Impact on

countrys export

ENERGY CRISIS
In

Pakistan

Submitted by:
BBA (BNF)
8TH Semester
HCBF(PU)
1

Tahmina Saleem

(m12bba003)

Faiza Iqbal

(m12bba010)

Ambreen Kazmi

(m12bba056)

Shumaila Iftikhar

(m12bba069)

In the name of ALLAH, The Most Merciful, the Most Kind

W e a r e s o m u c h g r a t e f u l t o o u r P r e s t i g i o u s Prof.
RI AZ AHM AD MI AN w h o g a v e u s t h i s opportunity to
make this project on energy crises in Pakistan and its
impact on export which enhances our ability in understanding
the declining trend in export.
We would also like to pay our all my friends who help
us in providing in-depth information about consumer banking.

Dedication:
I dedicated my project to my respected instructor and
parents Love, affection and prayers has been a source
of inspiration and encouragement for me.

Contents
Sr.
no

Particulars

Page
no.

Part 1: Energy crises in Pakistan

1.1.
1.2.
1.3.
1.4.
1.5.
1.6.
1.7.
1.8.
1.9.

Importance of energy
Energy crisis
Energy Sector in Pakistan
Pakistan Energy Supply Demand Forecast
Energy Supply
Energy Consumption
Sources of Energy in Pakistan
Causes of energy crises
Origin of crises

5-6
6-7
7-8
8-8
9-9
10-10
10-14
14-16
16-17

Part 2: Export of Pakistan

2.1.
2.2.
2.3.
2.4.

Intro of export
History of export in Pakistan
Major export of Pakistan
Comparison of export 2014 vs 2015

19-20
20-22
23-23
24-24

Part 2: Energy crises impact on export

3.1.
3.2.
3.3.
3.4.

4
5
6

Consequences of Energy Crisis:

Impact of energy crises on export of Pakistan
Impact on Textile export
Impact of energy crises on agriculture sector export
3.4.1. Export of Rice:
3.4.2. Export of Wheat:
3.4.3. Export of Sugar

26-27

Summary of energy crises impact on export:

Conclusion
Recommendations

33-34

27-28
28-30
31-33

34-34
35-35

Part: 1
Energy crises in Pakistan
In part 1 we discuss following:

Importance of energy
Energy crisis
Energy Sector in Pakistan
Pakistan Energy Supply Demand Forecast
Energy Supply
Energy Consumption
Sources of Energy in Pakistan
Causes of energy crises

Importance of energy: Energy is considered to be life line of

any economy and most vital instrument of socioeconomic development
of a country. Energy is pivotal in running machinery in factories and
industrial units, for lighting our cities and powering our vehicles etc.
There has been an enormous increase in the demand of energy as a
result of industrial development and population growth, in comparison to
enhancement in energy production. Supply of energy is, therefore, far
less than the actual demand, resultantly crisis has emerged. An energy
crisis can be defined as any great bottleneck (or price rise) in the supply
of energy resources to an economy. Energy is like an oxygen to modern
economies and any deficit in it has an adverse effect on a developing
country. Pakistan, being developing country, needs uninterrupted energy
supply to progress at a good pace. Unfortunately, over the past few
year, energy crisis has crippled the economy of Pakistan. Pakistan is
facing short-fall of 4000MW to 5000WM in electricity, while situation of
gas and oil is no different. Resultantly, Pakistan GDP is well behind
other south-Asian countries. According to Pakistan Economic Survey
2014-2015, Pakistan is losing 2% of GDP because of this crises. This
situation is deteriorating after every passing day and economic growth
has been halted.
It is without exaggeration and beyond the doubt that energy has become
one of the most significant needs of the human being. The utility of
energy has greatly evolved over the last century. The whole range of
human activities including dwelling, trade and commerce, industry,
transportation and agriculture has mostly become depended on energy.
Globally, energy prosperity has become very crucial to overcome
fundamental social problems such as poverty, hunger, disease and
illiteracy. The growing human reliance on energy has been paralleled by
a string of challenges that are both local and global in nature. It is
increasingly understood that ensuring availability of sufficient, affordable,
and environmentally friendly energy is one of the major challenges
faced by the world in the twenty first century. Energy is considered to be
the backbone of human activities. The accomplishment of human
civilization has been achieved through the increasingly efficient and
extensive production of various forms of energy to extend human
capabilities and ingenuity.

