University of Agriculture Faisalabad
SPECIAL PROBLEM
Submitted by:
LUQMAN ILYAS
2018-ag-3398
M.Com Finance
Supervised by:
Dr. MUBASHIR MEHDI SB
UNIVERSITY OF AGRICULTURE, FAISALABAD
2
INSTITUTE OF BUSINESS MANAGEMNET SCIENCES
2020
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Acknowledgement
Thanks to the ALMIGHTY ALLAH, the merciful most beneficial, for everything He has
given us & all that has not.
First of all we are thankful to our honorable Dr. MUBASHIR MEHDI for giving us
chance to improve our skills by making research on the topic energy crises and solution
in Pakistan economy. This will definitely help us building our talent, skills and for better
opportunities.
We pay thanks to every person who helped us in the research to complete the topic on
energy crises, specially our friends, and respected teachers because with out there
appreciation and help the research on this topic cannot be completed.
Last but not the least our beloved PARENTS.
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Preface
In this special problem we are trying to give a important Information for our topic energy
crises & its solution. We have done our level best to make our readers aware about this
topic. To make them able to imagine what is the importance of this topic.
We have described firstly the introduction on energy crises in Pakistan, Strategies of
energy crises, define the actual problems, impact on imports and exports of our country
due to the energy crises, economic review and variables of energy crises and in last give
the solution to solve the energy crises in Pakistan. We give the energy crises and the
industrial out puts.
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Table of Contents Page No
1. Objectives
2. research proposal 05
3. Introduction 05
4. Problem identification 06
5. Background information 06
6. Research goal 06
7. Energy resources of Pakistan 07
8. Pakistan's energy crisis: short and long-term solutions 09
9. State of energy resources 10
10. The reason behind the crisis 11
11. Energy conservation measures 12
12. Measures by the government 12
13. Recommendations 13
14. Conclusion 13
15. References 14
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Objectives
Why Pakistan is facing such a huge energy crisis of its history?
What are the reasons behind this crisis?
Why Pakistan cannot able to utilize its natural resources?
If Pakistan has abundance of coal then why Pakistan importing coal?
Why half of the Pakistani population has no access to electricity?
Research Proposal
Energy crises are the major problem of our country, due to this reason our economy is
going to downward. There are number of industries in our country which close due to the
energy crises which directly effect our economy. The reason for chose this problem is to
identify the main problem and select the best way by which we overcome this problem.
We find out the reason for this problem and give the suggestion to over come this
problem.
Introduction
Electricity Crisis in Pakistan is one of the severe challenges the country is facing today.
Electricity is essential part of our daily life and its shortage has severely affected the
economy and overall living of ours. Pakistan is currently facing up to 18 hours of
electricity outage a day, is expected to face more if not dealt with in time.
Energy crises is one of the most important and highly growing problem is Pakistan. In
this report our main focus is on the energy crises and its impacts on Pakistan’s economy.
Recent rise in energy prices, shrinking existing resources, and the search for Alternative
sources of energy and energy conservation technologies have brought into Focus the
issue of causality between energy use and economic growth. Economic growth may
affect the demand for energy significantly. The country may face energy crisis by the
year 2007 following healthy growth of 13 per cent in electricity demand during the last
quarter, which will erode surplus production in absence of commissioning of any new
power generation project during this financial year. As per Pakistan Economic Survey
2003-04, electricity consumption has increased by 8.6 per cent during first three-quarter
of last fiscal year. However, a top level WAPDA official maintained that electricity
demand surged up to 13 per cent during last quarter.
Chairman WAPDA Tariq Hamid at a Press conference early this year warned about the
possible energy crisis and stressed the need for ‘quantum jump’ in power generation. The
experts say it could only be possible through a mega project of hydropower generation;
otherwise the gap between firm supply and peak demand will remain on the rise.
What Is Energy Crises?
An energy crisis is any great shortfall (or price rise) in the supply of energy
resources to an economy. It usually refers to the shortage of oil and
additionally to electricity or other natural resources.
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Problem Identification
The main problem which we identify is the lack of energy due to the different reasons, in
this report we see who energy crises is start and how it is impacting on different sectors
of Pakistan.
