ENERGY CRISIS OF PAKISTAN

Pakistan's Energy Mix

 According to the Pakistan Bureau of Statistics (PBS) report,
‘Trends in Electricity Generation 2006-07 to 2020-21’, Pakistan’s
energy mix has evolved over time.
o Currently, according to the Economic Survey of Pakistan
2022-23, the energy mix consists of 58.8 percent thermal,
25.8 percent hydel, and 8.6 percent nuclear power.
Additionally, alternative power sources contribute 6.8
percent to the overall mix.
  The heavy reliance on imported oil, coal, and LNG makes the
country vulnerable to price shocks, supply interruptions, and
geopolitical risks. As a result, energy prices in Pakistan surpass
those of regional economies like China and other neighboring
countries, hindering competitiveness, and impeding the growth
of export-oriented industries in the country
 This nearly sixty percent reliance on thermal sources means
depending on finite and increasingly costly fossil fuels. Pakistan is
underutilizing domestic renewable sources like solar, wind, hydro,
and biomass which are comparatively cheaper and cleaner
alternatives.
 Consequently, Pakistan confronts a severe energy crisis that
affects millions, detrimentally impacting the economic security.

PAKISTAN’S ENERGY PROFILE-different policies

Government of Pakistan (GoP) has announced different policies to
ensure the smooth supply of energy to the general public and to boost
economic growth. These polices include
 “The National Power Policy 2013”, The main targets included
complete elimination of load shedding, decreasing the average
cost of electricity generation, decrease in the transmission &
distribution losses, increase in the revenue collection and a
reduction in the time required for decision making at the ministry
level or other related departments.
 “The Power Generation Policy 2015” to facilitate private
investment in the power sector. The policy offered incentives to
the private sector to set up new power generation projects as well
 as invest in public sector power generation projects in a different
phases of development.
 “Alternative and Renewable Energy Policy 2019” was introduced
to assist and promote the development of renewable resources in
the country. The main objective of the policy was to provide
supportive environment for renewable power projects, increase
the share of green energy capacity to 20 percent by 2025 and 30
percent by 2030 through attracting private capital in the area of
green energy.
According to one estimate, the country imports coal worth $3-4bn
per year. And former Pakistan`s chief economist Pervez Tahir says
a promise made by the federal government at the highest level to
link Thar by rail has not gone past the PC-l (Planning Commission)
level preparation.

Owing to transmission constraints, 36 wind power projects in

Jhimpir and Gharo in Sindh with a combined installed capacity of
1,835 MW, according to industry representatives, will only be able
to dispatch 1,300 MW to the national grid in the immediate term.
Official data shows that the share of wind power in the national
energy mix in December was 2.5pc versus its share of 4.5pc in the
installed capacity.

 Pakistan’s dependence on liquefied natural gas (LNG) has

increased in recent years due to depleting indigenous natural gas
deposits.
Pakistan is also producing energy from the nuclear technology whose
contribution is increasing gradually.
 REASONS OF CRISIS
CAUSES OF ENERGY CRISIS
1. Imported fuel
 Coal is an important source of energy and power sector uses
significant share of coal for the generation of electricity. Generally,
indigenous coal is consumed in brick kilns and cement factories
while imported coal is used for power generation, cement
manufacturing and other industries like steel making, etc.
 Thar coal is contributing 1,320 MW, while imported coal
contribution in electricity generation is 3,960 MW which is around
75 percent of the total electricity generation from coal in the
country. (Economic Survey of Pakistan, 2021-2022)
 Currently, Pakistan imports around 3,000 tons of coal every day
from Afghanistan. (source, Arab News, August 2, 2022)
 Power sector uses most of the coal and the share has increased to
44.5 percent during July-March FY2022 from 42.7 percent during
the corresponding period last year. (Economic Survey of Pakistan,
2021-2022).
o Inability of exploiting the untapped potential
i. coal in the form of Lakhra coal mines of Sindh. The
mine has coal reserves amounting to 1.33 billion tons
ii. The Thar desert in Sindh province contains 175 billion
tons of lignite coal.
2. Lack of implementation of policies
 Dams are the solution to energy crisis but Kalabagh dam
politicized due to provincial prejudice and weak writ of
government.
  Former finance minister Dr Salman Shah said, in 2012, Kalabagh
Dam was the only short-term option to overcome the energy crisis
and revive the stagnant economy. It was a feasible project, which
could be constructed in just four years and produce 4,000
megawatts at a cheaper rate of Rs1.5 per unit at that time.
Some history of Kalabagh dam
 In December 2004, Pervez Musharraf announced that he would
re-initiate the Kalabagh project to serve the larger interest of
Pakistan. However, on 26 May 2008, the Federal Minister for
Water and Power of Pakistan, Raja Pervez Ashraf, said that the
"Kalabagh Dam would not be constructed" and that the project
had been cancelled due to "opposition from Khyber
Pakhtunkhwa, Sindh and other stakeholders, the project was no
longer feasible" In 2010 after the worst floods in Pakistani history,
the Prime Minister of Pakistan, Yousaf Raza Gilani, stated flood
damage would be minimized if the Kalabagh Dam were built