Energy crisis: Energy crisis has been defined as a great shortfall

in the supply of energy resources to the economy or price rise of the
energy resources it is referred to the shortage of oil, electricity and other
natural resources.
Energy Crisis in Pakistan is one of the severe challenges the country is
facing now-a-days. Electricity, natural gas, water and fuel are essential
part of our daily life and its outage has severely affected the economy
and overall living of our country. Thousands have lost their jobs,
businesses; our daily life has become miserable. Pakistan is currently
facing up to 18 hours of electricity outage a day and 2 days of Gas
outage a week, is expected to face more if not dealt with in time.
Pakistan has been facing an unprecedented energy crisis since the last
few years. The problem becomes more severe during summers. Initially,
during the peak crisis there was a power outage of 3-4 hours daily but it
keep on increasing as the demand of electricity rises. According to the
reports of Wapda, the electricity need of Pakistan increases more rapidly
than it can be generated which cause a major increase in the duration of
load sheading. The exact rate of demand and supply is given in the
figure below:

The persistent shortage of electricity in the country has adversely

affected the national economy. Industrial production has been severely
hit; and also triggered social unrest which sometimes turns violent thus,
creating law and order problems in many urban centers in the country.
According to one estimate power shortages have resulted in an annual
loss of about 2 percent of GDP. Another recent study reports total
industrial output loss in the range of 12 percent to 37 percent due to
power outages.
Energy is considered to be life line of any economy and most vital
instrument of socioeconomic development of a country. Energy is pivotal
in running machinery in factories and industrial units, for lighting our
cities and powering our vehicles etc.
6

There has been an enormous increase in the demand of energy as a

result of industrial development and population growth, in comparison to
enhancement in energy production. Supply of energy is, therefore, far
less than the actual demand, resultantly crisis has emerged. An energy
crisis can be defined as any great bottleneck (or price rise) in the supply
of energy resources to an economy.
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.
Pakistan is a developing country. Now a days Energy crisis in Pakistan
is a burning issue. Energy crisis is a great hurdle in supply of energy in
Pakistan. Every country in the world is moving towards enlightenment
but Pakistan is moving towards darkness. People of Pakistan even each
person depends on energy. But it is not possible to provide electricity for
people twenty-four hours in a day. Because energy crisis on its peak
level in Pakistan.
No Nation can make progress without energy. Pakistan is facing energy
crisis although Pakistan has been gifted with the following most
economical methods of energy production. Only vision and direction is
very much required which our policy makers are lacking. Unfortunately
the so called economists and sick planners have made the Nation
hostage. They have borrowed certain economic terminology and try to
impress the peoples representatives having no knowledge of economy.
These terms are commonly used by these ill minded so called
economists. These idiots policy makers are wasting our resources and
become a big liability. Let us throw them out and replace them with
honest and intelligent young economists from Universities.

Energy Sector in Pakistan:

Pakistans energy infrastructure is not well developed, rather it is
considered to be underdeveloped and poorly managed. Currently the
country is facing severe energy crisis. Despite of strong economic
growth and rising energy demand during past decade, no serious efforts
have been made to install new capacity of generation. Moreover, rapid
demand growth, transmission losses due to outdated infrastructure,
power theft, and seasonal reductions in the availability of hydropower
have worsened the situation. Consequently, the demand exceeds supply
7

and hence load-shedding is a common phenomenon through power

shutdown. Pakistan needs around 14,000 to 15,000 MW electricity per
day, and the demand is likely rise to approximately to 20,000 MW per
day by 2010. Presently, it can produce about 11,500 MW per day and
there is a shortfall of about 3000 to 4000 MW per day. This shortage is
badly affecting industry, commerce, daily life and posing risks to the
economic growth. During the past 25 years energy supply in Pakistan
has been increased by about 40 times but still the demand outstrips
supply. With the increase in economic activities, per capita energy
consumption had also been increased. Industrialization, growth in
agriculture and services sectors, urbanization, rising per capita income
and rural electrification has resulted in a phenomenal rise in energy
demand (NBP, 2008). Inefficient use of energy and its wastages has
further widened the demand-supply gap and exerts strong pressure on
the energy resources in the country. The annual growth of primary
energy supply increased from 3.17% to 4.3% during 1997-98 to 200607. The share of natural gas reached to 48.5%, followed by oil 30.0%,
hydroelectricity 12.6%, coal 7.3%, nuclear electricity 0.9%, LPG 0.5%
and imported electricity by 0.1% during the year 2006-07. Figure 1
presents the shares of primary energy supply in Pakistan.

Pakistan Energy Supply Demand Forecast:

Various studies have indicated that Pakistans energy appetite is
expected to grow at an ACGR of 4.37% to 6.09 %. This growth in energy
demand is contingent on GDP growth and is likely to be in the range of
116 to 148 MTOE by FY 2022. Following Exhibits shows the Energy
Demand supply Projection of Pakistan up to FY-22.

Energy Supply:
During 2009-10, Energy supply and per capita availability of energy
witnessed a decline of 0.64 % and 3.09 % respectively in comparison to
previous year.
Pakistan needs around 15,000 to 20000 MW electricity per day,
however, currently it is able to produce about 11,500 MW per day hence
there is a shortfall of about 4000 to 9000 MW per day. This shortage is
badly hampering the economic growth of the country.

2,500

2,125

26,171

22,951

4,273

4,331

2014-15

43,611

44,847

23,478

23,953

2013-14

1,098,869

1,124,822

E NE RGY SUPPLY 2 0 1 3 - 1 4 VS 2 0 1 4 - 1 5

Energy Consumption:

ENERGY CONSUMPTION 2013-14 VS 201415

OIL &
PETROLEUM(TONS)

GAS(MM)

ELECTRICITY(GWH)

3,837.00

5,798.00

62,015

2013-14

906,400

879,175

2014-15

62,846

13,549,344

15,827,510

Pakistans energy consumption is met by mix of gas, oil, electricity, and

coal and LPG sources with different level of shares. Share of gas
consumption stood at 43.7 %, followed by oil 29.0 percent, electricity
15.3 percent, coal 10.4 percent and LPG 1.5 percent.

