Economics

Saturday, 4 February 2012

CONTENTS Definition of Energy crisis Importance of
energy Energy Problem in Pakistan Artificially Created
Energy Crisis Supply Sources of Electricity WAPDA KESC
IPPs NEPRA Inefficiency of Electricity Authorities
Inefficiency of Government Electric Power Shortage
Reasons of Energy Crisis in Pakistan Effects of Energy
Crisis on the Economy Way Forward


Energy Crisis

An energy crisis is any great shortfall (or price rise) in the supply of energy resources to an
economy. It usually refers to the shortage of oil and additionally to electricity or other natural
resources.[1]
An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to
an economy. In popular literature though, it often refers to one of the energy sources used at a
certain time and place, particularly those that supply national electricity grids or serve as fuel for
vehicles.
The crisis often has effects on the rest of the economy, with many recessions being caused by an
energy crisis in some form. In particular, the production costs of electricity rise, which raises
manufacturing costs.


Importance of Energy:
Energy is central to the development of a country for several reasons.
First, without access to modern energy services, it is difficult to effectively provide modern
health services (e.g., keep vaccines cooled properly), improve agricultural productivity through
intensification or increased value-added product processing such as drying, get the full benefit of
improved educational systems (e.g., lights for night study), support democratic governance
through communication with citizens, or building an economic base that can participate in
todays globalized economy.[2]
The economic engine and the wheels of industry, agriculture and business need energy to move
forward. On the social aspect, energy consumption per capita is a key indicator of the quality of
life of the citizens and community.
Distances through transmission lines and distribution systems to businesses, industries, schools,
hospitals, and residences where it performs work.

Line Losses:
Bringing energy to the location where it can be used to perform work is often necessary.
Electricity, once generated by falling water or burning oil, gas, or coal, is often transferred long
As when converting one form of energy to another, some energy is also lost during
transportation. In the electric sector, these losses are called line losses and while some are due
to technical factors such as line heating, theft of electricity also can contribute to losses.
Energy Problem in Pakistan
Energy is now the talk of town in Pakistan. Starting from house wives, traders, businessmen,
students, ministers all the victims of the shortage of energy. Karachi the biggest city
experiencing up to 12 hours load shedding in peak hot weather and during the board exams are
on the way. Every body now became the expert of energy and all the figures are on finger tips.
Some time the shortage is 200 MW some time 2500 MW.[3]
In addition to these commercial forms of modern energy, the World Energy Council has
estimated in 2000 that about one-third of Pakistans energy needs are met by non-commercial
sources of energy such as firewood, charcoal, and cow dung [World Energy Council 2000]. In
2006, ESMAP estimated the percentages of households meeting their energy needs using
noncommercial and commercial sources of energy and this data. The poor generally meet their
energy needs through free biomass (wood, dung, agricultural wastes) and kerosene, particularly
in rural areas.
The reason that Pakistans population uses extensive quantities of non-commercial forms of
energy is that a significant portion of the population lacks access to modern forms of energy such
as electricity.
In 2006, the Asian Development Bank estimated that 45% of Pakistans population lacked access
to electricity [ADB 2006a].
Even with increased domestic production of energy, Pakistans energy import bill can be
projected to rise as it economy continues to grow and require more energy.
Part of the reason for Pakistans expanding appetite for energy is that its overall economy
requires large amounts of energy to produce one unit of Gross Domestic Product (GDP), a
measure known as energy intensity. However, much of Pakistans rural areas do not have
access to electric power and about half the population is not connected to the national grid.
Rotating blackouts (load shedding) are also necessary in some areas. In addition, transmission
losses are about 30%, due to poor quality infrastructure and a significant amount of power theft.
Unfortunately in Pakistan, in spite of tall claims and rhetoric by all governments, real solutions
to meet the energy requirements of the nation have never been formulated or achieved. As a
consequence, Pakistans economic, industrial and social growth has been greatly constrained.
Due to an increasing gap in energy demand versus capacity, while successive governments put
power generation and availability of gas as a priority on their agenda, unfortunately, all plans of
providing adequate and affordable energy to the citizens have failed to materialize.

