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Archives of Business Research – Vol. 10, No. 10
Publication Date: October 25, 2022
DOI:10.14738/abr.1010.13210. Rubab, R. K., Tagar, H. K., Shoro, I., & Jalbani, M. S. (2022). Significance of the Energy Resources for Pakistan’s Economy: Challenges
and the Way Forward. Archives of Business Research, 10(10). 10-18.
Services for Science and Education – United Kingdom
Significance of the Energy Resources for Pakistan’s Economy:
Challenges and the Way Forward
Rahila Khatoon Rubab
Data Analyst, Public Private Partnership Node
School Education & Literacy Department
Government of Sindh, Karachi Pakistan
Hamzo Khan Tagar
Director Public Private Partnership Node
School Education & Literacy Department
Government of Sindh, Karachi Pakistan
Iram Shoro
Senior Banker in Sindh Bank LTD. Government of
Sindh Finance Department, Karachi, Pakistan
Muhammad Saleem Jalbani
Senior Chief Environment & Climate Change Sindh
Planning&DevelopmentBoard, Government of Sindh
Karachi Pakistan
ABSTRACT
Energy has been widely demanded, due to increasing population pressure and
changing consumptions pattern globally. Domestic and commercial activities have
become more dependent on the energy sector in the 21st century. Reliable and
affordable energy is the dream of developing countries for their economic growth
and development because of its correlation to the subject matter. The rapid growth
of the industries developed agriculture; modern trade and dynamic transportation
facilities are mostly dependent on the energy sector. A decent supply of energy at a
cheap rate for sustainable growth and development is the need of the hour in
Pakistan. It is analyzed that the energy crisis began in the country in 1990, after Iraq
and Kuwait war. Pakistan mostly depends on energy imports because energy
resources of hydro powers, natural gas and oil fields are untapped due to a lack of
sufficient investment and several other unavoidable circumstances. The basic aim
and objectives of this study are to investigate and explore the major obstacles in
efficient energy management to reduce the gap shortfall. This study recommends
that the policymakers of the government of Pakistan specifically political economy
managers focus attention and investment should be on green energy resources i.e.,
solar, wind energy, biogas and other options of alternatives energy resources in
their policies and programs in the greater public interest of economic development
for all in the region.
Keywords: Electricity, Alternate Renewal Energy (ARE), Polices, Independent Power
producers-(IPPs). Liquid Natural Gas – (LNG)
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Rubab, R. K., Tagar, H. K., Shoro, I., & Jalbani, M. S. (2022). Significance of the Energy Resources for Pakistan’s Economy: Challenges and the Way
Forward. Archives of Business Research, 10(10). 10-18.
URL: http://dx.doi.org/10.14738/abr.1010.13210
INTRODUCTION
Pakistan facing an energy crisis for a long, which has direct and indirect impact on all sectors of
the economy i.e. Growth and Development of the country in the long run and reduced
employment and income opportunities. Pakistan’s Energy sector is confronted with some
major obstacles, which need to be filled up along with improvement in its supply at the lowest
cost to save the losses of the national exchequer. There is a need to put more attention to
renewable energy sources which are cost-saving and time effective, and easy to install to
further improve the existing energy mix in the country for the socio-economic development of
the nation. Social protection signifies the capacity of a society to meet the basic human needs of
the country through a coherent strategy with decent implementations key to facing the energy
challenge to the economy in the 21st century, particularly in the post-pandemic era. Another
side it is decided globally to stop building new coal-fired power plants because of upraising
environmental issues and their adverse impact on human lives and economies. The oil and gas
resources are also depleting widely because of heavy consumption with rapid population
growth. The Pakistan economy rapidly facing a fiscal sustainability challenge in the 21st
century particularly in the post-pandemic era due to the increase in energy payments to Saudi
Arabia, Qatar and other gulf countries. This energy deficiency began severely three decades ago
due to the Iraq war with Kuwait, United States of America (USA) (NATO) allied countries in
1990 and power generation used to relies more on imported furnace oil than hydropower in
Pakistan in the mid-nineties 1995 to 2000.
The increasing demand of rapid populations, urban business centers and agriculture sector tub
wells and other allied machinery use are the major factors of demand side analysis. This sharp
increase in energy demands created a ‘circular debt’ issue in Pakistan and further weakened
the roots of the already destabilized economy. This leads to the cash flow shortfall incurred in
the power sector from the delayed/non-payment of obligations by consumers, distribution
companies and the government. “It has continued to grow in size over the years, rising from 1.6
per cent of GDP (Rs161billion) in 2008, to 5.2 per cent of gross domestic product (GDP) (Rupees
2,150 billion) in June 2020”.(ESP , 2020-2021)
The political economy elites have not given importance to resolving this issue and working on
various old methods and time-barred options to reduce the size of circular debt on traditional
patterns. It is analyzed based on historical facts and figures that Pakistan’s reliance on hydro
thermal powerhouse built on dames in northern areas i.e. Tarbella and Manglla dams but these
sources of huge energy are very older and need immediate attention of policymakers to rebuild
the old and proposed the new ones to face the challenge of the energy shortfall. It also includes
others sources of energy generations as imported coal, local coal, liquid natural gas (LNG) and
natural gas but these are also decreasing over the last two decades of the 21st century. Natural
gas has great significance in the overall energy mix but these important resources are also on a
declining path because of inappropriate and unplanned use and less investment to find new
reservoirs. The energy systems around the world are going through rapid transitions that will
bring significant changes to the way we fuel our cars, heat our houses and power our industries.
