9 Energy
9 Energy
9 Energy
ENERGY
Access to affordable, sustainable, and efficient sources of In five years span, the of Petroleum products’
energy is a ballooning challenge for Pakistan and for consumption have bumped up from 38% to 41% in overall
Punjab, in particular. The province has to explore and energy consumption. Punjab energy mix is converging to
develop multiple resources of energy for fueling its fossil fuels largely due to limited and curtailed supplies of
growing economy and population. The importance of natural gas. This changing trend also being supported by
localized solutions has increased after 18th Amendment the electricity load shedding which has kept the share of
and its consequent implications in growing energy gaps. electricity 13% without any change. Owing to the limited
supplies and continuous disruptions from the network-
Despite all the efforts and investments made, after 18th based energy, both natural gas and electricity, the
Amendment, in energy infrastructure, Punjab still has consumers have largely shifting towards alternate fuels
serious gaps to fill in this aspect. Punjab’s economy is which driving the consumption of imported energy
unable to perform on its optimum level due to a upward overall.
mismatched energy infrastructure coupled with forced
electricity load shedding, prolonged gas disruptions and Petroleum Products
dollar-linked energy pricing mechanisms. Predominately Punjab consumes above 60% of total Pakistan’s oil
fossil fuels and now the natural gas too are import consumption which has an increasing trend with a rate of
oriented thus both energy prices and efficient distribution above 8% per annum as compared to 6% of overall energy
are the major concerns for Punjab’s energy requirements. consumption. The increasing dependence on fossil fuel is
further denting the provincial competitiveness dimensions
9.1 ENERGY CONSUMPTION AND CHANGING MIX and country overall economic progress as a result. Vehicles
on roads are growing which is the major oil consuming
Punjab’s energy consumption is augmenting very sharply sector of Punjab with 61% share in its oil consumption
with a changing mix. In just course of five years, from 2012 followed by Power sector, Industry and Domestic sectors.
to 2017, the total energy consumed in Punjab has risen by Punjab’s agriculture has consumed above 90% of the oil
30% i.e. 6% per annum on average. The energy being consumed by the whole Agriculture sector in
consumption patterns also corroborate, somehow, with Pakistan that is mainly due to Diesel consumption in
the economic progression of the province in this period. Tractors and Tubewells across Punjab.
During 2011-12 total energy consumption, comprising
Source: Authors’ calculations using Pakistan Energy Year Book, 2017 and 2012
Source: Authors’ calculations using Pakistan Energy Year Book, 2017 and 2012
Source: Authors’ calculations using Pakistan Energy Year Book, 2017 and 2012
It is very important to highlight that the competitiveness Figure 9.5 Natural Gas price for industry
of Industries’ related factors should be safeguarded if
Punjab wants to focus on structural transformation
through industrial development. In competitiveness Gas
supplies play an important role for the industrial sector.
Punjab-based Industries cannot perform in international
markets with high cost of doing business especially the
high-priced utilities. Following figure portrays the
challenges Punjab-based Industry is facing in shape of gas
rates;
Figure 9.7 Demand Supply gap of Natural Gas In view of severe energy constraints, there is a dire need
to increase energy supplies and conserve the existing
supplies. In this regard, pricing is also one of the tool for
the judicious utilization of energy source.
Electricity
Despite several-hour-long load shedding spans, Punjab
electricity consumption still posted a modest growth in
last five years. Overall, Punjab electricity consumption
grew by 6% from 2012 to 2017 on yearly average. The
trend is almost similar to overall Pakistan. If the electricity
supplies had not curtailed, Punjab consumption would
have grown in double-digit. Electricity infrastructure in
Punjab is best-in-class if compared with Punjab this is the
reason why over 95% of population has access to
Source: OGRA Report electricity (PSLM, 2015). There are very few remote areas
in Punjab which are not electrified yet.