Power Production I n Pakistan
Presently in Pakistan energy is generated in the form of:
Hydal Power:
Hydal power stations in Pakistan are working at Warsak, Mangla, Tarbela and Ghazi Brotha.
Thermal Power :
In Pakistan, thermal power stations are located in Multan, Hyderabad, Karachi and many other
places.
Wind power

Artificially Created Energy Crisis
Pakistan holds great, but unrealized, potential to produce abundant hydro, coal, wind and solar
power. Decades of state ownership, subsidies, insufficient investment, distribution losses,
pilferage and the accumulation of a large circular debt have rendered the energy sector inefficient
and unable to support high long-term growth. Hydropower projects have often been delayed
since the early 1980s due to deep-seated inter-provincial mistrust regarding the distribution of
water and royalties. The country currently suffers from growing electricity and gas
shortages. Apart from rebuilding inter-provincial trust, Pakistan needs to develop regional energy
infrastructure with neighboring countries.
Also there is major dispute on the Kala Bagh dam due to the self interest of the politicians and
the region.

Electric Power Sector:
Supply Sources of Electricity:
Pakistans power sector is dominated by two vertically integrated giants:
The state-owned WAPDA (Water and Power Development Authority) and
KESC (Karachi Electric Supply Corporation).
Independent Power Producer (IPP)

WAPDA
As Pakistans largest power producer, WAPDA controls 58% or 11.3GW of the nations total
installed capacity of 19.4GW. Split into the water and power wings,
WAPDA has a monopoly over hydro generation and controls about 38% of thermal power
generated in Pakistan. As the sole purchaser of power from the IPPs, WAPDAs stability has
been the main factor deciding the cash flows of IPPs.
WAPDAs Total Hydel + Thermal capacity is ==> 11,272 MW
When WAPDA was unbundled, eight different distribution companies were formed to distribute
power directly to residential, commercial, industrial, and agricultural consumers. [4]
Lahore Electric Supply Company (LESCO)
Gujranwala Electric Supply Company (GESCO)
Faisalabad Electric Supply Company (FESCO)
Islamabad Electric Supply Company (IESCO)
Multan Electric Power Company (MEPCO)
Peshawar Electric Supply Company (PESCO)
Hyderabad Electric Supply Company (HESCO)
Quetta Electric Supply Company (QESCO)

Under the WAPDA Act, WAPDA was unbundled into 12 separate units:
1. Eight distribution companies (DISCOS), formed from existing area electricity boards.
2. Three thermal generation (GENCO) companies, formed from WAPDAs 11 thermal
generation plants.
3. The National transmission and Dispatch Company (NTDC), formed from the National Grid

Function of WAPDA and KESC:
Until the recent privatization of KESC, electricity transmission and distribution has been the sole
preserve of the state as these two entities control national electricity distribution and generate
almost 70% of the countrys power.
Total (KESC) ==> 1756 MW
KESC supplies electricity to the city of Karachi and WAPDA, to the rest of the country. Both
operate independently of each other, except for a 220KV double circuit link and two 132KV
links. While transmission and distribution falls solely to these two entities, the third and
increasingly relevant source of power is the IPPs.
The IPPs have a joint capacity of 5.83GW and produce 30% of Pakistans electricity which is
sold to and distributed by WAPDA.

The I ndependent Power Producer (I PP)

The Independent Power Producer (IPP) is an entity, which is not a public utility, but which owns
facilities to generate electric power for sale to utilities and end users.
In Pakistan, a country where private power producers control about 30% of the total generation
capacity, the electricity market was opened to IPPs in 1990. Subsequently, 15 IPPs achieved
commercial operations under the first generation PPAs (those signed under Pakistans first power
policy 1994).[5]

