Energy crisis in Pakistan

Energy Crisis in Industrial Sector of Pakistan

Prepared for

Saima Masood

Prepared by

Malik Waqar Ahmad

FA15-BEE-150/WAH

May 12, 2019

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 Energy crisis in Pakistan

Contents

1.1. Introduction.................................................................................................................................................. 3

2.1. Crisis since partition/Analysis ....................................................................................................................... 5

3.1. Suggestions: ................................................................................................................................................. 10

3.1.1. Energy Efficiency Improvement ………………………….……………………………………………………………………........11

3.1.2. Solar thermal………………………………………………………………….………………………………………………………………..12

3.1.3. Solar Photovoltaic…………………………………………...………………………………………………………………………………13

3.1.4. Solar and Led Lighting…………………………………………………......……………………………………………………………..13

3.1.5. Wind Power………………………………...………………………………………………………………………………………………….14

4.0. Energy Adminstration authority……………….…………………………………………………………………………………………….14

5.0.0 IMF Recommendation………………………………………………………………………………………………………………………….15

6.0. Conclusion…………………………………………………………………………………………………………………………………………..…15

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 Energy crisis in Pakistan

Energy Crisis in Industrial Sector of Pakistan

1.1. Introduction
Energy crisis is defined as price rise of the energy resources or a great shortfall in the supply of

the resources of energy. Usually it is referred to shortage of electricity, oil, natural gas, and other

natural resources. As the world is changed entirely by globalization, many issues have emerged

among which the energy got significant attention of researchers. With respect to supply the demand

for energy is continuously increasing in this globalized world; resultantly crisis for energy has

emerged. Shortage of energy is faced by most of the countries and consequently it is severely

affecting their economic growth and social transformation. There are numerous views and ideas

that potentially make linkage between energy and economic growth. Energy is considered as a

backbone of any economy and plays an important role in the socio-economic development of a

country. If there is not sufficient energy, industrialization will not take place, it is crucial for

running industries and output units, for residual and commercial use and for transportation, etc. As

expansion in energy is expected to result higher growth similarly its shortage may hold back the

growth process. In short, energy is vital for running all the resources and energy crisis directly

influence all the sectors of economy such as agriculture sector, industrial sector, unemployment,

poverty, lower GDP and higher inflation. Unfortunately, Pakistan is facing worst energy crisis in

its history. Pakistan like other developing countries is one of the energy intensive growing

economy, and its energy needs are met by large quantities of oil imports as in most other non-oil

producing countries. Pakistan energy’s infrastructure is not well developed and said to be managed

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poorly. Despite of population growth, economic growth and increased demand during the past

decades, no serious efforts were made for the generation of energy. Moreover electricity theft and

transmission losses due to outdated infrastructure have worsened the situation.

The electricity Pakistan is presently facing a serious energy crisis. Despite strong

economic growth during the past decade and consequent rising demand for energy, no worthwhile

steps have been taken to install new capacity for generation of the required energy sources. Now,

the demand exceeds supply and hence “load-shedding” is a common phenomenon through

frequent power shutdowns. Pakistan needs about 14000-15000MW electricity per day, and the

demand is likely to rise to approximately 20,000 MW per day by 2010. Presently, it can produce

about 11, 500 MW per day and thus there is a shortfall of about 3000-4000MW per day. This

shortage is badly affecting industry, commerce and daily life of people. All possible measures

need to be adopted, i.e., to conserve energy at all levels, and use all available sources to enhance

production of energy. It seems that the government is considering importing energy from Iran and

Central Asian Republics and using indigenous sources, such as, hydel, coal, waste, wind, and solar

power, as well as other alternate and renewable energy sources, besides nuclear power plants for

production of energy. Needless to say that if the country wishes to continue its

economic development and improve the quality of life of its people, it has to make serious efforts

towards framing a coherent energy policy. Energy crisis is the most burning issue that is facing

by the whole world now a days. It is the one of the basic requirement of economic development

and an adequate standard for living. The demand in the electrical energy demands in a country is

proportional to the growth in the population. If this demand is not met with the supply, energy

crisis is produced.Pakistan has been facing an unprecedented energy crisis since last many years.

