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Energy Crisis in Pakistan

By

Aveenash Chhabria BBA-VI (B) International Economics Submitted to: Sir, Javed Rasool

Energy Crisis in Pakistan, Term Report (International Economics)

ENERGY CRISIS IN PAKISTAN


INTRODUCTION:
Energy is the lifeline of a country. The economic locomotive and the steering wheel of industry, factory farm and business need Energy to move forward. On the social view, Energy intake per capita is a key indicator of the quality of life of the citizen and residential district. Unfortunately in Pakistan, in spite of tall claim and rhetoric by all politics, real number solutions to meet the energy requirements of the nation have never been formulated or achieved. As a consequence, Pakistan's economic, industrial and social maturation has been greatly constrained. Due to an increasing spread in energy demand versus capacity, while successive governments put powerfulness generation and availability of gas pedal as a priority on their agenda, unfortunately, all plan of providing adequate and affordable energy to the citizens have failed to materialize. The inability to implement vim undertaking has been attributed to fiscal restraint, but in realism it is due to paucity of an Imagination, absence seizure of robust design and of a loyalty to national development. Further there continues to be a basic deficiency of understanding of the dynamics of the energy sector and market power. The disastrous solution are for all to see, while those in the corridors of power and authority in various ministries, and caput of public sector utilities have moved on, without any self-reproach or sentiency of responsibility or answerableness. There was also from another source it was mentioned that Now a days in Islamic Republic of Pakistan Department of Energy crisis is the bottom line of almost every confluence no matter either it is evening formal or informal because even in metropolitan urban center like Karachi which is business organization hub of Pakistan look great electrical shortfalls ranging from decade to 12 hours cargo shedding in peak summer which impacting performance of businesses severely ultimately thriftiness is playing poorly. Sometime the shortfall is of 200 MV and sometime it is of 2500 MV this uncertainty berth is adding fuel in the fire and whole public from houses to business, infirmary to shoal , government business to topical anesthetic business, rich to poor are badly victimize by this current hot issue of Pakistan. Where situation

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

of gas supply is also worst as currently it is cladding shortfall of 800million cubic feet per day which will even increase up to 1.8 million per day. But on it ministry of oil hold their argument that this is because of increased need which is reflecting their lack of responsibility, will, inefficiency and management which possess great challenge for whole economy. The focus of this report is on four things which are general over purview of free energy sphere and crisis of Pakistan, reasons for energy crisis in Pakistan, consequences of energy crisis on economy of Pakistan and in last the solutions and proffer to resolve this burning issue to improve performance to stimulate ontogenesis of rural area.

PAKISTANS ENERGY SECTOR AND CRISIS OVERVIEW:


On the current energy crisis, much has been claimed by the past and present government activity, discussed and debated in recent months, and numerous articles have appeared in the insistence and various magazines. The absolute majority of articles have been written by amateurs, or those who openly do not have an adequate understanding of the energy sector, and the related way out. There is no clear construct of viable solutions or the finances required and prison term rail line for project implementation. But, it is obvious, even to the commons citizen that the strategy and plans for the Pakistan's energy sector are neither clear nor properly formulated by the government, nor is there an established road map which can provide some light at the end of the burrow. 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 increment in top executive load desquamation, shortage of gasoline, and even petroleum mathematical product. Unfortunately in spite of tall title there is no sliver liner in the dark clouds. The call by the government that load shedding will end by Dec 2009 are nothing but illusions of the Ministry of H2O and Magnate, while the Ministry of Crude oil and Cancel Imagination has chosen not to make any claim on meeting the gas shortage. Meanwhile the much trumpeted task s for gas import by successive Govt.s namely the IPI, as well as the TAP and State of Katar transnational gas pipelines, as well as Mashal LNG, continue to be a victim of missed opportunity, delayed decision making, flawed strategy and incorrect planning and project development.