COAL(OOO METRIC
TONS)

Sources of Energy in Pakistan:

1. Non-renewable resources (Fossil fuels): [Limited
Expensive]
Nonrenewable resources are primarily fossil fuels emanating from
remains/decomposition of animals and plants deposited deep into the
earth crust and converted into oil and gas. These resources cannot
be replenished. There are three main types of fossil fuels: coal,
petroleum, natural gas and liquefied petroleum gas (LPG).
1.1. Petroleum products: consumption of petroleum products was
29% of total share of energy. Majority of crude oil is imported from
gulf countries to meet the demand. Power, industry and transport
sectors consume higher quantity of petroleum followed by
10

1.2.

1.3.

agriculture and households. Petroleum is also used in generation

of electricity, which counts 64 percent of total electricity generation
(34 coming from hydro generation). Balance recoverable reserves
of crude oil in country have been estimated at 303.63 million
barrels and we are extracting approximately 24 million crude oil
annually, meaning if we do not explore new wells, we will exhaust
our current crude oil reserves in 12-13 years.
Natural Gas: Importance of natural gas is increasing rapidly.
Average production of natural gas is 4,048.76 million cubic feet per
day as against 3,986.53 million during corresponding last year,
showing an increase of 1.56 percent. Natural gas is used in
general industry to prepare consumer items, to produce cement,
for manufacturing fertilizers and to generate electricity. In form of
CNG, it is used in transport sector. Share of natural gas in energy
consumption is 43.7 percent. Due to price differential between
CNG and Petrol, vehicles are using converted to CNG and
approximately 2.0 million vehicles are using CNG and currently
Pakistan is the largest CNG user country in the world. Liquefied
petroleum gas (LPG) contributes around 0.7 percent to total
energy supply in country and is being imported to stop
deforestation in hilly areas.
Coal: Pakistan has coal reserves estimated at over 185 billion
metric tons, including 175 billion metric tons identified at Thar
coalfields. Coal is primarily being used in brick kiln and cement
industries and approximately 67 percent coal is imported because
indigenous coal is not considered of good quality.
Guddu plant is largest plant thermal operated plant with a capacity
of 1,650 MW, while two largest Independent Power Plants (IPPs)
in Pakistan are Kot Addu (1,600 MW) and Hubb River (1,300 MW).

2. Renewable Resources: (Unlimited sustainable clean)

Renewable energy resources are those, which are naturally
replenished and come from resources such as water, sunlight, wind,
rain, tides, and geothermal heat.
2.1. Hydro power: Hydro power is generated by using electricity
generators to extract energy from moving water. Pakistan is having
rich resource of energy in hydal power, however, only 34 % of total
electricity generation is coming from hydro power. Currently we are
having 6555 MW against the potential of 41000 to 45000 MW.

11

Current Hydropower stations:

Tarbella Dam : 3,478 MW
Ghazi Brotha: 1450 MW
Mangla 1,000 MW
Warsak 240 MW
Chashma 184 MW
Potential Hydropower stations:
Diamer-Bhasha Dam 4500 MW
Munda Dam Swat river in Mohamand Agency 740 MW
Kalabagh Dam 2400-3600 MW
Bunji Dam 5400 MW
Dasu Dam 3800 MW
3. Alternative Sources of Energy :
3.1. Wind: Wind power harnesses the power of the wind to propel the
blades of wind turbines. These turbines cause the rotation of
magnets, which creates electricity. Though Pakistan has potentials
of wind energy ranging from 10000 MW to 50000 MW, yet power
generation through wind is in initial stages in Pakistan and
currently 06 MW has been installed in first phase in Jhampir
through a Turkish company and 50 MW will be installed shortly.
More wind power plants will be built in Jhampir, Gharo, Keti
Bandar and Bin Qasim Karachi.
3.2. Solar: Solar power involves using solar cells to convert sunlight
into electricity, using sunlight hitting solar thermal panels to convert
sunlight to heat water or air. Pakistan has potential of more than
100,000 MW from solar energy. Building of solar power plants is
underway in Kashmir, Punjab, Sindh and Balochistan. However,
private vendors are importing panels / solar water heaters for
consumption in the market. Alternative Energy Development Board
(AEDB) is working for 20,000 solar water heaters in Gilgit
Baltistan. Mobile companies have been asked by the government
to shift supply of energy to their transmission towers from
petroleum to solar energy panels.
3.3. Agricultural biomass /biodiesel: Biomass production involves
using garbage or other renewable resources such as sugarcane,
corn or other vegetation to generate electricity. When garbage
decomposes, methane is produced and captured in pipes and later
burned to produce electricity. Vegetation and wood can be burned
directly to generate energy, like fossil fuels, or processed to form
alcohols. Brazil has one of the largest renewable energy programs
12

3.4.

from biomass/biodiesel in the world, followed by USA. Alternative

Energy Development Board (AEDB) of Pakistan has planned to
generate 10 MW of electricity from municipal waste in Karachi
followed by similar projects in twenty cities of country.
Tidal: Tidal power can be extracted from Moon-gravity-powered
tides by locating a water turbine in a tidal current. The turbine can
turn an electrical generator, or a gas compressor, that can then
store energy until needed. Coastal tides are a source of clean,
free, renewable, and sustainable energy.
Plans are underway in Pakistan to harness tidal energy; however,
no implementation has been made so far.

