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Table of Contents

Introduction.

Energy crisis in Pakistan.

Main causes of energy crisis in Pakistan.

How energy crisis affects the economy.

Effects of energy crisis in Pakistan’s economy.

Prevention of energy crisis in Pakistan.

Conclusion.

Introduction to Energy Crisis

Energy is important for the life and functioning of all resources and industrial processes. It is considered as a lifeline for every economy to sustain and key for socio-economic development of the country effectively (Sajid & Javaid, 2018). Without energy, it is hard to survive and running all the resources required to ensure sustainability. However, the energy crisis is been emerging as a global issue that affects life, economy and other resources. With growing energy consumptions for human needs, the world is gradually falling short of resources and energy supplying of vital energy (Aftab, 2015). Several countries across the world are facing severe challenges and issues of availability of energy in their region. It has posed as a major concern that globally, every country requires a high amount of energy to run every activity which is essential to life and economy, but due to the over expanding demand of energy, natural resources are diminishing gradually.

For example, Pakistan is one of the worst-hit country facing an extreme energy crisis in its national history (Sajid & Javaid, 2018). Energy crisis in Pakistan is been responsible for the massive downfall in country’s economy. Understanding and assessing the reasons behind such crisis and how it has affected Pakistan’s economy would help significantly to conclude an effectual outcome for future point of reference or any further research on a similar topic. Thus, this research report would focus considerably to evaluate the reasons for the energy crisis in Pakistan and its impact on its economy by assessing the factors involved.

Energy Crisis in Pakistan

Pakistan is an Islamic Republican nation located in the Southern part of Asia and is considered one of the world’s fifth most densely populated country in the world. The infrastructures of energy sectors in Pakistan are poorly managed and are not well established as required. According to Qureshi et al., (2016) energy crisis can be stated as an extensive obstruction in the supply of energy resources to any specific economy (Qureshi et al., 2016). Besides that, the energy crisis commonly denotes to a decline in the supply of electrical energy as compared to its demand within the economy or society as large (Qureshi et al., 2016). Concerning such fact, only 55% of the overall population in Pakistan has access to electricity, the rest of them has zero access to electricity (Iqbal et al., 2018). In addition to that, the power or electrical supply in context to per capita supply is about 520 kWh which is comparatively less as required (Iqbal et al., 2018). Due to the energy crisis, Pakistan facing considerable challenges in promoting investments, enhancing economy emergence, and shrinking poverty from the country effectively. Also, the country undergoes immense power cut or load shedding of at least 6 to 9 hours daily for family units and 1 to 3 hours for several high functioning industries (Iqbal et al., 2018). Hence, this indicates that energy supply in Pakistan is not sufficient to meet its demand and is constantly facing extensive challenges and issues in tackling the energy crisis throughout the country.

Main Causes of The Energy Crisis in Pakistan

As we understood and aware of the fact that the energy crisis is an emerging global issue affecting many economies across the world. Pakistan has been facing severe energy crisis throughout and it is causing enormous loss to the country’s economy. According to the reports by Ministry of Finance, Government of Pakistan, the energy crisis is the major deplete on Pakistan’s economy, shredding off up to 2% from the yearly gross domestic product development within the country (Iqbal et al., 2018). Thus, it is crucial to look at the main causes of energy crisis in Pakistan to find out implications to resolve. Following are indicates are the prime causes of energy crisis in the country:

  • Oil mixture price inferences – Since 1994’s power policy decision by the Pakistan government, power generation from imported furnace fuel was knowingly more expensive as compared to hydro sources (Aftab, 2015). Besides that, generation from diesel-run power plants is way more expensive at about Rs. 23 per capita unit of power generated (Aftab, 2015). The amplified power generation cost, doubled with the high percentage of losses makes sure that power supply cost is approximately near to Rs. 16 per capita unit in Pakistan as equalled to around $0.08 for the rest of South Asian countries in total (Aftab, 2015).
  • Spherical obligation – With the increased reliance on the expensive thermal power generation sources has given considerable surge to the occurrence of spherical obligation or debt in the energy sector of Pakistan. It has drastically led to falling in electricity bill payments; specifically, for public establishments, further prompted as a series of late payments for the imported furnace fuel, natural gas, and additional inputs required to the thermal power generation system. This has extensively hampered the economy of the country leading to a spherical debt of nearly $1 billion as per the reports by National Assembly, the Treasury which I emerging rapidly causing the economy collapse (Aftab, 2015). Thus, it indicates that these two factors are the major cause of the energy crisis in Pakistan.