3. Agreement with IPPs; A little history

 In 1994, the Government of Pakistan announced an investor-
friendly policy to develop IPPs based on oil, coal and gas. To
convince these investors to empower an uncertain economy they
were granted guarantees and de-risking initiatives under a two-
part tariff regime i.e., energy payment and Capacity Payment.
This was and is a standard IPP payment structure found in
numerous other IPPs around the world. The Capacity Payment
Mechanism is a fixed revenue stream for an IPP offering
generation capacity and availability. Capacity payments are the
payments in which the energy producers are paid for the energy
 they produce and consumed by the user and they also receive a
payment (a capacity payment) for being available to produce.
Following the policy, 16 IPPs were established. The next year, a
hydro power policy was announced, which resulted in the
development of the country's first Hydro IPP.
 In 2002, the new government adopted a new policy, under which
another 12 IPPs began operations. For the development of
Independent Power Producers (IPPs), Private Power and
Infrastructure Board operates as one window facilitator on behalf
of all the departments and Ministries of the Government of
Pakistan to; process power projects in IPP mode, monitor their
development, and facilitates in providing all required support on
behalf of the Government of Pakistan.
 In 2015, Pakistan adopted a new power policy by which another
13 IPPs were established, mostly by Chinese companies. A
transmission policy for development of transmission line in the
private sector was also announced.
 More than 40 IPPs were operating in Pakistan as of 2018.
The gravity of the problem is that the annual capacity payment
for not utilizing the surplus Independent Power Plants (IPPs) is
projected to soar to an unsustainable level of Rs 1.5 trillion over
the next two years.

4. Unrealistic tariffs, low recovery, subsidies

 The government’s only remedy is to raise the tariff (electricity bill
have gone up by 100 percent over the past four years). (THE
NEWS, controlling circular debt, 2022)
  In 2019 alone, DISCOs posted a loss of Rs171 billion due to less
recovery of pending bills and another Rs38 billion due to technical
losses. (The NEWS, April 1, 2022)
 (An energy tariff is how an energy provider charges a customer for
their gas and electricity use)
 The government must stop “subsidizing” falsification and corrupt
practices and must limit their role to being a competent regulator.
 Power subsidies can only be sustained if they are explicitly
acknowledged in the fiscal budget; otherwise, the economy will
continue to suffer from the indirect cost of these subsidies.

5. No long term policies

 We are surplus as regards the installed capacity but still have to
resort to load shedding. Why? Every new government installed new
power plants, and increased the installed capacity, but failed to
improve the transmission and distribution capacity.
 Only short term plans are usually made by governments so that they
can present it among people and can secure next election.

6. No punishment for defaulters

Power thefts (kunda system)
 Besides electricity theft by individuals and communities, industries
are also stealing electricity by tampering with meter readers.
 Rs 53 billion worth of power theft in Pakistan in 2018 (Tribune,
April 2021)

7. Infrastructure failure T&D losses

 Distribution Sector considered as the weakest link in the entire
power sector.
 Technical line losses due to poor conductors, aged grid,
transmission and distribution infrastructure, infrequent
maintenance, and resistive losses (losses due to resistance,
atmospheric conditions, and heat) have reached 20 percent.
Studies reveal that Pakistan’s overall circular debt could reach Rs4
trillion by 2025 if these technical and non-technical losses are not
handled and controlled. (THE NEWS, controlling circular debt).
 In 2019, DISCOs posted a loss of Rs38 billion due to technical
losses. On average, nearly 20 percent of the electricity transmitted
to the distribution system is lost the effects of which are borne by
end consumers. (THE NEWS, April 1, 2022)
 The Aggregate Technical & Commercial (AT&C) losses of Pakistan’s
power sectors soared to 29.7%, (MAY 2020, The Tribune)