These trends will have widespread implications for businesses, governments and individuals
in the coming decades. In Pakistan, special measures should be taken to overcome the problem
of energy shortfall for tomorrow's people. This paper has been written in that context to
evaluate major obstacles in the energy supply to bridge the gap of shortfall and provide feasible
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Archives of Business Research (ABR) Vol. 10, Issue 10, October-2022
Services for Science and Education – United Kingdom
recommendations for improvement in the system because of its mixed roots with the overall
economic development of the country.
REVIEW OF LITERATURE
Energy Potentials and Production in Pakistan
The hydropower generations, thermal power, oil resources, natural gas, and atomic energy
alternative energy are the main resources of energy production in the country which can be
decently utilized and consumed with care. The available capacity does not fully contribute to
energy production due to various factors like auxiliary consumption, the impact of site
reference conditions and seasonality effects on the renewable and large hydropower plants.
The discussions on the main resources are given below for more understanding of the subject
matter.
Electricity Productions, Prices and Challenges of Load shedding in the Country and its
Adverse Impact on the Economic Activates
The production of electricity is the main source of the country's energy bank. After accounting
for the above factors, the capacity, known as the generation capability, is effectively used for
the electricity demand. The data about the generation capability of electricity and future
demand reported by the national transmissions and distributions company (NTDC2020) is
given in the following table.
TABLE-01: Last Five-Year Data of Energy Shortfall in Pakistan
Year Production Demand Deficit Surplus
2016 17261 22559 3298 -
2017 19020 25117 6097 -
2018 23766 26741 2975 -
2019 24565 25627 1062 -
2020 27780 26252 - 1528
TABLE-02: Next Five-Year Projected Data of Energy in Pakistan
Year Production Demand Deficit Surplus
2021 30582 29325 - 1257
2022 32989 30921 - 2086
2023 35896 31953 - 3943
2024 37918 33696 - 4222
2025 39157 35442 - 3735
(The State of Industry Report, 2020)
The Pakistani nation has been in the grip of unannounced power load shedding for a long and
this directly impacted daily business life and inversely impacted the economic growth and the
development of the country. The National Electric Power Regulatory Authority (NEPRA)
cautioned that any power circulation organization viewed as associated with unscheduled
blackouts will confront serious results but their notions implementations are null and void. The
hours-long unannounced power cuts had taken genuine life misery. The workplaces confront
10 to 12 hours of blackouts and makes the life of the consumers difficult. It is observed that in
the rural and far-flung areas, it more than 15 hours and makes more difficulties in the routine
life of agricultural concerned professionals. The other causes after shortfall are maintenance
work of supply lines very poor and in shambling condition because of old age infrastructures.
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Rubab, R. K., Tagar, H. K., Shoro, I., & Jalbani, M. S. (2022). Significance of the Energy Resources for Pakistan’s Economy: Challenges and the Way
Forward. Archives of Business Research, 10(10). 10-18.
URL: http://dx.doi.org/10.14738/abr.1010.13210
It has also been analyzed that the power-creating units have been closed down due to fuel
deficiencies. As indicated by reports, “18 power plants with a complete limit of 3605 megawatts
are currently not delivering energy attributable to specialized issues, while nine power plants
with an all-out limit of 3535 megawatts are closed down because of fuel deficiencies”.(Load
Shedding Nothing New, 2022)
Alternative Renewable Energy (ARE) Resources Analysis
The public sector policymakers are globally emphasizing on utilization of indigenous and
environmentally clean energy generation. Several initiatives have been taken to create a
conducive environment for the sustainable growth of the Alternative Renewable Energy (ARE)
sector in Pakistan to harness the potential of indigenous renewable energy resources but the
implementation of these policies in the fields is an actual issue due to lethargically and time
barred traditional practices by the complexity of local laws in the long way of actualizations it
in the realities.
Pakistan has tremendous potential for producing power through solar power. South Asian
nations are dry and hot, excepting a couple of regions in the northwest. In any case, the nation
right now just delivers a pitiful 1.16% of its power through sun-based power and 64% with
petroleum derivatives. Other power sources incorporate hydropower at 27% and atomic at 5%.
Sustainable power sources count for just 4% of complete power creation. The country is
seriously impacted by environmental change but still keeps on putting resources into
ecologically unpleasant strategies for power creation. (Economic Servey of Pakistan, 2011)
There are powerful administrators, policymakers and hydropower entryways that are against
sun-oriented energy, an obsolete planetary group introduced in Punjab by China loaned
confidence to the cases of cynics who state sunlight based wouldn't work in Pakistan, creating
sun-oriented power would be less expensive than hydroelectric power, and asserted that a $10
billion interest in sunlight-based power could produce 50 to 60 gigawatts of limit. This would
address multiple times more than whatever is created from the Tarbela and Mangla dams, two
huge hydropower projects. Said Hassan Abbas (environmentalist), told DW Asia on the matter
in an interview.(S. Khan, 2021)
Ghazala Reza, a Pakistani energy expert, expressed that many variables are holding solar power
back from prospering. These remember confusions for tracking down space for sun-based
ranches, procedural postponements in development endorsements and ugly levies for offering
the capacity to the public framework. She concludes that "Absence of political will and
hesitance of government speculation runs the expectations of producing power through this
manageable strategy". (S. Khan, 2021)
Azra Talat Saeed cautions against putting vigorously in sunlight-based power without thinking
about all elements albeit sun-oriented power is vastly improved for the climate than petroleum
products, sun-based innovation risks expanding Pakistan's reliance on innovation possessed
by the US and China. "Sunlight-powered chargers likewise consume a lot of room if introduced
for an enormous scope, this could incredibly hurt our horticulture, compounding food
instability. Their strength is likewise an issue other than the enormous introductory venture,
which must be made by huge landowners and not by unfortunate ranchers," (Why doesn't
Pakistan tap its solar power potential?, n.d.)