This problem becomes more severe in summer and as a result shortage of electricity is faced 8 to

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 Energy crisis in Pakistan

10 houres in urban areas while 16 to 18 hours in rural areas. The above mentioned circumstances

are due to lake of management and planning. Any power system has three major parts- generation

system, Transmission System and Distribution System. The main technical causes of the shortfall

in the ability of energy crisis in Pakistan are

1. Insufficient installed generating capacity

2. Transmission system unable to transmit the load imposed

3. Grid stations and related equipment unable to carry the load imposed

4. Substantial distribution system of power supply

The major management related causes of the crisis are:

1. Faulty management information system

2. 2 Failure of forecast and future planning

3. 3 No new transmission / distribution networks and grid stations

2.1. Crisis since partition/Analysis

At the time of independence in 1947, Pakistan inherited 60MW of power generation capability

for a population of 31.5 million, yielding 4.5 units per capita consumption. The Government of

Pakistan in 1952 by acquiring majority shareholding took control of the Karachi Electric Supply

Company (KESC) engaged in generation, transmission and distribution of electric energy to the

industrial, commercial, agricultural and residential consumers of the metropolitan city of Karachi

and its suburbs.

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In 1958, Water and Power Development Authority (WAPDA) was created

as a semiautonomous body for the purpose of coordinating and giving a unified direction to the

development of schemes in water and power sectors, which were previously being dealt with by

the respective electricity and irrigation department of the provinces. In 1959, the generation

capacity had increased to 119 MW and by that time the country had entered the phase of

development, which required a dependable and solid infrastructure, electricity being its most

significant part. The task of power development was undertaken by WAPDA for executing a

number of hydel and thermal generation projects, a transmission network and a distribution

system, which could sustain the load of the rapidly increasing demand of electricity.

After the first five years of its operation by 1964-65, the

electricity generation capability rose to 636 MW from 119 MW in 1959, and power generation to

about 2,500 MKWH from 781 MKWH. At the inception of WAPDA, the number of electrified

villages in the country was 609 which were increased to 1882 villages (688,000 consumers) by

the year 1965. The rapid progress witnessed a new life to the social, technical and economic

structures of the country. Mechanized agriculture started, industrialization picked up and general

living standards improved.

The task of accelerating the pace of power development picked up speed and

by the year 1970, the generating capability rose from 636 MW to 1331 MW with installation of a

number of thermal and hydel power units. In the year 1980 the system capacity touched 3,000

MW which rapidly rose to over 7,000 MW in 1990-91. However, electricity consumption in

Pakistan has been growing at a higher pace compared to economic growth due to the increasing

urbanization, industrialization and rural electrification. From 1970 to the early 1990s, the supply

of electricity was unable to keep pace with demand that was growing consistently at 9-10% per

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annum. In the early 1990s, the peak demand exceeded supply capability by about 15-25%,

necessitating load shedding of about 1,500 - 2,000 MW. On the demand side, there was a weak

link between the electricity price and demand, which failed to manage the demand. On the

supply side, the main reason behind this capacity shortage was the inability of the public budget

to meet the high investment requirement of the power sector, despite the allocation of a high

share to this sector. During the 1990s, the economic growth rate of Pakistan declined to a level of

4-5% per annum from a level of 6% per annum in the 1980s.

In order to eliminate power shortage/load shedding in the minimum

possible time, the Government constituted an Energy Task Force in 1993 to devise a

consolidated and comprehensive policy for revamping the energy sector. On the

recommendations of the Energy Task Force, the Government announced a “Policy Framework

and Package of Incentives for Private Sector Power Generation Projects” in March 1994 for a

large scale induction of private sector in power development. The said policy offered a fix

levelized tariff of USD 5.57/kWh to the prospective investors (USD 6.1/kWh average for 1-10

years) and a number of other incentives to attract foreign investment in the power sector.

The Power Policy 1994 helped in overcoming load shedding in the

country. Rather, it resulted in surplus power as the actual load growth was much less than that

projected and the projects were contracted beyond requirement. Moreover the Policy attracted

only thermal projects resulting in reversal of the hydel / thermal generation mix. In the year

2000, the vertical disintegration of WAPDA started as part of the country’s new electricity

market restructuring and liberalization program. Since then WAPDA has been broken down into

fourteen separate units: four thermal power generating companies, nine distribution companies

and a transmission and distribution company. In November 2005, the Government of Pakistan

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privatized (74.35%) the Karachi Electric supply Company (KESC). At present, KESC and

WAPDA operate their own networks and are interconnected through 220 KV double circuit

transmission lines and can supply power to each other.