NEGLIGENCE OF SUCCESSIVE GOVERNMENTS

 From the energy generation point of view, the best era in Pakistan
was the 1960s when Tarbela, Mangla, and Warsak dams were
built, and dams like Kalabagh were actively taken up. But, the
politicization of this essential and well-needed dam has made its
execution next to impossible.
 Alternative dams like the Diamer-Bhasha Dam the feasibility of
which was prepared in the early 1990s also fell prey to criminal
negligence of the successive governments.
 The 969 MW Neelum-Jhelum Hydroelectric project was to be built
in 2003 at the cost of $1.5 billion but was not taken up until the
energy crisis intensified in the year 2007.
 As regards other alternative sources, Karachi Nuclear Power
Plant(KANUPP) was built with the help of the Canadian
government in the 1960s. Likewise, Chashma Nuclear power plant
was built with the help of the Chinese government in the1980s.
 PAKISTAN’S ENERGY CROSSROADS:
WHY THERE IS A NEED TO RESHAPE ENERGY MIX:
Natural cause
 From close to 1 billion persons in 1800, UN predicts the world’s
population to increase by 2 billion persons in the next few
decades – from 8 billion on November 15, 2022 to 9.7 billion in
2050. This population could further peak at nearly 11 billion
around 2100.

Climate Factor
 Climate change and environmental aspect are other key
contributors to this silent crisis. For instance, coal mining and their
subsequent supplies are affected when large coal producing areas
receive more than generous rainfalls. On the other side are some
countries which, at times, are forced to close their coal fields due
to environmental concerns. This disrupts coal supplies which, in
turn, impact energy production in various domestic and overseas
plants thereby pilling on the energy woes. Similarly, cold places
like Europe are characterized by regular harsh winters adversely
affecting the transport systems deployed for importing gas in the
region.

Demand-Supply Imbalance
 In spite of exploiting energy sources for over a century we are still
unable to plug demand-supply gap owing to various factors. The
problem is more prominent in developing countries though some
developed ones too struggle with disproportionate distribution of
 energy sources. Running for many years, the power generating
equipment and related infrastructure is now also aging fast.
Outdated equipment restricts the energy production. The old
plants come under huge stress to meet the daily demand for
power. In the situation of supply not meeting demand or due to
poor distribution systems there are acute load-shedding and
breakdowns. In few countries, significant delay in commissioning
of new power plants adds to the problem

Geopolitics
 In today’s modern world, geopolitics is emerging as the most
impacting cause in already ailing energy sector. Wars between
countries supplying energy or providing energy source or located
at strategic locations in energy supply chain, do hamper the
supplies and fuel prices. The Middle East region hosting Saudi
Arabia, Iraq, Iran, Kuwait, UAE or Qatar – the top oil producing
nations, is one such geography in this context. It was seen during
the Gulf war in 1990 when price of oil reached its peak causing
global shortage, creating major problem for energy consumers.
Currently, we have a similar situation in Europe, where the Russia-
Ukraine war is escalating the global energy crisis with each day as
the war prolongs.

Crosslink Between Energy and Supply Chains

 Supply chain is the lifeline of global economy. When the world
experiences problems with the supplies or price of energy, it
affects interconnected supply chains worldwide. For instance,
there has been a recent shortage of magnesium required in the
 production of aluminium compounds that are essential for
automotive industry to make vehicle frames. Owing to its power
outages, China decided to limit its production of the element
despite its importance for the European metal industry. Such
abruption in production and supply leads to shortage of products-
in-demand resulting in price rise. In such cases, the end-
consumers have to face the consequences as they have to deal
with higher prices and long delays for goods. Under such
interdependency, it becomes imperative to understand what
energy crisis means for global supply chains across various sectors.