Total (IPPs) capacity is 6365 MW
Like most other countries, here, IPPs face a single buyer market. Water and Power Development
Authority (WAPDA) is the key buyer of IPP power. IPPs negotiate a tariff (their sole source of
revenue) with the regulatory authority, National Electric Power Regulatory Authority (NEPRA),
under a transparent competitive bidding process.
The past decade and a half has seen an unprecedented growth of population, per capita
income and rapid urbanization, leading to an intensive demand for utilities. The availability
of adequate power, in particular, which keeps a nation fired up, has merged as the most
serious bottleneck constraining long-term growth and development.
In such a scenario, Pakistan is fortunate to have IPP's or Independent Power Producers like
HUBCO, who since 1997, have added 2581 MW to Pakistan's thermal power generation
capacity. Without their presence, Pakistan's thermal power would have been in the
doldrums. The country's demand for power increases by an estimated 8% annually.
Statistics reveal that electricity is available to only 40% of the population and that the per
capita consumption per annum is 300 Kwh/year. Considering the increase in the rate of
population, a minimum additional requirement of 5000 MW by the year 2018, is needed in
order to prevent load shedding.[6]
Pakistan, like most developing countries, faces a shortfall of power because of the excess of
industrial and residential demand over the existing power-generating capacities. In fact, in
the composition of end use sectors,
Pakistan's power generation and supply has long remained in a state of monopoly.
Respective governments have owned, operated and regulated the power entities. This
resulted in overlapping, undemarcated responsibilities and a lack of accountability in terms
of operational performance, service standards and codes. In addition, they have suffered
from high system losses and low collection from the consumers, which have ultimately
made these entities both defaulters and sick units. The two main state-owned utilities
WAPDA and KESC are plagued by these very problems and ever-mounting financial losses
which are seemingly uncontrollable.
The government of Pakistan had long realized that poor performance of state-owned
monopolies combined with the rapid globalization of world economies required desperate
measures. However, removing the power shortages required a large amount of capital and
strong incentives that were beyond the resources and institutional capabilities of the public
sector of Pakistan.
Despite the fact that we owe much to the IPP's and their contribution to the country's power
capacity, we cannot ignore the fact that the power sector of Pakistan is plagued by a plethora
of problems. These include persistent spells of load shedding, poor service of WAPDA and
KESC, high T&D losses and their ever mounting financial losses. In addition, to this we are
faced with a situation where over 60% of the population is still without access to electricity.
National Electric Power Regulatory Authority (NEPRA)
The National Electric Power Regulatory Authority is exclusively responsible for regulating the
provision of electric power services.
The National electric Power regulatory Authority (NERPA) was created under the NERPA Act
in 1997. NERPAs main purpose is to ensure fair competition and consumer protection. Its
primary responsibilities include the issue of licenses for power production, transmission and
distribution (including the stipulation of licensing fees), specification of electricity tariffs, both
with regard to remuneration of producers (NTDC purchase price) and consumer pricing. In
addition, NERPA is responsible for approving the tariffs negotiated in connection with bilateral
agreements between individual power producers and the NTDC, distribution companies and
major customers. It also defines the licensing requirements and can impose fines for
noncompliance with the relevant regulations.
Inefficiency of Electricity Authorities
WAPDA and KESC are facing institutional and organizational weaknesses. The combined
direct and indirect losses incurred by these utilities during the period 1996 till now have
created large fiscal deficits, being covered through taxpayers money and through
borrowings. The quality of regulatory agency is determined by the quality of its
governance.[7]
Manufacturing firms in Karachi are investing in electricity supply for their own use. This is
happening because publicly supplied electricity is of poor quality and subject to chronic
failures. In Pakistan, public electricity provision suffers from two kinds of inefficiencies; (a)
a non-performing public sector and (b) private provision by end users, specifically
manufacturing firms.
The KESC and WAPDA failed to meet the increasing demand of electricity. Pakistans
indigenous energy resources as currently developed were insufficient, and significant supplies of
energy had to be imported.

