfortunately until now no implementation
have been observed yet.
In Pakistan Nuclear energy generation is very low which is around 425 MW because only
KANUPP-1 and CHASNUPP-1 and 2 are operational while remaining are not yet implemented.
Causes of Energy Crises in Pakistan:

The following are the main reasons of energy crises in Pakistan:

 Increasing Energy Demand:

It is the major reason of energy crises in Pakistan. Over the years the demand of energy is
growing in Pakistan because of increase in population, enhancement in lifestyle, increase
in Industrial and agricultural growth and greater needs of transportation.
 Lack of Planning for Production of Energy:
The second major reason of energy crises is the lack of planning for the production of
energy in Pakistan. Very less number of power producing plant were installed to meet
increasing demand of energy. Resultantly, over the years, the gap between energy
demand and supply drastically grew and now against demand of 20000 MW, we are
having around 11500 MW.
 Non-Utilization Of Indigenous Energy Resources:
Thar Coal:
Pakistan is having one of the largest coal fields in Thar, having reserves of more than 175
billion tones, which exceeds equivalent oil reserves of Saudi Arabia, Iran etc. In addition
to power generation, this coal can be used for chemical and fertilizer production. 
Hydel Power Generation:
Pakistan has potential of hydro resources to generate 41000 to 45000 MW; however, only
6555 MW is currently being generated by this important renewable resource. 
Four large hydropower dams namely Kalabagh 3600 MW, Bhasha 4500 MW, Bunji 5400
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MW and Dasu 3800 MW can be constructed to generate hydroelectricity. Similarly,

many small to medium hydro plants can be installed on rivers and canals etc.
 Nonpayment of Bills:
Corruption in energy sector is on the peak. People do not pay their energy bills and use
energy in large amount as a free product so this corruption and nonpayment of bills is
also creating energy crises in Pakistan.
 Power Theft:
Power theft also contributes to the energy crises. Power theft and under recovery of bills
causes a loss of Rs.260 billion to the power sector and discourages investment in the
sector. 
 Old Transmission System:
Electricity transmission system is very old in Pakistan like wires that are used to provide
electricity are not of better quality and can’t bear extra load beyond its capacity . This
situation is further compounded by the fact that the government has not encouraged any
public investment in thermal power as the sector was to be privatized. As a result of this
situation, power plants in public sector are producing far less power than their actual
capacity.
 Gas shortage for Power Sector:
In the winter season when the country faces extreme shortage of gas, government
normally cuts down the gas supply to power sector in order to meet the demand of
domestic users and selected fertilizer companies, which reportedly causes a loss of USD
400 million to the power sector and causes shortage of energy generation.
 Circular debt:
The issue of circular debt also creates reduction in power generation. More reliance on
furnace oil not only enhances circular debt, it also pushes up the cost of electricity and
government has to spend more on subsidy. The 2014-15 budget has specified an amount
of Rs.350 billion for power subsidy while the actual subsidy is expected to come close to
Rs.600 billion and this situation may further complicate the energy shortage problem.
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Consequences of Energy Crises:

 Effect on Economy:
Energy plays a very important role in any economy of the world. All the sectors of the
economy depend on energy so development and growth of all these sectors would be
directly influences all other sectors of the economy. The economic progress would be
badly affected by decline in agricultural productivity as well as by halting in operations
of industries.
 Agriculture Sector:
Agricultural productivity of Pakistan is decreasing due to provision of energy for running
tube wells, agricultural machinery and production of fertilizers and pesticides.
 Industrial Sector:
Almost all Industrial units of Pakistan run with the energy. Breakage in energy supply is
having dreadful consequences on industrial growth. As a result of decline in energy
supply, industrial units are not only being opened, but also the existing industrial units are
gradually closing.
 Low National Income:
As savings and investment would be low due to energy crises, the increase in national
income would also be low
 Unemployment:
By closure of industrial units and less agricultural productivity, new employment
opportunities are not opening. And due to increase in energy inflation in the country, the
employers hire less labor to keep their profit ratios high. Thus energy crisis contributes
towards unemployment.
 Inflation:
The high prices of fuel and electricity created a long-term inflation in the prices of raw
material of one commodity that causes high prices of other commodities.
 Education:
Energy crises also badly effect the education of people in our country. Load shedding of
electricity and gas (in winter season) affect the study of the people who cannot afford the
precautionary measures to avoid this load shedding.
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 Poverty:
Decrease in economic growth, lower agricultural and industrial productivity and
unemployment result in increasing poverty. Currently, around 40% of our population is
living beyond poverty line and this ratio is increasing day by day.
 Social Issues:
Social issues are primarily related to the domestic usage of energy like cooking, heating
and water provision. Load shedding cause unrest and frustration amongst the people and
results in hatred for the government.
 Low Savings:
As energy crises would decrease the economic growth, agricultural and industrial
productivity; increase unemployment and poverty and increase the inflation then there
will be less amount that people will save so saving ratio will decrease in the economy.
 Low Investment:
As energy crises causes the saving ratios to decrease it will result in low investment in the
economy..