Background Information
Pakistan Economic Survey 2003-04, electricity consumption has increased by 8.6 per
cent during first three-quarter of last fiscal year. However, a top level WAPDA official
maintained that electricity demand surged up to 13 per cent during last quarter.
Chairman WAPDA Tariq Hamid at a Press conference early this year warned about the
possible energy crisis and stressed the need for ‘quantum jump’ in power generation. The
experts say it could only be possible through a mega project of hydropower generation;
otherwise the gap between firm supply and peak demand will remain on the rise. The
country may face energy crisis by the year 2007 following healthy growth of 13 per cent
in electricity demand during the last quarter, which will erode surplus production in
absence of commissioning of any new power generation project during this financial
year. Energy crises is one of the most important and highly growing problem is Pakistan.
In this report our main focus is on the energy crises and its impacts on Pakistan’s
economy. Recent rise in energy prices, shrinking existing resources, and the search for
Alternative sources of energy and energy conservation technologies have brought into
Focus the issue of causality between energy use and economic growth. economic growth
may affect the demand for energy.
Research Goals
In this research we see the strength of the energy crises and solution ( how it is impacting
on the economy of Pakistan and how we can overcome on energy crises).
Energy and sources of energy
Energy is the power to change things or in other words we can say that it is the ability to
do work. It gives us light it runs our machines it keeps us warm and many other things. In
other words we can say that it is impossible to survive without energy in the present time.
Moreover energy also plays a great role in the economic development of a country. a
country utilizing all its sources of energy has a better chance to grow economically as
compared to a country where the sources of energy are less or not utilized properly. This
is because energy has a direct impact on the standard of living of people and industrial
side of the country and both of these are a good measure of economic development of a
country. If people of a country are having a high standard of living and their industrial
side is progressing well (means the exports are greater than the imports) than it is a clear
sign that the country is making full use of its resources its growth rate is high.
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The main sources of energy in Pakistan
(for generating electricity)
A) Conventional sources :
Conventional energy sources are typically fully developed, nonrenewable
resources
It includes ;
1) Thermal energy
2) Hydel energy
3)nuclear energy
B) Non conventional sources :
Nonconventional sources may be functional but are still undergoing
development and use renewable resources.
1) Wind energy
2) Solar energy
3) Bio gas (energy animal &plant wastes)
A) Conventional sources
Conventional sources of energy are those sources which are generally used
In the country for the production of heat , electricity , and power . Pakistan has the
following conventional sources of energy that are as follows :
1. THERMAL ENERGY
Thermal energy refers to the type of energy in which heat is used to produce energy .
Thermal Energy is the oldest type of energy. With all known history available, Wood was
always used for heating and cooking. In 2nd world war fossil fuels entered in the form of
coal to get the energy, until liquid fuels were discovered and because of their
convenience of transportation they took over as major contributors of the energy source.
Once the steam engines were invented then the coal or liquid fuel was burnt in the boilers
and the heat produces steam which is used to drive electrical generators, or any other
mechanical device.
Rudolph diesels invention of diesel engine revolutionaries the energy concept and today
we see sine the majority of machines moving on diesel engines.
Thermal energy sources in Pakistan
1.Coal
Pakistan has huge reserves of coal which can be used to overcome the problem of energy
crises in the country . The government of Pakistan is making hectic efforts to introduce
the coal usage in the industrial sector. The machinery for these units is totally exempted
from import duties and taxes. A coal based power plant of 150MW has been set up in the
interior sindh.
2.Oil
Oil is one of the most important sources of energy through out the world and its
importance is increasing day by day. many wars are being fought just tov get the reserves
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of the oil..the government of Pakistan is making sincere efforts to find out new oil fields
in the country .the policy is to attain self sufficiency in oil because oil as a source of
energy is expensive if it is imported from other countries and it greatly increases the
import bills of the country.at present the generation capacity of electricity through oil is
12340MW
3.Natural gas:
Natural gas is also a precious gift of Allah to our country. huge deposits of natural gas
has been discovered in many parts of Baluchistan and sindh.natural gas is a cheap sources
of energy in comparison to oil and it can also play a great role in the industrial sector
because it is used as a raw material in many industries like fertilizers cement and plastics
etc.
2. HYDEL ENERGY
Water flowing in the rivers has kinetic energy. Once they are used to drive the turbine
and produce electricity the power generated as Hydel Energy.