4. Nuclear:
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 program, with 425 MW capacity, but there
are plans to increase this capacity substantially.
Since Pakistan is outside the Nuclear Non-Proliferation Treaty, it is
excluded from trade in nuclear plant or materials, which hinders its
development of civil nuclear energy. Remaining issues in
development of nuclear energy are enrichment of uranium from U235
to U238, controlling chain reaction and dumping of solid waste.

13

Pakistans Conventional Energy Resources

Energy Type

Potential

Source

Crude Oil

339 million barrels recoverable reserves.

Pak Eco Survey

2010-11

Natural Gas

31,266 trillion cubic feet recoverable reserves.

Pak Eco Survey

2010-11

Coal

185 billion tones recoverable reserves.

Pak Eco Survey

2010-11

CAUSES OF ENERGY CRISIS:

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. Everybody now became the expert of energy and all the figures are
on finger tips. Sometime the shortage is 200 MW sometime 2500 MW.
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.
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 have 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.
HIGH COST OF FUEL
The cost of crude has increased from 40 $ to 140 $/barrel. it means
14

15

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.
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.
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.
ROLE OF GOVERNMENT
So far the government is looking for private sector investment in
energy sector and for itself it choose 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.
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
DISTRIBUTION SYSTEM
Wapda briefing highlight the poor distribution system as the main
cause of tripping and break down of the system. However we
consider as the last of our concern.

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 complaining about the
distribution system but fails to bring any improvement
Gas shortage for Power Sector:
In the winter season when the country faces extreme shortage of gas,
government normally cuts down the gas supply to power sector in
order to meet the demand of domestic users and selected fertilizer
companies, which reportedly causes a loss of USD 400 million to the
power sector and causes shortage of energy generation.
Reduction in hydropower production:
Pakistan has the capacity to produce 6600 MW electricity, but the
country is generating around 3600 MW hydroelectricity due to water
shortage on account of lack of water reservoirs.

Origins of the crisis

While 2007 is considered the starting point of the ongoing energy
crisis, the issue has its roots in policy decisions taken two decades
ago. In 1994, when only 40% of the population had access to
electricity, Pakistan was facing power shortages of about 2,000 MW
during peak load times (Pakistan, 1994). The government of the day
assessed that the average annual increase in power demand would
be about 8% in the short to medium term, and generation capacity of
the order of 960-1,300 MW would have to be added to the system
annually from the mid-1990s onwards to meet the demands of a
growing economy. The scale of investment required was deemed to
be well beyond what the public sector could muster.
A power policy was thus issued in 1994 that offered an attractive
package of incentives to foreign investors, including a tariff ceiling
that resulted in returns on investment of 15-18%, a minimum required
equity investment of just 20%, and a host of fiscal and security
incentives (for details, see Pakistan, 1994). More importantly, the
policy effectively transformed the fuel mix for energy generation in the
country. In the 1980s a little over 60% of Pakistans power was
generated from hydropower. The 1994 power policy, on the other
hand, was designed to encourage the quick installation of thermal
power plants, the bulk of which were fuel oil based. The government
of the time considered this strategy to be the optimal one, not only
because of the relative ease with which thermal power plants could
16

be added to the generation mix compared to hydropower resources,

which would take much longer, but also because key proposed
hydropower projects, for which feasibility studies had been prepared,
were controversial for political reasons.2 By 2013, however, the
proportion of power generation from hydro and nuclear sources was
about 36%, while the proportion of generation from furnace oil-fired
sources was almost equal at 35% (EAW, 2013: Table 14.6). Gas-fired
plants accounted for 29% of power generation, while coal-fired plants
accounted for a minuscule 0.1% of generation. Thus, in less than two
decades the fuel mix for power generation underwent a significant
transformation.

At present Pakistan meets 75% of its energy needs by

domestic resources including gas, oil and
hydroelectricity production.
Only 25% energy needs were managed through imports
and Oil taken major share alone and imported oil may
likely maintain important share in the future energy mix.
To sustain the pace of economic growth rate of over 7%
over the next 25 year, Pakistan needs to expand its
energy resource base.