Ukraine War
 The simmering tension between east European neighbors –
Ukraine and Russia, culminated into a war on February 24, 2022,
making geopolitics raise its ugly head yet once again. In addition
to its military aggression, Russia is accused of cutting-off its Nord
Stream 1 pipeline, leading to 89 per cent drop in its gas shipments
from last year’s numbers. This left most of Europe to seek other
energy sources in order to save businesses from going bankrupt
due to exorbitant prices.
 Along with small businesses many large European producers
experienced disrupted production including Germany-based large
producer Hakel and Arcelor Mittal – Europe’s largest steel maker;
Norway’s aluminium producer Alcoa; and the Netherlands-based
zinc producer Nyrstar. Many such companies produce necessary
global products for businesses worldwide. The war, still going on
while this is being written, is feared to end many businesses and
lead to a global supply chain disaster for an already struggling
system.
Paradoxes Of Crisis
 Fossil fuel has limited availability. Its usage begets environmental
and pollution problems too, forcing a recent major shift from fossil
fuel to more sustainable source of energy i.e., natural gas.
However, even natural gas is limited, and its increasing demand is
resulting in massive price rises, causing ‘greenflation’. Various
restrictions put by many governments on traditional energy
sources is also adding to the green-inflation, suggesting that even
switching to sustainable option will have its own challenges
 PAKISTAN’S ENERGY POTENTIAL
 Coal is also used for electricity generation in Pakistan. Thar has the
largest coal reserves in the country. Pakistan has vast reserves of
coal in the form of Lakhra coal mines of Sindh but these have not
been tapped timely

 The potential for solar power in Pakistan is also high. The sunlight
is available abundantly almost throughout the country.

 Pakistan has wind corridors as well and there is huge potential to

generate electricity from wind. It is estimated that Pakistan can
generate 50,000 MW from wind. There are wind corridors on the
coastal belt of Sindh and Baluchistan.
 Pakistan is very rich in hydropower and has the enormous
potential to generate electricity from water. The estimated total
hydropower potential of Pakistan is around 60,000 MW.
 Pakistan has also a lot of offshore Hydrocarbon potential. As it
stretches over 200,000 Sq. Kms; including Indus offshore Basin,
and Makran offshore Basin. Up till now, we have drilled around 17
offshore wells but subsequently abandoned for one or the other
reason.
 The scarce natural gas reserves of the country are quickly
depleting due to substantial increase in the demand for gas,
putting huge pressure on the limited natural gas reserves of the
country.
 Pakistan is producing very limited percentage of oil to meet the
overall demand of the country.
 SOLUTIONS
SOLAR ENERGY AS A PANACEA FPR PAKISTAN’S ENERGY WOES
Miriam Katz's study in Triple Bottom Line Magazine, titled The
Feasibility of Renewable Energy in Pakistan revealed that if only
0.25 percent of the land area of the province of Baluchistan were
covered by solar panels with 20 percent efficiency, this would be
enough to provide electricity to the entire country. With a solar
capacity of just 1.22 GW by the end of 2022 (IRENA figures),
Pakistan has failed to utilize its potential and underperformed.

Why Solar?
In Pakistan, solar energy emerges as a practical solution for several
compelling reasons
GEOGRAPHY
 approximately 70 percent of the population resides in remote
villages, situated far from the reach of the national grid, according
to findings of the Solar Energy Research Center (SERC). These
people rely on wood and animal dung as their major source of
cooking fuel, a practice that has led to alarming deforestation and
has affected the environment and health of the people.
PRACTICAL APPROACH; COST EFFECTIVE ENERGY
 At the individual level, the billing prices can be assessed cost-
effectively. India's average electricity cost is 5.90 per unit, very low
compared to Pakistan which is more than 45 per unit and not
affordable for a salaried person.
 o (Going solar in a small home needs six panels of 3.3 kW.
However, India offers generous subsidies for solar roofs that
cover up to 10 KW capacity.)
o (The Turkiye recipe can also be adopted – an installed power
generation capacity of 8 GW with 16 producers, with an
average plant capacity of 200 MW)
PRODUCING EMPLOYMENT
 The solar market in the US is increasing, resulting in an increase of
solar jobs by 167 percent.