Power produced by the turbines depends on quantity of water flowing/minute and the
head of water available.
Mostly river flows by melting glaciers on high mountains. Once the water start flowing in
the valleys it changes its head very rapidly. This energy can be converted into electrical
energy.
Two method are normally used:-
1. Dams
2. Run of River projects.
In case of Dams the water flow is restricted by making a huge storage device and the
head of water is increased, the water then is allowed to flow by means of gates and pass
through the turbines, the head of reservoir level is maintained to provide uniform power,
and the water stored in peak season additionally is used for irrigation purposes in dry
seasons.
In run of river projects the water is diverted through the tunnels and once it gains the
head allowed to fall and pass through the turbines and back to river. the water in these
projects is continuously flowing and not being stored.
Geographical situation is paramount importance in choosing a suitable site for the hydro
project and it evolves a very serious time and money consuming study.
Once a site is located further detailed feasibility study is required before proceeding any
serious effort to start the work.
The feasibility study should include following field work.
1. Detailed Mapping of the area
5. Weather data containing, Temperatures, pressures, rain humidity
6. Water sampling and testing
7. Environmental study
8. Social impact
9. Wild life and fish study
10. Identification of stake holders of the area
11. Coring and getting samples of the soil at 50-200 meters depth
12. Laboratory testing of the cores samples
13. study to evaluate earth quake dangers
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Hydel energy in Pakistan :
In Pakistan hydel energy is usually generated through waterfalls (dams).there are many
dams in the country which play a great role in the generation of electricity for household,
business and industrial sector. since independence huge amounts have been allocated for
the development of hydel energy as it is a main source of electricity generation in the
country as a result of this the generation of electric power through hydel energy has been
increased from 68MW in 1947 to 6555MW in 2009.
3. Nuclear energy
The importance of nuclear energy as a source of electricity generation is increasing very
rapidly throughout the world as many developed as well as developing countries are
making use of nuclear enery to generate electricity. the main fuel which is required to run
the nuclear reactor is called uranium.with the grace of all mighty uranium is found in
excess in Pakistan. at present there are two nuclear electric power generation plants in
Pakistan namely Karachi nuclear power plant and chasma nuclear power plant
B) Non-conventional sources of energy
The less developing countries are now developing other renewable sources of
energy . these sources are comparatively cheaper to those of conventional sources of
energy and these sources have a simplified technology , the non-conventional sources of
energy are as follows :
1. Wind energy
Wind energy is a very cheap source of generating power.in windy areas,the windmills
can be used for supplying electricity on a small scale the windmill can be used for
pumping water for crops,grinding corn,crushing sugar cane,thrashing,cutting of wood etc
etc.at present there are four mechanical wind pumpers and one wind power generation
system has been set up
2. Solar energy
The sun provides 170000MW of power to earth on daily basis.the sunshine can also be
used a cheap source of energy.many developed countries as well as developing countries
are now making use of the solar energy in order to fulfill their energy demand as it is a
very cheap and easily available source of energy
3. Biogas
It is produced from animal and plant wastes although it is a very cheap source of energy
but it can not be used on the large scale like the solar and wind energy. However it can be
utilized very well in the rural areas.as 72% of our population live in villages they make
the best use of this source of energy .
Pakistan's energy crisis: short and long-term solutions
Pakistan is in the grip of a serious energy crisis that is affecting all sectors of the
economy and the various segments of the society. As the situation stands to-day, there are
hardly any immediate solutions to resolve the issue. A change of attitude and a change of
life style is needed at the national level which should be triggered by the ruling elite and
followed by all segments of the society that have access to electricity. At best there could
be some short and long-term solutions to the crisis but they need immediate planning and
execution with an enormous investment. None of the previous rulers of the country
solved the issue due to which the energy crisis kept on increasing regularly.
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State of energy resources
Pakistan has a deficit of fossils or hydrocarbons sources of energy and to cover up the
deficit, it depends upon importing crude oil at an enormous cost from its meager forex
reserves. The need of crude oil is on an increase because of an improved life style which
has necessitated the use of vehicles and cars for transportation. Import of oil at around
$110 per barrel, increases the trade deficit and the current account deficit. It makes fiscal
management a difficult task which affects the government as well as the people.
