Group -II

Adnan Ali
Zainab Rauf
Abdul Rehman
Abdul Samad
Muhammad Kashif
Tauqeer Raza
 TOPIC
Electricity shortage in Pakistan in comparison with air conditioners
imported and Produced in2005-2006.
 
 INTRODUCTION

Background of the Study

Pakistan’s overall economy review (2004-2006)
Pakistan’s energy overview
Introduction of load shedding problem in Pakistan
due to increase in the usage of air conditioners
 Objectives of my research
Significance of the study
 AGENDA
• Introduction
• Literature review
• Theoretical Framework
• Hypothesis
• Research Design
• Data Collection, Processing and Analysis
• Findings
• Conclusion and Recommendations
 Background of the Study:
This study was made to demonstrate the effects of massive
installation and usage of air conditioners in Pakistan during 2005-
2006.

The introduction phase consists of three parts.

1. Pakistan’s overall economy review .
2. Pakistan’s energy overview .
3. And the third portion consists of introduction of load shedding
problem in Pakistan due to increase in the usage of air
conditioners.
Pakistan’s overall economy review (2004-2006)

• Pakistan's economy has recovered from years of sluggishness,

caused primarily to droughts, with growth experienced in the
agriculture, industry and service sectors.

• In fiscal year (FY) 2004/2005 (ending in June), Pakistan

achieved gross domestic product (GDP) growth of 8.4 percent
and in 2005/2006 the country had GDP growth of 6.6 percent.

• High inflation (9.1 percent) in 2004/2005 was attributed to

escalating oil prices, higher housing rents and food item
shortages. country in 2005.
 Pakistan’s overall economy review (2004-
2006)
• In an effort to decrease inflation, the central bank of Pakistan
announced that it would raise interest rates. The strategy worked,
with inflation decreasing to 7.6 percent by the end of FY 2005/2006.

• IMF approved a fresh loan of nearly $250 million as part of its

overall $1.5 billion aid package to Pakistan. In 2005, the United
States began the first installments of a $3 billion aid package, which
will continue through 2010.

• In 2006, the World Bank approved loans of $185 million for various
reform and infrastructure projects, in addition to the nearly $850
million loaned to the country in 2005.
 Pakistan’s energy overview

• In recent years, the combination of rising oil consumption and flat oil production
in Pakistan has led to rising oil imports from Middle East exporters.

• In addition, the lack of refining capacity leaves Pakistan heavily dependent on

petroleum product imports. Natural gas accounts for the largest share of
Pakistan’s energy use, amounting to about 50 percent of total energy
consumption.

• Pakistan currently consumes all of its domestic natural gas production, but
without higher production Pakistan will need to become a natural gas importer.
 Pakistan’s energy overview

• As a result, Pakistan is exploring several pipeline and

LNG import options to meet the expected growth in
natural gas demand.

• Pakistan’s electricity demand is rising rapidly.

According to Pakistani government estimates,
generating capacity needs to grow by 50 percent by
2010 in order to meet expected demand.
 Table evaluating Pakistan’s Energy Supply.

Sector Energy supply

Oil 29.40%
Natural Gas 50.30%
Hydroelectricity 15.69%
Nuclear 1.20%
Coal 7.60%
LPG 0.40%
Diagram evaluating Pakistan’s Energy Supply.

East
1% 5% 0%

15% 29% OIL

NATURAL GAS
HYDROELECTRICITY
NUCLERS
COAL
LPG

50%
Introduction of load shedding problem in Pakistan due
to increase in the usage of air conditioners:

• Pakistan is facing a huge electric power crisis today

• At present total power production capacity in the country is about

19,500 MW, out of which Hydel Power is only 6,500 MW, balance
of 13,000 MW is thermal either using Natural Gas or Furnace Oil.
Small capacity of 450 MW is Nuclear and only 150 MW is through
coal

• The problem of massive load shedding in Pakistan was properly

introduced in 2004-2005.Because in these days the overall GDP
growth was very high near about 9% per year.
Introduction of load shedding problem in Pakistan
due to increase in the usage of air conditioners

• Banks introduces new schemes in which peoples were provided

home appliances on lease

• These home appliances not only include the necessity objects like
refrigerator but also the Luxury objects like Air conditioners.