THE VIABILITY OF WIND POWER IN PAKISTAN

A recent analysis by the German Think tank Agora
Energiewende revealed the need for Pakistan to adopt a
more aspirational approach in harnessing its variable
renewable energy (VRE) potential, specifically solar and
wind. The National Transmission and Dispatch Company's
(NTDC) 10-year Indicative Generation Capacity Expansion
Plan (IGCEP) falls short of forecasting this potential.
According to Agora Energiewende, Pakistan has the
capability to generate a substantial 33,000 MW of solar and
wind power. Implementing this strategy could yield cost
savings of 15 percent and significantly reduce emissions by
50 percent. It is stated that the design future installed
capacity share of VRE is 20,548; 13,680 MW from solar
photovoltaic (PV) and 6,868 MW from wind. The
government should pursue this ambitious program.

WHY WIND POWER?

 GEOGRAPHY
 Pakistan is fortunate to have something many other countries do
not, which are high wind speeds near major centers. Near
Islamabad, the wind speed is anywhere from 6.2 to 7.4 meters per
second (between 13.8 and 16.5 miles per hour). Near Karachi, the
range is between 6.2 and 6.9 (between 13.8 and 15.4 miles per
hour). Pakistan is also fortunate that in neighboring India, the
company Suzlon manufactures wind turbines, thus decreasing
transportation costs. Its turbines start to turn at a speed of 3
meters per second. Vestas, which is one of the world’s largest
wind turbine manufacturers, has wind turbines that start turning
at a speed of 4 meters per second. In addition to Karachi and
Islamabad, there are other areas in Pakistan that receive a
significant amount of wind.

 In only the Baluchistan and Sindh provinces, sufficient wind exists

to power every coastal village in the country. There also exists a
corridor between Gharo and Keti Bandar that alone could produce
between 40,000 and 50,000 megawatts of electricity.

 Given this surplus potential, Pakistan has much to offer Asia with
regards to wind energy. In recent years, the government has
completed several projects to demonstrate that wind energy is
viable in the country. In Mirpur Sakro, 85 micro turbines have
been installed to power 356 homes. In Kund Malir, 40 turbines
have been installed, which power 111 homes. The Alternative
Energy Development Board (AEDB) has also acquired 18,000 acres
for the installation of more wind turbines.
 In addition to high wind speeds near major centers as well as the
Gharo and Keti Bandar corridor, Pakistan is also very fortunate to
have many rivers and lakes. Wind turbines that are situated in or
near water enjoy an uninterrupted flow of wind, which virtually
guarantees that power will be available all the time.

RECENT PROJECTS
 To bring reliable power to schools in far-flung areas that previously
had no or limited electricity, the government began installing solar
facilities. The Asian Development Bank (ADB) supported this
through a $325 million loan that covered both Punjab and Khyber
Pakhtunkhwa province, where about 20% of schools are off-grid.
Almost 2,500 basic health units are also being fitted with solar
panels to ensure the continuous delivery of healthcare services.
The project, which is nearing completion, is also supporting the
construction of around 600 micro hydropower plants in off-grid
areas in Khyber Pakhtunkhwa.

“ADB is working to provide wider energy access throughout Asia

and the Pacific. The best way to do it is through the development
of renewable energy sources, We are happy to support the
government of Pakistan to achieve its goal of providing clean,
reliable, and sustainable electricity for all.”

(ADB Country Director for Pakistan Yong Ye)

 UNDER CONSTRUCTION PROJECTS
 Import of gas from Iran through the Iran Pakistan gas pipeline is
one of the most appropriate projects, but it has taken unduly
longtime to conclude and still has not taken off properly.
 Likewise, Turkmenistan-Afghanistan-Pakistan-India gas pipeline
did not move forward due to the situation in Afghanistan
 The Dasu Dam is a large hydroelectric gravity dam currently under
construction on the Indus River near Dasu in Kohistan District,
Khyber Pakhtunkhwa Province, Pakistan. It is developed by
Pakistan Water and Power Development Authority (Wapda), as a
key component of the company's Water Vision 2025.
 Mohmand Dam is the under construction Dam on Swat River
expected to generate 800MW energy.
 884MW, Suki Kinari hydropower project, KP (Energy project under
CPEC)
 300MW Coal-Fired Power Project at Gwadar (Energy project under
CPEC).
 Diamer-Bhasha Dam is in the preliminary stages of construction
on the Indus River between Kohistan district in Khyber
Pakhtunkhwa and Diamer district in Gilgit Baltistan. Upon
completion, Diamer-Bhasha dam would (i) produce 4800
megawatts of electricity through hydro-power generation; (ii)
store an extra 10.5 cubic kilometers (8,500,000 acre ⋅ft) of water
for Pakistan that would be used for irrigation and drinking; (iii)
extend the life of Tarbela Dam located downstream by 35 years;
and (iv) control flood damage by the River Indus downstream
during high floods.
 LINE LOSSES IN PAKISTAN
Pakistan power sector’s Transmission & Distribution (T&D) losses have
risen to Rs520.3 billion with the highest-ever deficit incurred in the
Peshawar Electric Power Supply Company (PESCO) to the tune of
Rs153.8 billion, in just one financial year.

