Pakistanis often talk about a “power crisis” in the political sense, but its true, unending crisis is that of electricity. At peak usage, the country’s electricity shortages can exceed 7,000MW, while its gas shortfall stands at 2 billion cubic feet per day, with the combined energy shortages estimated to cost around 2% of GDP annually. No single government can be blamed for this, as it is the result of successive governments’ failure to invest in infrastructure and set tariffs far below cost recovery levels.
The government, diverting resources from other priorities, subsidizes the difference. With utilities unable to cover costs of production, investment has lagged, while reliance on fossil fuels leads to carbon emissions that ultimately boost climate-change challenges within the country.
Further issues are caused by inefficiency in both producing electricity and collecting dues. Various plans to address the issue have proven contentious, as they tend to require punishing tariff increases that prove politically challenging. Meanwhile, authorities repeatedly fail to hold utilities accountable for their performances, and prosecution of power-theft remains weak.
In recent years, governments have sought to address these concerns by examining alternative energy sources. The country has a huge potential for hydroelectric generation, but currently only receives 8,700MW from the sector, compared to nearly 15,300MW from independent power projects, which generate power through imported fuel. The current crisis has adversely impacted Pakistan’s industrial competitiveness, with power shortages blamed for an estimated $70 million in losses to the textile industry, its largest export sector.
The incumbent government claims it would address the issue through improvements to infrastructure and a shift to renewables, particularly solar. However, with IPP contracts requiring capacity payments existing as albatrosses around the state’s neck, it is far easier said than done. Pakistan needs cheap energy to achieve economic growth and stability; securing it requires further punishing reforms that a politically weak government can ill afford.