I nefficiency of Government
The government is losing steam to resolve the energy crisis due to a lack of expertise in the
concerned ministries, failure to reduce the price difference of various fuels, delay in backing
energy imports, absence of rules for regulating the sector after devolution and above all, the
failure to address the circular debt.[8]
According to officials, whatever steps the government had taken during the last four years
were short-term and no long-term plan had been envisioned for implementation due to a
lack of expertise and planning at the central level.
It is evident from the fact that no new investment in the power sector has been made during
the governments four-year tenure. The Finance Ministry has also failed to decide on
deduction at source of power dues of over Rs 150 billion dues of government departments,
taking the plea that it was not possible after devolution.
Government agencies are focusing on the expensive, mega hydel power projects, not on
easy-to-build run of the river projects that could yield more hydel power in the short run.
Lack of public sector investment is another major cause for slow progress in hydel and coal
sectors. Private sector investment has been on the hold, as local banks are reluctant to
finance any new project until the resolution of the circular debt. Independent power
producers receivables have soared to Rs 266 billion by December 31, 2011. They have to
repay Rs 150 billion in debts to banks by the year end.
The government has an offer to import 1,000MW of electricity from India. But the move
could have serious consequences for Pakistan, as it could be used by New Delhi to expedite
water storage on three western rivers given to Pakistan under the Indus Water Treaty, as it
could claim that the country was not interested to tap the hydel water resources.
Sources said the most viable project for hydel power generation remained the Kalabagh
Dam, but the failure to have a national consensus was delaying its execution.
The inability to implement energy projects has been attributed to fiscal constraints, but in reality
it is due to paucity of a VISION, absence of robust planning and of a commitment to national
development. Further there continues to be a basic lack of understanding of the dynamics of the
energy sector and market forces. The disastrous results are for all to see, while those in the
corridors of power and authority in various ministries, and heads of public sector utilities have
moved on, without any remorse or sense of responsibility or accountability.
On the current energy crisis, much has been claimed by the past and present governments,
discussed and debated in recent months, and numerous articles have appeared in the press and
various magazines. There is no clear concept of viable solutions or the finances required and
time lines for project implementation. But, it is obvious, even to the common citizen that the
strategy and plans for the Pakistans energy sector are neither clear nor properly formulated by
the government, nor is there an established roadmap which can provide some light at the end of
the tunnel.

Electric Power Shortage
In the current scenario, the nation is faced with electric power shortages of about 3,500
MW. If we consider the load of the industry of about 1,500 2,000 MW, which has been
shut down, due to unavailability of power, as well as gas, then the actual shortfall is in the
5,000 MW range.
Part of the shortage is attributable to non- payment of subsidies by the government, and
non-payment by KESC and FATA for power supplied. This has resulted in a circular debt of
over Rs. 300 billion in the energy sector. Consequently the oil companies have not been paid
and have held up oil supplies to the IPPs and GENCOs. At the same time the gas supply
shortage is in the range of 500 MMcfd 800 MMcfd mostly in the SNGPL area. As such
nearly 3,000 MW of capacity with the IPPs, and GENCOs has been made idle, while the
government is busy signing up new rentals and IPPs with tariffs in the 10-15 cts/kwh range.
I ncreased Energy Demand
It is widely accepted by all parties that Pakistan is entering a period where energy demand is
exceeding readily available supply. Electricity supplies are already falling behind demand during
peak periods which is leading to rolling blackouts.
Pakistan is presently facing a serious energy crisis. Despite strong economic growth during
the past decade and consequent rising demand for energy, no worthwhile steps have been
taken to install new capacity for generation of the required energy sources. Now, the
demand exceeds supply and hence load-shedding is a common phenomenon through
frequent power shutdowns. Pakistan needs about 14000-15000MW electricity per day, and
the demand is likely to rise to approximately 20,000 MW per day by 2010. Presently, it can
produce about 11, 500 MW per day and thus there is a shortfall of about 3000-4000MW per
day. This shortage is badly affecting industry, commerce and daily life of people.
All possible measures need to be adopted, i.e., to conserve energy at all levels, and use all
available sources to enhance production of energy. It seems that the government is
considering importing energy from Iran and Central Asian Republics and using indigenous
sources, such as, hydel, coal, waste, wind, and solar power, as well as other alternate and
renewable energy sources, besides nuclear power plants for production of energy. Needless
to say that if the country wishes to continue its economic development and improve the
quality of life of its people, it has to make serious efforts towards framing a coherent energy
policy.
Reasons of the Energy Crisis in Pakistan:
1. AGING OF THE EQUIPMENT
One very important reason attributed to this energy shortage is the aging of the generating
equipment which could not develop the electricity as per the design requirement. This is the
responsibility of continuous updating the equipment and keeping the high standard of
maintenance.
We sincerely think a serious thought should be given for general overhaul and maintenance
of existing equipment to keep them in good working order.
2. WASTAGE OF ENERGY
So far energy conservation is limited to newspaper ads lip service in seminars. No serious
thought is being given to utilize the energy at the optimum level. A new culture need to
develop to conserve energy. Some times on government level illiteracy is blamed for the
failure of the energy conservation program. This is not true,. Maximum energy is consumed
by elite class which has all the resources of knowledge and communication. But for their
own luxury they themselves ignore the problem. Government should seriously embark on
energy conservation program.[9]
3. HIGH COST OF FUEL
The cost of crude has increased from 40 $ to 140 $/barrel. it means the generation from
thermal units are costing exorbitant price. WAPDA and KESC when purchasing electricity
on higher cost are not eager to keep on selling the electricity on loss. Therefore they do not
move on general complain of load shedding.
One simple solution is to increase the energy cost. Again the theft of electricity from the
consumers adding the misery of common citizen who wants to pay the bills honestly.
The problem of the energy losses is being discussed for more than a decade and in spite all
efforts no solution has been found.