 According to the official data available with The News, total

purchased units were 130,158 Gigawatt hours (GWh), out of
which sold units stood at 107,860 units; so the lost units stood at
22,298 units of GWh in financial year 2021-22. The target losses of
T&D envisage at 13.41 per cent, but actual losses went up to
17.13 per cent in financial year 2021-22.

o PESCO purchased 16,560 units of GWh of electricity and sold

10,355 units, so the lost units stood at 6,205 of GWh. Losses of
PESCO stand at 37.47 per cent and those went up to Rs153.8
billion in money terms in the current fiscal year. The losses of
Tribal Electric Power Company (TESCO) stand at 9.33 per cent
and at Rs3.7 billion in money terms. Total purchased units
stood at 2,284 units and sold units 2,071, so the lost units of
electricity estimated at 213 of GWh.
o The losses of Islamabad Electric Power Company (IESCO) stand
at 8.18 per cent, which caused losses of Rs21.9 billion in money
terms. The total purchased units stood at 13,027 and sold units
were 11,961, so the lost units of electricity were estimated at
1,066 units of GWh.
o The Gujranwala Electric Power Company (GEPCO) losses stand
at 9.07 per cent to the tune of Rs24.7 billion.
o The Lahore Electric Power Supply Company (LESCO) losses
stand at 11.52 per cent, which is equivalent to Rs72.7 billion.
The lost units in case of LESCO are estimated at 3,264 units of
GWh in the fiscal year 2021-22.
o The losses of Faisalabad Electric Power Company (LESCO) stand
at Rs33.4 billion, equivalent to 9.1 per cent. The losses of
Multan Electric Power Company (MEPCO) stood at higher side,
amounting to Rs75.1 billion. The losses of MEPCO stand at
14.84 per cent.
o The losses of Hyderabad Electric Power Supply Company
(HESCO) have gone down from 38.55 per cent in 2020-21 to
32.88 per cent in 2021-22 and in financial term stood at Rs45
billion.
o The losses of Sukkur Power Supply Company (SEPCO) remained
unchanged and stood at 35.27 per cent in 2020-21 and 35.62
per cent in 2021-22. In financial terms, the losses of SEPCO
stand at Rs43.7 billion.
o The losses of Quetta Electric Supply Company (QESCO) stood at
28.07 per cent and in financial terms escalated to Rs46.3 billion
in financial year 2021-22.
WHY ELECTRICITY PRICE HIKE IN PAKISTAN

Few people are aware of the fact that the price of electricity is
usually determined based on two factors: the first is the price of
fuel and the second is the supply and acquisition of foreign
exchange for its purchase.

(Express Tribune)

 In relation to the dollar rate, a condition was imposed by the

International Monetary Fund (IMF) that the government of
Pakistan would not artificially control the exchange rate of the
dollar rather the rate would be determined by the open market.
 It is also important to point out that electricity theft (line losses) is
a social problem that needs to be rectified. However, concrete
measures in this regard are still awaited. If action was taken
without any delay against the culprits, there would have been no
reason the power theft would have continued.
 Increase in the domestic consumption results in high electricity
bills, which creates unease among the public
 The hike has mainly to do with the conditions Pakistan agreed to
for a $3-billion bailout by the International Monetary Fund (IMF)
in June. Under a host of regimes to boost fiscal discipline, the IMF
has asked Pakistan to shore up tax revenue. The bailout deal could
be signed only after eight months of tough negotiations.