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

In the current scenario, the nation is faced with electric power dearth of about threesome, Little Phoebe 00 MW. If we consider the load of the industry of about 1, D - 2,000 MW, which has been shut down, due to unavailability of power, as well as petrol, then the actual deficit is in the 5,000 MW range. Part of the shortage is attributable to non- defrayment of subsidies by the regime, and non-defrayment by KESC and FATA for power supplied. This has resulted in a circular debt of over Rs. 300 billion in the vigor sector. Consequently the oil companies have not been paid and have held up oil provision 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 shuffling idle, while the government is busy signing up new rental and IPPs with duty in the 10-15 cts/kwh range. There also has been no analytical work of the price encroachment and its essence on the tariff. So the Ministry of Urine and World power is playing a waiting game with frequent hints of further escalation of power tariffs. In this setting it is also necessary to understand what needs to be done, and how to provide for free muscularity sufficiency, sustainability and reign for Pakistan. Whereas push sufficiency is most easily understood, it must be considered that the nation\'s industriousness, business and the people have been subjected to a demand suppression scenario. The energy white plague of Pakistan\'s per capita is only fifteen MMBtu, as compared to 104 MMBtu for Malaya, 106 MMBtu for Iran, an EU average of about 170 MMBtu, and world Average of 68 MMBtu. Thus it is essential for Pakistan to increase its per capita Energy availability and economic consumption to at least 50 % of the world spirit level to about 35 MMBtu in the culture medium term (2012- 2020). Only then could we claim to be energy sufficient and have a reasonable measure of the quality of aliveness for the citizen. In Pakistan almost all electrical energy is been produced in two forms that are HYDAL world power and Thermal power which are expensive origin indeed. This production of electricity is produced by three giant entity WAPDA (piddle and power development agency) which is country owned, KESC (Karachi electric supply corporation) and IPP (independent power producer) among these three WAPDA is largest producer with share of almost 58% of production. To hold the social occasion of electrical energy generation there is authority

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

namely NEPRA (national electric power regulatory authority) produced under NEPRA number in 1997 which ensure fair competition and consumer security.

Fig: 1.1 Summary of Pakistans potential Production of HYDEL Power

Pakistans energy crisis if not tackled at both operating and strategic level in the immediate future might become a national security threat. It has been a major drag on the economy and a serious impediment to growth with an estimated cost of 10% of the Gross domestic product during the past five years. The present crisis started around 2006-2007 as a gradual addition in need outstripped magnate propagation. The installed generation capability is 23,500 megawatt (MW) but any given time, the actual available capacity has remained below 14,000 MW because the independent power industrial plant (IPPs) have not been able to buy the fuel oil and production of old plants in the public sector has drop curtain causing shortage of 4,000 to 7,000 MW. While it is true that the IPPs are not producing enough power to meet the shortfall, it is only role of the job. Amount electricity generation has virtually remained flat since 2008 despite an increase of 7,827 GWH produced by the IPPs since the generation by old public sector power plants (otherwise known as GENCOs) decreased by 7,647 GWH as show in the table.

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

120000

101478
100000

80000

72169

MW

60000

44903 35413 22353

40000

20000

17328
0

2007

2010

2013

2016

2019

2022

2025

2028

Fig: 1.2 Expected demand of electricity from 2007 to 2028 in Pakistan When talking about gas, gas reserves are present at ADHKI, BADIM, BHIT GAS FIELD, KHASAN GAS FIELD, KANDANWARI GAS FIELD, KANDKHOT FIELD, KHAN FIELD, MARI FIELD, SAWAN GAS FIELD, SUI GAS FIELD, MIRZA GAS FIELD, MIANO GAS FIELD, TOOT GAS FIELD, ULHAQ FIELD AND ZAMZAMA FIELD. Among these fields SUI is largest field of country which is situated in BALOCHISTAN which was discovered in 1952 and its commercial exploitation started in 1955. It currently generating 26 % gas production and is estimated that its reserves still remaining roundabout to 800 billion cubic feet (CFT). Currently in Pakistan there are several gas companies that are SUI NORTHERN GAS COMPANY LIMITED, SUI SOUTHERN GAS COMPANY LIMITED, PAKISTAN STATE OIL COMPANY LIMITED, PAKISTAN PETROLEUM LIMITED, PAK ARAB REFINERY LIMITED, SAINDAK