On June 30’ 2008, the total generation capacity from WAPDA’s own hydel and

thermal sources plus generation from two nuclear power plants, KESC and Independent Power

Procedures (IPPs) stood at 19,420 MW.

the industrial sector contributes major share to the GDP of the country. Owing to persistent

energy crisis, many units have been shut down. Resultantly, causing our GDP to decline. Decline

in GDP of the country indicates its economic backwardness. Country with low GDP growth fails

to attract Foreign Direct Investment (FDI).

Poor economic condition of the country has not only kept the foreign investors but the local as

well. When the conditions for industrial sector are not healthy in the country, the inflow of

foreign money to the country is checked causing decline in foreign reserves. Decline in foreign

reserves compel the country to seek loans from the other countries.

With unhealthy conditions and decline in foreign reserves, the country is destined to face low

export and high import. It is also the case with our industrial sector. Due to inconsistent supply

of electricity to industrial sector, our industry fails to give required output. Not to speak of

surplus production, our industries are not able to meet the national requirement. The production

of goods in lesser quantities has affected export from our industrial sector. This makes our

country to import goods, in order to meet the needs of the masses causing inflation.

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 Energy crisis in Pakistan

Moreover, energy crisis is the core reason behind de-industrialization process in our country. The

closure of small and big industries deprives our people of employment or job opportunities.

Industries failing to create new jobs, lead to wastage of precious talent in the country.

The overall poor condition compels the youth to migrate somewhere for earning. This indirectly

is depriving the country of its talented youth.

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And from year 2005 to 2015 industrial sector

3.1. Suggestions:

Energy in all forms is closely linked to economic prosperity of the county. Energy demand is
increasing day by day because of urbanization, climate change and global warming.

Pakistan is energy deficient country because of its inadequate energy power supply mix, rising
energy gap between supply & demand, lack of energy efficiency legislation and its
implementation.

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 Energy crisis in Pakistan

Conventional ways of generation of electricity energy through non-renewable resources is a long

term process and this process usually takes five to ten years. In parallel to this, we should adopt
all alternate ways to save and generate electricity through renewable resources to overcome the
energy crisis in Pakistan. We discuss below that what the alternate ways to save and generate
energy are.

3.1.1.ENERGY CONSERVATION AND ENERGY EFFICEINCY

IMPROVEMENT

The first and foremost task is to save and conserve energy

in domestic, commercial, industrial and institutional
facilities. Every facility is trying to conserve energy but
process is too slow because of the lack of the energy
conservation legislation and its implementation.

The most dominant energy saving activity is the

replacement of incandescent lights with compact florescent lighting (CFL). No doubt this
activity will save lot of energy but this is not sufficient. The energy saving activities to be
adopted in domestic, industrial, commercial and institutional facilities are as follows,

 Insulation of buildings roofs, walls, pipes and ducts.

 Use of glazed glass at building facades
 Use of energy efficient materials in buildings
 Use of high efficiency motors, pumps and controllers
 Use of Variable Frequency Drives (VFDs)
 Replacement of conventional heating & cooling by solar water heating & cooling
 Replacement of electro-magnetic ballast by electronic ballasts
 Replacement of conventional lighting by LED and Solar Lighting
 Installation of automatic shut off of lighting

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 Energy crisis in Pakistan

 Installation of occupancy sensors

 Installation of exterior lighting controls

Pakistan Engineering Council and ENERCON have made joint efforts to conclude the Building
Energy Code 2010 through a task force consisting of experts from various sectors and Izhar
Group also contributed in this endeavor but without legislation and its implementation, we can
not achieve energy saving targets. There is a need for quick enforcement of the Building Energy
code 2010 so that national energy saving targets can be achieved.

ALTERNATE AND RENEWABLE ENERGY APPLICATIONS

3.1.2.SOLAR THERMAL

Solar Thermal is the process of

generating heating and cooling through
solar radiations. Solar Water Heaters are
very economical and feasible option for
use in domestic, commercial, industrial
and institutional facilities. The barrier to
the growth of application of solar water
heating is the lack of knowledge, skills
for installation, operation and use of solar water heaters. The user’s behavior and wrong
perceptions is also one of the main barriers in its growth. The growth of the solar water heaters
can be increased by creating more incentives by the government and making it mandatory
through Building Energy Code to install solar water heaters in all kinds of facilities. The payback
of solar water solution varies from one to two years.