4.MONOPOLY IN THE BUSINESS
WAPDA and KESC are two generation and dispatch units in Pakistan. Although NEPRA is a
government authority to settle the tariff issues but the fact remains that once the question
of WAPDA comes the authority has a very little influence.
This is suggested that private sector should be allowed to install power plant and settle the
electricity to consumers. Once the rates are settled on competitive basis and the service and
uninterrupted power supply will be insured then consumers will be benefited.
4. EXPLORING COAL
Pakistan is blessed with large amount of the coal. again no serious work is done to explore
the coal for power generation. This is complained that the coal quality is inferior. however
tailored made solutions are available to burn any type of coal. Government is looking for
private sector to play its role.
In our opinion the government itself should come forward and install the power plants on
the site of coal mines only.
5. RENEWABLE ENERGY
The government exerting great efforts to develop the renewable energy. PPIB has issued
letter of intent to many private sector sponsors. If a serious work is done then the total
shortage can be met from Hydro and wind power sector.
This is also suggested that small loans should be provided to consumers to install small
hydro and solar cells for one family usage of electricity. The mechanism should be made that
instead of monthly bills loan recovery each month to be carried out.



6. ROLE OF GOVERNMENT
So far the government is looking for private sector investment in energy sector and for itself
it chooses a role of facilitator and arbitrator. We strongly suggest that a massive investment
from government itself in generating units for conventional as well as new technologies is
needed. Once the government sector embarks on massive plans then private sector will
follow immediately.