Steps Taken By Current Government:

Pakistan has been facing acute shortage of energy for quite a number of years and there have
been some attempts to resolve the crisis.

 When the government of Prime Minister Nawaz Sharif took over in June 2013, the
energy shortfall was already at dangerous levels with overall supply deficit reaching
6000MW to 7000MW during the summers. Prime Minister Nawaz Sharif and his team
took drastic steps to reduce load shedding by implementing shortfall reduction policies
for commercial and residential areas. Furthermore, six coal-based power projects in
Punjab and Sindh were proposed and initiated during late 2013 and early 2014 that were
meant to increase the power generating capacity by up to 14000MW. However, the
experts considered them environmentally hazardous due to coal being utilized as the
primary resource.
 A lucrative $21bn deal for Liquefied Natural Gas (LNG) projects with the government of
Qatar was also finalized by March 2015.This has been a positive step taken by the PML-
N led government for it can decrease the costs by 40 percent and emit 45 percent less
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carbon dioxide as compared to coal. This means that a cleaner and more efficient energy
source shall be available for the consumers.
 During the recent visit of President of China, Pakistan and China signed 51different
memorandums of energy projects. Thus almost $15.5 billion worth of coal, wind, solar
and hydro energy projects will come online by 2017 and when mature will add 10,400
megawatts of energy to Pakistan's national network.
 Furthermore, the coal gasification project in Thar under the leadership of Dr Samar
Mubarakmand is also of high significance as its purpose is to reduce the emission of
harmful gases and provide high quality source for electricity generation that can run side
by side with LNG projects.
 Asian Development Bank has approved assistance packages to help Pakistan to undertake
key reforms in the power sector. This included funding to ensure energy delivery to
industrial and private consumers. The Jamshoro Power Generation Project, which on
completion in 2018, will add 1,300 megawatts (MW) to the country’s electricity grid.
Reliability of the power distribution network is also being enhanced through the
investment of $167.2 million to upgrade 284 grid stations.
 The government has also several other plans in place to reduce energy crises. These plans
include “Coal based power plant at Port Qasim, Gadanni power park where 6600 MW
coal based power plants will be setup, world bank’s commitment and their board
anticipated approval of Dasu project, speedy work at Neelum Jhelum hydro power
project, import of power from India, the inauguration of 747 MW Guddu power plant, the
revival of 425 MW Nandipur power plant, coal based power plants in Punjab, Sukki
Kenari, karoot and Patrind hydro power projects.
 Government of Pakistan had also signed the project of natural gas with Iran in 1990’s
which is 2,775km long underproduction pipeline instruction to deliver natural gas from
Iran to Pakistan. 
It is stated that there was improvement as number of projects for increasing power
generation was already underway and cited the examples of Dasu and Basha hydropower
projects. The government has been working on LNG facility and making investment on
increasing gas production. However all this will not happen overnight and will take
couple of years to achieve the desired results.
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Recommendations:

As all above discussion shows that energy crisis is one of the biggest issue faced by Pakistan, the
following recommendations should be followed to solve this problem:

 Unnecessary use of energy must be reduced through usage of electricity saving

devices, awareness campaign for energy saving, reduction in unnecessary transportations
by developing good public transport systems and strengthening Pakistan railways,
reduction in industrial uses with installation of effective equipment/ energy efficient and
with increasing efficiency of workforce (cost effective) and decreasing line losses by
using efficient power transmission cables.
 Government should utilize the Indigenous Energy Resources that is it should use Thar
coal for energy generation.
 Government should use renewable resources (water) by constructing new dams and
hydro power plants. Solar and wind power should also be invested upon due to the fact that
Pakistan’s climate is ideal for their utilization.
 Government can Import natural gas by IPI (Iran, Pakistan, India) and TAPI
(Turkmenistan, Afghanistan, Pakistan and India) pipelines.
 Electricity can be imported from Tajikistan -through Pak Afghan Tajikistan transmission-
and Iran (approximately 1000 MW from each of them) pipelines
 Government should also take strict actions against power theft and under recovery of
bills.