Economic cost of Energy Crisis in Pakistan


Energy indisputably is a primary catalyst for national development. It is termed the backbone and lifeline of a country’s economy and its availability ensures accelerated growth and development. On the other hand, an acute shortage of energy can be a great bottleneck in the supply of energy resources to an economy. Continuous and accelerated supply of energy has turned out to be the biggest challenge and a matter of serious concern in the contemporary world as the global scenario is now shifting its face from geopolitics to geo-economics. As a matter of fact, there has been an enormous increase in the global demand for energy in recent years as a result of industrial development and population growth. The supply of energy is, therefore, far less than the actual demand. Pakistan’s energy concerns are now assuming serious and horrific proportions owing to the fact that Pakistan has been suffering from an energy crisis for about half a decade now. The power crisis is becoming unbearable with every passing day proving to be a serious threat and impediment to the country’s economic progress. The internal stability of any country is highly dependent on its economic well-being which is directly dependent upon sufficient energy resources and their proper management. At present Pakistan is suffering from an energy deficit of about 4500 MW. This dismal state of affairs has led to the closure of many industrial units hence rendering a large number of people unemployed. Moreover, large parts of Pakistan have been affected by power blackouts due to an electricity crisis.

There is a shortage of more than 7,000 megawatts which amounts to 40 percent of the total demand. The energy crisis is threatening to become bigger in the coming years. There is an expected shortfall of up to 50% because of an increase in demand and a supply gap of up to 3,000 MW. Pakistan’s total energy requirement will probably increase by 48% in 2011. Power generation in Pakistan is hugely dependent on oil, whereas we have only 20% oil of the original amount needed for production. The remaining oil has to be imported from the Gulf States and other countries of the world. No major oil field so far has been discovered in the last three decades. Oil demand is expected to double by 2015 and quadruple by 2025. This would lead to an alarming trade shortage and a general price hike. Pakistan’s energy sector comprises major sources with a share of 50.4% of gas, followed by oil 29%, hydro-electricity 11%, and coal 7.6%. Consequently, Pakistan imports energy to overcome the problem and maintain its standard of living of people. The major shortfall is expected in natural gas supplies. Pakistan had 28 trillion cubic feet of reserves of natural gas in 2006 but due to an increase in its demand, it is expected to be exhausted in the next two decades.

Pakistan has the world’s seventh largest reserves of coal after the discovery of THAR. These reserves are still untouched due to a lack of technique in coal mining. Similarly solar and wind energy in coastal areas of Baluchistan and Sindh have a lot of potential to generate electricity but the acquisition of technology at an enormous cost makes this an unbelievable source. Pakistan has only two nuclear plants providing two percent of electricity to our country. Population explosion is another cause of energy crises. At present Pakistan is pursuing a multidimensional pro-longed strategy to ensure adequate and uninterrupted oil and gas supply and other energy resources to sustain the present pattern of energy for the rapid national economic growth. Greater reliance on gas, aggressive pursuit of hydroelectric power generation, and enhancing nuclear power generation capacity are some of the key elements of this strategy. Pakistan is also seeking to expand its primary energy supply base by encouraging oil exploration and power generation companies to undertake energy projects in Pakistan. The regional gas pipeline projects Pakistan is actively pursuing to meet its expanding domestic energy demands. These are the prerequisite for resolving energy crises that, unless resolved promptly, would cast a long shadow on the short and medium-term objectives of economic growth and development. To cut the long story short, Pakistan is at a critical juncture entangled with multifaceted problems. A pragmatic approach coupled with rational decision-making can show some light at the end of the tunnel.

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