Energy crisis a side effect of bad administration?

Causes of power outages

The power crisis is not only destroying the economy but also disrupting the political system. The power distribution mechanism in Pakistan is outdated and inefficient hence power is wasted to adequately meet the demand of the consumers. Power outages are not due to less power supply in Pakistan but fluctuations in the transmission lines which were not updated from time to time and hence the basic problem is the gap between the generation capacity and the transmission capacity to the distribution companies. In 2020, 20 percent of the power was lost during transmission. WAPDA used to supply 65 percent of the power in the country but now it has been reduced to just 35 percent.

It is also said that the Sui gas reserves are also fast depleting and will be exhausted soon. At most, they can last for another three years. And then we will be forced to import natural gas. Many experts believe that the decision to use natural gas as CNG in cars in Pakistan has turned out to have more disadvantages than advantages when viewed in the context of long-term effects on gas supply.

Financial crisis caused by circular debt

The country’s power sector debt has reached Rs 5.422 trillion, while capacity payments to independent power producers have risen to Rs 2 trillion. (as of February)

Power cuts are common in many cities in Pakistan. “Power cuts in Pakistan are caused by the circular debt problem. When the government cannot pay the power distribution companies (DISCOs) on time due to circular debt, they in turn cannot pay the power producers (GENCOs). These power producers then have trouble paying their fuel suppliers, who do not have money to import oil. In this way, cash flow problems lead to payment delays that affect the entire power sector, despite the fact that we have sufficient generation capacity.”

Pakistan’s domestic energy production relies heavily on imported fossil fuels. The construction of coal-fired power plants on imported coal when local coal was available was indeed odd. Due to insufficient storage, floods wreak havoc. One scientist said, “If the Bhasha dam had existed, the entire flood water would have been stored in 2022.”

What is required?

To overcome Pakistan’s energy problems, the economy needs to grow and scale up. There needs to be a strategy to get rid of the dependence on fossil fuels due to their contribution to carbon dioxide emission. Although Pakistan does not contribute as much to the global emissions of the world as other developed countries, we need to ensure that these effluents do not exceed the permissible levels. The need of the hour is to provide cheap electricity to the population.

Electricity shortfall increased to 6,623 MW in May 2024

We are facing rampant commodity price volatility, double-digit inflation, declining foreign exchange reserves, dangerously high national debt. Economic instability and exorbitant cost of living are exacerbated by ongoing challenges in energy production and distribution, which are negatively affecting economic development. Pakistan is facing supply mismanagement issues. The overall planning of our regulatory bodies in Pakistan needs to be improved. Focus needs to be placed on areas such as energy management, infrastructure and economic planning. Our industry needs to become competitive.

India last approached the IMF in 1991, but never since. It is important to remember that the IMF’s policy is narrowly rooted in securing its loans. Pakistan has participated in 24 IMF programs since the first agreement was signed in 1958 to help overcome economic crises.

Pakistan also requested financial assistance from China, Saudi Arabia and the United Arab Emirates.

Over-dependence on non-renewable energy sources should be avoided. Resilient energy infrastructure is required. We should strive to use untapped renewable energy sources such as solar, hydro, wind, tidal, nuclear, biofuels and geothermal. Modernisation of the grid and review of transmission processes are also required. Sustainable energy policies are needed. Construction of small and medium-sized dams would help to overcome water shortages to a large extent.

Mismanagement in the oil and gas industry in licensing processes, permit applications and outsourcing of parts of the company’s operations leads to chaos, the visible manifestations of which are inflated energy prices and industry shutdown. Lack of technical knowledge is also responsible. Another reason is inefficiency and short-sighted political involvement in IPPs. Per capita energy consumption is directly related to the economic development of any country. According to NEPRA, the annual electricity consumption in Pakistan was 644 kilowatt-hours in 2022, which was one of the lowest in the world.

Conventional energy resources

The global energy demand is growing at a rate of 2 percent per year, while renewable energy resources are doubling. Conventional energy resources are depleting over time. Moreover, they emit harmful emissions such as carbon dioxide, methane, sulfur dioxide, nitrogen oxide, and nitrous oxide. There is a direct correlation between economic growth and carbon dioxide emissions. “The average global surface carbon dioxide concentration for all 12 months of 2023 was 419.3 ppm (parts per million)” and it is worth noting that it will take five years to reduce it by 1 part per million. Due to increased carbon dioxide emissions and climate change, extreme weather patterns are visible. In 2022, Karachi experienced seven waves of monsoon rains. This also emphasizes the need for cleaner energy sources.

Renewable energy resources are environmentally friendly and are cost-effective to meet future energy demands. Pakistan has an abundance of natural resources. Northwestern KPK has many hydroelectric power plants and coastal Sindh has vast wind energy resources.

How important is connection with the environment

We should follow a path that confirms the natural path and pay special attention to the means that will ensure our survival in the future. If we go against nature, it will simply turn on us. At some point, the population will reach a point where the land cannot support it.

Pakistan is facing a serious water crisis.

According to UNICEF, an estimated 53,000 children under the age of five die each year in Pakistan from diarrhea caused by poor water and sanitation, and an estimated 70 percent of households still drink water contaminated with bacteria. (Report published in 2021)

The government’s priority should be to provide people with drinking water, because without food a person can survive up to three weeks, but without water they cannot survive longer than 3 days.

Energy economics should be integrated into energy policy. For this, we need people who are well-versed and have the right knowledge. Students should be given training in colleges and universities to enable them to include this component in energy policy and work accordingly. Most importantly, the culture of being a son of the soil should be instilled among the youth. Our youth should get rid of the fixation of leaving the country for good. They should have in mind that they can go temporarily to enhance their capacities, but when they come back, they must use their expertise to uplift their country. Our youth lack such commitment.

Encouraging renewable energy and energy efficiency ensures the development of the economy and trade. We need to socially contextualize energy issues. Individual contributions, such as using energy-efficient appliances, LEDs and promoting similar behavioral changes, including using public transport, reducing the use of private cars, more walking and cycling, can help promote a culture of energy saving.

Other measures include reducing carbon dioxide emissions to limit temperature increases and keep them at 1.5 degrees Celsius.

The government should be more proactive in shifting to renewable energy. Pakistan needs sustainable economic growth over a reasonable period of time. We have been facing a balance of payments problem for a long time. This problem is compounded by high import bills. If we import solar panels, the same balance of payments problem will come again.

The main challenge for Pakistan is economic growth. We should aim for a growth rate of 6-7 percent, which can be achieved through stable monetary policy, balanced capital account, and preservation of biodiversity and ecosystem, among other factors. Currently, Pakistan’s energy mix indicates that we are more inclined towards non-renewable energy sources. Solar, wind and tidal energy have a very small share. Pakistan needs to be ready for a sustainable energy transformation. There is a need to diversify the energy mix. Energy security is a basic requirement for every country. It leads the country to prosperity.

The way forward

Over-dependence on non-renewable energy sources should be avoided. Resilient energy infrastructure is required. We should strive to use untapped renewable energy sources such as solar, hydro, wind, tidal, nuclear, biofuels and geothermal. Modernisation of the grid and review of transmission processes are also required. Sustainable energy policies are needed. Construction of small and medium-sized dams would help to overcome water shortages to a large extent.