• Although most of the air conditioners were made in Pakistan but

60% of the raw material used in air conditioners was imported
from different countries of the world.

• Due to these reasons Pakistan was hit badly by two basic problems
such as budget deficit and shortage of electricity.
 Objectives of my research
• The main objective of my research is to find out either the
consumption of air conditioners in Pakistan is responsible
for Load shedding or the growth in industrial sector in
Pakistan is responsible for load shedding, or no
installation of new power plants is responsible for the
problem.
• From different resources it is also confirmed that during
2002-2006 Pakistan’s industry sector was also at boom so
without testing the hypothesis we cannot say that the
Load shedding problem is due to usage of Air
conditioners.
 Significance of the study

• The research work on load shedding will help

us to demonstrate the true reasons of load
shedding problem. It also helps us to find out
the total energy consumption and production
of Pakistan.
• The study will also help us to evaluate how
much growth is needed in electricity
production sector to cease the load shedding
problem.
 Literature Review:
• General Musharraf (R) after becoming Chief Executive used to talk
about building dams especially Kalabagh Dam. This was one of the
many promises he failed to keep.

• During the second government of Benazir some independent

power plants were set up. Had they not been setup then we would
have had a much bigger crisis with life almost coming to a standstill.

• Pakistan far behind in development according to recently

announced World Bank report.
• Pakistan is suffering from shortage of infrastructure in the
water, irrigation, power, and transport sectors.
 Literature Review:
• Much of the water infrastructure is in poor repair and Pakistan has to invest almost Rs 60 billion per
year in new large dams and related infrastructure over the next five year.

• In the energy sector, Pakistan will face severe power shortages of approximately 6,000
megawatts by the year 2010 (equivalent to about three Tarbela dams) and 30,700 MW by the year
2020.

• At present total power production capacity in the country is about 19,500 MW, out of which
Hydel Power is only 6,500 MW, balance of 13,000 MW is thermal either using Natural Gas or
Furnace Oil. Small capacity of 450 MW is Nuclear and only 150 MW is through coal.

• Although gas is to be provided for 5800 MW to various thermal plants, but in actual fact much less
gas is being made available, the deficiency is being filled through furnace oil. It can be inferred that
in the recent past, only furnace oil was used as fuel for about 9000 MW generation. I

• t is very important to understand the consequence of the prevailing situation. Current price of
furnace oil is about Rs 49,000 per ton, which amount upto Rs 49/- per kg. On an average one kg of
furnace oil produces 3.8 kWh of electricity. Thus, the cost of furnace oil for generating one unit of
electricity is about Rs 13.
 Problem Statement:

• Do the increased consumption and production

of Air conditioners in Pakistan is responsible
for severe load shedding in Pakistan or other
factors like growth in industry and no
installation of electricity capacities were
responsible for that.”
 Theoretical Framework:
• After analyzing the Pakistan’s energy
shortages and their different reasons for these
shortages the following variables were
identified.
 Inventory of Variables:

Dependent variable: • Air

• Electricity
• condi
Independent variables tione
•Air conditioners r
•New electricity • Electrici • NEC
capacities installed ty
•Industrial growth • instal
• shortag
lation
e
• Indus
trial
 Explanation of established
relationships among variables.
The Increased usage of air conditioners in homes will ultimately
affects the electricity supply in the country because it is very difficult
to control production process in the country. If the income levels in
the country are high then people will ultimately use luxury items.

on the other hand heavy industry also needs much electricity to

generate production in this scenario we can say that if during 2005-
2006 new industries open then this will also create shortage however
this could be decided in the findings portion of the report that either
industrial growth or no installation of electricity capacities or massive
usage of electricity appliances is responsible for this problem.
 Hypothesis:

POSItIVE HYPOTHESIS:
• P1) Massive usage of air conditioners and growth in industrial sector in
the country is responsible for the electricity shortage in the country.
NEGATIVE HYPOTHESIS
• P0) Massive usage of air conditioners and growth in industrial sector in
the country is not responsible for the electricity shortage in the country.