Source: Authors’ calculations using Pakistan Energy Year Book, 2017 and 2012
Lahore electricity consumption is on the highest and its For Electricity, starting from generation to distribution and
households have highest ratio of air conditioning facilities. regulation all major players are federal not provincial. In
Lahore is the highest but there is still a significant gap as it parallel; however, Punjab has developed various
stands at only 20%. The electricity consumption in the institutions and successfully implemented number of
domestic sector will increase if the buying capacity of initiatives for electricity generation in Pakistan. Overall,
consumer increases a fact that will go up. Punjab has to following figures are showing the electricity generation
be very active in undertaking appropriate planning for capacity of Punjab, with both Federal and Provincial
meeting future electricity demand keeping sustainability initiated, as of 2015.
and affordability in the focus. Though, there are several
federal institutions and regulatory regimes are involved in
the power sector, Punjab has to play a very active role in
streamlining and aligning them for a collaborative
development. The advent of Pak China Economic Corridor
has provided a window of opportunities. Previously
important projects had not implemented due to lack
financial resources; however, CPEC is now investing
heavily for developing coal, wind and solar energy projects
in Pakistan and several in Punjab too.
The Punjab’s district wise electricity generation by source Thermal is the major source of energy in Punjab with most
breakup is indicated by the above shows that districts like of the plants located in the northeastern side of the
Muzaffargarh, Narowal, Mandi Bhaudin, Sheikhupura, province. There is limited renewable energy sources such
Lahore, Kasur Khanewal, Jhang and Gujranwala generate as solar and wind resources. The Hydel potential has not
energy through gas and oil. Attock is primarily generating been developed optimally thus leading to stagnant growth
electricity through Hydel resources while Sahiwal and in hydel energy generation. Nevertheless, In generation
Faisalabad are utilizing mostly coal as fuel for electricity. capabilities, Punjab is now on track to produce a sizeable
Renewable energy and Nuclear are scanty amongst the electricity from renewable sources by 2023.
regions.
Wind
5% of the total motor 10% of the total motor 30% of the total motor
Electric Vehicles on the road
vehicles vehicles vehicles
15% network energy saved 10% network energy saved 5% network energy saved
Energy savings across
through conservation and through conservation and through conservation and
sectors
technology shifts technology shifts technology shifts
9.3 KEY POLICY FOCUS AND STRATEGIC improve the consistency of supply to the industrial and
domestic sector.
AREAS
Efficient consumption of available energy sources
Though the energy is mainly a federal subject, as per the
present dynamics, the Province needs to advocate its Use of high-efficiency domestic appliances should be
issues to the respective forums and also introduce promoted to minimize the demand side inefficiencies.
localization solutions and interventions where if possible. Highly energy intensive appliances and equipment should
Following are key points Punjab to focus on: be replaced with modern technologies through
government backed incentives. Introduction of taxes
Affordable Energy Supplies should be made on inefficient usages including appliances
and machineries. Similarly, the use of inefficient vehicles
Energy prices need to be rationalized and brought to a including diesel and conventional petrol engines needs to
level which will enable our production sectors, particularly be discouraged. Import levies on hybrid and electric cars
the industry, to become competitive in international should be immediately reduced to promote their use and
markets in face of stiff competition from other regional in the meanwhile Punjab should develop domestic
economies. Currently the energy prices in Punjab are capacity for manufacturing hybrid and electric vehicles by
much higher than other regional economies such as China, identifying and enabling Automobile industrial clusters in
Bangladesh and India which is hampering our the province.
competitiveness and hence the growth of export-oriented
Industry in the province. The export-oriented industry Industrial units in Punjab in all major sectors are using
need to be supported, on emergency basis, in terms of outdated and energy intensive technologies. Up gradation
energy prices and quality of supplies to improve the export of current technologies and incorporation of high-value
competitiveness of Punjab. added technologies should be encouraged. Modern
technology, high value added and low energy intensive
Import oriented energy production, which is currently the sectors need to supported. Punjab need to promote off
main component in the energy production mix of Pakistan, grid and localized energy generation solutions for rural
needs to be discouraged and domestically available and remote areas through private sector and
resources should be developed and utilized on a national communities’ participation.
level. Punjab will have to champion the use of domestically
available resources such as coal to the Federal government Optimum utilization of indigenous and renewable energy
as import of expensive thermal fuels for energy and resources
electricity production not only drive up electricity costs but
also is a heavy burden on the foreign exchange reserves of Support for Solar PV on large scale for domestic
the country. consumers through net metering and banking facilities. In
order to overcome the high capital investments, Solar
Distribution and transmission losses of electricity due to panels manufacturing industries should be incentivized
inefficient transmission systems further aggravate the and installed with allied infrastructure and support
electricity demand and supply gap leading to more hours leveraging CPEC and Chinese technologies. Agriculture and
of load shedding. These losses need to be curbed to municipal wastes need to be fully converted into energy
through feasible and economic instruments. Punjab also