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

METALS LIMITED, LAKHRA COAL DEVELOPMENT COMPANY Ltd, GOVERNEMNT HOLDINGS (Private) LIMITED, PAKISTAN MINERAL DEVELOPMENT CORPORATION LIMITED, INTER STATE GAS SYSTEMS (PVT) LIMITED, STATE PETROLEUM REFINING AND PETROCHEMICAL CORPORATION (PVT) LTD, NATIONAL REFINERY LIMITED (NRL),OIL AND GAS DEVELOPMENT COMPANY LIMITED. In 1996 Pakistan had capacity to produce 15000 megawatt which was more than demand so talks were carried out to supply it to other countries but due to not geographic expedition of new reserves this state of affairs changed dramatically and in 2007 electrical shortage come in double digits similar sort of blueprint realized in oil and gas uptake and exploration. Even though we are at 2nd identification number in earth in footing of reserves and we have alternative sources to produce energy in cheap way despite of it we are unable to meet our needs because we only increased 10000 to 14 000 megawatts in 14 class which display great flaw in management in every regard in terms of exploration, forecasting, developing infrastructure etc.

MAJOR CAUSES OF ENERGY CRISIS IN PAKISTAN:


There are many causes of this crisis but in this report only main causes are emphasized in below given section separately. 1. Wastage of energy: A Lot of electrical energy and oil and gas energy is wasted by elite group class for their luxury they use unnecessary fuel and home convenience to display their class and caliber to depict their standards over other. 2. High Cost of fuel: Cost of fuel per barrel increased from $40 to $140 which pinch WAPDA and KESC to increase prices and theft of electrical energy did not enable them to respond to this shortfall. 3. Ageing of the Equipment: Equipments are not updated and maintained properly

hence they cannot produce electricity in designed manner. Due to this there productivity is low which results in less production and continuous supply. 4. Poor collection system: Due to dishonesty and proper system bill collection system is poorly designed which is discourage WAPDA and KESC to generate more supply or to attract private firms.

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

5. Putrefaction: Corruption is deep rooted in our current system favoritism; nepotism and misappropriation are common in all sectors which results in low recovery and propagation of output specifically in this aspect of energy crisis. 6. Monopoly in market place: There is monopoly in market because only WAPDA and KESC are historian of this market and WAPDA has monopoly major force. NEPRA has no much power to impose or exert its power over strong WAPDA. 7. Exploring Ember (coal): No seriousness shown from politics to explore coal in THAR to utilize it to garden truck electricity they claim without examination coal that it is inferior in quality. 8. Lack of Proper Energy Planning: Lack of planning is adding fuel in the fire unrealistic plan, unrealistic forecast, unrealistic budget etc. making it worse rather than resolution this yield. 9. Lack of dames: Due to lack of political harmony we are unable to build dames in country which upshot in loss of huge water sum which could be utilized by agricultural sphere and energy sector. 10. Lack of adequate dames: Due to lack of political harmony we are unable to build adequate dames in country which upshot in loss of huge water sum which could be utilized by agricultural sphere and energy sector. 11. Distribution organization: Due to monopoly of WAPDA statistical distribution scheme is not maintained properly many break downs and trip are resulted from poor distribution system. 12. No usage of Nuclear Energy: We are not utilizing our nuclear power properly due to lack of infrastructure to control that immense power hence we have small capability in this regard which is only 425 megawatts 13. Authorities role: Government role is minimal in this issue government is looking for private investing this will not body of work until government will put its hands up.

CONSEQUENCES OF ENERGY CRISIS IN PAKISTAN:


1. Impact on Education: Like all other sectors education sector which is backbone of any country suffered a lot because IT centers and research labs are closed due to energy shortfall which possess