17

Part: 2
Export of Pakistan
Before we discuss the impact of energy
crises on export first we discuss important
point about Pakistan export which include

18

Intro of export
History of export in Pakistan
Major export of Pakistan
Comparison of export 2014 vs 2015

Exports Of Pakistan:
Introduction:
Exports means transfer of national wealth outside the
country. Exports is an important component of the economy. An economy
is the system of human activities related to the production, distribution,
exchange, and consumption of goods and services of a country or other
area. The composition of a given economy is inseparable from
technological evolution, civilization's history and social organization, as
well as from Earth's geography and ecology, e.g. Eco regions which
represent different agricultural and resource extraction opportunities,
among other factors. Economy refers also to the measure of how a
country or region is progressing in terms of product. Pakistan, a rapidly
developing nation, has a diverse economy that include textiles, chemicals,
food processing, agriculture and other industries. The economy has
suffered in the past from decades of internal political disputes, a fast
growing population, mixed levels of foreign investment.
Pakistan is member of the World Trade Organization, and has bilateral
and multilateral trade agreements with many nations and international
organizations. Fluctuating world demand for its exports, domestic political
uncertainty, and the impact of occasional droughts on its agricultural
production have all contributed to variability in Pakistan's trade deficit. In
the six months to December 2003, Pakistan recorded a current account
surplus of $1.761 billion, roughly 5% of GDP. Pakistan's exports continue
to be dominated by cotton textiles and apparel, despite government
diversification efforts. Exports grew by 19.1% in FY 2002-03.Pakistans
international trade is suffering from huge amount of deficit due to low
demand for its exports. Domestic political instability also accounts for
trade deficit. The trade deficit stood at US$3.946 billion in 2010. Pakistan
is a member of several international organizations such as ECO
(Economic Cooperation Organization), SAFTA (South Asian Free Trade
Area), WIPO (World Intellectual Property Organization) and WTO (World
Trade Organization).
Pakistan Horticulture Development & Export Board (PHDEC), an
autonomous body under the administrative control of Ministry of
Commerce has been mandated with the development of horticulture
19

industry of Pakistan with focus on exports. Its functions, inter alia,

include provision of improved marketing infrastructure like
establishment of agro processing zones, cold chain system,
processing plants (for value added products) etc. The
implementation arrangements are preferably under the public
private partnership (PPP) modality with a clear exit strategy. PHDEC
envisions the vitalization of a dynamic and market driven
horticulture sector, which is resilient, sustainable and responsive to
meet the challenges of globalization.
Approximately 70% of Pakistan's foreign exchange earnings come from
the sale of agricultural products (such as cotton, rice, fruits and vegetables
etc.) and this has stimulated demand for the provision of raw materials,
equipment (mostly second hand) and services to agro-based industries,
mainly in the cotton textile industry which is the largest industrial subsector in the country.
Pakistan main exports are mineral fuels (19 percent of the total
shipments), manufactured goods (19 percent) and beverage and
tobacco (13 percent). Others include: food and live animals (11 percent),
crude materials (11 percent), chemicals (11 percent), machinery (8
percent) and miscellaneous articles (8 percent). Main export partners are
United States (13.6 percent), China (11 percent of the total export),
United Arab Emirates (8.5 percent) and Saudi Arabia (8.5 percent).

History:
Because of Pakistani fears of protectionism in developed countries and
the increasing importance of regional blocs in international trade, the
government in the 1980s and early 1990s placed new importance on
developing trade links with nearby nations. In the early 1990s, new
trading initiatives were being pursued through membership in two
regional organizations, the Economic Co-operation Organization (ECO)
and the South Asian Association for Regional Cooperation SAARC.
SAARC was founded in the mid-1980s primarily as a vehicle to increase
trade within South Asia by delinking the region's political conflicts from
economic cooperation. Its seven member states--Bangladesh, Bhutan,
India, Maldives, Nepal, Pakistan, and Sri Lanka--adopted the principle of
unanimity in selecting multilateral questions for debate. Despite frequent
consultative committee meetings, progress toward increased trade
remained limited in 1994. Pakistan's trade with India, for instance, is
20

extremely limited. At the annual SAARC summit in April 1993,

members agreed to negotiate a South Asian Preferential Trade
Agreement by 1996 that would lower or abolish tariffs among members.
In the early 1980s, incentives were again provided to industrialists to
increase manufactured exports. Nonetheless, in the early 1990s the
export base remained primarily dependent on two agricultural products,
cotton and rice, which are subject to great variations in output and
demand. In FY 1992, raw cotton, cotton yarn, cotton cloth, and cotton
waste accounted for 37 percent of all exports .Other important exports
were ready made garments (15 percent), synthetic textiles (6 percent),
and rice (6 percent). There was some diversification during the late
1980s as the share of manufactured goods rose. The share of primary
goods fell from 35 percent to 16 percent between FY 1986 and FY 1993.
During the same period, the share of semi manufactures rose from 16
percent to 20 percent, and that of manufactured goods rose from 49
percent to 64 percent. In the early 1990s, Pakistan's balance of trade
remained particularly vulnerable to changes in the world economy and
bad weather. Sharp increases in crude oil prices, such as those of 197981 and 1990, raised the nation's import bill significantly. Total exports, on
the other hand, are more sensitive to agricultural production. The decline
in cotton production in FY 1993, for instance, seriously affected the
export level.
Markets for exports are widely scattered, and they fluctuate from year to
year. In the early 1990s, the United States and Japan were Pakistan's
most important trading partners. In FY 1993, the United States
accounted for 13.7 percent of Pakistan's exports. Japan accounted for
6.6 percent of exports. Germany, Britain, and Saudi Arabia are also
important trading partners. Hong Kong is an important export market.
Trade with the Republic of Korea (South Korea) and Malaysia is small
but not unimportant. Trade with India is negligible.
The ECO was formed in 1985 with Pakistan, Iran, and Turkey as its only
members, but Afghanistan, Azerbaijan, Kyrgyzstan, Tajikistan,
Turkmenistan, and Uzbekistan joined in 1992. Some politicians in the
member nations see the ECO as a potential Muslim common market, but
political rivalries, especially between Iran and Turkey, limit its
effectiveness. In 1994 most of the concrete measures being taken by the
ECO concerned the improvement of transportation and communications