NULL HYPOTHESIS
• There is no relationship between Massive usage of air conditioners and
growth in industrial sector in the country is responsible for the electricity
shortage in the country.
 Research Design:
Classification of research: 
 In our research the purpose of study would be descriptive and also quantitative because substantial
information is known about situation and hand on how this particular issue have been solved in past.
 
  Data Collection Techniques:
 As our research is based on historic data. Such as data regarding shortage of electricity in Pakistan during 2005-2006.So
the process of data collection involves two steps first step was to collect data from two historic sources such as
different government sources and the second source is private institutions such as newspapers. and the second step
was to send questionnaire to different energy suppliers of the country. these resources are contacted through
PEPCO to provide necessary information. For the purpose of data collection a request was sent to PEPCO to provide
data regarding Electricity. The research was of quantitative nature and the quantitative data was collected through
various sources.

 Population and Sample:

 As our research is totally based on historic data so for data collection the population is all power Supply
companies of Pakistan. These all companies are headed by PEPCO.(Pakistan Electric Power Company. )
These companies are responsible for electric supply in Pakistan. A list of these companies is given below.
No supply Electricity Companies

1 LESCO.
2 GEPCO.
3 FESCO.
4 MEPCO.
5 PESCO.
6 HESCO.
7 QESCO.
8 IESCO.
9 TESCO.
10 NTDC.

11 GENSCO.

12 KESC.

13 GENCO I.

14 GENCO II.
Tools of Data Collection: 
The data collection tools were Filling up a questionnaire in which
the details for electricity consumption and production were asked
from the staff members of these companies. The analysis data was
also collected from different news papers, websites and other sources.
The responsible members of different electric supply companies are
contacted through e-mails and Telephones.

  Forms of data collected:

 Thus data collected from different sources are of two types one type is
completely filled questionnaire and the other type is different
reports on Electricity supply and shortage. The data thus collected
is and managed so that results can be identified and also the trends of
electricity consumption during different seasons in Pakistan. There are
Two  objectives of data one is based on past situation and one is based
on present and future situations.
 Data Collection,Data Processing and analysis
 

The Primary and secondary data collected from different

sources thus managed. Primary data was collected in the
form of filled questionnaire and the secondary data was
collected in the form of reports of different journalists and
other government officials.

The data collected in the form of filled questionnaire is of

primary nature thus it is directly analyzed by using different
statistical tools such as coefficient of variation and other
measures of location and measures of dispersion.

Then the data was arranged and presented in a graphical

form so that any one can analyze the situation of electricity
shortage in Pakistan.
Here is the picture of Forecast of Pakistan’s Energy Consumption and production. (Source:
World Energy Data.)
 SUPPLY OF ELECTRICTY
Domestic Supply
 It includes power supply to residences, places of worships, approved charitable institutions,
Government approved educational institutions, hospitals etc.

 Commercial Supply
 It includes power supply to offices and establishments such as shops, hotels, restaurants,
petrol pumps, private hospitals, cinemas, offices of associations and consultants etc.

 Industrial Supply
It means power supply for bona fide industrial purposes in factories including the supply required
for the offices and for normal working of the industry and also for water pumps and tube wells
other than those meant for irrigation or reclamation of agriculture land .
 SUPPLY OF ELECTRICTY
 Agricultural Supply 
“Agricultural Supply” means a supply for lift Irrigation Pumps and/or Tube wells
intended solely for irrigation or reclamation of agricultural land or forests, and
includes supply for lighting of tube well chamber.