7.ENERGY PLANNING
In spite higher costs immediate relief is only possible with thermal power plants which can
be commissioned in 24 months time. A comprehensive and realistic planning will help to
develop generating units in Pakistan which will be a catalytic element for
the economic growth, poverty elevation and prosperity in Pakistan
7. DISTRIBUTION SYSTEM
WAPDA briefing highlights the poor distribution system as the main cause of tripping and
breaks down of the system. This is true that the distribution system causes many unwanted
tripping and break down but now we honestly believe that the shortage of energy generation
is our main cause of the problem. For last twenty years WAPDA and KESC are complaining
about the distribution system but fail to bring any improvement.
Reasons for shortage of energy are lopsided priorities, poor management and lack of
accountability can be denoted as the reasons for dearth of energy in Pakistan. The number
of consumers of electricity is now increased owing to the rapid urbanization process. The
facility of electricity is now provided to the remote villages. We waste a lot of energy, about
15 to 20 percent through poor distribution system. Industrial, transport and domestic
sectors are the three important consumers of energy. It is assumed that a misplaced use of
energy is rampant in industries which need to be curtailed.
8. Fluctuation of oil prices in international market:
WAPDA and KESC purchase expensive oil and transfer that cost to the consumers. The problem
behind that increase in oil prices causes subsequent changes occurs in Pakistan economy which
can be understand through basic national income accounting equation. Increase in oil prices
cause rising the surprise inflation and lower economic growth. As the following equation shown
below:
GDP = Y = C + I + G + (x-m)
Where
C= consumption,
I= investment spending,
G= Government Spending,
x = exports,
m = imports.
As price of oil increases it can causes inflation goes up and prices of each item in the basket of
commodity increase. The Increase in oil prices lead to shift back ward aggregate demand curve
which can cause to reduce output level. Another affects of rising oil prices is that as oil price
increases cause the increase in import bill and adverse affects on current account balances and
causes negative affects on output level. Economic development of Pakistan and its growth are
adversely affected due to high oil price and as result cost of production became high. Pakistan
needs to search alternate energy resources instead of importing crude oil to ensure a sustainable
economic growth and development. It is suggestion to policy maker and planner to further
incorporate to diversify energy mix. This is a further need to make smart a taxation policy on
petroleum products which may enhance to reduce deficit on balance of trade. It may also affect
on government revenues and reduces dependency on import.
9. Unproductive efforts:
Many seminars and conferences are conducting for the saving of electricity, introducing new
methods of generating energy but there are no practical implementations.


10. Economic and political instability:
In Pakistan there is no political and economic stability. Policies change with the change in
government; it effects our GDP and energy growth. Policies should not change with the change
in the government.
11. Failure in using nuclear power:
Nuclear power stations use nuclear fission reaction to generate energy by the reaction of uranium
inside a nuclear reactor. Pakistan has a small nuclear power programme, with 425 MW capacity,
but there are plans to increase this capacity substantially. Since Pakistan is outside the Nuclear
Non-Proliferation Treaty (NPT), it is excluded from trade in nuclear plant or material which
hinders its development of civil nuclear energy. Remaining issue in development of nuclear
energy is enrichment of uranium from U235 to U238, controlling chain reaction and dumping of
solid waste.
12. Lack of dams:
The recent floods cost Pakistan a lot on a one end we lost around 1600 innocent peoples, around
4 million homes, 20 million people suffering without food, water and shelter, our crops lost and
billion of rupees goods also lost due to the country worst ever floods. All of the above damage
done by water which can be reserved in dams but because of the political games we are still not
able to builds dams. According to economic experts of Pakistan we have lost water worth Rs 240
billion because of the no storage and this is because of lack political harmony.[10]
13. Mismanagement of energy resources:
Pakistan has had wider potentials to tap energy, however, due to lack of any integrated/proactive
planning, very less number of power producing plant were installed to meet demand. Resultantly,
over the years, the gap between energy demand and supply drastically grew and now against
demand of 20000 Mw, we are having around 115000 MW.[11]
14. Corruption and lack of accountability:
Corruption has become synonymous with our existing system and is pushing our nation to a dead
end. Favoritism, nepotism, misappropriation of public fund, bad debts and misuse of power are
on the rise. Corruption has gained roots in our society because of wrong decisions and weak
policies of the successive governments. The agencies responsible for checking corruption have
completely failed in their mission. Thus accountability seems non-existent. Corruption today has
become a way of life and it encompasses the ideological, moral and ethical values of society. It
has become a part of our culture.
15. Lack of modern technique facilities :
The power generation system and its distribution system are of very old techniques in our
country. There is lack of modern technique facilities in our country.
18. Poor collection of bills:
The bill collection system in Pakistan is very poor. Huge amount of customers didnt pay bills
that create a big problem for this department.