How Energy Crisis Affects the Economy

From a global overview, the security of energy depends on the availability of energy from accessible sources. Energy is essential for life and economy; its crisis can damage an economy massively. As stated by Zameer & Wang, (2018) energy crisis has an enormous impact to decline a growing economy to ground zero and recovery of such impact would be challenging and require massive monetary and strategic contributions (Zameer & Wang, 2018). Concerning such fact, from world’ perspective, production of coal, oil, and gas cannot sustain open-endedly with the emerging global demand for energy consumption. For instance, without adequate energy or electricity supply, industrial sectors who are into manufacturing, service-related, and mass production finds it difficult to cope with the business needs and demands, thus, causing failure and decline within the competitive market remarkably (Zameer & Wang, 2018). Besides that, when there will be a poor supply of energy, poverty will likely take a sharp rise as well as there will be a considerable upsurge of unemployment within the country which in turn, would severely affect the overall economy of the country.

Effects of Energy Crisis in Pakistan’s Economy

Effects of energy create an enormous impact on the economy as a whole and it has harsh consequences to the public, business, and government as well. Relating to such fact, Pakistan has been experiencing severe energy crisis such a couple of decades and it's still prevailing. Looking at current situations of Pakistan, energy crisis is relatively deducting 2% of the economy even though the Pakistan government has disbursed Rs. 1.2 trillion on enhancing the energy sector as subsidies for the last four years which is responsible for 2.6 % of the overall capacity of the country’s economy (Aftab, 2015). The country faces long blackout for long hours for domestic segments and for industrial sectors the load shedding will be for more than a couple of hours which makes them less productive and led to considerable loss (Shah & Solangi, 2019). On the other hand, due to the ineffective and poorly planned energy policy implementation by the government of Pakistan has led to the origin of the issue ad crisis. The poor policy has caused massive damage to the country’s economy, income proposition, and poverty level.

Prevention of Energy Crisis in Pakistan

The energy crisis has been a key obstacle for economic growth and progression of Pakistan. Thus, it is crucial to prevent the crisis strategically and decisively to help promote growth and development of the overall economy. Concerning such fact, the Pakistan government must initiate strategic step and implementations to make prevent of the identified and long waging energy crisis (Shah & Solangi, 2019). By renewing energy policy and interest in the energy sectors of Pakistan would help ease the problem significantly. In context to policy reform or renewal, the main document will assist guide Pakistan’s energy policy agenda to International Monetary Fund (IMF) to seek financial assistance in term of a loan to make development and recoveries effectively (Aftab, 2015). Besides that, there must be a set tariff for various subsidies, industries, and households who consumes over average energy per day to acquire the recovery cost of energy crisis gradually (Zameer & Wang, 2018). Allocation of fuel or energy would also be determined as per the set tariffs to various consumers which shall be accountable to economic value will help monitor and control the energy supply and distribution activity effectively and strategically (Aftab, 2015). Thus, the government of Pakistan must make arrangements to import natural gas and increase incentives for domestic exploration.

Conclusion on Energy Crisis and Its Impact on The Economy of Pakistan

Energy crisis in Pakistan has been a major cause of the decline in the country's overall economy. The shortage of supply in meeting the high demand and led the country to face severe challenges and issues for decades. By analysing and assessing this research report, it has been understood that there are several factors involved in the occurrence of energy crisis in Pakistan and how it has affected its economy negatively. Energy crisis in Pakistan has indicated the world that, production of oil, gas, and coal cannot survive forever, it is gradually coming to shrink in the nearest time. Thus, focusing on the prevention guidelines and recommendation would help lessen the issues and would considerably assist in eradicating the energy crisis out of Pakistan and help sustain the economy towards growth and development.

References for Energy Crisis and Its Impact on The Economy of Pakistan

 Aftab, S. (2015). Pakistan’s energy crisis: causes, consequences and possible remedies [Ebook] (2nd ed., pp. 1-4). The Norwegian Peacebuilding Resource Centre. Retrieved from files.ethz.ch

Iqbal, T., Kiran, S., Tehseen, A., & Bashir, A. (2018). A Short Review on Energy Crisis in Pakistan and Sustainable Energy Solutions. International Journal of Electrical Power System and Technology, 04(2), 152-267. https://doi.org/https://doi.org/10.37628/ijepst.v4i2.943

Qureshi, M., Rasli, A., & Zaman, K. (2016). Energy crisis, greenhouse gas emissions and sectoral growth reforms: repairing the fabricated mosaic. Journal of Cleaner Production, 112, 3657-3666. https://doi.org/10.1016/j.jclepro.2015.08.017

Sajid, Z., & Javaid, A. (2018). A Stochastic Approach to Energy Policy and Management: A Case Study of the Pakistan Energy Crisis. Energies, 11(9), 2424. https://doi.org/10.3390/en11092424

Shah, S., & Solangi, Y. (2019). A sustainable solution for electricity crisis in Pakistan: opportunities, barriers, and policy implications for 100% renewable energy. Environmental Science and Pollution Research, 26(29), 29687-29703. https://doi.org/10.1007/s11356-019-06102-0

Zameer, H., & Wang, Y. (2018). Energy production system optimization: Evidence from Pakistan. Renewable and Sustainable Energy Reviews, 82, 886-893. https://doi.org/10.1016/j.rser.2017.09.089

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