21

among the member nations, including the construction of a highway

from Turkey to Pakistan through Iran.

Free Trade Agreement:

Pakistan has following free trade agreements with different countries
Pak-Afghanistan Trade Agreement
Agreement on South Asian Free Trade Area
Pak-Malaysia Trade Agreements
Pak-China Trade Agreements
Pak-Sri Lanka Free Trade Agreement
Pak-Iran Preferential Trade Agreement
Pak-Mauritius Preferential Trade Agreement

Major export partners of Pakistan:

The major export partners of Pakistan are

Malaysia
Japan
Iran
Afghanistan
Singapore

China
European Union
United Arab Emirates
Saudi Arabia
United States
Kuwait
India

22

Major export products of Pakistan

The major export products of Pakistan are

23

Rice

Furniture

Cotton fiber

Cement

Tiles

Marble

Textiles

Clothing

Leather goods

Sports goods (renowned for footballs/soccer balls)

Surgical instruments

Electrical appliances

Software

Carpets and rugs

Ice cream

Livestock meat

Chicken

Powdered milk

Wheat

Seafood (especially shrimp/prawns)

Vegetables

Processed food items

Pakistani assembled Suzukis (to Afghanistan and other countries)

Defense equipment (submarines, tanks, radars)

Salt

Marble

Onyx

Engineering goods etc.

Pak export 2013-14 vs 2014-2015

2,050,000
2,000,000

1,990,557

1,950,000
1,900,000
1,850,000

1,812,810
1,800,000

1,750,000
1,700,000

24

Part: 3
Impact of energy crises on
export of Pakistan

25

Consequences of Energy Crisis:

i). Economic Factors: Energy is pivotal for running all other resources
and crisis of energy directly influences all other sectors of the economy.
The economic progress is hampered by decline in agricultural
productivity as well as by halting in operations of industries. One
important factor of lower GDP and inflation of commodity prices in recent
years is attributed to shortfalls in energy supply.
ii). Agriculture Sector: Agricultural productivity of Pakistan is
decreasing due to provision of energy for running tube wells, agricultural
machinery and production of fertilizers and pesticides. Thus higher
energy means higher agricultural productivity.
iii). Industrial Sector: Nearly all Industrial units are run with the energy
and breakage in energy supply is having dire consequences on
industrial growth. As a result of decline in energy supply, industrial units
are not only being opened, but also the existing industrial units are
gradually closing.
iv). Unemployment: By closure of industrial units and less agricultural
productivity, new employment opportunities ceased to exist and already
employed manpower is shredded by the employers to increase their
profit ratios. Thus energy crisis contributes towards unemployment.
v). Social Issues: This factor is primarily related to the domestic usage
of energy (cooking, heating and water provision). Load shedding cause
unrest and frustration amongst the people and results in agitation
against the government.
vi). Poverty: Declination in economic growth, lower agricultural
productivity, unemployment and shackling industrial growth result in
increasing poverty. Currently, around forty percent of our population is
living beyond poverty line and this ratio is increasing day by day. Ample
control of energy crisis will surely yield in curbing the menace of poverty.
Pakistans energy infrastructure is not well developed, rather it is
26

considered to be underdeveloped and poorly managed. Currently the

country is facing severe energy crisis. Despite of strong economic
growth and rising energy demand during past decade, no serious efforts
have been made to install new capacity of generation. Moreover, rapid
demand growth, transmission losses due to outdated infrastructure,
power theft, and seasonal reductions in the availability of hydropower
have worsened the situation. Consequently, the demand exceeds supply
and hence load-shedding is a common phenomenon through power
shutdown