Effects of Energy Crisis on the Economy
Energy crisis in Pakistan is badly affecting the major sectors of the country including
domestic, business, industrial, IT and textile sector. There are two major impacts of load
shedding both on micro and macro levels. Load shedding has a direct impact on GDP and
International trade. Mills and factories cannot survive in this kind of situation and result in
either closing down the business or downsizing which again creates another problem of
unemployment. People who have experience of certain industry cannot switch to any other
industry that easily and In addition to that we have economy crisis everywhere right from
financial markets to pharmaceuticals, textiles to shipping. We are living in an age where we
are facing these kinds of problems which is not any more issues for developed countries.
Business Sector:
Without electricity for a good part of a day (8 hours +) can really mess up your business
operations. Everything requires electricity. You cannot work if theres no power available.
Businesses and marketplaces understandably are suffering immensely and some are even
forced to close down. The alternate is buying a generator, but the costs of running it are too
much for most of the business owners. Shop owners are forced to close down, while
business and offices are forced to waste their precious time and wait for the power to come
back on. Productivity is badly affected.
Energy Crisis affecting the IT industry:
Among many industries, the IT industry is the one affected the most with the coming of the
Energy crisis and rightly so. The IT industry is all about providing services and products
through the use of electronics, computers and everything that is related to power; which we
lack! Our IT industry was among the fastest growing industry in the Asian region. The
energy crisis has hit us bad. The whole industry has been forced to struggle and cut their
costs down drastically just so they can survive. This has of course had a trickle-down effect
on the whole economy and has negatively affected the jobs situation in the country as well.
The frightening thing is the fact that people are still now completely aware that this energy
crisis has the potential to completely destroy our economy. International Aid cannot be seen
as the solution, because it is not. It is only but a temporary bandage on a cancer wound.
Effect on the Textile industry:
Pakistans textile industry is going through one of the toughest periods in decades. The
global recession which has hit the global textile really hard is not the only cause for concern.
Serious internal issues also affected Pakistans textile industry very badly. The high cost of
production resulting from an instant rise in the energy costs has been the primary
cause of concern for the industry. Pakistans textile industry is going through one of
the toughest periods in decades. The global recession which has hit the global textile really
hard is not the only cause for concern. Serious internal issues also affected Pakistans textile
industry very badly. The high cost of production resulting from an instant rise in the
energy costs has been the primary cause of concern for the industry. The load-
shedding of electricity cause a rapid decrease in production which also reduced
the export order. The cost of production has also risen due to instant increase
in electricity tariff. Due to load shedding some mill owner uses alternative
source of energy like generator which increase their cost of production
further. Worlds third largest spinning industry of Pakistan has closed down 43 percent
capacity owing to energy crisis in the country.
Domestic Life:
The domestic life is also suffering from many problems. 8-12 hours of load shedding has
affected every sector in Pakistan. People are using UPS or generators in their houses to meet
their needs during load shedding times. Such alternatives make the energy shortfall high as
UPS gives 1 unit of electricity by taking 4 units as input. Most of the people are unable to
afford such alternatives and face many problems in operating electric utilities.
Effect on Education:
The student life has also been affected by the worse load shedding effects in Pakistan. The IT
and research labs are closed down due to load shedding. The students face problems in
research works and study.
Hospitals and Institutions:
The electrical equipments in the hospitals and other institutions are unable to operate due
to load shedding in the emergency requirements. Patients are some time treated with delay
due to electric shortfall and this sometimes causes serious problems.
Financial Burden on Public:
Although having 8-12 hours of load shedding in the urban areas and 21-20 hours of load
shedding in the rural areas, people have to make heavy bill payments of electricity. This put
pressure on the earning hand of the family.
Effect on overall economy:
As load shedding has a direct effect on the business and industrial sector, yet it also
adversely affects the GDP. Load shedding results in unemployment; rise in per unit cost of
goods, social confusion and mental distortions. Ultimately it gives rise to inflation in the
economy.
The people of Pakistan are looking for positive change and relief from the burden of a
grossly inefficient & mismanaged energy sector. They are held hostage to the progressive
increase in power load shedding, shortages of gas, and even petroleum products.
Unfortunately in spite of tall claims there is no sliver lining in the dark clouds. The claims by
the government that load shedding will end by December 2009 are nothing but illusions of
the Ministry of Water and Power.
The situation appears even more distressing when we consider that Pakistan is blessed with
a hydel potential of 45,000 MW power generation capacities, an equal if not more capacity
for alternative energy. On the primary fuel side, our coal reserves are estimated as the 2nd
largest globally. However, with the essential planning not in place and adequate project
development and financing arrangements not carried out, the much talked about projects
are mostly pipe dreams.