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 Energy crisis in Pakistan

3.1.3.SOLAR PHOTOVOLTAICS

Solar Photovoltaic is the process of generation of

electricity through solar radiations. It is commonly
called as PV. PV components include Solar Panels,
Inverters and Charge Controllers, Deep Cycle Batteries,
Mountings, cables and accessories. Solar PV solution is
not affordable and feasible as the current price of PV
solution is $8 per watt. This high cost is because of 40% duties on PV Components. The recent
news in media about zero duty shows that Government has reduced duties to zero but one time
zero duty needs more clarification by the Government. If the news of zero duty for all times is
correct, this will spur growth in PV sector and this can help in saving energy. Grid Tied is
process by which the electricity can be sold back by user to the grid at fixed feed-in-tariff and
when electricity is sold back, the energy meter moves in reverse direction. Grid-Tied policy
implementation is the real solution to overcome energy crisis in Pakistan.

Alternate and Renewable Energy Policy 2010 is almost ready and in last Women to Energy
Conference at PEC, it was told by AEDB that this policy will be enforced in January 2011 but so
far this policy is also prey to vested interests. This policy can bring revolution in Pakistan if truly

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implemented.

3.1.4.SOLAR & LED

LIGHTING

Solar and LED lighting is really a best energy

saving option. The barrier in its growth is the
high percentage of duties on import of Solar
and LED lights. If the duties are made zero,
this sector can grow at faster pace. It is just an
estimate that 400 watts of conventional search
light can be replaced by 80 Watt LED search
Lights. You can see tremendous search lights in Government and Pakistan buildings and about
one fifth energy can be saved by just replacement of conventional lights with LED lights. LED
lighting has tremendous advantages in comparison with conventional lighting.

3.1.5.WIND POWER

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Wind Power is relatively a cheaper alternate energy solution and

Pakistan has great potential in wind power. The barrier in its
growth is the lengthy process of acquisition of land and
coordination issues of wind power developers with the
Government Institutions. Implementation of AE and RE policy
2010 can be instrumental in its fast growth of wind power.

4.0. ENERGY ADMINSTRATION AUTHORITY

One of the barriers in growth of Alternate and Renewable applications is the lack of presence of
one sole Energy Administration Authority for regulation of energy sector. We strongly
recommend that that one Energy Administration Authority should be evolved to streamline
decision making.

Energy Efficiency Improvement and use of alternate and renewable energy applications can
bring the country out of energy crises and it will help in reduction of GHS emissions enhancing
energy security of the country.

Government should provide facilitation through legislation, Private sector should follow the
policies and laws and all chambers of commerce and industries should bridge this gap by
providing platform where the Private and Government sector should work as team for growth of
Alternate and Renewable Energy Sector in Pakistan.

5.0. The IMF’s recommendations for the energy sector :

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 Energy crisis in Pakistan

The energy crisis has become one of the key impediments to growth in
Pakistan and as such has prompted international financial institutions to renew their interest in
the energy sector. In terms of policy reform, the key document that will guide Pakistan’s policy
agenda in the short to medium term is the government’s agreement with the International
Monetary Fund (IMF) reached in September 2013, according to which a $6.7 billion loan has
been extended to Pakistan under the IMF’s Extended Fund Facility. The agreement includes a
number of clauses that specifically deal with the energy sector. In the document, IMF staff
argued that the key to reform is to make the energy sector financially viable (see IMF, 2013:
para. 38). The measures suggested to do this included clearance of the circular debt, tariff
adjustments aimed at improving resource allocation and encouraging conservation, and fuel
policies aimed at ensuring the supply of natural gas to power plants to facilitate a switch from
furnace oil to a cheaper indigenous fuel.

6.0.0 Conclusion:
Keeping in view the above mentioned ground realities, it is concluded that burning issue of
energy crisis is not new to Pakistan rather this is the global issue. Not only under developed
countries like Pakistan but also many developed countries are threatened by energy crisis. As
tabulated above, Pakistan has already enough installed capacity that can cope with the present
demand if all the installed units would operate and give their maximum possible outputs.
Moreover, according to the given records, Pakistan has many untapped fuel reservoirs which
may meet the increasing demands of the country. Influential planning on the part of government
is required. In that case, this issue can be easily resolved. Furthermore, efforts are required on
individual basis by wise consumption of energy as well as timely bill payment system to improve
the efficiency of the concerned department. In the same line, media needs to play its positive
role to improve our social behavior rather than creating any frustration among the masses.

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