Contrary to the deficit of fossils or hydrocarbon resources, Pakistan is rich in hydro
resources of energy. According to an estimate the country has enough resources to
generate approximately 40000 mw of hydro-electricity. However, presently it only
generates 8000 mw of electricity against an installed capacity of 11327 mw. In addition
the country can generate electricity with the help of wind and solar energy which has not
yet been exploited to meet the energy deficit. Nuclear energy is yet another source of
energy and at present PAEC produces 472 mw. It is far less than what PAEC should have
been producing to meet the energy deficit.
Three major electricity generation agencies presently operate in the country. They have a
total installed capacity of around 19522 mw. Their installed capacities are as follows:
WAPADA: 11327 mw; KESC: 1756 mw and Independent Power Producers (IPPs), 5977
mw. PAEC produces 472 mw as stated earlier. Thermal power accounts for 64 per cent of
the total installed capacity, hydro-electricity accounts for 33 per cent and nuclear power
plants account for 3 per cent. Thermal power is mostly produced by burning either
natural gas or imported oil. The country is yet to switch over to coal from the indigenous
source of energy that is estimated to be the third largest in the world with a reserve of
33.0 trillion tons.
The Energy market has been changing according to the demands of power consumption.
The Prices of energy raw materials also kept changing. According to an analysis, in the
fiscal year 1990-91 hydropower accounted for 45 per cent of all electricity produced in
the country but it was reduced to 26 per cent with a 10-year period. The share of
thermally generated electricity increased from 54 per cent to 71 per cent during the same
period. Needs of most of the commercially used oil are met by imports whose prices have
skyrocketed during past five years and as such the cost of power generation through oil
has increased.
Power consumption because of increasing needs of industry, agriculture and households
has been on the rise. According to an estimate, between the period of 1990 and 2003 the
total consumption increased by 84 per cent, from 31twh to 57twh. Presently, an annual
average increase of 7 per cent has been postulated. The energy sector, in which the
government has a greater role to play, will have to work hard to make up for the existing
deficit and to meet the growing demand.
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The reason behind the crisis
An important question in the midst of ongoing power shortage crisis, being raised is that
why the energy crisis looms on our head after an interval of around 10-15 years despite
the fact that statistics about energy resources, demand and consumption are well
articulated. They are also readily available to planning commission and other federal and
provincial governments. The answer is simple; poor management, lopsided priorities and
lack of accountability on part of those who stay at the helm of affairs.
In the early 90s, the power crisis had started emerging and the political government that
was mandated to govern the country was faced with the issue of power crisis. The
government had to resolve the crisis by engaging almost 19 Independent Power
Producers (IPP). 19 IPP projects were initiated with an installed capacity of 3158 mw and
investment of $4.0 billion and by March 2003 the installed capacity was at 2728 mw that
has reached to 5977 mw through expansion. Till 2005, supply of electricity produced
through different power generating units was surplus to demand by around 450 mw but
since then demand has been outstripping supply because there was practically no
additional power generation.
The government did not anticipate that there would be an increase in demand of
electricity and it was its responsibility to arrange the supply according to the demand.
Consequently, during summer, 2007, supply of electricity ran short of 2500 mw. It is
being anticipated that this year the deficit between supply and demand could be as high
as 3000 mw. By the end of year 2010, the deficit could be as large as 5500 mw. There are
no immediate solutions to generating additional power through any source because a unit
takes at least 2-3years to establish properly. More than 5 years is required to construct a
hydroelectric dam and the investment is enormous. This crisis has literally paralysed the
construction industry, badly affected agriculture and made life hell for the citizens. In
view of existing ground realities and constraints to address power crisis by generating
electricity within a short span of a few months, the need to make the best use of existing
power generation by taking conservation measures at individual, community and national
level are essential. These measures if implemented with commitment and honesty of
purpose can help a lot of people to over come negative implications of power crisis.
Energy conservation measures
Energy conservation or efficient use of electricity is what is needed at this crucial time.
There are three major users of electricity and they need to be educated and motivated to
play their role in energy conservation. The three stakeholders are: industrial sector,
transport sector and domestic/household sector. Each sector needs to be dealt separately
to high light the efficacy of conserving energy.