Impact of energy crises on export of

Pakistan
Effects of electricity crisis in Pakistan are immense and massive in
number. It has been noticed and observed with great care and attention
that our country Pakistan is facing serious sort of dilemma and crisis with
regard to electricity sector! Yes, this is quite and rather true. This
electricity crisis is now having adverse effects on us. From political point
of view, industrial view point, social lives and from economic prospect,
this thunderstorm is on us. Talking about the actual Electricity crisis in
Pakistan, the very first is the economic impact. This shortage of
electricity has a crucial impact on the economic growth of Pakistan.
Deficiency and lack in electricity has now put a full stop to the economic
growth. In other words, we can say that growth rate has now been
hampered now. Second impact of shortage of electricity would be on the
industrial sector of Pakistan. No electricity, no industries would be there.
As we all know that Pakistan is earning huge some of national income
on the basis of textile sector. From the studies we came to know this
textile sector is contributing around 60 % of exports input but due to
scarcity of electricity, factory owners are bound to close their industries
and factories. This declining has now asked the owners to shut down
their units. We have seen that in Faisalabad, large number of factory
and industry units are now been closed only because of this electricity
shortage. According to the survey of 2011, out of 2000 factories in
Punjab, 800 factories have now been closed. Moving on, due to this shut
down of factories and industries in large number, huge and massive
employment loss is there. Around, 4.1 million job losses were there in
27

the last year only because of this dilemma. This 4.1 million is equal to
7.5 % of labor force. We need an international investment to overcome
this problem. It is the need of the hour that each and every provincial
government should put some effort to abandon this problem. Each
province should have its own electricity house so that there would be no
shortage. Government of Pakistan now need to think seriously and
should overcome these effects of electricity crisis in Pakistan as soon as
possible. It is time to save this country from this serious dilemma before
it gets worse.

Textile export
Pakistans export of textile items which has almost 60 per cent share in
overall exports of the country has declined by 4.68 per cent in the first
six months of the financial year.
The textile industry has potential to meet shortfall in exports that has
reached $1 billion during first nine months of current fiscal against the
corresponding period provided that it is facilitated with continuous
energy supply and globally competitive interest rates. Energy crises
have a negative impact on the exports of textile of Pakistan as the
shortage of the energy cause delay in work and thus delay in overall
business. The textile exports have suffered a loss of $1 billion during
first nine months of current fiscal against the corresponding period,
mainly due to energy crisis and financial constraints.
The textile exports would have crossed $12 billion in first nine months of
current fiscal if production shortfall in quantity terms had not taken place.
Only in the month of March, the quantitative exports of cotton cloth have
declined by 43%, followed by 33% drop in knitwear, 30% in bed
wear, 22% in towel and 35% in readymade garments. 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
28

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.
Electricity crises: As a consequence of load shedding the textile
production capacity of various sub-sectors has been reduced by
up to 30 per cent. The representatives of the all textile
associations presented their serious concerns on the huge losses
being incurred due to electricity load shedding and the instant rise
in the Electricity tariff. They said that the industry has already
been crippled due to record load shedding during winter months.
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.
Gas shortage: A spokesman for the All Pakistan Textile Mills
Association claimed that 60 to 70 per cent of the industry had
been affected and was unable to accept export orders coming in
from around the globe. He said the textile industry had already
endured over 45 days of gas disconnection over a period of four
months, causing extraordinary production losses and badly
affecting capability of the industry. In Punjab, he said, the textile
industry's share was over 60 per cent, according to APTMA's
study energy supply disruption only was causing an estimated
loss of Rs1 billion per day. He regretted that at a time when the
export-oriented industry had ready demand in terms of meeting
export orders, the policy-makers failed to take prudent steps to
help ensure timely execution of orders. In the larger interest of the
economy and exports, he suggested, the government should
ensure utility companies provide smooth electricity and gas
supply to the textile industry and accord the industry top priority at
this critical time.

29

120%

Textile sector export decline

100%

80%

60%

40%

20%

0%
cotton cloth

knitwear

bed wear
2014 2015

towel

readymade
garments

As a result of the chronic energy crisis in the country, many firms in the
textile export hub of Faisalabad have begun moving out of the export
market and focusing on domestic retail consumers, with many others
branching out of textiles altogether into real estate and other segments
that serve Pakistans growing middle class.
The shortage of gas and electricity has forced many textile firms to shut
down their export operations since they cannot compete with global
rivals situated in countries like China which has a much better
infrastructure or Vietnam and Bangladesh, which have lower input
costs.
There is no more international demand for Pakistani products because
industrialists have not been able to deliver on previous orders, said
Umar Nazer Shah, who owns Hassan Textile Mills. The massive cuts in
electricity and gas supplies have led many companies to miss their order
deadlines.
The international textile market is brutally competitive. Companies that
miss a deadline can find themselves facing cancelled contracts and
difficulty getting new orders, since many European and North American
30

retailers work on a just in time basis, meaning that they need orders
delivered by a very specific date. Failure to do so by a supplier
jeopardizes their business model and is unacceptable to them.