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

challenge for students to carry out research projects which results in lack of results hence we attain lack of development in country. 2. Impact on Business Sector: Productivity of businesses are immensely impacted by energy crisis and some are even forced to shut down there plants or shift them to other countries like Bangladesh etc. load shedding of almost 8 hours a day hit the working capabilities of businesses very badly due that they tend to use generators as an alternative but again it is an challenge due to high prices of oil which tends them to increase their prices which leads to decrease in market share. 3. Impact on Hospitals and other Institutions: In hospitals doctors find it very challenging to use electrical equipment in case of emergency which even delayed due to electrical shortfall which results in serious damages to life which can be controlled if not delayed due to crisis. 4. Impact on IT Industry: IT means selling products and services via internet or electronic media. Our IT sector was one of leading sectors in world but energy crisis ruined it which resulted in lack of employment in country and over all sector hit badly by this crisis. 5. Impact on Textile Industry: Due to energy crisis this industry is under performing by 43% of their capacity. While due to rise in span of load shedding it is unable to meet the international orders and also due to rise in energy prices their cost of production is increasing which putting pressure to rise their final price which making them less competitive in rest of world. 6. Impact on Home Life: Domestic life suffered very badly because many people in Pakistan cannot afford to install facilities like UPS or generators because they are costly hence find it very difficult to utilize electrical instruments. Despite of it UPS like facilities are sources to increase load shedding because they require 4 units of input to produce 1 unit of output. 7. Impact on Overall Economy of our Country: As businesses have direct impact on GDP hence due to this crisis our GDP is decreasing in real terms, unemployment is increasing due to shifting of businesses from country, inflation is rising due to increase in price of goods due to rise in per unit cost of

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

electrical supply and transportation due to oil prices, purchasing power of people is decreasing etc. So in wide vision due to this energy crisis our economy is suffering which results in impeding growth and crawling development in country.

SOLUTION OF ENERGY CRISES IN PAKISTAN:


1. Fit new Equipment: Government need to install new equipment to increase efficiency and have to employee new methods of production to cater huge demand. 2. Eradicate Monopoly: Moreover government needed to eliminate monopoly from market by encouraging private firms to come and join in market which leads to improve situation in terms of price, distribution, continuous supply etc. 3. Unconventional Energy Sources: Government should produce electricity from other sources like wind energy, bio gas technology, solar energy, geo thermal power, nuclear power etc. to cater need in a cheap mean. 4. Serious approach from Authorities: There must be seriousness from government is required government need to step up and invest by themselves rather than relying on private investment and we have abundant natural resources only they need to be managed by honesty, determination, devotion and dedication in a proper and optimal manner. 5. Construct New Dames: Government of provinces with consensus and consent built dams in order to utilize water for energy purposes. 6. Discover further New Sources: New reserves must be explored in order to meet requirement in proper way and also need to maintain current reserves at optimal level. 7. Putrefaction must be abolished: Government need to work on developing such an integrated systems to manage accountability in which there in minimal level or loops for corruption. Moreover it must

Aveenash Chhabria

Energy Crisis in Pakistan, Term Report (International Economics)

need to work on developing system under one authority which will be responsible for from hiring, controlling, managing, firing and other works to eliminate corruption.

CONCLUSION:
This Report highlights the importance of the Energy in our daily life, Education and Business etc. but due to lake of proper supply we are currently facing huge losses and suffering from all facilities those are availed by the other countries. So we study in detail that from where these energy crisis start and why still they are persistent mean why government is unable to cope up them. Then we highlighted major impact of these crises on our social, economic and physical life and finally we proposed some feasible solution to overcome them. But despite of all of it, there must be strong will from all stakeholder of country, means from all of us to resolve it as it is said, where there is a will there is a way.

References:
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remedies. Available:

http://www.peacebuilding.no/Regions/Asia/Pakistan/Publications/Pakistan-s-

energy-crisis-causes-consequences-and-possible-remedies. Last accessed 20th April 2014. Muhammad T S Awan. (2011). Energy Crisis in Pakistan. Available:

http://www.cssforum.com.pk/css-compulsory-subjects/essay/essays/46177-energy-crisispakistan.html. Last accessed 20th April 2014.

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Energy Crisis in Pakistan, Term Report (International Economics) Shanzeh Iqbal. (2010). Energy OF ENERGY crisis, CRISIS causes IN & remedies. Available: PAKISTAN. Available:

http://pakobserver.net/detailnews.asp?id=35838. Last accessed 20th April 2014. Anonymous. (2014). CAUSE http://rehanenergy.com/articles/cause-of-energy-crisis-in-pakistan/. Last accessed 20th April 2014. Irshad 2014. Ali Sodhar (FSP). (2012). Global Energy Crisis. Available: April

http://cssexam2013.blogspot.com/2012/11/essay-energy-crisis.html. Last accessed 21th

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