Pakistan, with a population of 20.8 million, a GDP per capital of US $5845.

61, is a
country with a troubled past yet gifted with important strategic endowments and
development potential. The country is located at the crossroads of South Asia,
Central Asia, China and the Middle East, and thus at the fulcrum of a regional
market. Pakistans economic potential lies not only in its natural endowments but in
its culturally links to both the middle-east and Indian subcontinent with a vast
population and large and diverse resources.
While attributable to Pakistans natural gifts, Pakistan still has a large agrarian
component in its economy, with its agricultural sector accounting for 21% of its GDP
and employing 43% of its labour force. Its industrial sector accounts for
approximately 24% of GDP, with cotton textile production forming 66% of
merchandise exports and 40% of the employed labour force. Its manufacturing
sector has experienced double-digit growth from 2000-2007, with large-scale
manufacturing growing to a record 19.9% in 2004-2005, and averaging 8.8% by the
end of 2007.
However, Pakistan faces significant economic and governance challenges and a
key dimension to these challenges can be found in the severe electricity crisis,
caused by a widening gap between demand and available system generating
capacity. Saddled with overloaded infrastructure and capacity shortfall,
unprecedented load shedding, excessive distribution losses and massive circular
debt Pakistans excess demand is now over 5000 MW. Rural areas have reported
blackouts of up to 20 hours. This has only increased in recent years. Population
growth, industrialization and rising incomes are stimulating substantial energy
demand, and the gap is poised to widen further. The result is an acute energy crisis
that it cannot resolve domestically at least not in the near term placing the onus
on greater regional cooperation. The crisis reflects years of underinvestment not
only with respect to electricity but in Pakistans domestic economy , partly
implememnted reforms, Pakistans policy failures have resulted in supply failing to
match this augmentation of demand.
Pakistans development rests heavily in a successful embrace of investment-based
development, which largely entails developing a competitive industrial and
manufacturing capacity. The provision of reliable electricity supply thus is vital to
Pakistans economic development. Given that its competitiveness is linked heavily
with textile and low-margin manufacturing, electricity costs form a significant cost
component and is a strong determinant of Pakistans economic success.
Thus, identifying the planning objectives and recommended policy response for
Pakistan is a vital for the operation and planning not only of its power system, but
its wider economy. This spans both supply-side options such as installation of new
power plants and increases in transmission efficiency, but also in identifying lowcost and implementable ways of incorporating demand-side innovations and
methods. Currently, Pakistan is not well placed to transform itself, beign in a fiscally
fragile position. Its security situation is poor and social unrest is unusually high.
Relations with regional neighbours such as Afghanistan and India remain
problematic.