 Maximum Demand
 “Maximum Demand” means the highest demand obtained in any month measured
over successive periods each of 30 minutes duration.

 Public Lighting
  Public Lighting means illuminating public lamps.

 Bulk Supply
 Bulk Supply” for the purpose of this tariff means a supply given in a bulk at one point
to consumers having their own distribution facilities, i.e. own grid station etc. Beside
that Electricity consumed in auxiliaries and system losses are referred as other
Consumption.
Statistics of Number of Consumers of Electricity by Branch in Pakistan
Partition of consumers of electricity by branch

industrial 1% agriculture 1%
Commercial 14%

Domestic
Commercial
industrial
agriculture
Others

Domestic 84%
Electricity Consumption by Province and Branch (2005-06)
 Graph of System Losses
 

system
loss uint loss
19%
system loss

uint loss
81%
 Analysis According to The Director General (Energy Management & Conservation) PEPCO.
 

• It was found that half a million ACs mainly of the split version was sold
and added to the power system during fiscal 2005-06.
Thereafter, another 750,000 pieces of such equipment was
installed in Pakistan during the next financial year.

• 2005-06 Importers and manufacturers of air conditioners had planned to

sell upwards of a million ACs during 2006-06, but
due to the on-going power crises they could only purvey750,000 such
appliances.

• A market survey revealed that people wanting to add three ACs during
2008 would now buy two and spend the rest of the money on
procurement of a generator. The sale figures for the three years viz.
 Analysis According to The Director General
(Energy Management & Conservation) PEPCO.
• 2005-08 add to a phenomenal two million pieces or an addition of
4000 MW of load or at least a usage effect equaling 800MW at 20
per cent diversely factor.

• It was estimated that four million ACs of both the window and the
split versions (in addition to package and centrally air conditioned
buildings) were added between 2000-08 or a load of 1600 MW
(with due diversity) to the system.

• One can safely assume that a large number of such contraptions

would be hooked up to the system in addition to the equipment
bought during 2000-2008.
 Findings

• From above analysis it is found that shortage of electricity in Pakistan is

caused by only frequent use of Air Conditioners in by domestic consumers
only. As it is evident from graphs that domestic consumption of electricity is
raised about 30% during 2005-2006.

• The other variables of our research such as industrial growth and

consumption of electricity in industry has almost no impact on shortage.
Because industrial growth is only 7% during 2005-2006 raised from 3.5%
from previous year. But Domestic consumption is increased from 5% per
year to 30% which is alarming.

• So we accept the first null hypothesis that Massive usage of air conditioners
in the country is responsible for the electricity shortage in the country. And
we reject all other hypothesis.
 Conclusion & Recommendations
 The problem of energy shortage can be solved by imposing more duties on luxurious goods
such as Air Conditioners.
 
 ™ Installation of low cost new energy generation plants is very necessary. (Low cost plant includes
solar energy and wind energy systems theses systems are expensive at purchasing but after
installation these are the free sources of energy).
 
 ™ Line losses should be decreased to 3% currently it is 20%
 
 ™ Line loses in shape of theft of electricity should also be decreased by making new and harder laws.
 
 ™ A strong media campaign should also be introduced on TV. Channels to create awareness in the
society to decrease energy consumption.
 
 ™ Electricity saver appliances should be introduced in the country.
 
 ™ Home users use less energy so that industrial can benefit from it.
 References
 World Energy Data: www.eia.doe.gov
 Daily Times
 
 Daily News
 
 Contemporary issues in Pakistani Economy by DR. M.
Aslam(2005-2006 Edition) Major issues in Pakistan’s Economy BY.
A.Hamid Shahid(2005-2008 Edition) Statistical bureau of Pakistan
PEPCO (Pakistan Electric Power Company)
 
 www.worldbank.org