The Industrial sector is consuming the largest amount of energy in the country. It
consumes around 45 per cent of the total commercial energy. Most of them are
concentrated in a few industrial areas close to or within large cities such as Karachi,
Lahore and other comparatively smaller cities. Industrial units are not energy efficient
and management practices also need improvement to make efficient use of electricity. A
study carried out by the ENERCON reveals that efficient use of electricity by the
industrial sector could save up to 23 per cent of electricity. The focus on energy
conservation is on the improvement of steam distribution systems, air conditioning,
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refrigeration and modernizing and revamping energy efficient combustion processes and
controls.
The transport sector is the second largest consumer of energy. According to an
ENERCON study, this sector consumes 28 per cent of total national consumption of
energy. This could be reduced by 10 per cent if car owners alone were to economise on
consumption of fuel and kept their car engines fully tuned up. The sector has the potential
to be 20 per cent energy-efficient if railways, shipping and aviation are included. One of
the visible constraints that keeps the industrial and transport sector away from being
energy-efficient is the lack of observing energy conservation rules and regulations which
are already laid down by the government. Their focus is perhaps on short-term gains that
run contrary to national interest.
The third largest consumer of electricity is domestic/household sector that consumes
around 21 per cent of electricity produced in the country. According to a study this sector
could be efficient by 30 per cent by avoiding wasteful habits of consuming energy such
as keeping markets fully lit etc. A positive development that has so far taken place in this
sector is gradual shifting over to use of energy savers. Similarly energy could be saved by
minimum use of air conditioners. The entire household should be well-aware of energy
consumption.
To achieve meaningful results about conservation of energy the charity should start from
home, that is, the ruling elite should take the initiative and set example to conserve
energy as a national imperative for emulation by other segments of the society. If
conservation measures stated above were to be implemented partially, it would go a long
way in addressing the energy crisis immediately without any additional cost.
Measures by the government
The outgoing government had belatedly addressed the power crisis by hyping up the
construction of mega hydro-electric dams including politically controversial Kalabagh
dam without going into details about their feasibility and sources of investment. The new
government has a real big challenge of addressing the energy crisis at hand. Its first
priority should be to implement immediate measures that might bring some relief to the
public. It should also immediately embark upon the programmed of expansion of
generating capacities that has been laid down by the previous government under “Vision
2025” program
It envisions increasing existing power generating capacity by 10000 mw by 2010 and
around 35000 mw by 2025 at an enormous cost of $35 billion to be shared by the
government and private sector. The share of different sources of energy is stipulated to be
as follows: hydro-electricity: 22563 mw, new gas fired plants: 4680 mw, coal fired
plants: 4350 mw, nuclear plants: 1800 mw and finally 1500 mw from renewable energy
resources. It is certainly an ambitious plan that needs to be implemented on priority basis
with changes that the new government might like to make within its national policy
framework.
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Recommendations
To overcome present energy crisis, Pakistan needs to take the following steps in form of:
1. Short Term Plan
2. Medium Term Plan
3. Long Term Plan.
1. Short-term Plan:
1. Increase the number of IPPs (Independent Power Producers).
2. Reactivate the closed power generating units.
3. Overhaul the existing poor distribution system.
4. Import electricity to fulfill the current need for industries on ad hoc basis.
5. Government should have strict check on energy indicators on regular basis to
counter such crisis in future.
2. Medium-term Plan:
1. Transformation of existing system to renewable energy resources.
2. Developing and installing biogas, solar, wind and micro hydro based projects in
villages.
3. Long-term Plan:
1. Developing and installing coal based powerhouses.
2. Initiate agreements for mega projects with the energy extensive countries for
sustainable energy resources.
3. Explorations of more oil, gas and coal reserves.
4. Provide incentives for up-gradation and training to the engineer for new technology
Conclusion
The conclusion which we have made from this assignment is that our country is facing a
lot of problems regarding to the energy resources, but yet there are ways by which these
resources can be utilized.
It hardly needs to be emphasized that electricity is the lifeline of national economy and
the people at large. The Economy and public life practically come to a halt because of the
load shedding. The existing crisis can be addressed by the government by taking prompt
measures. There is hardly any room for neglect or delay.
All the thing that is need to be done is that efficient technology , proper funds ,
government interest and effective plans for utilizing the underutilized resources .if
Pakistan will not take steps for the development of energy and power resources than it
will have the worse result on the further years.
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