Way forward:
The traditional energy sources are no longer abundant as they are rapidly being depleted
due to increase in population and pace of development. Pakistan is very fortunate in the
sense that renewable sources of energy can meet its entire energy requirement. In response
to the petroleum crisis, the principles of green energy and sustainable living movements
gain popularity. Hydrogen gas is currently produced at a net energy loss from natural gas,
which is also experiencing declining production in North America and elsewhere. When not
produced from natural gas, hydrogen still needs another source of energy to create it, also at
a loss during the process. This has led to hydrogen being regarded as a 'carrier' of energy,
like electricity, rather than a 'source'. The unproven dehydrogenating process has also been
suggested for the use water as an energy source.
Alternative Energy Resources:
The government of Pakistan is spending billions of dollars for the short term production of
electricity. The economy analysts have argued that if the government of Pakistan agrees to
buy few generators of worth less then it is currently spending; there will be 450 megawatt of
electricity in the system within 3 months. Along with this way, there are many other
alternatives for electricity generation. Pakistan is generating electricity by old methods. The
world has changed now but we are still using old methods of generating electricity. The
other alternative resources are:
Solar Energy
Bio Gas Technology
Biomass
Wind Energy
Geothermal power
Nuclear Power[12]
Government taking serious steps to overcome energy crisis:
The government does not realize the frustration of the people. Moreover, the problem of our
country has never been the lack of natural resources, but our only problem is lack of sincere
leadership. The power crisis can be alleviated by reallocating gas towards power production
and reducing the supply to the transport sector temporarily as power production must take
precedence over other sectors.The Prime Minister said that he has issued directives to the
concerned ministries for the rapid completion of Thar Coal Project which would ultimately
help to reduce our energy crisis and would also help in our economic development. He said
the country is rich in natural resources and by utilizing them we can overcome the energy
shortage once and for all.

[1]http://en.wikipedia.org/wiki/Energy_crisis
Weynand Gordan (June 2007) Energy sector assessment for USAID/ PAKISTAN. Pg .2.
Bureau of economic growth, agriculture and trade, United States agency for international
development.





[3] http://viewstonews.com/index.php/cause-of-energy-crisis-in-pakistan/poetry
[4] Weynand Gordan (June 2007) Energy sector assessment for USAID/ PAKISTAN. Pg. 18-
22, Bureau of economic growth, agriculture and trade, United States agency for international
development.

[5] http://www.pakistaneconomist.com/database2/cover/c2001-31.asp
[6] Independent Power Producer (IPP) (January 2009) Rating Methodology. The Pakistan
Credit Rating Agency Limited.
[7] Malik Afiya Effectiveness of Regulatory Structure in the Power sector in Pakistan
[8] http://www.pakistantoday.com.pk/2012/01/govt-losing-steam-to-resolve-energy-crisis/
[9] http://viewstonews.com/index.php/cause-of-energy-crisis-in-pakistan/poetry
[10] http://www.pakistantopstories.com/2010/08/pakistan-loses-around-4-billion-of-water-due-to-
lack-of-dams/

[11]http://www.cssforum.com.pk/css-compulsory-subjects/current-affairs/current-affairs-
notes/51018-energy-crisis-pakistan-must-read.html

[12] Weynand Gordan (June 2007) Energy sector assessment for USAID/ PAKISTAN. Pg 82
Bureau of economic growth, agriculture and trade, United States agency for international
development.

[13] http://www.sananews.net/english/2012/01/govt-taking-serious-steps-to-overcome-energy-
crisis-gilani%C2%A0/
Posted by Anam at 00:11
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