Export of Agriculture sector:

Pakistan is an agriculture country and most of its exports are related to
this sector. More than fifty percent of the total population is directly
related to agriculture. The boom in development of agriculture apparatus
has increased their use in Pakistani agriculture as well. Nowadays, tubewells are powered by electricity. Crops require water to grow and
farmers use tube-well to water their crops. But the energy crisis has
rendered these modern technological advancement useless, as there is
not enough power to operate them. Farmers are left at the mercy of rain
water only. There has been a significant decrease in production of crops
because of the heavy reliance on rain water.
In modern days, fertilizers have become indispensable for high-yield
agriculture crops. Pakistan is facing worse crisis in gas supply along with
other energy sources. Methane - an important component of gas- is
used in the production of fertilizers. Unfortunately, the fertilizers plants
are not provided with the gas, as there is severe gas scarcity in
Pakistan. Our indigenous resources are depleting at a rapid pace. It is
estimated that Pakistan`s local gas reserves will be exhausted till 2025.
It is pertinent that the long-term interruption in gas-supply to fertilizers
will have negatively effect on our agriculture sector. Pakistan, being an
agriculture country, cannot afford to happen this lest it will face adverse
economic problem in coming future.

Impact of energy crises on agriculture

sector export
Pakistan is an agriculture country and most of its exports are
related to this sector.
Pakistan exported agricultural products worth Rs 288.18 billion
Tube-wells are powered by electricity. Crops require water to grow
and farmers use tube-well to water their crops. But the energy
crisis has rendered these modern technological advancement
useless, as there is not enough power to operate them.

31

 There has been a significant decrease in production of crops

because of the heavy reliance on rain water and also decrease
export of vegetables, grains and fruits
fertilizers have become indispensable for high-yield agriculture
crops
Pakistan is facing worse crisis in gas supply along with other
energy sources.
Unfortunately, the fertilizers plants are not provided with the gas,
as there is severe gas scarcity in Pakistan which negative effect
agriculture sector and its export.

Export of Rice:
According to available data, adding the downward trend of exports,
various kinds of rice export has also shown at least 17 per cent decline.
Rice exports recorded a steep fall of up to 30 per cent in quantity and
by 35 per cent in terms of price.

Export of Wheat:
Even Pakistan was surplus in wheat, its export is minor. During the 2015
fiscal year, Pakistan exported only 6,408 MT at a value of $1.67 million
against 20,037 MT valued at $7 million showing a decline of 76 per
cent.

32

Export of Sugar
Export of sugar stood at 354,111 MT during 2014-15 at a value of $208
million whereas 538,001 MT sugar was exported against total value of
$236.7 million in 2013-14.

In short energy crises:

Decrease exports
Increase product prices
Shortage of gas and electricity has forced many textile firms
to shut down their export operations since they cannot
compete with global rivals situated in countries
No more international demand for Pakistani products
because industrialists have not been able to deliver on
previous orders
33

 The massive cuts in electricity and gas supplies have led

many companies to miss their order deadlines and find
themselves facing cancelled contracts and difficulty getting
new orders
Many firms in the textile export hub of Faisalabad have
begun moving out of the export market and focusing on
domestic retail consumers.

Conclusion:
Energy Crisis has, more or less, plagued all sectors of Pakistans
machinery ranging from economy to industry, agriculture to social life,
inflation to poverty and it is hampering national progress in a drastic
manner. Nonetheless, menace of energy crisis can be overwhelmed by
government through making effective policies and its proactive
implementation. Simultaneously, it is the responsibility of us, the people
of Pakistan, to utilize the available energy astutely and wisely to play our
due role for progress of the country.
Energy Crisis in Pakistan is one of the severe challenges the country is
facing now-a-days. Electricity, natural gas, water and fuel are essential
part of our daily life and its outage has severely affected the economy
and overall living of our country. Thousands have lost their jobs,
businesses; our daily life has become miserable. Pakistan is currently
facing up to 18 hours of electricity outage a day and 2 days of Gas
outage a week, is expected to face more if not dealt with in time.
Pakistan has been facing an unprecedented energy crisis since the last
few years. The problem becomes more severe during summers. Initially,
during the peak crisis there was a power outage of 3-4 hours daily but it
keep on increasing as the demand of electricity rises, Due to energy
crises in Pakistan, Pakistan export badly effect. Impacts of energy crises
are Decrease exports, Increase product prices, Shortage of gas and
electricity has forced many textile firms to shut down their export
operations since they cannot compete with global rivals situated in
countries, No more international demand for Pakistani products because
industrialists have not been able to deliver on previous orders, The
massive cuts in electricity and gas supplies have led many companies to
miss their order deadlines and find themselves facing cancelled
contracts and difficulty getting new orders, many firms in the textile

34

export hub of Faisalabad have begun moving out of the export market
and focusing on domestic retail consumers.

Recommendations
This study recommends Government of Pakistan to take strong
steps to overhaul its existing infrastructure and transformed it to
utilize renewable energy for future needs.
To overcome present energy crisis, Pakistan needs to take the
following steps in form of:
1. Short Term Plan
2. Medium Term Plan
3. Long Term Plan.
Using renewable resources (water) by constructing new dams and
hydro power plants
Energy crisis can be curtailed by Reducing unnecessary energy
use & Usage of electricity saving devices

Short Term Plan

Overhaul the existing poor distribution system
Import electricity
Government should have strict monitoring system

Medium Term Plan

Transformation of existing system
Developing and installing solar and wind projects in villages

Long Term Plan

Installing coal based powerhouses
Initiate agreements for mega projects
Explorations of more oil, gas and coal reserves

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36